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☒
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QUARTERLY 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
|
|
|
Delaware
|
|
20-1548921
|
(State or other jurisdiction of
incorporation or organization) |
|
(I.R.S. Employer
Identification No.)
|
|
Title of each class
|
Trading Symbol
|
Name of each exchange on which registered
|
Common Stock, $0.0001 par value per share
|
FEYE
|
The NASDAQ Global Select Market
|
Large accelerated filer
|
☒
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
|
|
Emerging growth company
|
☐
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Page
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Item 4.
|
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Item 5.
|
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Item 6.
|
|
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||
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Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Product, subscription and support
|
$
|
183,836
|
|
|
$
|
179,823
|
|
|
$
|
535,224
|
|
|
$
|
523,828
|
|
Professional services
|
54,624
|
|
|
46,091
|
|
|
157,858
|
|
|
130,238
|
|
||||
Total revenue
|
238,460
|
|
|
225,914
|
|
|
693,082
|
|
|
654,066
|
|
||||
Cost of revenue:
|
|
|
|
|
|
|
|
||||||||
Product, subscription and support
|
54,933
|
|
|
54,272
|
|
|
162,095
|
|
|
155,938
|
|
||||
Professional services
|
29,473
|
|
|
24,948
|
|
|
84,889
|
|
|
72,243
|
|
||||
Total cost of revenue
|
84,406
|
|
|
79,220
|
|
|
246,984
|
|
|
228,181
|
|
||||
Total gross profit
|
154,054
|
|
|
146,694
|
|
|
446,098
|
|
|
425,885
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
61,662
|
|
|
68,857
|
|
|
189,762
|
|
|
203,790
|
|
||||
Sales and marketing
|
93,961
|
|
|
98,355
|
|
|
284,202
|
|
|
303,745
|
|
||||
General and administrative
|
23,096
|
|
|
27,717
|
|
|
75,806
|
|
|
83,019
|
|
||||
Restructuring charges
|
1,488
|
|
|
6,481
|
|
|
25,020
|
|
|
10,280
|
|
||||
Total operating expenses
|
180,207
|
|
|
201,410
|
|
|
574,790
|
|
|
600,834
|
|
||||
Operating loss
|
(26,153
|
)
|
|
(54,716
|
)
|
|
(128,692
|
)
|
|
(174,949
|
)
|
||||
Interest income
|
2,164
|
|
|
5,275
|
|
|
9,450
|
|
|
17,260
|
|
||||
Interest expense
|
(14,353
|
)
|
|
(15,554
|
)
|
|
(45,555
|
)
|
|
(46,224
|
)
|
||||
Other income (expense), net
|
157
|
|
|
40
|
|
|
(951
|
)
|
|
(1,018
|
)
|
||||
Loss before income taxes
|
(38,185
|
)
|
|
(64,955
|
)
|
|
(165,748
|
)
|
|
(204,931
|
)
|
||||
Provision for income taxes
|
933
|
|
|
540
|
|
|
2,952
|
|
|
3,262
|
|
||||
Net loss
|
$
|
(39,118
|
)
|
|
$
|
(65,495
|
)
|
|
$
|
(168,700
|
)
|
|
$
|
(208,193
|
)
|
Net loss per share, basic and diluted
|
$
|
(0.17
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
(0.76
|
)
|
|
$
|
(1.02
|
)
|
Weighted average shares used in computing net loss per share, basic and diluted
|
224,807
|
|
|
212,207
|
|
|
221,329
|
|
|
204,855
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Net loss
|
$
|
(39,118
|
)
|
|
$
|
(65,495
|
)
|
|
$
|
(168,700
|
)
|
|
$
|
(208,193
|
)
|
Change in net unrealized gain (loss) on available-for-sale investments
|
(1,197
|
)
|
|
107
|
|
|
3,934
|
|
|
3,376
|
|
||||
Comprehensive loss
|
$
|
(40,315
|
)
|
|
$
|
(65,388
|
)
|
|
$
|
(164,766
|
)
|
|
$
|
(204,817
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Total stockholders' equity, beginning balances
|
$
|
660,359
|
|
|
$
|
728,770
|
|
|
$
|
701,666
|
|
|
$
|
650,394
|
|
|
|
|
|
|
|
|
|
||||||||
Common stock and additional paid-in-capital:
|
|
|
|
|
|
|
|
||||||||
Balance, beginning of period
|
3,470,524
|
|
|
3,369,984
|
|
|
3,457,381
|
|
|
3,152,179
|
|
||||
Issuance of common stock for equity awards, net of tax withholdings
|
2,539
|
|
|
1,665
|
|
|
6,270
|
|
|
3,159
|
|
||||
Shares withheld for taxes
|
(762
|
)
|
|
—
|
|
|
(8,802
|
)
|
|
—
|
|
||||
Issuance of common stock related to employee stock purchase plan
|
—
|
|
|
—
|
|
|
12,300
|
|
|
12,315
|
|
||||
Shares retired
|
—
|
|
|
—
|
|
|
(70,000
|
)
|
|
—
|
|
||||
Issuance of common stock and assumption of options related to Verodin, Inc. acquisition
|
—
|
|
|
—
|
|
|
|
|
121,158
|
|
|||||
Stock-based compensation
|
41,340
|
|
|
37,863
|
|
|
116,492
|
|
|
120,701
|
|
||||
Balance, end of period
|
3,513,641
|
|
|
3,409,512
|
|
|
3,513,641
|
|
|
3,409,512
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Treasury stock:
|
|
|
|
|
|
|
|
||||||||
Balance, beginning of period
|
(80,000
|
)
|
|
(150,000
|
)
|
|
(150,000
|
)
|
|
(150,000
|
)
|
||||
Shares retired
|
—
|
|
|
—
|
|
|
70,000
|
|
|
—
|
|
||||
Balance, end of period
|
(80,000
|
)
|
|
(150,000
|
)
|
|
(80,000
|
)
|
|
(150,000
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Accumulated other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Balance, beginning of period
|
6,311
|
|
|
970
|
|
|
1,180
|
|
|
(2,299
|
)
|
||||
Unrealized gain (loss) investments
|
(1,197
|
)
|
|
107
|
|
|
3,934
|
|
|
3,376
|
|
||||
Balance, end of period
|
5,114
|
|
|
1,077
|
|
|
5,114
|
|
|
1,077
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Accumulated deficit:
|
|
|
|
|
|
|
|
||||||||
Balance, beginning of period
|
(2,736,477
|
)
|
|
(2,492,184
|
)
|
|
(2,606,895
|
)
|
|
(2,349,486
|
)
|
||||
Net loss
|
(39,118
|
)
|
|
(65,495
|
)
|
|
(168,700
|
)
|
|
(208,193
|
)
|
||||
Balance, end of period
|
(2,775,595
|
)
|
|
(2,557,679
|
)
|
|
(2,775,595
|
)
|
|
(2,557,679
