☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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94-3354663
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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(Title of class)
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(Trading Symbol)
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(Name of exchange on which registered)
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Common Stock, $0.0003 par value
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VCRA
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New York Stock Exchange
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Large accelerated filer
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x
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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☐
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Emerging Growth Company
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☐
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Page
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PART I
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Item 1.
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Business
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Item 1A.
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Risk factors
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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PART II
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Item 5.
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Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Item 6.
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Selected Financial Data
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Item 7.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 8.
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Financial Statements and Supplementary Data
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Item 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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Item 9A.
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Controls and Procedures
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Item 9B.
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Other Information
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PART III
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Item 10.
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Directors, Executive Officers and Corporate Governance
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Item 11.
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Executive Compensation
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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Item 14.
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Principal Accounting Fees and Services
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PART IV
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Item 15.
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Exhibits and Financial Statement Schedule
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Item 16.
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Form 10-K Summary
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Index to Exhibits
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Signatures
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Item 1.
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Business
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•
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Expand our business to new U.S. healthcare customers. We believe our solutions can provide significant value to health systems, hospitals and smaller healthcare facilities. We plan to continue to add new customers among hospitals of all sizes, and expand to outpatient clinics, aged-care and skilled nursing facilities.
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Further expand our footprint within our existing installed customer base. Many of our customers initially deploy our solutions in a few departments of a hospital and gradually expand to additional departments as they come to fully appreciate its value. We have a significant opportunity to up-sell and cross-sell to our existing customers, including into new hospitals that are part of an existing healthcare system customer. Key sales strategies include expanding our footprint at existing customer facilities and capturing additional revenue by cross selling additional solutions. We plan to continue expanding within our existing customers in order to grow our revenue and maintain and improve customer experience.
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Extend our technology advantage and create new product solutions. We intend to continue our investment in research and development to enhance the functionality of our solutions and further differentiate them from other competing solutions. As we did with the introduction of the Smartbadge in January 2019, enhancements to the Vocera Care Experience suite in June 2019 and the introduction of the new Vina Smartphone Application in September 2019, we plan to continue to invest in product upgrades, product line extensions and new solutions to enhance our portfolio, including further development of applications for iOS and Android devices.
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Increase our health system selling efforts. Our increasingly comprehensive product suite is enabling us to sell to more large health systems. These sales efforts typically involve conversations with more senior decision makers and result in larger deal sizes with complex and elongated sales cycles. We have organized a strategic accounts sales team to pursue more of these opportunities in the future.
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Invest in partnerships. In order to gain access to clinical data and patient context needed to create a highly efficient communication and workflow system for the entire care team, we plan to continue to broaden our ecosystem of technology partners, including vendors that provide nurse call systems, patient monitoring systems, analytics and EHRs. We added new partnerships in 2018 and 2019 and will continue to explore new relationships that broaden our overall market presence and accelerate the sales of our offerings.
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Pursue acquisitions of complementary businesses, technologies and assets. Over the last several years we have completed a number of acquisitions to help us achieve our strategic vision by enhancing our products and enabling us to enter new markets. Our acquisitions have expanded our solutions, demonstrating that we can successfully source, acquire and integrate complementary businesses, technologies and assets. We intend to continue to pursue acquisition opportunities that we believe can accelerate the growth of our business.
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Grow our international healthcare presence. Today, in addition to our core U.S. market, we sell into other English-speaking markets, including Canada, the United Kingdom, Australia, New Zealand, and Middle Eastern countries including the United Arab Emirates, Saudi Arabia, Oman and Qatar. We believe that the rapid pace of investment in new healthcare facilities in these developing international markets provides a significant opportunity for growth. As of December 31, 2019, our solutions were selected by approximately 300 healthcare facilities outside the United States. We plan to utilize both our direct sales force and leverage channel partners to expand our presence into other markets over time.
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Expand our solutions in non-healthcare markets. While our primary focus is on the healthcare market, our solutions also provide great value in non-healthcare markets. Our solutions have been selected by facilities in markets beyond healthcare including hospitality, retail, energy, education and other mission critical mobile worker environments. Currently, this is not a material portion of our revenue, but longer term, we believe these markets could represent potential opportunities for growth.
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Action
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Spoken commands
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Call by name
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Call John Smith.
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Call a group member
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Call an Anesthesiologist.
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Dial a phone number or extension
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Dial extension 3145.
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Initiate a broadcast to a group
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Broadcast to Emergency Response Team.
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Locate nearest member of a group
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Where is the nearest member of Security?
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Send a voice message
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Record a message for Pediatric Nursing.
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Vocera Software Platform. At the heart of our Vocera Communication and Workflow System is a patent-protected, enterprise-class software platform. The intelligence of our client-server system is contained primarily within our server-software. This platform contains an optimized speech recognition engine, intelligent call routing and management functionality, reporting and analytics tools, clinical directories and user profiles. As part of this software platform, the Engage intelligent workflow engine allows routing, escalation and prioritization of communication and alert and alarm notifications that include patient content. In addition, our platform has the ability to integrate with a significant number of third-party clinical systems, including telephony, nurse call, patient monitoring and EHR systems. Our software platform features an advanced clinical rules engine that unifies data from multiple sources simultaneously, enables prioritization of notifications, adds patient context, and sends messages to the right care team members on their mobile devices, helping to improve patient safety and satisfaction and increase operational efficiency. By providing real-time situational awareness about the patients and care teams, we enable healthcare workers to be more effective and suffer less from alarm and alert fatigue. Recognizing the rapidly expanding footprint of care, our scalable software platform can support multiple geographic sites and multiple facilities within a healthcare system to help clinicians stay connected to the current status of their patients.
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Vocera Smartbadge. Our Smartbadge, launched in January 2019, is the only wearable communication device purpose-built for patient care. Our Smartbadge is powered by the Vocera Software Platform and operates over customers' industry-standard Wi-Fi networks. The Smartbadge has a 2.4” touchscreen that enables the user to receive prioritized alert and alarm notifications with additional patient context. Additionally, users can make and answer calls hands-free or by holding it up to the ear for privacy, and send and receive secured text messages, using the touchscreen keyboard with no character limit. The Smartbadge also has a dedicated panic button and enhanced "do not disturb" functionality.
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Vocera Badge. Our Badge is a smaller and lighter hands-free wearable device that allows the users instant two-way voice conversations without the need to remember a phone number or use a handset. Similar to the Smartbadge, it is powered by the Vocera Software Platform and operates over the customers' industry-standard Wi-Fi networks. It has a small display that provides a concise amount of information and allows the user to receive prioritized alarm and alert notifications with limited context. The Badge has received the FIPS 140-2 certification from the National Institute of Standards and Technology. We have also received an Authority to Operate (ATO) certification from the U.S. Department of Defense. Both of these certifications are requirements to sell our solutions to U.S. government and military hospital and medical facilities.
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Vocera Smartphone Applications. Vocera's suite of smartphone applications enable a seamless multi-mode communications and collaboration experience; combining the unique calling, texting, alerting and content distribution capabilities of Vocera into a secure, easy-to-use smartphone application that presents incoming communication in order of importance. Available and certified for use on commercially available iOS and Android devices, our smartphone applications support both personal (bring your own device or BYOD) and shared device usage models. Powered by the Vocera Software Platform, our new Vina Smartphone application delivers relevant context about clinical events, patient status and clinician availability, helping care teams improve safety, quality of care and experience for patients and care teams. The customizable communication application presents prioritized patient-centric calls, secure messages and alerts in a unified inbox and provides an intuitive user experience for clinicians inside and outside the hospital.
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Choice of Mobile Devices. We resell the Spectralink Versity Smartphone and Zebra Technologies TC52 Android mobile computer. These devices are offered as a bundled solution with our smartphone applications to provide a complete, turnkey solution for our customers’ clinical communication needs. We also deliver our solution on iOS devices. This gives our customers a choice of different devices to access the power of the Vocera software platform.
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Professional services. Our professional services help customers successfully deploy, manage, update and/or expand their Vocera systems in order to gain the full benefits of our solutions. As of December 31, 2019, our professional services team consisted of 114 professionals with expertise in wireless communication, clinical workflow, end-user training, speech science and project management. We offer a full suite of services, including clinical workflow design, wireless assessment, solution configuration, training and project management, enabling customers to integrate our solutions and improve workflow efficiency and staff productivity. We also provide classroom and distance learning curricula for systems administrators, information technology professionals and clinical educators.
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Software Maintenance and Technical support. We provide 24x7 technical support to our customers through our support centers in San Jose, California; Fort Wayne, Indiana; Toronto, Canada; Knoxville, Tennessee and Reading, United Kingdom. As of December 31, 2019, our technical support team consisted of 68 technical support professionals with expertise in wireless, telephony, integration, servers and client devices. Our team utilizes remote diagnostic tools to proactively assess the performance of customer systems. We assign technical account management resources to our largest accounts to help them expand the use of our solutions and facilitate adoption of new functionality. Software maintenance entitles customers to unspecified upgrades, bug fixes and patch releases. Additional services, including an annual Remote System Health Assessment and biweekly technical webinar education, are offered as project-based consulting or through our membership collaborative.
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Experience Innovation Network. The Experience Innovation Network is a membership program that partners with healthcare provider organizations to further the development of innovations and solutions that improve care team and patient experience as well as clinical and operational performance.
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Vocera University. We provide hands-on, interactive educational experience through classroom training, distance learning or customized courseware covering best practices, implementation and use of our solutions. Training courses are provided for systems administrators, IT professionals and industry-specific, end-user educators.
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comprehensiveness of the solution, the features provided and the ability to purchase the complete solution from a single vendor
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product performance and reliability
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the initial cost and ongoing cost of ownership
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customer service and support capabilities
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Item 1A.
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Risk Factors
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manage our expenses in line with our operating plans and current business environment;
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maintain and enhance our operational, financial and management controls, reporting systems and procedures;
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integrate acquired businesses, technologies or assets;
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manage operations in multiple locations and time zones; and
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develop and deliver new solutions and enhancements to existing solutions efficiently and reliably.
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the financial health of our healthcare customers and budgetary constraints on their ability to upgrade their communications;
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the availability of government funding for healthcare facilities operated by the United States federal, state and local governments;
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changes in customer purchasing patterns or sales cycles;
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market acceptance of our Smartbadge and its impact on orders for our existing Badge and related software;
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changes in the regulatory environment affecting our healthcare customers, including impediments to their ability to obtain reimbursement for their services;
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our ability to expand our sales and marketing operations;
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our ability to successfully integrate acquired businesses, technologies or assets;
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the announcement of new significant contracts or relationships;
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the procurement and deployment cycles of our healthcare customers and the length of our sales cycles;
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changes in how healthcare operating and capital budgets are administered within the enterprise;
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changes in customer deployment timelines;
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variations in the amount of orders booked in a prior quarter but not delivered until later quarters;
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our mix of solutions and the varying revenue recognition rules that apply;
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pricing, including discounts by us or our competitors;
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our ability to expand into non-healthcare markets;
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our ability to develop significant new reseller relationships and maintain existing reseller relationships;
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the financial health of our resellers;
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our ability to successfully deploy our solutions in a timely manner;
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our ability to sell and integrate third-party products and services, and our customer’s satisfaction with those third-party products and services;
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our ability to forecast demand and manage lead times for the manufacture of our solutions;
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our ability to develop and introduce new solutions and features to existing solutions that achieve market acceptance;
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the announcement of a new product, which may cause sales cycles to lengthen;
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federal government shutdowns;
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occurrence of health epidemics or contagious diseases, such as the novel coronavirus, and potential effects on our business and manufacturing operations;
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fluctuations in foreign currencies in the international markets in which we operate; and
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future accounting pronouncements and changes in accounting policies.