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Total stockholders' equity, ending balances
|
$
|
663,160
|
|
|
$
|
702,910
|
|
|
$
|
663,160
|
|
|
$
|
702,910
|
|
|
Nine Months Ended September 30,
|
||||||
|
2020
|
|
2019
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net loss
|
$
|
(168,700
|
)
|
|
$
|
(208,193
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
71,238
|
|
|
76,238
|
|
||
Stock-based compensation
|
113,593
|
|
|
117,162
|
|
||
Non-cash interest expense related to convertible senior notes
|
35,480
|
|
|
35,768
|
|
||
Deferred income taxes
|
91
|
|
|
(661
|
)
|
||
Other
|
6,836
|
|
|
463
|
|
||
Changes in operating assets and liabilities, net of business acquisitions:
|
|
|
|
||||
Accounts receivable
|
36,148
|
|
|
5,929
|
|
||
Inventories
|
1,576
|
|
|
29
|
|
||
Prepaid expenses and other assets
|
13,476
|
|
|
4,824
|
|
||
Accounts payable
|
(17,292
|
)
|
|
2,127
|
|
||
Accrued liabilities
|
(4,902
|
)
|
|
1,206
|
|
||
Accrued compensation
|
26,763
|
|
|
2,448
|
|
||
Deferred revenue
|
(80,952
|
)
|
|
(2,172
|
)
|
||
Other long-term liabilities
|
(9,854
|
)
|
|
(7,146
|
)
|
||
Net cash provided by operating activities
|
23,501
|
|
|
28,022
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Purchases of property and equipment and demonstration units
|
(22,198
|
)
|
|
(38,615
|
)
|
||
Purchases of short-term investments
|
(305,180
|
)
|
|
(493,038
|
)
|
||
Proceeds from maturities of short-term investments
|
355,820
|
|
|
502,100
|
|
||
Purchase of investment in privately held company
|
(1,000
|
)
|
|
—
|
|
||
Proceeds from sales of short-term investments
|
28,208
|
|
|
—
|
|
||
Business acquisitions, net of cash acquired
|
(12,948
|
)
|
|
(127,249
|
)
|
||
Lease deposits
|
68
|
|
|
637
|
|
||
Net cash provided by (used in) investing activities
|
42,770
|
|
|
(156,165
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Repurchase of convertible senior notes
|
(96,392
|
)
|
|
—
|
|
||
Payment related to shares withheld for taxes
|
(8,802
|
)
|
|
—
|
|
||
Proceeds from employee stock purchase plan
|
12,300
|
|
|
12,315
|
|
||
Proceeds from exercise of equity awards
|
6,270
|
|
|
3,159
|
|
||
Net cash provided by (used in) financing activities
|
(86,624
|
)
|
|
15,474
|
|
||
Net change in cash and cash equivalents
|
(20,353
|
)
|
|
(112,669
|
)
|
||
Cash and cash equivalents, beginning of period
|
334,603
|
|
|
409,829
|
|
||
Cash and cash equivalents, end of period
|
$
|
314,250
|
|
|
$
|
297,160
|
|
|
Nine Months Ended September 30,
|
||||||
|
2020
|
|
2019
|
||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
|
|
|
||||
Cash paid for income taxes
|
$
|
3,961
|
|
|
$
|
3,981
|
|
Cash paid for interest
|
$
|
6,962
|
|
|
$
|
6,962
|
|
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
||||
Common stock issued in connection with acquisitions
|
$
|
—
|
|
|
$
|
119,682
|
|
Purchases of property and equipment and demonstration units in accounts payable and accrued liabilities
|
$
|
2,031
|
|
|
$
|
4,438
|
|
•
|
validating the effectiveness of existing cybersecurity controls before an attack occurs,
|
•
|
detecting and preventing advanced, targeted and other evasive attacks missed by other security controls,
|
•
|
enabling more efficient management of security operations, including alert management, investigations and response when a breach occurs, and
|
•
|
providing assessment, training and other strategic security consulting services that help organizations improve their resilience to attack.
|
•
|
Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
|
•
|
Level 2: Inputs that reflect quoted prices for identical assets or liabilities in less active markets; quoted prices for similar assets or liabilities in active markets; benchmark yields, reported trades, broker/dealer quotes, inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
•
|
Level 3: Unobservable inputs that reflect our own assumptions incorporated in valuation techniques used to measure fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.
|
|
As of September 30, 2020
|
|
As of December 31, 2019
|
||||||||||||||||||||||||||||
Description
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Money market funds
|
$
|
29,481
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
29,481
|
|
|
$
|
24,246
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24,246
|
|
Total cash equivalents
|
29,481
|
|
|
—
|
|
|
—
|
|
|
29,481
|
|
|
24,246
|
|
|
—
|
|
|
—
|
|
|
24,246
|
|
||||||||
Short-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Certificates of deposit
|
—
|
|
|
3,254
|
|
|
—
|
|
|
3,254
|
|
|
—
|
|
|
5,145
|
|
|
—
|
|
|
5,145
|
|
||||||||
Commercial paper
|
—
|
|
|
19,982
|
|
|
—
|
|
|
19,982
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Corporate notes and bonds
|
—
|
|
|
447,977
|
|
|
—
|
|
|
447,977
|
|
|
—
|
|
|
472,908
|
|
|
—
|
|
|
472,908
|
|
||||||||
U.S. Treasuries
|
—
|
|
|
71,092
|
|
|
—
|
|
|
71,092
|
|
|
—
|
|
|
48,069
|
|
|
—
|
|
|
48,069
|
|
||||||||
U.S. Government agencies
|
—
|
|
|
85,587
|
|
|
—
|
|
|
85,587
|
|
|
—
|
|
|
178,833
|
|
|
—
|
|
|
178,833
|
|
||||||||
Total short-term investments
|
—
|
|
|
627,892
|
|
|
—
|
|
|
627,892
|
|
|
—
|
|
|
704,955
|
|
|
—
|
|
|
704,955
|
|
||||||||
Total assets measured at fair value
|
$
|
29,481
|
|
|
$
|
627,892
|
|
|
$
|
—
|
|
|
$
|
657,373
|
|
|
$
|
24,246
|
|
|
$
|
704,955
|
|
|
$
|
—
|
|
|
$
|
729,201
|
|
|
As of September 30, 2020
|
||||||||||||||