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experience technical issues as we integrate acquired businesses, technologies or assets into our existing solutions;
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encounter difficulties leveraging our existing sales and marketing organizations, and direct sales channels, to increase our revenue from acquired businesses, technologies or assets;
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find that the acquisition does not further our business strategy, we overpaid for the acquisition or the economic conditions underlying our acquisition decision have changed;
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have difficulty retaining key personnel of acquired businesses;
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suffer disruption to our ongoing business and diversion of our management’s attention as a result of transition or integration issues and the challenges of managing geographically or culturally diverse enterprises;
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experience unforeseen and significant problems or liabilities associated with quality, technology and legal contingencies relating to the acquisition, such as intellectual property or employment matters; and
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incur substantial costs to integrate the acquired business.
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challenges incorporating non-English speech recognition capabilities into our solutions as we expand into non-English speaking jurisdictions;
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difficulties integrating our solutions with wireless infrastructures with which we do not have experience;
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difficulties integrating local dialing plans and applicable PBX standards;
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challenges associated with delivering support, training and documentation in several languages;
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difficulties in staffing and managing personnel and resellers;
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the need to comply with a wide variety of foreign laws and regulations, including increasingly stringent data privacy regulations, requirements for export controls for encryption technology, employment laws, changes in tax laws and tax audits by government agencies;
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political and economic instability in, or foreign conflicts that involve or affect, the countries of our customers;
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the impacts associated with epidemics or contagious diseases, such as the novel coronavirus;
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adverse effects on us directly, or on our customers and suppliers, of changes in trade, fiscal or tax policies, including the imposition of tariffs;
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difficulties in collecting accounts receivable and longer accounts receivable payment cycles;
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exposure to competitors who are more familiar with local markets;
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risks associated with the Foreign Corrupt Practices Act and local anti-bribery law compliance;
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difficulties associated with resolving contract disputes in foreign countries with varied legal systems;
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limited or unfavorable intellectual property protection in some countries; and
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currency exchange rate fluctuations, which could affect the price of our solutions relative to locally produced solutions.
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delayed market acceptance of our affected solutions;
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loss of revenue or delay in revenue recognition;
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loss of customers or inability to attract new customers;
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diversion of engineering or other resources for remedying the defect or error;
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damage to our brand and reputation;
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delay in delivery of information;
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increased service and warranty costs, including potential replacement costs for product recalls or returns; and
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legal actions by our customers and hospital patients, including product liability claims.
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current or future U.S. or foreign patent applications will be approved;
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our issued patents will protect our intellectual property and not be held invalid or unenforceable if challenged by third parties;
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we will succeed in protecting our technology adequately in all key jurisdictions in which we develop technology, or we or our competitors operate; or
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others will not independently develop similar or competing products or methods or design around any patents that may be issued to us.
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heighten our vulnerability to adverse general economic conditions and heightened competitive pressures;
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require us to dedicate a larger portion of our cash flow from operations to interest payments, limiting the availability of cash for other purposes;
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limit our flexibility in planning for, or reacting to, changes in our business and industry; and
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impair our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate purposes or other purposes.
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actual or anticipated variation in anticipated operating results of us or our competitors;
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the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;
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announcements by us or our competitors of new solutions, new or terminated significant contracts, commercial relationships or capital commitments;
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changes in the regulatory environment affecting our healthcare customers, including impediments to their ability to obtain reimbursement for their services, and other actual or anticipated legal or regulatory developments in the United States or foreign countries;
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actual or anticipated developments in our competitors’ businesses or the competitive landscape generally;
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failure of securities analysts to maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;
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developments or disputes concerning our intellectual property or other proprietary rights;
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commencement of, or our involvement in, litigation;
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announced or completed acquisitions of businesses, technologies or assets by us or our competitor;
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changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;
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price and volume fluctuations attributable to inconsistent trading volume levels of our common stock;
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our decision to seek additional equity or debt financing;
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our public float relative to the total number of shares of our common stock that are issued and outstanding;
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price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;
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rumors and market speculation involving us or other companies in our industry;
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the dissemination of adverse or misleading reports or opinions about our business;
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any major change in our management;
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unfavorable economic conditions and slow or negative growth of our markets; and
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other events or factors, including those resulting from war, incidents of terrorism or health epidemics or contagious diseases.
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authorize the issuance of “blank check” preferred stock that our board of directors could issue to increase the number of outstanding shares and to discourage a takeover attempt;
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prohibit stockholder action by written consent, requiring all stockholder actions to be taken at a meeting of stockholders;
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establish advance notice procedures for nominating candidates to our board of directors or proposing matters that can be acted upon by stockholders at stockholder meetings;
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limit the ability of our stockholders to call special meetings of stockholders;
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prohibit stockholders from cumulating their votes for the election of directors;
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permit newly created directorships resulting from an increase in the authorized number of directors or vacancies on our board of directors to be filled only by majority vote of our remaining directors, even if less than a quorum is then in office;
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provide that our board of directors is expressly authorized to make, alter or repeal our bylaws;
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establish a classified board of directors so that not all members of our board are elected at one time;
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provide that our directors may be removed only for “cause” and only with the approval of the holders of at least 66 2/3rds percent of our outstanding stock; and
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require super-majority voting to amend certain provisions in our certificate of incorporation and bylaws.
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Location
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Approximate
square feet
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Primary use
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Lease expiration date
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San Jose, California
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70,000
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Corporate headquarters and product warehousing
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March 31, 2022
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Fort Wayne, Indiana
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27,860
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Development, sales and support
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February 28, 2023
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San Francisco, California
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3,054
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Vocera Care Experience offices
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June 30, 2022
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Toronto, Canada
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4,578
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Development, sales and support
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April 30, 2021
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Reading, United Kingdom
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1,366
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Sales and support
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June 6, 2022
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Bangalore, India
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20,734
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Development
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July 24, 2022
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Bangalore, India
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20,734
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Development
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July 1, 2024
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Dubai, United Arab Emirates
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1,905
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Sales and support
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December 20, 2022
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Queensland, Australia
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1,100
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Sales and support
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June 23, 2021
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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12/31/14
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12/31/15
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12/31/16
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12/31/17
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12/31/18
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12/31/19
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Vocera Communications Inc.
|
100.00
|
|
|
117.08
|
|
|
177.45
|
|
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290.02
|
|
|
377.64
|
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|
199.23
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NYSE Composite
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100.00
|
|
|
95.91
|
|
|
107.36
|
|
|
127.46
|
|
|
116.06
|
|
|
145.66
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|
S&P Health Care Technology
|
100.00
|
|
|
93.06
|
|
|
73.26
|
|
|
104.22
|
|
|
81.10
|
|
|
114.37
|
|
Item 6.
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Selected Financial Data
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|
|
Years ended December 31,
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||||||||||||||||||
(in thousands, except per share data)
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2019
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2018
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2017
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2016
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2015
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||||||||||
Consolidated statements of operations data:
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||||||||||
Total revenue
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$
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180,501
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|
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$
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179,630
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|
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$
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165,989
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|
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$
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132,026
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|
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$
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95,421
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|
Gross profit
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109,099
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|
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111,887
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101,062
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82,951
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|
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58,185
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|
|||||
Net loss
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(17,980
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)
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(9,674
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)
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(10,897
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)
|
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(11,400
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)
|
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(28,297
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)
|
|||||
Net loss attributable to common stockholders
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|
$
|
(17,980
|
)
|
|
$
|
(9,674
|
)
|
|
$
|
(10,897
|
)
|
|
$
|
(11,400
|
)
|
|
$
|
(28,297
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net loss per share attributable to common stockholders
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic and diluted
|
|
$(0.57)
|
|
$(0.32)
|
|
$(0.38)
|
|
$(0.42)
|
|
$(1.12)
|
||||||||||
Weighted average shares used to compute net loss per share attributable to common stockholders
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic and diluted
|
|
31,273
|
|
|
30,041
|
|
|
28,655
|
|
|
26,859
|
|
|
25,329
|
|
|
|
As of December 31,
|
||||||||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Consolidated balance sheet data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash, cash equivalents and short-term investments
|
|
$
|
229,868
|
|
|
$
|
221,170
|
|
|
$
|
81,233
|
|
|
$
|
74,066
|
|
|
$
|
116,774
|
|
Total assets
|
|
370,455
|
|
|
352,098
|
|
|
204,973
|
|
|
192,495
|
|
|
162,261
|
|
|||||
Long-term debt
|
|
117,178
|
|
|
110,540
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total stockholders’ equity
|
|
163,825
|
|
|
162,867
|
|
|
128,000
|
|
|
119,146
|
|
|
104,431
|
|
Item 7.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Product. Our solutions include both hardware and software. We refer to hardware revenue as device revenue, which includes revenue from sales of our communication badges and badge accessories, which include batteries, battery chargers, lanyards, clips and other ancillary badge components as well as revenue from the resale of third-party devices and related accessories. Software revenue is derived primarily from the sale of perpetual licenses to our Vocera Communication and Workflow System. We derive additional software revenue from the sale of term licenses and cloud-based subscriptions, which can be renewed on a subscription basis. Product revenue is generally recognized upon shipment of hardware and perpetual licenses and, in the case of subscription software, ratably over the applicable term.
|
•
|
Service. We receive service revenue from sales of software maintenance, extended hardware warranties and professional services. Software maintenance is typically invoiced annually in advance, recorded as deferred revenue, and recognized as revenue ratably over the service period. Our professional services revenue is based on both time and materials, and fixed price contracts, and is recognized as the services are provided. Extended warranties are invoiced in advance, recorded as deferred revenue, and recognized ratably over the extended warranty period.
|
•
|
Cost of product. Cost of product is comprised primarily of materials costs, software license costs, provisions for excess and obsolete inventory, warranty, and manufacturing overhead costs for test engineering, material requirements planning and our shipping and receiving functions. These overhead costs also include facilities, equipment depreciation, amortization of developed technology and stock-based compensation expenses. We expect material costs to vary with the product life cycle of our devices.
|
•
|
Research and development. Research and development expenses consist primarily of employee wages, benefits and related personnel expenses, hardware materials, and consultant fees and expenses related to the design, development, testing and enhancements of our solutions. We intend to continue to invest in improving the functionality of our solutions and the development of new solutions.
|
•
|
Sales and marketing. Sales and marketing expenses consist primarily of employee wages, benefits and related personnel expenses, as well as trade shows, marketing programs and collateral and public relations programs.
|
•
|
General and administrative. General and administrative expenses consist primarily of employee wages, benefits and related personnel expenses, consulting, accounting fees, legal fees and other general corporate expenses.
|
•
|
Interest income. Interest income consists primarily of interest income earned on our cash, cash equivalent and short-term investment balances. Our interest income will vary each reporting period depending on our average cash, cash equivalent and short-term investment balances during the period and market interest rates.
|
•
|
Interest expense. Interest expense consists of amortization of debt discount and debt issuance costs as well as the contractual interest incurred of the issuance of the Convertible Senior Notes which are discussed in further detail in Note 8 of the Notes to Consolidated Financial Statements.
|
•
|
Other income (expense), net. Other income (expense), net consists primarily of foreign exchange gains and losses.
|
|
|
Years ended December 31,
|
|
|||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
|||||||||||||||
(in thousands, except percentages)
|
|
Amount
|
|
% Revenue
|
|
Amount
|
|
% Revenue
|
|
Amount
|
|
% Revenue
|
|
|||||||||
Consolidated statements of operations data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product
|
|
$
|
92,561
|
|
|
51.3
|
%
|
|
$
|
97,447
|
|
|
54.2
|
%
|
|
$
|
91,585
|
|
|
55.2
|
%
|
|
Service
|
|
87,940
|
|
|
48.7
|
|
|
82,183
|
|
|
45.8
|
|
|
74,404
|
|
|
44.8
|
|
|
|||
Total revenue
|
|
180,501
|
|
|
100.0
|
|
|
179,630
|
|
|
100.0
|
|
|
165,989
|
|
|
100.0
|
|
|
|||
Cost of revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product
|
|
29,039
|
|
|
16.1
|
|
|
27,425
|
|
|
15.3
|
|
|
27,244
|
|
|
16.4
|
|
|
|||
Service
|
|
42,363
|
|
|
23.5
|
|
|
40,318
|
|
|
22.4
|
|
|
37,683
|
|
|
22.7
|
|
|
|||
Total cost of revenue
|
|
71,402
|
|
|
39.6
|
|
|
67,743
|
|
|
37.7
|
|
|
64,927
|
|
|
39.1
|
|
|
|||
Gross profit
|
|
109,099
|
|
|
60.4
|
|
|
111,887
|
|
|
62.3
|
|
|
101,062
|
|
|
60.9
|
|
|
|||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Research and development
|
|
34,280
|
|
|
19.0
|
|
|
30,879
|
|
|
17.2
|
|
|
27,685
|
|
|
16.7
|
|
|
|||
Sales and marketing
|
|
63,168
|
|
|
35.0
|
|
|
62,214
|
|
|
34.6
|
|
|
60,107
|
|
|
36.2
|
|
|
|||
General and administrative
|
|
25,774
|
|
|
14.3
|
|
|
25,099
|
|
|
14.0
|
|
|
23,970
|
|
|
14.4
|
|
|
|||
Total operating expenses
|
|
123,222
|
|
|
68.3
|
|
|
118,192
|
|
|
65.8
|
|
|
111,762
|
|
|
67.3
|
|
|
|||
Loss from operations
|
|
(14,123
|
)
|
|
(7.8
|
)
|
|
(6,305
|
)
|
|
(3.5
|
)
|
|
(10,700
|
)
|
|
(6.4
|
)
|
|
|||
Interest income
|
|
5,110
|
|
|
2.8
|
|
|
3,044
|
|
|
1.6
|
|
|
604
|
|
|
0.3
|
|
|
|||
Interest expense
|
|
(8,789
|
)
|
|
(4.8
|
)
|
|
(5,241
|
)
|
|
(2.9
|
)
|
|
—
|
|
|
—
|
|
|
|||
Other expense, net
|
|
(158
|
)
|
|
(0.1
|
)
|
|
(1,523
|
)
|
|
(0.8
|
)
|
|
(42
|
)
|
|
—
|
|
|
|||
Loss before income taxes
|
|
(17,960
|
)
|
|
(10.0
|
)
|
|
(10,025
|
)
|
|
(5.6
|
)
|
|
(10,138
|
)
|
|
(6.1
|
)
|
|
|||
Provision for income taxes
|
|
(20
|
)
|
|
—
|
|
|
351
|
|
|
0.2
|
|
|
(759
|
)
|
|
(0.5
|
)
|
|
|||
Net loss
|
|
$
|
(17,980
|
)
|
|
(10.0
|
)%
|
|
$
|
(9,674
|
)
|
|
(5.4
|
)%
|
|
$
|
(10,897
|
)
|
|
(6.6
|
)%
|
|
|
|
Years ended December 31,
|
|
||||||||||||
|
|
2019
|
|
2018
|
|
Change
|
|||||||||
(in thousands, except percentages)
|
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
|||||||
Product Revenue
|
|
|
|
|
|
|
|
|
|||||||
Device
|
|
$
|
61,224
|
|
|
$
|
60,130
|
|
|
$
|
1,094
|
|
|
1.8
|
%
|
Software
|
|
31,337
|
|
|
37,317
|
|
|
(5,980
|
)
|
|
(16.0
|
)
|
|||
Total product revenue
|
|
92,561
|
|
|
97,447
|
|
|
(4,886
|
)
|
|
(5.0
|
)
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Service revenue
|
|
|
|
|
|
|
|
|
|||||||
Maintenance and support
|
|
68,846
|
|
|
62,267
|
|
|
6,579
|
|
|
10.6
|
|
|||
Professional services and training
|
|
19,094
|
|
|
19,916
|
|
|
(822
|
)
|
|
(4.1
|
)
|
|||
Total service revenue
|
|
87,940
|
|
|
82,183
|
|
|
5,757
|
|
|
7.0
|
|
|||
Total revenue
|
|
$
|
180,501
|
|
|
$
|
179,630
|
|
|
$
|
871
|
|
|
0.5
|
%
|
|
|
Years ended December 31,
|
|
|
|||||||||||
|
|
2019
|
|
2018
|
|
Change
|
|||||||||
(in thousands, except percentages)
|
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
|||||||
Cost of revenue
|
|
|
|
|
|
|
|
|
|||||||
Product
|
|
$
|
29,039
|
|
|
$
|
27,425
|
|
|
$
|
1,614
|
|
|
5.9
|
%
|
Service
|
|
42,363
|
|
|
40,318
|
|
|
2,045
|
|
|
5.1
|
|
|||
Total cost of revenue
|
|
$
|
71,402
|
|
|
$
|
67,743
|
|
|
$
|
3,659
|
|
|
5.4
|
%
|
Gross margin
|
|
|
|
|
|
|
|
|
|||||||
Product
|
|
68.6
|
%
|
|
71.9
|
%
|
|
(3.3
|
)%
|
|
|
||||
Service
|
|
51.8
|
|
|
50.9
|
|
|
0.9
|
|
|
|
||||
Total gross margin
|
|
60.4
|
%
|
|
62.3
|
%
|
|
(1.9
|
)%
|
|
|
|
|
Years ended December 31,
|
|
||||||||||||
|
|
2019
|
|
2018
|
|
Change
|
|||||||||
(in thousands, except percentages)
|
|
Amount
|
|
Amount
|
|
Amount
|
|
%
|
|||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|||||||
Research and development
|
|
$
|
34,280
|
|
|
$
|
30,879
|
|
|
$
|
3,401
|
|
|
11.0
|
%
|
Sales and marketing
|
|
63,168
|
|
|
62,214
|
|
|
954
|
|
|
1.5
|
|
|||
General and administrative
|
|
25,774
|
|
|
25,099
|
|
|
675
|
|
|
2.7
|
|
|||
Total operating expenses
|
|
$
|
123,222
|
|
|
$
|
118,192
|
|
|
$
|
5,030
|
|
|
4.3
|
%
|
|
|
Years ended December 31,
|
|
|
||||||||
(in thousands, except percentages)
|
|
2019
|
|
2018
|
|
Change
|
||||||
Non-operating income (expense) elements:
|
|
|
|
|
|
|
||||||
Interest income
|
|
$
|
5,110
|
|
|
$
|
3,044
|
|
|
$
|
2,066
|
|
Interest expense
|
|
(8,789
|
)
|
|
(5,241
|
)
|
|
(3,548
|
)
|
|||
Other expense, net
|
|
(158
|
)
|
|
(1,523
|
)
|
|
1,365
|
|
|||
|
|
|
|
|
|
|
||||||
Income taxes:
|
|
|
|
|
|
|
||||||
Benefit from (provision for) income taxes
|
|
(20
|
)
|
|
351
|
|
|
(371
|
)
|
|||
Loss before income taxes
|
|
(17,960
|
)
|
|
(10,025
|
)
|
|
(7,935
|
)
|
|||
Effective tax rate %
|
|
(0.1
|
)%
|
|
3.5
|
%
|
|
(3.6
|
)%
|
|
|
Years ended December 31,
|
||||||
(in thousands)
|
|
2019
|
|
2018
|
||||
Consolidated statements of cash flow data:
|
|
|
|
|
||||
Net cash provided by operating activities
|
|
$
|
15,778
|
|
|
$
|
14,298
|
|
Net cash used in investing activities
|
|
(20,536
|
)
|
|
(139,533
|
)
|
||
Net cash provided by (used in) financing activities
|
|
(3,814
|
)
|
|
130,785
|
|
||
Net (decrease) increase in cash and cash equivalents
|
|
$
|
(8,572
|
)
|
|
$
|
5,550
|
|
(in thousands)
|
|
Total
|
|
Less than 1
year
|
|
1-3 years
|
|
3-5 years
|
|
More than
5 years
|
||||||||||
Principal amount payable on convertible senior notes (1)
|
|
$
|
143,750
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
143,750
|
|
Non-cancelable purchase commitments(2)
|
|
9,747
|
|
|
9,747
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
153,497
|
|
|
$
|
9,747
|
|
|
$
|
—
|
|
|
$
|
143,750
|
|
|
$
|
—
|
|
(1)
|
For additional information regarding our convertible senior notes, refer to Note 8 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
|
(2)
|
Consists of minimum purchase commitments with our independent contract manufacturers and other vendors.
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
Page
|
|
|
Report of independent registered public accounting firm
|
|
|
|
Consolidated balance sheets
|
|
|
|
Consolidated statements of operations
|
|
|
|
Consolidated statements of comprehensive loss
|
|
|
|
Consolidated statements of stockholders’ equity
|
|
|
|
Consolidated statements of cash flows
|
|
|
|
Notes to consolidated financial statements
|
•
|
Identification and evaluation of terms and conditions within contracts that impact revenue recognition
|
•
|
Determination of whether promised goods or services, such as hardware and software licenses, are capable of being distinct and are distinct in the context of the Company’s customer contracts which leads to whether they should be accounted for as individual or combined performance obligations
|
•
|
Determination of stand-alone selling prices for each distinct performance obligation and for products and services that are not sold separately
|
•
|
Determination of transaction price and allocation of transaction price to identified performance obligations
|
•
|
We tested the effectiveness of controls related to the identification and evaluation of terms and conditions in contracts, determination of distinct performance obligations, determination of the standalone selling prices, determination of transaction price, allocation of the transaction price to the performance obligations in the contract, and recognition of revenue when, or as, the Company satisfies a performance obligation.
|
•
|
We evaluated management’s significant accounting policies related to revenue recognition for reasonableness.
|
•
|
We selected a sample of recorded revenue transactions and performed the following procedures:
|
▪
|
Obtained and read customer purchase orders and the underlying contract for each selection, including master agreements and related amendments to evaluate if relevant contractual terms have been appropriately considered by management.
|
▪
|
Evaluated management’s application of their accounting policy and tested revenue recognition for specific performance obligations by comparing management’s conclusions to the underlying master agreement and any related amendments.
|
▪
|
Tested the mathematical accuracy of management’s calculations of revenue and the associated timing of revenue recognized in the financial statements.
|
•
|
We evaluated the reasonableness of management’s estimate of standalone selling prices for products and services that are not sold separately by performing the following:
|
▪
|
Assessed the appropriateness of the Company’s methodology and mathematical accuracy of the determined standalone selling prices.
|
▪
|
Tested the completeness and accuracy of the source data utilized in management’s calculations.