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
||||||||
Certificates of deposit
|
$
|
3,169
|
|
|
$
|
85
|
|
|
$
|
—
|
|
|
$
|
3,254
|
|
Commercial paper
|
19,987
|
|
|
—
|
|
|
(5
|
)
|
|
19,982
|
|
||||
Corporate notes and bonds
|
442,616
|
|
|
5,407
|
|
|
(46
|
)
|
|
447,977
|
|
||||
U.S. Treasuries
|
71,053
|
|
|
51
|
|
|
(12
|
)
|
|
71,092
|
|
||||
U.S. Government agencies
|
85,446
|
|
|
149
|
|
|
(8
|
)
|
|
85,587
|
|
||||
Total
|
$
|
622,271
|
|
|
$
|
5,692
|
|
|
$
|
(71
|
)
|
|
$
|
627,892
|
|
|
As of December 31, 2019
|
||||||||||||||
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
||||||||
Certificates of deposit
|
$
|
5,118
|
|
|
$
|
27
|
|
|
$
|
—
|
|
|
$
|
5,145
|
|
Corporate notes and bonds
|
471,172
|
|
|
1,950
|
|
|
(214
|
)
|
|
472,908
|
|
||||
U.S. Treasuries
|
48,086
|
|
|
2
|
|
|
(19
|
)
|
|
48,069
|
|
||||
U.S. Government agencies
|
178,891
|
|
|
52
|
|
|
(110
|
)
|
|
178,833
|
|
||||
Total
|
$
|
703,267
|
|
|
$
|
2,031
|
|
|
$
|
(343
|
)
|
|
$
|
704,955
|
|
|
As of September 30, 2020
|
||||||||||||||||||||||
|
Less Than 12 Months
|
|
Greater Than 12 Months
|
|
Total
|
||||||||||||||||||
|
Fair Value
|
|
Unrealized Loss
|
|
Fair Value
|
|
Unrealized Loss
|
|
Fair Value
|
|
Unrealized Loss
|
||||||||||||
Certificates of deposit
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commercial paper
|
19,982
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
19,982
|
|
|
(5
|
)
|
||||||
Corporate notes and bonds
|
70,390
|
|
|
(43
|
)
|
|
9,669
|
|
|
(3
|
)
|
|
80,059
|
|
|
(46
|
)
|
||||||
U.S. Treasuries
|
58,886
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
58,886
|
|
|
(12
|
)
|
||||||
U.S. Government agencies
|
21,995
|
|
|
(7
|
)
|
|
9,200
|
|
|
(1
|
)
|
|
31,195
|
|
|
(8
|
)
|
||||||
Total
|
$
|
171,253
|
|
|
$
|
(67
|
)
|
|
$
|
18,869
|
|
|
$
|
(4
|
)
|
|
$
|
190,122
|
|
|
$
|
(71
|
)
|
|
As of December 31, 2019
|
||||||||||||||||||||||
|
Less Than 12 Months
|
|
Greater Than 12 Months
|
|
Total
|
||||||||||||||||||
|
Fair Value
|
|
Unrealized Loss
|
|
Fair Value
|
|
Unrealized Loss
|
|
Fair Value
|
|
Unrealized Loss
|
||||||||||||
Certificates of deposit
|
$
|
244
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
244
|
|
|
$
|
—
|
|
Corporate notes and bonds
|
117,271
|
|
|
(205
|
)
|
|
24,514
|
|
|
(9
|
)
|
|
141,785
|
|
|
(214
|
)
|
||||||
U.S. Treasuries
|
5,041
|
|
|
(2
|
)
|
|
33,996
|
|
|
(17
|
)
|
|
39,037
|
|
|
(19
|
)
|
||||||
U.S. Government agencies
|
91,221
|
|
|
(103
|
)
|
|
25,997
|
|
|
(7
|
)
|
|
117,218
|
|
|
(110
|
)
|
||||||
Total
|
$
|
213,777
|
|
|
$
|
(310
|
)
|
|
$
|
84,507
|
|
|
$
|
(33
|
)
|
|
$
|
298,284
|
|
|
$
|
(343
|
)
|
|
Amortized Cost
|
|
Fair Value
|
||||
Due within one year
|
$
|
336,578
|
|
|
$
|
338,020
|
|
Due within one to three years
|
285,693
|
|
|
289,872
|
|
||
Total
|
$
|
622,271
|
|
|
$
|
627,892
|
|
|
As of September 30, 2020
|
|
As of December 31, 2019
|
||||
Computer equipment and software
|
$
|
216,124
|
|
|
$
|
203,242
|
|
Leasehold improvements
|
62,544
|
|
|
64,180
|
|
||
Furniture and fixtures
|
15,314
|
|
|
15,496
|
|
||
Machinery and equipment
|
465
|
|
|
465
|
|
||
Total property and equipment
|
294,447
|
|
|
283,383
|
|
||
Less: accumulated depreciation
|
(210,450
|
)
|
|
(189,571
|
)
|
||
Total property and equipment, net
|
$
|
83,997
|
|
|
$
|
93,812
|
|
|
Amount
|
||
Net tangible liabilities assumed
|
$
|
(288
|
)
|
Intangible assets
|
5,650
|
|
|
Goodwill
|
7,846
|
|
|
Total preliminary purchase price allocation
|
$
|
13,208
|
|
|
Preliminary Estimated Useful Life (in years)
|
|
Amount
|
||
Developed technology
|
3
|
|
$
|
5,500
|
|
Trade name
|
1
|
|
150
|
|
|
Total identifiable intangible assets
|
|
|
$
|
5,650
|
|
|
Amount
|
||
Net tangible assets assumed
|
$
|
15,036
|
|
Intangible assets
|
45,200
|
|
|
Deferred tax liability
|
(1,158
|
)
|
|
Goodwill
|
205,804
|
|
|
Total purchase price allocation
|
$
|
264,882
|
|
|
Estimated Useful Life (in years)
|
|
Amount
|
||
Developed technology
|
5
|
|
$
|
38,300
|
|
Customer relationships
|
5
|
|
4,600
|
|
|
Trade name
|
5
|
|
1,600
|
|
|
Contract backlog
|
2
|
|
700
|
|
|
Total identifiable intangible assets
|
|
|
$
|
45,200
|
|
|
As of September 30, 2020
|
|
As of December 31, 2019
|
||||
Developed technology
|
$
|
153,803
|
|
|
$
|
148,303
|
|
Content
|
158,700
|
|
|
158,700
|
|
||
Customer relationships
|
115,690
|
|
|
115,690
|
|
||
Contract backlog
|
13,200
|
|
|
13,200
|
|
||
Trade names
|
17,310
|
|
|
17,160
|
|
||
Non-competition agreements
|
1,400
|
|
|
1,400
|
|
||
Total intangible assets
|
460,103
|
|
|
454,453
|
|
||
Less: accumulated amortization
|
(354,247
|
)
|
|
(320,033
|
)
|
||
Total net intangible assets
|
$
|
105,856
|
|
|
$
|
134,420
|
|
Years Ending December 31,
|
Amount
|
||
2020 (remaining three months)
|
$
|
10,839
|
|
2021
|
40,220
|
|
|
2022
|
28,942
|
|
|
2023
|
22,082
|
|
|
2024
|
3,692
|
|
|
2025
|
81
|
|
|
Total
|
$
|
105,856
|
|
|
Severance and related costs
|
|
Facilities costs
|
|
Total costs
|
||||||
Balance, December 31, 2019
|
$
|
164
|
|
|
$
|
470
|
|
|
$
|
634
|
|
Provision for restructuring charges
|
13,861
|
|
|
257
|
|
|
14,118
|
|
|||
Cash payments
|
(16,598
|
)
|
|
(97
|
)
|
|
(16,695
|
)
|
|||
Other adjustments
|
3,153
|
|
|
(103
|
)
|
|
3,050
|
|
|||
Balance, September 30, 2020
|
$
|
580
|
|
|
$
|
527
|
|
|
$
|
1,107
|
|
|
Three Months Ended September 30, 2020
|
|
Nine Months Ended September 30, 2020
|
||||
Operating lease costs
|
$
|
4,363
|
|
|
$
|
13,044
|
|
Short-term lease costs
|
352
|
|
|
1,401
|
|
||
Sublease income
|
(223
|
)
|
|
(720
|
)
|
||
Total net lease costs
|
$
|
4,492
|
|
|
$
|
13,725
|
|
|
As of September 30, 2020
|
||
Operating leases:
|
|
||
Operating lease right-of-use assets, net
|
$
|
51,604
|
|
|
|
||
Operating lease liabilities, current
|
$
|
18,109
|
|
Operating lease liabilities, non-current
|
61,882
|
|
|
Total operating lease liabilities
|
$
|
79,991
|
|
|
|
||
Weighted average remaining lease term (in years)
|
6.5
|
|
|
Weighted average discount rate
|
6.8
|
%
|
|
Nine Months Ended September 30, 2020
|
|
Nine Months Ended September 30, 2019
|
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
||||
Operating cash outflows from operating leases
|
$
|
15,335
|
|
|
$
|
11,212
|
|
|
|
|
|
||||
Lease liabilities arising from obtaining right-of-use assets:
|
|
|
|
||||
Operating leases
|
$
|
478
|
|
|
$
|
7,769
|
|
Years Ending December 31,
|
Amount
|
||
2020 (remaining three months)
|
$
|
4,264
|
|
2021
|
18,569
|
|
|
2022
|
15,082
|
|
|
2023
|
13,125
|
|
|
2024
|
11,796
|
|
|
2025
|
11,350
|
|
|
2026 and thereafter
|
26,497
|
|
|
Total lease payments
|
100,683
|
|
|
Less: imputed interest
|
(20,692
|
)
|
|
Total lease obligations
|
79,991
|
|
|
Less: current lease obligations
|
(18,109
|
)
|
|
Long-term lease obligations
|
$
|
61,882
|
|
|
As of September 30, 2020
|
|
As of December 31, 2019
|
||||
Product, subscription and support, current
|
$
|
478,235
|
|
|
$
|
508,580
|
|
Professional services, current
|
88,966
|
|
|
95,364
|
|
||
Total deferred revenue, current
|
567,201
|
|
|
603,944
|
|
||
Product, subscription and support, non-current
|
325,152
|
|
|
369,589
|
|
||
Professional services, non-current
|
1,262
|
|
|
1,034
|
|
||
Total deferred revenue, non-current
|
326,414
|
|
|
370,623
|
|
||
Total deferred revenue
|
$
|
893,615
|
|
|
$
|
974,567
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Deferred revenue, beginning of period
|
$
|
892,846
|
|
|
$
|
912,749
|
|
|
$
|
974,567
|
|
|
$
|
934,828
|
|
Billings for the period
|
239,229
|
|
|
248,572
|
|
|
612,130
|
|
|
651,895
|
|
||||
Revenue recognized
|
(238,460
|
)
|
|
(225,914
|
)
|
|
(693,082
|
)
|
|
(654,066
|
)
|
||||
Assumed in connection with acquisitions
|
—
|
|
|
—
|
|
|
—
|
|
|
2,750
|
|
||||
Deferred revenue, end of period
|
$
|
893,615
|
|
|
$
|
935,407
|
|
|
$
|
893,615
|
|
|
$
|
935,407
|
|
|
Total
|
|
Less than 1 year
|
|
1-2 years
|
|
2-3 years
|
|
More than 3 years
|
Deferred revenue
|
100%
|
|
63%
|
|
23%
|
|
10%
|
|
4%
|
Backlog
|
100%
|
|
45%
|
|
35%
|
|
16%
|
|
4%
|
•
|
during any calendar quarter commencing after the calendar quarter ended on September 30, 2018 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price of the 2024 Notes on each applicable trading day;
|
•
|
during the five business day period after any five consecutive trading day period (the "measurement period") in which the trading price per $1,000 principal amount of the 2024 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate for the notes on each such trading day;
|
•
|
if we call any or all of the 2024 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the relevant redemption date; or
|
•
|
upon the occurrence of specified corporate events, as specified in each indenture governing the 2024 Notes.
|
|
As of September 30, 2020
|
|
As of December 31, 2019
|
||||
|
2024 Notes
|
|
2024 Notes
|
||||
Liability component:
|
|
|
|
||||
Principal
|
$
|
600,000
|
|
|
$
|
600,000
|
|
Less: 2024 Notes discounts and issuance costs, net of amortization
|
(98,944
|
)
|
|
(117,078
|
)
|
||
Net carrying amount
|
$
|
501,056
|
|
|
$
|
482,922
|
|
|
|
|
|
||||
Equity component, net of issuance costs
|
$
|
138,064
|
|
|
$
|
138,064
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
2024 Notes
|
|
2024 Notes
|
|
2024 Notes
|
|
2024 Notes
|
||||||||
Coupon interest
|
$
|
1,313
|
|
|
$
|
1,313
|
|
|
$
|
3,938
|
|
|
$
|
3,145
|
|
Amortization of 2024 Notes discounts and issuance costs
|
6,119
|
|
|
5,825
|
|
|
18,133
|
|
|
17,264
|
|
||||
Total interest expense recognized
|
$
|
7,432
|
|
|
$
|
7,138
|
|
|
$
|
22,071
|
|
|
$
|
20,409
|
|
|
|
|
|
|
|
|
|
||||||||
Effective interest rate on the liability component
|
6.0
|
%
|
|
6.1
|
%
|
|
6.1
|
%
|
|
6.1
|
%
|
•
|
during any calendar quarter commencing after the calendar quarter ended on September 30, 2015 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the 2035 Notes of the relevant series on each applicable trading day;
|
•
|
during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of Series A Notes or Series B Notes, as applicable, for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate for the notes of the relevant series on each such trading day;
|
•
|
if we call any or all of the 2035 Notes of a series for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the relevant redemption date; or
|
•
|
upon the occurrence of specified corporate events, as specified in each indenture governing the 2035 Notes.
|
|
As of September 30, 2020
|
|
As of December 31, 2019
|
||||||||||||
|
Series A Notes
|
|
Series B Notes
|
|
Series A Notes
|
|
Series B Notes
|
||||||||
Liability component:
|
|
|
|
|
|
|
|
||||||||
Principal
|
$
|
23,436
|
|
|
$
|
460,000
|
|
|
$
|
119,828
|
|
|
$
|
460,000
|
|
Less: 2035 Notes discount and issuance costs, net of amortization
|
—
|
|
|
(34,843
|
)
|
|
(2,540
|
)
|
|
(49,650
|
)
|
||||