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
25,704
|
|
|
$
|
34,276
|
|
Short-term investments
|
204,164
|
|
|
186,894
|
|
||
Accounts receivable, net
|
42,547
|
|
|
40,127
|
|
||
Other receivables
|
6,312
|
|
|
4,148
|
|
||
Inventories
|
4,576
|
|
|
4,350
|
|
||
Prepaid expenses and other current assets
|
5,149
|
|
|
4,691
|
|
||
Total current assets
|
288,452
|
|
|
274,486
|
|
||
Property and equipment, net
|
8,661
|
|
|
7,468
|
|
||
Intangible assets, net
|
5,461
|
|
|
9,070
|
|
||
Goodwill
|
49,246
|
|
|
49,246
|
|
||
Deferred commissions
|
10,477
|
|
|
10,303
|
|
||
Other long-term assets
|
8,158
|
|
|
1,525
|
|
||
Total assets
|
$
|
370,455
|
|
|
$
|
352,098
|
|
Liabilities and stockholders' equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
6,036
|
|
|
$
|
4,217
|
|
Accrued payroll and other current liabilities
|
14,757
|
|
|
12,885
|
|
||
Deferred revenue, current
|
50,033
|
|
|
44,053
|
|
||
Total current liabilities
|
70,826
|
|
|
61,155
|
|
||
Deferred revenue, long-term
|
11,442
|
|
|
14,579
|
|
||
Convertible senior notes, net
|
117,178
|
|
|
110,540
|
|
||
Other long-term liabilities
|
7,184
|
|
|
2,957
|
|
||
Total liabilities
|
206,630
|
|
|
189,231
|
|
||
Commitments and contingencies (Note 9)
|
|
|
|
|
|
||
Stockholders' equity
|
|
|
|
||||
Preferred stock, $0.0003 par value - 5,000,000 shares authorized as of December 31, 2019 and December 31, 2018; zero shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.0003 par value - 100,000,000 shares authorized as of December 31, 2019 and December 31, 2018; 31,660,709 and 30,708,138 shares issued and outstanding as of December 31, 2019 and December 31, 2018, respectively
|
9
|
|
|
9
|
|
||
Additional paid-in capital
|
313,963
|
|
|
295,647
|
|
||
Accumulated other comprehensive income (loss)
|
179
|
|
|
(443
|
)
|
||
Accumulated deficit
|
(150,326
|
)
|
|
(132,346
|
)
|
||
Total stockholders’ equity
|
163,825
|
|
|
162,867
|
|
||
Total liabilities and stockholders’ equity
|
$
|
370,455
|
|
|
$
|
352,098
|
|
|
Years ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue
|
|
|
|
|
|
||||||
Product
|
$
|
92,561
|
|
|
$
|
97,447
|
|
|
$
|
91,585
|
|
Service
|
87,940
|
|
|
82,183
|
|
|
74,404
|
|
|||
Total revenue
|
180,501
|
|
|
179,630
|
|
|
165,989
|
|
|||
Cost of revenue
|
|
|
|
|
|
||||||
Product
|
29,039
|
|
|
27,425
|
|
|
27,244
|
|
|||
Service
|
42,363
|
|
|
40,318
|
|
|
37,683
|
|
|||
Total cost of revenue
|
71,402
|
|
|
67,743
|
|
|
64,927
|
|
|||
Gross profit
|
109,099
|
|
|
111,887
|
|
|
101,062
|
|
|||
Operating expenses
|
|
|
|
|
|
||||||
Research and development
|
34,280
|
|
|
30,879
|
|
|
27,685
|
|
|||
Sales and marketing
|
63,168
|
|
|
62,214
|
|
|
60,107
|
|
|||
General and administrative
|
25,774
|
|
|
25,099
|
|
|
23,970
|
|
|||
Total operating expenses
|
123,222
|
|
|
118,192
|
|
|
111,762
|
|
|||
Loss from operations
|
(14,123
|
)
|
|
(6,305
|
)
|
|
(10,700
|
)
|
|||
Interest income
|
5,110
|
|
|
3,044
|
|
|
604
|
|
|||
Interest expense
|
(8,789
|
)
|
|
(5,241
|
)
|
|
—
|
|
|||
Other expense, net
|
(158
|
)
|
|
(1,523
|
)
|
|
(42
|
)
|
|||
Loss before income taxes
|
(17,960
|
)
|
|
(10,025
|
)
|
|
(10,138
|
)
|
|||
Benefit from (provision for) income taxes
|
(20
|
)
|
|
351
|
|
|
(759
|
)
|
|||
Net loss
|
(17,980
|
)
|
|
(9,674
|
)
|
|
(10,897
|
)
|
|||
|
|
|
|
|
|
||||||
Net loss per share:
|
|
|
|
|
|
||||||
Basic and diluted
|
$(0.57)
|
|
$(0.32)
|
|
$(0.38)
|
||||||
Weighted average shares used to compute net loss per share:
|
|
|
|
|
|
||||||
Basic
|
31,273
|
|
|
30,041
|
|
|
28,655
|
|
|||
Diluted
|
31,273
|
|
|
30,041
|
|
|
28,655
|
|
|
Years ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net loss
|
$
|
(17,980
|
)
|
|
$
|
(9,674
|
)
|
|
$
|
(10,897
|
)
|
Other comprehensive loss, net:
|
|
|
|
|
|
||||||
Change in unrealized gain (loss) on investments, net of tax
|
622
|
|
|
(252
|
)
|
|
(122
|
)
|
|||
Comprehensive loss
|
$
|
(17,358
|
)
|
|
$
|
(9,926
|
)
|
|
$
|
(11,019
|
)
|
|
Common stock
|
Additional
paid-in capital |
Accum. other
comprehensive income (loss) |
Accumulated
deficit |
Total
stockholders’ equity |
||||||||||||
|
Shares
|
Amount
|
|||||||||||||||
Balance at January 1, 2017
|
27,568,103
|
|
$
|
8
|
|
$
|
230,605
|
|
$
|
(69
|
)
|
$
|
(111,398
|
)
|
$
|
119,146
|
|
Exercise of stock options
|
1,085,041
|
|
1
|
|
7,916
|
|
—
|
|
—
|
|
7,917
|
|
|||||
RSUs released net of shares withheld for tax settlement
|
599,440
|
|
—
|
|
(8,990
|
)
|
—
|
|
—
|
|
(8,990
|
)
|
|||||
Common stock issued under employee stock purchase plan
|
159,532
|
|
—
|
|
2,750
|
|
—
|
|
—
|
|
2,750
|
|
|||||
Effect of change in accounting principle related to stock-based compensation
|
—
|
|
—
|
|
377
|
|
—
|
|
(377
|
)
|
—
|
|
|||||
Employee stock-based compensation expense
|
—
|
|
—
|
|
18,196
|
|
—
|
|
—
|
|
18,196
|
|
|||||
Net loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(10,897
|
)
|
(10,897
|
)
|
|||||
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
(122
|
)
|
—
|
|
(122
|
)
|
|||||
Balance at December 31, 2017
|
29,412,116
|
|
9
|
|
250,854
|
|
(191
|
)
|
(122,672
|
)
|
128,000
|
|
|||||
Exercise of stock options
|
531,788
|
|
—
|
|
7,334
|
|
—
|
|
—
|
|
7,334
|
|
|||||
RSUs released net of shares withheld for tax settlement
|
606,808
|
|
—
|
|
(10,082
|
)
|
—
|
|
—
|
|
(10,082
|
)
|
|||||
Common stock issued under employee stock purchase plan
|
157,426
|
|
—
|
|
3,270
|
|
—
|
|
—
|
|
3,270
|
|
|||||
Equity component of convertible senior notes, net
|
—
|
|
—
|
|
23,307
|
|
—
|
|
—
|
|
23,307
|
|
|||||
Employee stock-based compensation expense
|
—
|
|
—
|
|
20,964
|
|
—
|
|
—
|
|
20,964
|
|
|||||
Net loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(9,674
|
)
|
(9,674
|
)
|
|||||
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
(252
|
)
|
—
|
|
(252
|
)
|
|||||
Balance at December 31, 2018
|
30,708,138
|
|
9
|
|
295,647
|
|
(443
|
)
|
(132,346
|
)
|
162,867
|
|
|||||
Exercise of stock options
|
187,174
|
|
—
|
|
2,439
|
|
—
|
|
—
|
|
2,439
|
|
|||||
RSUs released net of shares withheld for tax settlement
|
610,024
|
|
—
|
|
(11,460
|
)
|
—
|
|
—
|
|
(11,460
|
)
|
|||||
Common stock issued under employee stock purchase plan
|
155,373
|
|
—
|
|
3,472
|
|
—
|
|
—
|
|
3,472
|
|
|||||
Employee stock-based compensation expense
|
—
|
|
—
|
|
23,865
|
|
—
|
|
—
|
|
23,865
|
|
|||||
Net loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(17,980
|
)
|
(17,980
|
)
|
|||||
Other comprehensive gain
|
—
|
|
—
|
|
—
|
|
622
|
|
—
|
|
622
|
|
|||||
Balance at December 31, 2019
|
31,660,709
|
|
$
|
9
|
|
$
|
313,963
|
|
$
|
179
|
|
$
|
(150,326
|
)
|
$
|
163,825
|
|
|
Years ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
||||||
Net loss
|
$
|
(17,980
|
)
|
|
$
|
(9,674
|
)
|
|
$
|
(10,897
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
7,289
|
|
|
7,662
|
|
|
7,643
|
|
|||
Inventory provision
|
67
|
|
|
362
|
|
|
380
|
|
|||
Change in lease-related performance obligations
|
(1,173
|
)
|
|
(998
|
)
|
|
(864
|
)
|
|||
Stock-based compensation expense
|
23,865
|
|
|
20,964
|
|
|
18,196
|
|
|||
Amortization of debt discount and issuance costs
|
6,638
|
|
|
3,899
|
|
|
—
|
|
|||
Other
|
1,016
|
|
|
22
|
|
|
26
|
|
|||
Changes in assets and liabilities
|
|
|
|
|
|
||||||
Accounts receivable
|
(2,420
|
)
|
|
(5,017
|
)
|
|
(10,963
|
)
|
|||
Other receivables
|
(2,064
|
)
|
|
(2,810
|
)
|
|
(120
|
)
|
|||
Inventories
|
(293
|
)
|
|
(1,898
|
)
|
|
1,361
|
|
|||
Prepaid expenses and other assets
|
(880
|
)
|
|
(592
|
)
|
|
(866
|
)
|
|||
Deferred commissions
|
(174
|
)
|
|
(2
|
)
|
|
121
|
|
|||
Accounts payable
|
1,475
|
|
|
1,527
|
|
|
(611
|
)
|
|||
Accrued payroll and other liabilities
|
(2,431
|
)
|
|
(2,629
|
)
|
|
(1,104
|
)
|
|||
Deferred revenue
|
2,843
|
|
|
3,482
|
|
|
5,434
|
|
|||
Net cash provided by operating activities
|
15,778
|
|
|
14,298
|
|
|
7,736
|
|
|||
Cash flows from investing activities
|
|
|
|
|
|
||||||
Payment for purchase of property and equipment
|
(4,576
|
)
|
|
(4,892
|
)
|
|
(2,834
|
)
|
|||
Purchase of short-term investments
|
(137,508
|
)
|
|
(206,824
|
)
|
|
(67,426
|
)
|
|||
Maturities of short-term investments
|
121,548
|
|
|
72,183
|
|
|
53,831
|
|
|||
Net cash used in investing activities
|
(20,536
|
)
|
|
(139,533
|
)
|
|
(16,429
|
)
|
|||
Cash flows from financing activities
|
|
|
|
|
|
||||||
Cash from lease-related performance obligations
|
1,735
|
|
|
340
|
|
|
693
|
|
|||
Proceeds from issuance of the convertible senior notes, net of issuance costs
|
—
|
|
|
138,854
|
|
|
—
|
|
|||
Payments for purchase of capped costs
|
—
|
|
|
(8,907
|
)
|
|
—
|
|
|||
Proceeds from issuance of common stock from the employee stock purchase plan
|
3,472
|
|
|
3,269
|
|
|
2,750
|
|
|||
Proceeds from exercise of stock options
|
2,440
|
|
|
7,327
|
|
|
7,917
|
|
|||
Tax withholdings paid on behalf of employees for net share settlement
|
(11,461
|
)
|
|
(10,098
|
)
|
|
(8,974
|
)
|
|||
Net cash provided by (used in) financing activities
|
(3,814
|
)
|
|
130,785
|
|
|
2,386
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
(8,572
|
)
|
|
5,550
|
|
|
(6,307
|
)
|
|||
Cash and cash equivalents at beginning of period
|
34,276
|
|
|
28,726
|
|
|
35,033
|
|
|||
Cash and cash equivalents at end of period
|
$
|
25,704
|
|
|
$
|
34,276
|
|
|
$
|
28,726
|
|
Supplemental cash flow information
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
2,156
|
|
|
$
|
1,066
|
|
|
$
|
—
|
|
Cash paid for income taxes
|
$
|
345
|
|
|
$
|
216
|
|
|
$
|
342
|
|
Supplemental disclosure of non-cash investing and financing activities
|
|
|
|
|
|
||||||
Property and equipment in accounts payable and accrued liabilities
|
$
|
458
|
|
|
$
|
114
|
|
|
$
|
102
|
|
1.