Net carrying amount
|
$
|
23,436
|
|
|
$
|
425,157
|
|
|
$
|
117,288
|
|
|
$
|
410,350
|
|
|
|
|
|
|
|
|
|
||||||||
Equity component, net of issuance costs
|
$
|
15,559
|
|
|
$
|
117,834
|
|
|
$
|
79,555
|
|
|
$
|
117,834
|
|
|
Three Months Ended September 30, 2020
|
|
Nine Months Ended September 30, 2020
|
||||||||||||
|
Series A Notes
|
|
Series B Notes
|
|
Series A Notes
|
|
Series B Notes
|
||||||||
Coupon interest
|
$
|
59
|
|
|
$
|
1,869
|
|
|
$
|
577
|
|
|
$
|
5,606
|
|
Amortization of 2035 Notes discount and issuance costs
|
—
|
|
|
4,994
|
|
|
2,540
|
|
|
14,806
|
|
||||
Total interest expense recognized
|
$
|
59
|
|
|
$
|
6,863
|
|
|
$
|
3,117
|
|
|
$
|
20,412
|
|
|
|
|
|
|
|
|
|
||||||||
Effective interest rate on the liability component
|
1.0
|
%
|
|
6.5
|
%
|
|
3.5
|
%
|
|
6.6
|
%
|
|
Three Months Ended September 30, 2019
|
|
Nine Months Ended September 30, 2019
|
||||||||||||
|
Series A Notes
|
|
Series B Notes
|
|
Series A Notes
|
|
Series B Notes
|
||||||||
Coupon interest
|
$
|
300
|
|
|
$
|
1,869
|
|
|
$
|
2,537
|
|
|
$
|
5,585
|
|
Amortization of 2035 Notes discount and issuance costs
|
1,460
|
|
|
4,763
|
|
|
11,785
|
|
|
14,123
|
|
||||
Total interest expense recognized
|
$
|
1,760
|
|
|
$
|
6,632
|
|
|
$
|
14,322
|
|
|
$
|
19,708
|
|
|
|
|
|
|
|
|
|
||||||||
Effective interest rate on the liability component
|
6.2
|
%
|
|
6.6
|
%
|
|
6.3
|
%
|
|
6.7
|
%
|
|
As of September 30, 2020
|
|
As of December 31, 2019
|
||
Reserved under stock award plans
|
40,148
|
|
|
37,982
|
|
Convertible senior notes
|
33,856
|
|
|
35,442
|
|
Employee Stock Purchase Plan (ESPP)
|
4,316
|
|
|
3,428
|
|
Total
|
78,320
|
|
|
76,852
|
|
|
Options Outstanding
|
|||||||||||
|
Number of
Shares |
|
Weighted-
Average
Exercise
Price
(per share)
|
|
Weighted-
Average Contractual Life (years) |
|
Aggregate
Intrinsic Value |
|||||
Balance — December 31, 2019
|
4,391
|
|
|
$
|
9.07
|
|
|
5.2
|
|
$
|
45,931
|
|
Exercised
|
(1,144
|
)
|
|
5.48
|
|
|
|
|
8,863
|
|
||
Cancelled
|
(248
|
)
|
|
15.82
|
|
|
|
|
|
|||
Balance — September 30, 2020
|
2,999
|
|
|
$
|
9.87
|
|
|
4.7
|
|
$
|
20,115
|
|
Options exercisable — September 30, 2020
|
2,207
|
|
|
$
|
12.06
|
|
|
3.5
|
|
$
|
13,327
|
|
|
Number of
Shares |
|
Weighted-
Average Grant Date Fair Value (per share) |
|
Weighted-
Average Contractual Life (years) |
|
Aggregate
Intrinsic Value |
|||||
Unvested balance — December 31, 2019
|
21,697
|
|
|
$
|
16.07
|
|
|
1.2
|
|
$
|
358,651
|
|
Granted
|
14,654
|
|
|
15.03
|
|
|
|
|
|
|||
Vested
|
(8,150
|
)
|
|
15.20
|
|
|
|
|
|
|||
Cancelled
|
(6,568
|
)
|
|
16.54
|
|
|
|
|
|
|||
Unvested balance — September 30, 2020
|
21,633
|
|
|
$
|
15.34
|
|
|
1.4
|
|
$
|
267,163
|
|
Unvested awards for which the requisite service period has not been rendered and vesting is subject to the achievement of a performance condition — September 30, 2020
|
1,574
|
|
|
$
|
17.86
|
|
|
1.6
|
|
$
|
19,435
|
|
|
Three and Nine Months Ended September 30, 2020
|
|
Three and Nine Months Ended September 30, 2019
|
Fair value of common stock
|
$13.06
|
|
$14.59
|
Risk-free interest rate
|
0.17% - 0.18%
|
|
2.21% - 2.35%
|
Expected term (in years)
|
0.5 - 1.0
|
|
0.5 - 1.0
|
Volatility
|
52% - 68%
|
|
39%
|
Dividend yield
|
—%
|
|
—%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Cost of product, subscription and support revenue
|
$
|
4,245
|
|
|
$
|
3,590
|
|
|
$
|
12,037
|
|
|
$
|
11,501
|
|
Cost of professional services revenue
|
5,015
|
|
|
3,289
|
|
|
13,366
|
|
|
10,639
|
|
||||
Research and development
|
11,830
|
|
|
10,718
|
|
|
33,236
|
|
|
35,031
|
|
||||
Sales and marketing
|
13,306
|
|
|
12,252
|
|
|
36,202
|
|
|
38,019
|
|
||||
General and administrative
|
5,952
|
|
|
6,839
|
|
|
18,438
|
|
|
21,972
|
|
||||
Restructuring
|
21
|
|
|
—
|
|
|
314
|
|
|
—
|
|
||||
Total
|
$
|
40,369
|
|
|
$
|
36,688
|
|
|
$
|
113,593
|
|
|
$
|
117,162
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(39,118
|
)
|
|
$
|
(65,495
|
)
|
|
$
|
(168,700
|
)
|
|
$
|
(208,193
|
)
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted average number of shares outstanding—basic and diluted
|
224,807
|
|
|
212,207
|
|
|
221,329
|
|
|
204,855
|
|
||||
Net loss per share—basic and diluted
|
$
|
(0.17
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
(0.76
|
)
|
|
$
|
(1.02
|
)
|
|
As of September 30,
|
||||
|
2020
|
|
2019
|
||
Options to purchase common stock
|
2,999
|
|
|
4,795
|
|
Unvested restricted stock awards and units
|
21,633
|
|
|
23,227
|
|
Convertible senior notes
|
33,856
|
|
|
35,442
|
|
ESPP shares
|
744
|
|
|
691
|
|
|
Three Months Ended September 30,
|
||||||||||||||||||||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||||||||||
|
U.S.
|
|
EMEA
|
|
APAC
|
|
Other
|
||||||||||||||||||||||||
Product and related subscription and support
|
$
|
61,576
|
|
|
$
|
70,468
|
|
|
$
|
21,616
|
|
|
$
|
21,296
|
|
|
$
|
21,373
|
|
|
$
|
21,666
|
|
|
$
|
4,166
|
|
|
$
|
4,405
|
|
Platform, cloud subscription and managed services
|
50,173
|
|
|
42,593
|
|
|
10,937
|
|
|
9,197
|
|
|
9,969
|
|
|
7,461
|
|
|
4,026
|
|
|
2,738
|
|
||||||||
Professional services
|
37,486
|
|
|
30,275
|
|
|
7,049
|
|
|
7,675
|
|
|
4,890
|
|
|
4,726
|
|
|
5,199
|
|
|
3,414
|
|
||||||||
Total revenue
|
$
|
149,235
|
|
|
$
|
143,336
|
|
|
$
|
39,602
|
|
|
$
|
38,168
|
|
|
$
|
36,232
|
|
|
$
|
33,853
|
|
|
$
|
13,391
|
|
|
$
|
10,557
|
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||||||||||
|
U.S.
|
|
EMEA
|
|
APAC
|
|
Other
|
||||||||||||||||||||||||
Product and related subscription and support
|
$
|
180,071
|
|
|
$
|
207,359
|
|
|
$
|
62,698
|
|
|
$
|
67,197
|
|
|
$
|
62,660
|
|
|
$
|
64,785
|
|
|
$
|
12,794
|
|
|
$
|
14,431
|
|
Platform, cloud subscription and managed services
|
146,018
|
|
|
115,111
|
|
|
31,971
|
|
|
26,258
|
|
|
27,373
|
|
|
20,384
|
|
|
11,639
|
|
|
8,303
|
|
||||||||
Professional services
|
108,945
|
|
|
87,132
|
|
|
21,174
|
|
|
20,435
|
|
|
12,722
|
|
|
12,045
|
|
|
15,017
|
|
|
10,626
|
|
||||||||
Total revenue
|
$
|
435,034
|
|
|
$
|
409,602
|
|
|
$
|
115,843
|
|
|
$
|
113,890
|
|
|
$
|
102,755
|
|
|
$
|
97,214
|
|
|
$
|
39,450
|
|
|
$
|
33,360
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Product and related subscription and support
|
$
|
108,731
|
|
|
$
|
117,835
|
|
|
$
|
318,223
|
|
|
$
|
353,773
|
|
Platform, cloud subscription and managed services
|
75,105
|
|
|
61,988
|
|
|
217,001
|
|
|
170,055
|
|
||||
Professional services
|
54,624
|
|
|
46,091
|
|
|
157,858
|
|
|
130,238
|
|
||||
Total revenue
|
$
|
238,460
|
|
|
$
|
225,914
|
|
|
$
|
693,082
|
|
|
$
|
654,066
|
|
|
As of September 30, 2020
|
|
As of December 31, 2019
|
||||
Property and equipment, net:
|
|
|
|
||||
United States
|
$
|
77,435
|
|
|
$
|
85,287
|
|
International
|
6,562
|
|
|
8,525
|
|
||
Total property and equipment, net
|
$
|
83,997
|
|
|
$
|
93,812
|
|
•
|
the evolution of the threat landscape facing our customers and prospects;
|
•
|
our ability, and the effects of our efforts, to educate the market regarding the advantages of our security solutions;
|
•
|
our ability to continue to grow revenues, in particular annual recurring revenues from cloud and subscriptions;
|
•
|
our expected rate of decline in mature appliance revenues and associated subscription and support revenues;
|
•
|
our future financial and operating results;
|
•
|
our business plan and our ability to effectively manage our growth and associated investments;
|
•
|
our beliefs and objectives for future operations;
|
•
|
our ability to maintain our leadership position in advanced network security;
|
•
|
our ability to attract and retain customers and to expand our solutions footprint within each of these customers;
|
•
|
our expectations concerning customer retention rates as well as expectations for the value of subscriptions and services renewals;
|
•
|
our ability to maintain our competitive technological advantages against new entrants in our industry;
|
•
|
our ability to timely and effectively scale and adapt our existing technology;
|
•
|
our ability to innovate new products and bring them to market in a timely manner;
|
•
|
our ability to maintain, protect, and enhance our brand and intellectual property;
|
•
|
our ability to expand internationally;
|
•
|
the effects of increased competition in our market and our ability to compete effectively;
|
•
|
cost of revenue, including changes in costs associated with products, manufacturing and customer support;
|
•
|
trends in operating expenses, including changes in research and development, sales and marketing, and general and administrative expenses;
|
•
|
anticipated income tax rates;
|
•
|
potential attrition and other impacts associated with restructuring;
|
•
|
sufficiency of cash to meet cash needs for at least the next 12 months;
|
•
|
our ability to generate cash flows from operations and free cash flows;
|
•
|
our ability to capture new, and renew existing, contracts with the United States and international governments;
|
•
|
our expectations concerning relationships with third parties, including channel partners and logistics providers;
|
•
|
the release of new products;
|
•
|
economic and industry trends or trend analysis;
|
•
|
the impact of the COVID-19 pandemic and related public health measures on our business and the global economy;
|
•
|
the attraction, training, integration and retention of qualified employees and key personnel;
|
•
|
future acquisitions of or investments in complementary companies, products, subscriptions or technologies;
|
•
|
our expectations, beliefs, plans, intentions and strategies related to our acquisition of Verodin, Inc. ("Verodin"); and
|
•
|
the effects of seasonal trends on our results of operations.
|
|
Three Months Ended or as of
|
|
Nine Months Ended or as of
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Product, subscription and support revenue
|
$
|
183,836
|
|
|
$
|
179,823
|
|
|
$
|
535,224
|
|
|
$
|
523,828
|
|
Professional services revenue
|
54,624
|
|
|
46,091
|
|
|
157,858
|
|
|
130,238
|
|
||||
Total revenue
|
$
|
238,460
|
|
|
$
|
225,914
|
|
|
$
|
693,082
|
|
|
$
|
654,066
|
|
Year-over-year percentage increase
|
6
|
%
|
|
7
|
%
|
|
6
|
%
|
|
7
|
%
|
||||
Gross margin percentage
|
65
|
%
|
|
65
|
%
|
|
64
|
%
|
|
65
|
%
|
||||
Deferred revenue, (current and non-current)
|
$
|
893,615
|
|
|
$
|
935,407
|
|
|
$
|
893,615
|
|
|
$
|
935,407
|
|
Annualized recurring revenue
|
$
|
611,909
|
|
|
$
|
579,797
|
|
|
$
|
611,909
|
|
|
$
|
579,797
|
|
Billings (non-GAAP)
|
$
|
239,229
|
|
|
$
|
248,572
|
|
|
$
|
612,130
|
|
|
$
|
651,895
|
|
Net cash provided by operating activities
|
$
|
33,267
|
|
|
$
|
18,498
|
|
|
$
|
23,501
|
|
|
$
|
28,022
|
|
Free cash flow (non-GAAP)
|
$
|
28,625
|
|
|
$
|
8,123
|
|
|
$
|
1,303
|
|
|
$
|
(10,593
|
)
|
|
As of September 30,
|
||||||
|
2020
|
|
2019
|
||||
Deferred revenue, current
|
$
|
567,201
|
|
|
$
|
568,032
|
|
Deferred revenue, non-current
|
326,414
|
|
|
367,375
|
|
||
Total deferred revenue
|
$
|
893,615
|
|
|
$
|
935,407
|
|
|
As of September 30,
|
||||||
|
2020
|
|
2019
|
||||
Product and related subscription and support
|
$
|
298,040
|
|
|
$
|
313,035
|
|
Platform, cloud subscription and managed services
|
313,869
|
|
|
266,762
|
|
||
Total annualized recurring revenue
|
$
|
611,909
|
|
|
$
|
579,797
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Revenue
|
$
|
238,460
|
|
|
$
|
225,914
|
|
|
$
|
693,082
|
|
|
$
|
654,066
|
|
Add: deferred revenue, end of period
|
893,615
|
|
|
935,407
|
|
|
893,615
|
|
|
935,407
|
|
||||
Less: deferred revenue, beginning of period
|
(892,846
|
)
|
|
(912,749
|
)
|
|
(974,567
|
)
|
|
(934,828
|
)
|
||||
Less: deferred revenue assumed through acquisitions
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,750
|
)
|
||||
Billings (non-GAAP)
|
$
|
239,229
|
|
|
$
|
248,572
|
|
|
$
|
612,130
|
|
|
$
|
651,895
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Product and related subscription and support
|
$
|
98,897
|
|
|
$
|
108,621
|
|
|
$
|
253,493
|
|
|
$
|
321,910
|
|
Platform, cloud subscription and managed services
|
80,538
|
|
|
84,637
|
|
|
206,949
|
|
|
190,931
|
|
||||
Professional services
|
59,794
|
|
|
55,314
|
|
|
151,688
|
|
|
139,054
|
|
||||
Billings (non-GAAP)
|
$
|
239,229
|
|
|
$
|
248,572
|
|
|
$
|
612,130
|
|
|
$
|
651,895
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Net cash provided by operating activities
|
$
|
33,267
|
|
|
$
|
18,498
|
|
|
$
|
23,501
|
|
|
$
|
28,022
|
|
Less: purchase of property and equipment and demonstration units
|
(4,642
|
)
|
|
(10,375
|
)
|
|
(22,198
|
)
|
|
(38,615
|
)
|
||||
Free cash flow (non-GAAP)
|
$
|
28,625
|
|
|
$
|
8,123
|
|
|
$
|
1,303
|
|
|
$
|
(10,593
|
)
|
Net cash provided by (used in) investing activities
|
$
|
(125,139
|
)
|
|
$
|
(54,903
|
)
|
|
$
|
42,770
|
|
|
$
|
(156,165
|
)
|
Net cash provided by (used in) financing activities
|
$
|
1,776
|
|
|
$
|
1,664
|
|
|
$
|
(86,624
|
)
|
|
$
|
15,474
|
|
•
|
Product, subscription and support revenue. Our product, subscription and support revenue is generated from sales of our network, email, and endpoint security solutions deployed on the customer's premise (or in a hybrid on-premise/private cloud deployment), as well as our cloud-based security solutions, threat intelligence subscriptions, security validation and Helix security platforms, and managed detection and response services.