|
The Company and Summary of Significant Accounting Policies
|
•
|
Identification of the contract, or contracts, with a customer - A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer. Customer payments received by the Company are non-refundable.
|
•
|
Identification of the performance obligations in the contract - Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are capable of being both: a) functionally distinct, whereby the customer can benefit from the goods or service either on their own or together with other resources that are readily available from third parties or from the Company, and b) contractually distinct, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised goods or services, the Company applies judgment to determine whether promised goods or services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised goods or services are accounted for as a combined performance obligation.
|
•
|
Determination of the transaction price - The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods or services to the customer.
|
•
|
Allocation of the transaction price to the performance obligations in the contract - If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price, (SSP) basis. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.
|
•
|
Recognition of revenue when, or as, the Company satisfies a performance obligation - The Company satisfies performance obligations either over time or at a point in time as discussed in further detail below. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised good or service to a customer.
|
2.
|
Revenue, deferred revenue and deferred commissions
|
|
|
Years ended December 31,
|
||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue
|
|
|
|
|
|
|
||||||
Product
|
|
|
|
|
|
|
||||||
Device
|
|
$
|
61,224
|
|
|
$
|
60,130
|
|
|
$
|
61,746
|
|
Software
|
|
31,337
|
|
|
37,317
|
|
|
29,839
|
|
|||
Total product
|
|
92,561
|
|
|
97,447
|
|
|
91,585
|
|
|||
Service
|
|
|
|
|
|
|
||||||
Maintenance and support
|
|
68,846
|
|
|
62,267
|
|
|
52,342
|
|
|||
Professional services and training
|
|
19,094
|
|
|
19,916
|
|
|
22,062
|
|
|||
Total service
|
|
87,940
|
|
|
82,183
|
|
|
74,404
|
|
|||
Total revenue
|
|
$
|
180,501
|
|
|
$
|
179,630
|
|
|
$
|
165,989
|
|
(in thousands)
|
December 31, 2018
|
|
Additions
|
|
Commissions Recognized
|
|
December 31, 2019
|
||||||||
Deferred commissions
|
$
|
10,303
|
|
|
$
|
7,761
|
|
|
$
|
(7,587
|
)
|
|
$
|
10,477
|
|
(in thousands)
|
December 31, 2017
|
|
Additions
|
|
Commissions Recognized
|
|
December 31, 2018
|
||||||||
Deferred commissions
|
$
|
10,301
|
|
|
$
|
8,327
|
|
|
$
|
(8,325
|
)
|
|
$
|
10,303
|
|
(in thousands)
|
December 31, 2018
|
|
Additions
|
|
Revenue Recognized
|
|
December 31, 2019
|
||||||||
Deferred revenue
|
$
|
58,632
|
|
|
$
|
82,042
|
|
|
$
|
(79,199
|
)
|
|
$
|
61,475
|
|
(in thousands)
|
December 31, 2017
|
|
Additions
|
|
Revenue Recognized
|
|
December 31, 2018
|
||||||||
Deferred revenue
|
$
|
55,151
|
|
|
$
|
77,969
|
|
|
$
|
(74,488
|
)
|
|
$
|
58,632
|
|
3.
|
Fair value of financial instruments
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||
(in thousands)
|
Level 1
|
|
Level 2
|
|
Total
|
|
|
Level 1
|
|
Level 2
|
|
Total
|
|
||||||
Assets
|
|
|
|
|
|
|
|
||||||||||||
Money market funds
|
$
|
4,086
|
|
$
|
—
|
|
$
|
4,086
|
|
|
$
|
3,737
|
|
$
|
—
|
|
$
|
3,737
|
|
Commercial paper
|
—
|
|
12,854
|
|
12,854
|
|
|
—
|
|
16,570
|
|
16,570
|
|
||||||
U.S. government agency securities
|
—
|
|
3,000
|
|
3,000
|
|
|
—
|
|
3,325
|
|
3,325
|
|
||||||
Corporate debt securities
|
—
|
|
188,310
|
|
188,310
|
|
|
—
|
|
166,759
|
|
166,759
|
|
||||||
Total assets measured at fair value
|
$
|
4,086
|
|
$
|
204,164
|
|
$
|
208,250
|
|
|
$
|
3,737
|
|
$
|
189,384
|
|
$
|
193,121
|
|
4.
|
Cash, Cash Equivalents and Short-Term Investments
|
|
|
December 31, 2019
|
||||||||||||||
(in thousands)
|
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair
value
|
||||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
||||||||
Demand deposits and other cash
|
|
$
|
21,618
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21,618
|
|
Money market funds
|
|
4,086
|
|
|
—
|
|
|
—
|
|
|
4,086
|
|
||||
Total cash and cash equivalents
|
|
25,704
|
|
|
—
|
|
|
—
|
|
|
25,704
|
|
||||
Short-Term Investments:
|
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
|
12,861
|
|
|
—
|
|
|
(7
|
)
|
|
12,854
|
|
||||
U.S. government agency securities
|
|
3,000
|
|
|
—
|
|
|
—
|
|
|
3,000
|
|
||||
Corporate debt securities
|
|
187,866
|
|
|
499
|
|
|
(55
|
)
|
|
188,310
|
|
||||
Total short-term investments
|
|
203,727
|
|
|
499
|
|
|
(62
|
)
|
|
204,164
|
|
||||
Total cash, cash equivalents and short-term investments
|
|
$
|
229,431
|
|
|
$
|
499
|
|
|
$
|
(62
|
)
|
|
$
|
229,868
|
|
|
|
December 31, 2018
|
||||||||||||||
(in thousands)
|
|
Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair value
|
||||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
||||||||
Demand deposits and other cash
|
|
$
|
28,049
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
28,049
|
|
Money market funds
|
|
3,737
|
|
|
—
|
|
|
—
|
|
|
3,737
|
|
||||
Commercial paper
|
|
2,491
|
|
|
—
|
|
|
(1
|
)
|
|
2,490
|
|
||||
Corporate debt securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total cash and cash equivalents
|
|
34,277
|
|
|
—
|
|
|
(1
|
)
|
|
34,276
|
|
||||
Short-Term Investments:
|
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
|
14,091
|
|
|
—
|
|
|
(11
|
)
|
|
14,080
|
|
||||
U.S. government agency securities
|
|
3,339
|
|
|
—
|
|
|
(14
|
)
|
|
3,325
|
|
||||
U.S. Treasury securities
|
|
2,740
|
|
|
—
|
|
|
(10
|
)
|
|
2,730
|
|
||||
Corporate debt securities
|
|
167,110
|
|
|
28
|
|
|
(379
|
)
|
|
166,759
|
|
||||
Total short-term investments
|
|
187,280
|
|
|
28
|
|
|
(414
|
)
|
|
186,894
|
|
||||
Total cash, cash equivalents and short-term investments
|
|
$
|
221,557
|
|
|
$
|
28
|
|
|
$
|
(415
|
)
|
|
$
|
221,170
|
|
(in thousands)
|
|
One year or shorter
|
|
|
Between 1 and 2 years
|
|
|
Total
|
|
|||
Balances as of December 31, 2019
|
|
|
|
|
|
|
||||||
Cash and cash equivalents (1)
|
|
$
|
25,704
|
|
|
$
|
—
|
|
|
$
|
25,704
|
|
Short-term investments
|
|
113,010
|
|
|
91,154
|
|
|
204,164
|
|
|||
Cash, cash equivalents and short-term investments
|
|
$
|
138,714
|
|
|
$
|
91,154
|
|
|
$
|
229,868
|
|
|
|
|
|
|
|
|
||||||
Balances as of December 31, 2018
|
|
|
|
|
|
|
||||||
Cash and cash equivalents (1)
|
|
$
|
34,276
|
|
|
$
|
—
|
|
|
$
|
34,276
|
|
Short-term investments
|
|
109,451
|
|
|
77,443
|
|
|
186,894
|
|
|||
Cash, cash equivalents and short-term investments
|
|
$
|
143,727
|
|
|
$
|
77,443
|
|
|
$
|
221,170
|
|
(1) Includes demand deposits and other cash, money market funds and other cash equivalent securities, all with 0-90 day maturity at purchase.