|
•
|
Professional services revenue. Professional services, which includes incident response, security assessments, and other strategic security consulting services, are offered on a time-and-material basis, through a fixed fee arrangement, or on a retainer basis. We recognize the associated revenue as the services are delivered. Some professional services and our Expertise-on-Demand subscription are prepaid, and revenue is deferred until services are delivered.
|
•
|
Cost of product, subscription and support revenue. Cost of product, subscription and support revenue primarily consists of costs paid to our third-party contract manufacturers for our appliances, other costs in our manufacturing operations department, personnel costs associated with maintaining our threat intelligence, managed detection and response services, and global customer support operations, and hosting costs paid to third party cloud platform providers. Personnel costs associated with our manufacturing operations department, our threat intelligence, our managed detection and response services and our global customer support organization consist of salaries, benefits, bonuses and stock-based compensation. Overhead costs consist of certain facilities, depreciation and information technology costs. Our cost of product, subscription and support revenue also includes product testing costs, shipping costs and allocated overhead costs. If revenue from sales of product, subscriptions and support declines, the cost of product, subscription and support revenue may increase as a percentage of product, subscription and support revenue due to the fixed nature of a portion of these costs. Additionally, our appliance related cost of goods sold is capitalized and amortized on a systematic basis that is consistent with the pattern of transfer to which the asset relates.
|
•
|
Cost of professional services revenue. Cost of professional services revenue primarily consists of personnel costs for our services organization and allocated overhead costs. If sales of our professional services decline or we are unable to maintain our changeability rates, our cost of professional services revenue may increase as a percentage of professional services revenue.
|
•
|
Research and development. Research and development expense consists primarily of personnel costs and allocated overhead. Research and development expense also includes prototype related expenses. We expect research and development expense to stay relatively flat in terms of absolute dollars and remain relatively flat or decrease slightly as a percentage of total revenue.
|
•
|
Sales and marketing. Sales and marketing expense consists primarily of personnel costs, incentive commission costs and allocated overhead. Commission costs are capitalized and amortized based on the useful life amortization period, taking into consideration the pattern of transfer to which the asset relates and the expected renewal periods during which renewal
|
•
|
General and administrative. General and administrative expense consists of personnel costs, professional service costs and allocated overhead. General and administrative personnel include our executive, finance, human resources, facilities and legal organizations. Professional service costs consist primarily of legal, auditing, accounting and other consulting costs. We expect general and administrative expense to stay relatively flat in terms of absolute dollars and remain relatively flat or decrease slightly as a percentage of total revenue.
|
•
|
Restructuring charges. In April 2020 and August 2020, we implemented restructuring plans designed to align our resources with the strategic initiatives of the business. These restructuring plans resulted in a reduction of 6% and less than 1%, respectively, of our total workforce as well as the exiting and downsizing of certain real estate facilities and the impairment of certain assets. The expenses incurred primarily consisted of employee severance charges and other termination benefits, as well as real estate and related fixed asset charges for the consolidation or exiting of certain leased facilities.
|
|
Three Months Ended September 30,
|
||||||||||||
|
2020
|
|
2019
|
||||||||||
|
Amount
|
|
% of total Revenue
|
|
Amount
|
|
% of total Revenue
|
||||||
|
(Dollars in thousands)
|
||||||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||
Product, subscription and support
|
$
|
183,836
|
|
|
77
|
%
|
|
$
|
179,823
|
|
|
80
|
%
|
Professional services
|
54,624
|
|
|
23
|
|
|
46,091
|
|
|
20
|
|
||
Total revenue
|
238,460
|
|
|
100
|
|
|
225,914
|
|
|
100
|
|
||
Cost of revenue:
|
|
|
|
|
|
|
|
||||||
Product, subscription and support
|
54,933
|
|
|
23
|
|
|
54,272
|
|
|
24
|
|
||
Professional services
|
29,473
|
|
|
12
|
|
|
24,948
|
|
|
11
|
|
||
Total cost of revenue
|
84,406
|
|
|
35
|
|
|
79,220
|
|
|
35
|
|
||
Total gross profit
|
154,054
|
|
|
65
|
|
|
146,694
|
|
|
65
|
|
||
Operating expenses:
|
|
|
|
|
|
|
|
||||||
Research and development
|
61,662
|
|
|
26
|
|
|
68,857
|
|
|
30
|
|
||
Sales and marketing
|
93,961
|
|
|
39
|
|
|
98,355
|
|
|
44
|
|
||
General and administrative
|
23,096
|
|
|
10
|
|
|
27,717
|
|
|
12
|
|
||
Restructuring charges
|
1,488
|
|
|
1
|
|
|
6,481
|
|
|
3
|
|
||
Total operating expenses
|
180,207
|
|
|
76
|
|
|
201,410
|
|
|
89
|
|
||
Operating loss
|
(26,153
|
)
|
|
(11
|
)
|
|
(54,716
|
)
|
|
(24
|
)
|
||
Interest income
|
2,164
|
|
|
1
|
|
|
5,275
|
|
|
2
|
|
||
Interest expense
|
(14,353
|
)
|
|
(6
|
)
|
|
(15,554
|
)
|
|
(7
|
)
|
||
Other income, net
|
157
|
|
|
—
|
|
|
40
|
|
|
—
|
|
||
Loss before income taxes
|
(38,185
|
)
|
|
(16
|
)
|
|
(64,955
|
)
|
|
(29
|
)
|
||
Provision for income taxes
|
933
|
|
|
—
|
|
|
540
|
|
|
—
|
|
||
Net loss
|
$
|
(39,118
|
)
|
|
(16
|
)%
|
|
$
|
(65,495
|
)
|
|
(29
|
)%
|
|
Three Months Ended September 30,
|
|||||||||||||||||||
|
2020
|
|
2019
|
|
Change
|
|||||||||||||||
|
Amount
|
|
% of Total Revenue
|
|
Amount
|
|
% of Total Revenue
|
|
Amount
|
|
%
|
|||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product, subscription and support
|
$
|
183,836
|
|
|
77
|
%
|
|
$
|
179,823
|
|
|
80
|
%
|
|
$
|
4,013
|
|
|
2
|
%
|
Professional services
|
54,624
|
|
|
23
|
|
|
46,091
|
|
|
20
|
|
|
8,533
|
|
|
19
|
|
|||
Total revenue
|
$
|
238,460
|
|
|
100
|
%
|
|
$
|
225,914
|
|
|
100
|
%
|
|
$
|
12,546
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product, subscription and support by type:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product and related subscription and support
|
$
|
108,731
|
|
|
46
|
%
|
|
$
|
117,835
|
|
|
52
|
%
|
|
$
|
(9,104
|
)
|
|
(8
|
)%
|
Platform, cloud subscription and managed services
|
75,105
|
|
|
31
|
|
|
61,988
|
|
|
28
|
|
|
13,117
|
|
|
21
|
|
|||
Total product, subscription and support
|
$
|
183,836
|
|
|
77
|
%
|
|
$
|
179,823
|
|
|
80
|
%
|
|
$
|
4,013
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Revenue by geographic region:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S.