|
5.
|
Net loss per share
|
|
Years ended December 31,
|
||||||||||
(in thousands, except for share and per share amounts)
|
2019
|
|
2018
|
|
2017
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(17,980
|
)
|
|
$
|
(9,674
|
)
|
|
$
|
(10,897
|
)
|
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
||||||
Weighted-average shares used to compute net loss per common share - basic and diluted
|
31,273
|
|
|
30,041
|
|
|
28,655
|
|
|||
Net loss per share
|
|
|
|
|
|
||||||
Basic and diluted
|
$(0.57)
|
|
$(0.32)
|
|
$(0.38)
|
|
|
December 31,
|
|||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2017
|
|||
Options to purchase common stock
|
|
523
|
|
|
1,085
|
|
|
1,365
|
|
Restricted stock units
|
|
1,461
|
|
|
1,925
|
|
|
2,046
|
|
6.
|
Goodwill and intangible assets
|
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
(in thousands)
|
|
Weighted average
useful life
(years)
|
|
Gross
carrying
amount
|
|
Accumulated
amortization
|
|
Net
carrying
amount
|
|
Gross
carrying
amount
|
|
Accumulated
amortization
|
|
Net
carrying
amount
|
||||||||||||
Intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
|
7 to 9
|
|
$
|
10,920
|
|
|
$
|
5,819
|
|
|
$
|
5,101
|
|
|
$
|
10,920
|
|
|
$
|
4,645
|
|
|
$
|
6,275
|
|
Developed technology
|
|
3 to 7
|
|
10,050
|
|
|
9,803
|
|
|
247
|
|
|
10,050
|
|
|
7,731
|
|
|
2,319
|
|
||||||
Trademarks
|
|
3 to 7
|
|
1,110
|
|
|
1,110
|
|
|
—
|
|
|
1,110
|
|
|
831
|
|
|
279
|
|
||||||
Backlog
|
|
3
|
|
1,400
|
|
|
1,287
|
|
|
113
|
|
|
1,400
|
|
|
1,203
|
|
|
197
|
|
||||||
Non-compete agreements
|
|
2 to 4
|
|
460
|
|
|
460
|
|
|
—
|
|
|
460
|
|
|
460
|
|
|
—
|
|
||||||
Intangible assets, net book value
|
|
|
|
$
|
23,940
|
|
|
$
|
18,479
|
|
|
$
|
5,461
|
|
|
$
|
23,940
|
|
|
$
|
14,870
|
|
|
$
|
9,070
|
|
(in thousands)
|
|
Future amortization
|
||
2020
|
|
$
|
1,356
|
|
2021
|
|
1,130
|
|
|
2022
|
|
1,050
|
|
|
2023
|
|
1,050
|
|
|
2024
|
|
875
|
|
|
Future amortization expense
|
|
$
|
5,461
|
|
7.
|
Consolidated balance sheet components
|
|
|
December 31,
|
||||||
(in thousands)
|
|
2019
|
|
2018
|
||||
Raw materials
|
|
$
|
831
|
|
|
$
|
197
|
|
Finished goods
|
|
3,745
|
|
|
4,153
|
|
||
Total inventories
|
|
$
|
4,576
|
|
|
$
|
4,350
|
|
|
|
December 31,
|
||||||
(in thousands)
|
|
2019
|
|
2018
|
||||
Computer equipment and software
|
|
$
|
13,596
|
|
|
$
|
10,433
|
|
Furniture, fixtures and equipment
|
|
2,430
|
|
|
2,246
|
|
||
Leasehold improvements
|
|
5,283
|
|
|
5,183
|
|
||
Manufacturing tools and equipment
|
|
2,435
|
|
|
2,371
|
|
||
Construction in process
|
|
582
|
|
|
520
|
|
||
Property and equipment, at cost
|
|
24,326
|
|
|
20,753
|
|
||
Less: Accumulated depreciation
|
|
(15,665
|
)
|
|
(13,285
|
)
|
||
Property and equipment, net
|
|
$
|
8,661
|
|
|
$
|
7,468
|
|
|
December 31,
|
||||||
(in thousands)
|
2019
|
|
2018
|
||||
Minimum payments to be received on sales-type leases
|
$
|
2,078
|
|
|
$
|
2,111
|
|
Less: Unearned interest income and executory revenue portion
|
(1,190
|
)
|
|
(1,387
|
)
|
||
Net investment in sales-type leases
|
888
|
|
|
724
|
|
||
Less: Current portion
|
(452
|
)
|
|
(427
|
)
|
||
Non-current net investment in sales-type leases
|
$
|
436
|
|
|
$
|
297
|
|
|
Years ended December 31,
|
||||||||||
(in thousands)
|
2019
|
|
2018
|
|
2017
|
||||||
Lease revenue
|
$
|
6,394
|
|
|
$
|
2,697
|
|
|
$
|
2,932
|
|
Less: Cost of lease shipments
|
(1,670
|
)
|
|
(212
|
)
|
|
(306
|
)
|
|||
Gross profit
|
$
|
4,724
|
|
|
$
|
2,485
|
|
|
$
|
2,626
|
|
|
|
|
|
|
|
||||||
Interest income (expense), net on lease receivable
|
$
|
(18
|
)
|
|
$
|
(6
|
)
|
|
$
|
9
|
|
Initial direct cost incurred
|
$
|
277
|
|
|
$
|
140
|
|
|
$
|
167
|
|
(in thousands)
|
Future lease payments
|
||
2020
|
$
|
998
|
|
2021
|
615
|
|
|
2022
|
387
|
|
|
2023
|
78
|
|
|
Total
|
$
|
2,078
|
|
|
|
December 31,
|
||||||
(in thousands)
|
|
2019
|
|
2018
|
||||
Payroll and related expenses
|
|
$
|
6,053
|
|
|
$
|
7,241
|
|
Accrued payables
|
|
2,674
|
|
|
2,115
|
|
||
Operating lease liabilities, current portion
|
|
2,323
|
|
|
—
|
|
||
Lease financing, current portion
|
|
1,033
|
|
|
956
|
|
||
Product warranty
|
|
420
|
|
|
376
|
|
||
Customer prepayments
|
|
631
|
|
|
629
|
|
||
Sales and use tax payable
|
|
599
|
|
|
379
|
|
||
Other
|
|
1,024
|
|
|
1,189
|
|
||
Total accrued payroll and other current liabilities
|
|
$
|
14,757
|
|
|
$
|
12,885
|
|
|
|
Years ended December 31,
|
||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Warranty balance at the beginning of the period
|
|
$
|
376
|
|
|
$
|
353
|
|
|
$
|
596
|
|
Warranty expense accrued for shipments during the period
|
|
435
|
|
|
468
|
|
|
503
|
|
|||
Changes in estimate related to pre-existing warranties
|
|
(192
|
)
|
|
(223
|
)
|
|
(450
|
)
|
|||
Warranty settlements made
|
|
(199
|
)
|
|
(222
|
)
|
|
(296
|
)
|
|||
Total product warranty
|
|
$
|
420
|
|
|
$
|
376
|
|
|
$
|
353
|
|
(in thousands)
|
December 31,
2019 |
||
Other long-term assets
|
$
|
6,251
|
|
|
|
||
Accrued payroll and other current liabilities
|
2,323
|
|
|
Other long-term liabilities
|
4,866
|
|
|
Total operating lease liabilities
|
$
|
7,189
|
|
|
Year ended December 31,
|
||
(in thousands)
|
2019
|
||
Supplemental Cash Flow Information
|
|
||
Cash paid for amounts included in the measurement of lease liabilities
|
$
|
2,689
|
|
Right-of-use assets obtained in exchange for lease obligations
|
$
|
2,830
|
|
Weighted average remaining lease term
|
2.90 years
|
|
|
Weighted average discount rate
|
8
|
%
|
(in thousands)
|
Operating leases
|
||
2020
|
$
|
2,852
|
|
2021
|
3,043
|
|
|
2022
|
1,385
|
|
|
2023
|
442
|
|
|
2024
|
353
|
|
|
Total maturities of lease liabilities
|
8,075
|
|
|
Less imputed interest
|
$
|
(886
|
)
|
Total
|
$
|
7,189
|
|
(in thousands)
|
Operating leases
|
||
2019
|
$
|
2,224
|
|
2020
|
2,077
|
|
|
2021
|
1,835
|
|
|
2022
|
612
|
|
|
2023
|
35
|
|
|
Total maturities of lease liabilities
|
$
|
6,783
|
|
8.
|
Convertible Senior Notes
|
(in thousands)
|
December 31,
2019 |
|
December 31,
2018 |
||||
Liability:
|
|
|
|
||||
Principal
|
$
|
143,750
|
|
|
$
|
143,750
|
|
Unamortized debt discount
|
(23,880
|
)
|
|
(29,846
|
)
|
||
Unamortized issuance costs
|
(2,692
|
)
|
|
(3,364
|
)
|
||
Net carrying amount
|
$
|
117,178
|
|
|
$
|
110,540
|
|
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Debt discount for conversion option
|
$
|
33,350
|
|
|
$
|
33,350
|
|
Issuance costs
|
$
|
(1,136
|
)
|
|
$
|
(1,136
|
)
|
Net carrying amount
|
$
|
32,214
|
|
|
$
|
32,214
|
|
|
Year ended December 31,
|
|||||
(in thousands)
|
2019
|
2018
|
||||
Contractual interest expense
|
$
|
2,150
|
|
$
|
1,342
|
|
Amortization of debt discount
|
5,966
|
|
3,504
|
|
||
Amortization of issuance costs
|
673
|
|
395
|
|
||
Total interest expense
|
$
|
8,789
|
|
$
|
5,241
|
|
(in thousands)
|
December 31,
2019 |
||
Conversion option
|
$
|
33,350
|
|
Purchase of capped calls
|
$
|
(8,907
|
)
|
Issuance costs
|
$
|
(1,136
|
)
|
Total
|
$
|
23,307
|
|
9.
|
Commitments and contingencies
|
10.
|
Common Stock and Share-based Compensation
|
|
|
Options outstanding
|
|
|
|||||||||
|
|
Number
of options
|
|
Weighted
average
exercise
price
|
|
Weighted
average
remaining
contractual term
|
|
Aggregate
intrinsic
value
|
|||||
|
|
|
|
|
|
(in years)
|
|
(in thousands)
|
|||||
Outstanding at December 31, 2018
|
|
797,501
|
|
|
$
|
13.31
|
|
|
4.71
|
|
$
|
20,767
|
|
Options granted
|
|
—
|
|
|
—
|
|
|
|
|
|
|||
Options exercised
|
|
(187,174
|
)
|
|
13.03
|
|
|
|
|
|
|||
Options canceled
|
|
(4,000
|
)
|
|
10.41
|
|
|
|
|
|
|||
Outstanding at December 31, 2019
|
|
606,327
|
|
|
$
|
13.41
|
|
|
3.62
|
|
$
|
4,566
|
|
Options vested and expected to vest as of December 31, 2019
|
|
606,327
|
|
|
$
|
13.41
|
|
|
3.62
|
|
$
|
4,566
|
|
Options vested and exercisable as of December 31, 2019
|
|
606,327
|
|
|
$
|
13.41
|
|
|
3.62
|
|
$
|
4,566
|
|
|
|
Years ended December 31,
|
||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Intrinsic value of options exercised during period
|
|
$
|
3,700
|
|
|
$
|
10,243
|
|
|
$
|
18,603
|
|
|
|
Years ended December 31,
|
||||
|
|
2019
|
|
2018
|
|
2017
|
Expected term (in years)
|
|
0.5
|
|
0.5
|
|
0.5
|
Volatility
|
|
33% - 50%
|
|
33% - 37.8%
|
|
29.0% - 32.0%
|
Risk-free interest rate
|
|
1.59% - 2.51%
|
|
2.09% - 2.51%
|
|
0.61% - 1.39%
|
Dividend yield
|
|
0.0%
|
|
0.0%
|
|
0.0%
|
|
|
Restricted Stock Units
|
|||||
|
|
Number of shares
|
|
Weighted Average Grant Date Fair Value per Share
|
|||
Outstanding at December 31, 2018
|
|
1,807,180
|
|
|
$
|
23.13
|
|
Granted
|
|
845,437
|
|
|
31.88
|
|
|
Vested
|
|
(978,785
|
)
|
|
20.89
|
|
|
Forfeited
|
|
(123,186
|
)
|
|
27.78
|
|
|
Outstanding at December 31, 2019
|
|
1,550,646
|
|
|
$
|
28.94
|
|
|
|
Years ended December 31,
|
||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Cost of revenue
|
|
$
|
4,441
|
|
|
$
|
3,614
|
|
|
$
|
2,871
|
|
Research and development
|
|
3,955
|
|
|
2,976
|
|
|
2,122
|
|
|||
Sales and marketing
|
|
7,014
|
|
|
6,560
|
|
|
6,563
|
|
|||
General and administrative
|
|
8,455
|
|
|
7,814
|
|
|
6,640
|
|
|||
Total stock-based compensation
|
|
$
|
23,865
|
|
|
$
|
20,964
|
|
|
$
|
18,196
|
|
11.
|
Segments
|
|
|
Years ended December 31,
|
||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue
|
|
|
|
|
|
|
||||||
Product
|
|
$
|
92,561
|
|
|
$
|
97,447
|
|
|
$
|
91,585
|
|
Service
|
|
87,940
|
|
|
82,183
|
|
|
74,404
|
|
|||
Total revenue
|
|
180,501
|
|
|
179,630
|
|
|
165,989
|
|
|||
|
|
|
|
|
|
|
||||||
Cost of revenue
|
|
|
|
|
|
|
||||||
Product
|
|
29,039
|
|
|
27,425
|
|
|
27,244
|
|
|||
Service
|
|
42,363
|
|
|
40,318
|
|
|
37,683
|
|
|||
Total cost of revenue
|
|
71,402
|
|
|
67,743
|
|
|
64,927
|
|
|||
|
|
|
|
|
|
|
||||||
Gross profit
|
|
|
|
|
|
|
||||||
Product
|
|
63,522
|
|
|
70,022
|
|
|
64,341
|
|
|||
Service
|
|
45,577
|
|
|
41,865
|
|
|
36,721
|
|
|||
Total gross profit
|
|
109,099
|
|
|
111,887
|
|
|
101,062
|
|
|||
|
|
|
|
|
|
|
||||||
Operating expenses
|
|
123,222
|
|
|
118,192
|
|
|
111,762
|
|
|||
(Loss) income from operations
|
|
(14,123
|
)
|
|
(6,305
|
)
|
|
(10,700
|
)
|
|||
Interest income (expense), net and other
|
|
(3,837
|
)
|
|
(3,720
|
)
|
|
562
|
|
|||
Loss before income taxes
|
|
$
|
(17,960
|
)
|
|
$
|
(10,025
|
)
|
|
$
|
(10,138
|
)
|
|
|
Years ended December 31,
|
||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue
|
|
|
|
|
|
|
||||||
Product
|
|
|
|
|
|
|
||||||
Device
|
|
$
|
61,224
|
|
|
$
|
60,130
|
|
|
$
|
61,746
|
|
Software
|
|
31,337
|
|
|
37,317
|
|
|
29,839
|
|
|||
Total product
|
|
92,561
|
|
|
97,447
|
|
|
91,585
|
|
|||
Service
|
|
|
|
|
|
|
||||||
Maintenance and support
|
|
68,846
|
|
|
62,267
|
|
|
52,342
|
|
|||
Professional services and training
|
|
19,094
|
|
|
19,916
|
|
|
22,062
|
|
|||
Total service
|
|
87,940
|
|
|
82,183
|
|
|
74,404
|
|
|||
Total revenue
|
|
$
|
180,501
|
|
|
$
|
179,630
|
|
|
$
|
165,989
|
|
|
|
Years ended December 31,
|
||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue
|
|
|
|
|
|
|
||||||
United States
|
|
$
|
164,827
|
|
|
$
|
161,338
|
|
|
$
|
148,993
|
|
International
|
|
15,674
|
|
|
18,292
|
|
|
16,996
|
|
|||
Total revenue
|
|
$
|
180,501
|
|
|
$
|
179,630
|
|
|
$
|
165,989
|
|
|
|
December 31,
|
||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Property and equipment, net
|
|
|
|
|
|
|
||||||
United States
|
|
$
|
6,364
|
|
|
$
|
6,265
|
|
|
$
|
4,621
|
|
International
|
|
2,297
|
|
|
1,203
|
|
|
1,130
|
|
|||
Total property and equipment, net
|
|
$
|
8,661
|
|
|
$
|
7,468
|
|
|
$
|
5,751
|
|
12.
|
Income taxes
|
|
|
Years ended December 31,
|
||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||||
United States
|
|
$
|
(19,022
|
)
|
|
$
|
(10,852
|
)
|
|
$
|
(10,930
|
)
|
International
|
|
1,062
|
|
|
827
|
|
|
792
|
|
|||
Total loss before income taxes
|
|
$
|
(17,960
|
)
|
|
$
|
(10,025
|
)
|
|
$
|
(10,138
|
)
|
|
|
Years ended December 31,
|
||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Current
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(10
|
)
|
State
|
|
(25
|
)
|
|
53
|
|
|
54
|
|
|||
Foreign
|
|
240
|
|
|
368
|
|
|
324
|
|
|||
|
|
215
|
|
|
421
|
|
|
368
|
|
|||
Deferred
|
|
|
|
|
|
|
||||||
Federal
|
|
(43
|
)
|
|
(822
|
)
|
|
311
|
|
|||
State
|
|
7
|
|
|
99
|
|
|
119
|
|
|||
Foreign
|
|
(159
|
)
|
|
(49
|
)
|
|
(39
|
)
|
|||
|
|
(195
|
)
|
|
(772
|
)
|
|
391
|
|
|||
Total income tax provision (benefit)
|
|
$
|
20
|
|
|
$
|
(351
|
)
|
|
$
|
759
|
|
|
|
Years ended December 31,
|
||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||||
U.S. federal (tax benefit) provision at statutory rate
|
|
$
|
(3,772
|
)
|
|
$
|
(2,105
|
)
|
|
$
|
(4,576
|
)
|
State (tax benefit) income taxes, net of federal benefit
|
|
(646
|
)
|
|
(373
|
)
|
|
(437
|
)
|
|||
Foreign income taxes at rates other than the US rate
|
|
(145
|
)
|
|
92
|
|
|
(21
|
)
|
|||
Stock-based compensation
|
|
(2,119
|
)
|
|
(3,503
|
)
|
|
(8,373
|
)
|
|||
Change in valuation allowance
|
|
5,136
|
|
|
4,710
|
|
|
(6,023
|
)
|
|||
Non-deductible executive compensation
|
|
2,383
|
|
|
2,418
|
|
|
1,624
|
|
|||
Rate differential impact on Tax Cuts and Jobs Act
|
|
—
|
|
|
—
|
|
|
18,975
|
|
|||
Research and development credits
|
|
(1,209
|
)
|
|
(994
|
)
|
|
(602
|
)
|
|||
Indefinite net operating losses carryforward
|
|
(33
|
)
|
|
(1,470
|
)
|
|
—
|
|
|||
Other
|
|
425
|
|
|
874
|
|
|
192
|
|
|||
Total
|
|
$
|
20
|
|
|
$
|
(351
|
)
|
|
$
|
759
|
|
|
|
December 31,
|
||||||
(in thousands)
|
|
2019
|
|
2018
|
||||
Deferred tax assets
|
|
|
|
|
||||
Net operating loss carryforward
|
|
$
|
32,723
|
|
|
$
|
29,798
|
|
Research and development credits
|
|
8,449
|
|
|
6,840
|
|
||
Depreciation and amortization
|
|
2,402
|
|
|
3,007
|
|
||
Reserves and accruals
|
|
9,349
|
|
|
9,661
|
|
||
Total deferred tax assets
|
|
52,923
|
|
|
49,306
|
|
||
Valuation allowance
|
|
(40,436
|
)
|
|
(40,070
|
)
|
||
Net deferred tax assets
|
|
12,487
|
|
|
9,236
|
|
||
Deferred tax liabilities - convertible senior notes
|
|
(5,848
|
)
|
|
(7,503
|
)
|
||
Deferred tax liabilities - other
|
|
(7,097
|
)
|
|
(2,208
|
)
|
||
Net deferred tax liabilities
|
|
$
|
(458
|
)
|
|
$
|
(475
|
)
|
|
|
Years Ended December 31,
|
||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Balance at the beginning of the period
|
|
$
|
40,070
|
|
|
$
|
45,255
|
|
|
$
|
42,339
|
|
Net operating loss carryforwards generated
|
|
2,925
|
|
|
2,509
|
|
|
3,050
|
|
|||
R&D tax credit increase
|
|
1,609
|
|
|
1,014
|
|
|
1,121
|
|
|||
Depreciation and amortization increase
|
|
(605
|
)
|
|
925
|
|
|
237
|
|
|||
Reserves and accruals decrease
|
|
(312
|
)
|
|
(581
|
)
|
|
(1,479
|
)
|
|||
Deferred tax assets increase
|
|
(3,251
|
)
|
|
(9,052
|
)
|
|
(13
|
)
|
|||
Balance at the end of the period
|
|
$
|
40,436
|
|
|
$
|
40,070
|
|
|
$
|
45,255
|
|
|
|
Years ended December 31,
|
||||||
(in thousands)
|
|
2019
|
|
2018
|
||||
Gross amount of unrecognized tax benefits as of the beginning of the period
|
|
$
|
1,931
|
|
|
$
|
1,673
|
|
Increases related to prior year tax provisions
|
|
—
|
|
|
7
|
|
||
Decreases related to prior year tax provisions
|
|
(78
|
)
|
|
—
|
|
||
Increases related to current year tax provisions
|
|
398
|
|
|
251
|
|
||
Gross amount of unrecognized tax benefits as of the end of the period
|
|
$
|
2,251
|
|
|
$
|
1,931
|
|
(In thousands, except per share data)
|
|
Quarters Ended
|
||||||||||||||
2019
|
|
March 31,
|
|
|
June 30,
|
|
|
September 30,
|
|
|
December 31,
|
|
||||
Total revenue
|
|
$
|
35,309
|
|
|
$
|
44,759
|
|
|
$
|
50,781
|
|
|
$
|
49,652
|
|
Gross profit
|
|
$
|
19,685
|
|
|
$
|
27,016
|
|
|
$
|
31,888
|
|
|
$
|
30,510
|
|
Net income (loss)
|
|
$
|
(11,735
|
)
|
|
$
|
(4,857
|
)
|
|
$
|
298
|
|
|
$
|
(1,686
|
)
|
Net income (loss) attributable to common stockholders
|
|
$
|
(11,735
|
)
|
|
$
|
(4,857
|
)
|
|
$
|
298
|
|
|
$
|
(1,686
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
(0.38
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.05
|
)
|
Diluted
|
|
$
|
(0.38
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.05
|
)
|
Weighted average shares used to compute net income (loss) per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
30,800
|
|
|
31,242
|
|
|
31,459
|
|
|
31,579
|
|
||||
Diluted
|
|
30,800
|
|
|
31,242
|
|
|
31,944
|
|
|
31,579
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Quarters Ended
|
||||||||||||||
2018
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
||||||||
Total revenue
|
|
$
|
40,242
|
|
|
$
|
42,686
|
|
|
$
|
47,822
|
|
|
$
|
48,880
|
|
Gross profit
|
|
$
|
23,901
|
|
|
$
|
25,651
|
|
|
$
|
31,138
|
|
|
$
|
31,197
|
|
Net income (loss)
|
|
$
|
(4,770
|
)
|
|
$
|
(3,554
|
)
|
|
$
|
(249
|
)
|
|
$
|
(1,101
|
)
|
Net income (loss) attributable to common stockholders
|
|
$
|
(4,770
|
)
|
|
$
|
(3,554
|
)
|
|
$
|
(249
|
)
|
|
$
|
(1,101
|
)
|
Net loss per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
||||||||
Basic and Diluted
|
|
$
|
(0.24
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.04
|
)
|
Weighted average shares used to compute net loss per common share:
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted
|
|
29,476
|
|
|
29,867
|
|
|
29,861
|
|
|
30,592
|
|
Item 9.
|
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accounting Fees and Services
|
Item 15.
|
Exhibits, Financial Statement Schedules
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by reference
|
|
|
||||||
Exhibit
Number
|
|
Exhibit title
|
Form
|
File No.
|
|
Date
|
|
Number
|
|
Filed
herewith
|
|
|
|
|
|
|
|
|
|
|
|||
3.01
|
|
S-1
|
333-183546
|
|
August 24, 2012
|
|
3.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
3.02
|
|
8-K
|
001-35469
|
|
October 31, 2016
|
|
3.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
4.01
|
|
S-1
|
333-175932
|
|
August 1, 2011
|
|
4.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.02
|
|
8-K
|
011-35469
|
|
May 17, 2018
|
|
4.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.03
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|||
10.01
|
|
S-1
|
333-175932
|
|
August 1, 2011
|
|
10.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
10.02+
|
|
S-1(A2)
|
333-175932
|
|
February 24, 2012
|
|
10.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
10.03+
|
|
8-K
|
001-35460
|
|
June 6, 2018
|
|
10.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
10.04+
|
|
S-1(A3)
|
333-175932
|
|
March 13, 2012
|
|
10.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
10.05+
|
|
S-1
|
333-175932
|
|
August 1, 2011
|
|
10.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
10.06+
|
|
S-1
|
333-175932
|
|
August 1, 2011
|
|
10.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
10.07+
|
|
10-Q
|
001-35469
|
|
November 7, 2016
|
|
10.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.08+
|
|
10-Q
|
001-35469
|
|
November 7, 2016
|
|
10.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.09
|
|
S-1
|
333-175932
|
|
August 1, 2011
|
|
10.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.10†
|
|
S-1
|
333-175932
|
|
August 1, 2011
|
|
10.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
10.11†
|
|
S-1
|
333-175932
|
|
August 1, 2011
|
|
10.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
10.12+
|
|
S-1(A2)
|
333-175932
|
|
February 24, 2012
|
|
10.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
10.13+
|
|
S-1(A2)
|
333-175932
|
|
February 24, 2012
|
|
10.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
10.14
|
|
10-Q
|
001-35469
|
|
August 6, 2015
|
|
10.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.15
|
|
10-Q
|
001-35469
|
|
November 7, 2016
|
|
10.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.16
|
|
8-K
|
001-35469
|
|
May 17, 2018
|
|
99.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.17
|
|
8-K
|
001-35469
|
|
May 17, 2018
|
|
99.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.01
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|||
23.01
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|||
24.01
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|||
31.01*
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|||
31.02*
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|||
32.01
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
101.INS
|
|
Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|||
101.SCH
|
|
Inline XBRL Taxonomy Schema Linkbase Document
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|||
101.CAL
|
|
Inline XBRL Taxonomy Calculation Linkbase Document
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|||
101.DEF
|
|
Inline XBRL Taxonomy Definition Linkbase Document
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|||
101.LAB
|
|
Inline XBRL Taxonomy Labels Linkbase Document
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|||
101.PRE
|
|
Inline XBRL Taxonomy Presentation Linkbase Document
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104
|
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101
|
|
|
|
|
|
|
|
X
|
+
|
|
Indicates management contract or compensatory plan or arrangement.
|
|
|
|
†
|
|
Portions of have been granted confidential treatment by the SEC.
|
|
|
|
*
|
|
This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.
|
|
|
|
|
|
VOCERA COMMUNICATIONS, INC.
|
|
|
|
Date: February 26, 2020
|
By:
|
/S/ Brent D. Lang
|
|
|
Brent D. Lang
Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
Date: February 26, 2020
|
By:
|
/S/ Justin R. Spencer
|
|
|
Justin R. Spencer
Chief Financial Officer
|
|
|
(Principal Accounting and Financial Officer)
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/s/ Brent D. Lang
|
|
|
|
|
Brent D. Lang
|
|
Chief Executive Officer
(Principal Executive Officer) |
|
February 26, 2020
|
|
|
|
||
/s/ Justin R. Spencer
|
|
|
|
|
Justin R. Spencer
|
|
Chief Financial Officer
(Principal Accounting and Financial Officer)
|
|
February 26, 2020
|
|
|
|
||
/s/ Michael Burkland
|
|
|
|
|
Michael Burkland
|
|
Director
|
|
February 26, 2020
|
|
|
|
||
/s/ Julie Iskow
|
|
|
|
|
Julie Iskow
|
|
Director
|
|
February 26, 2020
|
|
|
|
||
/s/ Howard E. Janzen
|
|
|
|
|
Howard E. Janzen
|
|
Director
|
|
February 26, 2020
|
|
|
|
||
/s/ Alexa King
|
|
|
|
|
Alexa King
|
|
Director
|
|
February 26, 2020
|
|
|
|
||
/s/ John N. McMullen
|
|
|
|
|
John N. McMullen
|
|
Director
|
|
February 26, 2020
|
|
|
|
||
/s/ Sharon O'Keefe
|
|
|
|
|
Sharon O'Keefe
|
|
Director
|
|
February 26, 2020
|
|
|
|
||
/s/ Ronald A. Paulus
|
|
|
|
|
Ronald A. Paulus
|
|
Director
|
|
February 26, 2020
|
|
|
|
|
|
/s/ Bharat Sundaram
|
|
|
|
February 26, 2020
|
Bharat Sundaram
|
|
Director
|
|
|
•
|
prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
|
•
|
upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; or
|
•
|
at or subsequent to such time that the stockholder became an interested stockholder, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders by at least two-thirds of the outstanding voting stock not owned by the interested stockholder.
|
•
|
Board of Directors Vacancies. Our restated certificate of incorporation and restated bylaws authorize generally only our board of directors to fill vacant directorships. In addition, the number of directors constituting our board of directors may be set only by resolution adopted by a majority vote of our entire board of directors. These provisions prevent a stockholder from increasing the size of our board of directors and gaining control of our board of directors by filling the resulting vacancies with its own nominees.
|
•
|
Classified Board. Our restated certificate of incorporation and restated bylaws provide that our board is classified into three classes of directors. The existence of a classified board could delay a successful tender offeror from obtaining majority control of our board of directors, and the prospect of that delay might deter a potential offeror.
|
•
|
Stockholder Action. Our restated certificate of incorporation provides that our stockholders may not take action by written consent, but may only take action at annual or special meetings of our stockholders. Stockholders will not be permitted to cumulate their votes for the election of directors. Our restated bylaws further provide that special meetings of our stockholders may be called only by a majority of our board of directors, the chairman of our board of directors, our chief executive officer or our president.
|
•
|
Advance Notice Requirements for Stockholder Proposals and Director Nominations. Our restated bylaws provide advance notice procedures for stockholders seeking to bring business before our annual meeting of stockholders, or to nominate candidates for election as directors at our annual meeting of stockholders. Our restated bylaws also specify certain requirements regarding the form and content of a stockholder’s notice. These provisions may preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors at our annual meeting of stockholders.
|
•
|
No Cumulative Voting. The Delaware General Corporation Law provides that stockholders are not entitled to the right to cumulate votes in the election of directors unless a corporation's certificate of incorporation provides otherwise. Our restated certificate of incorporation and restated bylaws do not provide for cumulative voting.
|
•
|
Directors Removed Only for Cause. Our restated certificate of incorporation provides that stockholders may remove directors only for cause and only by the affirmative vote of holders of at least two-thirds of our then-outstanding shares of capital stock permitted to vote on the election of directors; however, our restated bylaws further provide that if the votes cast for any director nominee’s election do not exceed the votes cast against such nominee’s election the director must immediate tender his or her resignation and, following the recommendation of the governance and nominating Committee, the board shall act upon such resignation within 30 days following the stockholder vote.
|
•
|
Issuance of Undesignated Preferred Stock. Our restated certificate of incorporation provides our board of directors with the authority, without further action by the stockholders, to issue up to 5,000,000 shares of undesignated preferred stock with rights and preferences, including voting rights, designated from time to time by the board of directors. The existence of authorized but unissued shares of preferred stock enables our board of directors to render more difficult or to discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise.
|
•
|
Choice of Forum. Our restated bylaws provide that unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the exclusive forum for any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our restated certificate of incorporation or our restated bylaws; or any action asserting a claim against us that is governed by the internal affairs doctrine.
|
Date: February 26, 2020
|
|
/s/ Brent D. Lang
|
|
|
Brent D. Lang
|
|
|
Chief Executive Officer
|
Date: February 26, 2020
|
|
/s/ Justin R. Spencer
|
|
|
Justin R. Spencer
|
|
|
Chief Financial Officer
|
|
|
|
|
|
/s/ Brent D. Lang
|
|
|
|
/s/ Justin R. Spencer
|
Brent D. Lang
|
|
|
|
Justin R. Spencer
|
Chief Executive Officer
|
|
|
|
Chief Financial Officer
|