|
$
|
149,235
|
|
|
63
|
%
|
|
$
|
143,336
|
|
|
63
|
%
|
|
$
|
5,899
|
|
|
4
|
%
|
EMEA
|
39,602
|
|
|
17
|
|
|
38,168
|
|
|
17
|
|
|
1,434
|
|
|
4
|
|
|||
APAC
|
36,232
|
|
|
15
|
|
|
33,853
|
|
|
15
|
|
|
2,379
|
|
|
7
|
|
|||
Other
|
13,391
|
|
|
5
|
|
|
10,557
|
|
|
5
|
|
|
2,834
|
|
|
27
|
|
|||
Total revenue
|
$
|
238,460
|
|
|
100
|
%
|
|
$
|
225,914
|
|
|
100
|
%
|
|
$
|
12,546
|
|
|
6
|
%
|
|
Three Months Ended September 30,
|
|||||||||||||||||||
|
2020
|
|
2019
|
|
Change
|
|||||||||||||||
|
Amount
|
|
Gross
Margin
|
|
Amount
|
|
Gross
Margin
|
|
Amount
|
|
%
|
|||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product, subscription and support
|
$
|
54,933
|
|
|
|
|
$
|
54,272
|
|
|
|
|
$
|
661
|
|
|
1
|
%
|
||
Professional services
|
29,473
|
|
|
|
|
24,948
|
|
|
|
|
4,525
|
|
|
18
|
|
|||||
Total cost of revenue
|
$
|
84,406
|
|
|
|
|
$
|
79,220
|
|
|
|
|
$
|
5,186
|
|
|
7
|
%
|
||
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product, subscription and support
|
|
|
70
|
%
|
|
|
|
70
|
%
|
|
|
|
|
|||||||
Professional services
|
|
|
46
|
%
|
|
|
|
46
|
%
|
|
|
|
|
|||||||
Total gross margin
|
|
|
65
|
%
|
|
|
|
65
|
%
|
|
|
|
|
|
Three Months Ended September 30,
|
|||||||||||||||||||
|
2020
|
|
2019
|
|
Change
|
|||||||||||||||
|
Amount
|
|
% of Total Revenue
|
|
Amount
|
|
% of Total Revenue
|
|
Amount
|
|
%
|
|||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Research and development
|
$
|
61,662
|
|
|
26
|
%
|
|
$
|
68,857
|
|
|
30
|
%
|
|
$
|
(7,195
|
)
|
|
(10
|
)%
|
Sales and marketing
|
93,961
|
|
|
39
|
|
|
98,355
|
|
|
44
|
|
|
(4,394
|
)
|
|
(4
|
)
|
|||
General and administrative
|
23,096
|
|
|
10
|
|
|
27,717
|
|
|
12
|
|
|
(4,621
|
)
|
|
(17
|
)
|
|||
Restructuring charges
|
1,488
|
|
|
1
|
|
|
6,481
|
|
|
3
|
|
|
(4,993
|
)
|
|
(77
|
)
|
|||
Total operating expenses
|
$
|
180,207
|
|
|
76
|
%
|
|
$
|
201,410
|
|
|
89
|
%
|
|
$
|
(21,203
|
)
|
|
(11
|
)%
|
Includes stock-based compensation expense of:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Research and development
|
$
|
11,830
|
|
|
|
|
$
|
10,718
|
|
|
|
|
|
|
|
|||||
Sales and marketing
|
13,306
|
|
|
|
|
12,252
|
|
|
|
|
|
|
|
|||||||
General and administrative
|
5,952
|
|
|
|
|
6,839
|
|
|
|
|
|
|
|
|||||||
Restructuring charges
|
21
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|||||||
Total
|
$
|
31,109
|
|
|
|
|
$
|
29,809
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Change
|
|||||||||||
|
2020
|
|
2019
|
|
Amount
|
|
%
|
|||||||
|
(Dollars in thousands)
|
|||||||||||||
Interest income
|
$
|
2,164
|
|
|
$
|
5,275
|
|
|
$
|
(3,111
|
)
|
|
(59
|
)%
|
|
Three Months Ended September 30,
|
|
Change
|
|||||||||||
|
2020
|
|
2019
|
|
Amount
|
|
%
|
|||||||
|
(Dollars in thousands)
|
|||||||||||||
Interest expense
|
$
|
(14,353
|
)
|
|
$
|
(15,554
|
)
|
|
$
|
1,201
|
|
|
(8
|
)%
|
|
Three Months Ended September 30,
|
|
Change
|
|||||||||||
|
2020
|
|
2019
|
|
Amount
|
|
%
|
|||||||
|
(Dollars in thousands)
|
|||||||||||||
Other income, net
|
$
|
157
|
|
|
$
|
40
|
|
|
$
|
117
|
|
|
293
|
%
|
|
Three Months Ended September 30,
|
||||||
|
2020
|
|
2019
|
||||
|
(Dollars in thousands)
|
||||||
Provision for income taxes
|
$
|
933
|
|
|
$
|
540
|
|
Effective tax rate
|
(2.4
|
)%
|
|
(0.8
|
)%
|
|
Nine Months Ended September 30, 2020
|
|||||||||||||||||||
|
2020
|
|
2019
|
|
Change
|
|||||||||||||||
|
Amount
|
|
% of Total Revenue
|
|
Amount
|
|
% of Total Revenue
|
|
Amount
|
|
%
|
|||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product, subscription and support
|
$
|
535,224
|
|
|
77
|
%
|
|
$
|
523,828
|
|
|
80
|
%
|
|
$
|
11,396
|
|
|
2
|
%
|
Professional services
|
157,858
|
|
|
23
|
|
|
130,238
|
|
|
20
|
|
|
27,620
|
|
|
21
|
|
|||
Total revenue
|
$
|
693,082
|
|
|
100
|
%
|
|
$
|
654,066
|
|
|
100
|
%
|
|
$
|
39,016
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product, subscription and support by type:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product and related subscription and support
|
$
|
318,223
|
|
|
46
|
%
|
|
$
|
353,773
|
|
|
54
|
%
|
|
$
|
(35,550
|
)
|
|
(10
|
)%
|
Platform, cloud subscription and managed services
|
217,001
|
|
|
31
|
|
|
170,055
|
|
|
26
|
|
|
46,946
|
|
|
28
|
|
|||
Total product, subscription and support
|
$
|
535,224
|
|
|
77
|
%
|
|
$
|
523,828
|
|
|
80
|
%
|
|
$
|
11,396
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Revenue by geographic region:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
United States
|
$
|
435,034
|
|
|
62
|
%
|
|
$
|
409,602
|
|
|
63
|
%
|
|
$
|
25,432
|
|
|
6
|
%
|
EMEA
|
115,844
|
|
|
17
|
|
|
113,890
|
|
|
17
|
|
|
1,954
|
|
|
2
|
|
|||
APAC
|
102,755
|
|
|
15
|
|
|
97,214
|
|
|
15
|
|
|
5,541
|
|
|
6
|
|
|||
Other
|
39,449
|
|
|
6
|
|
|
33,360
|
|
|
5
|
|
|
6,089
|
|
|
18
|
|
|||
Total revenue
|
$
|
693,082
|
|
|
100
|
%
|
|
$
|
654,066
|
|
|
100
|
%
|
|
$
|
39,016
|
|
|
6
|
%
|
|
Nine Months Ended September 30,
|
|||||||||||||||||||
|
2020
|
|
2019
|
|
Change
|
|||||||||||||||
|
Amount
|
|
Gross
Margin
|
|
Amount
|
|
Gross
Margin
|
|
Amount
|
|
%
|
|||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product, subscription and support
|
$
|
162,095
|
|
|
|
|
$
|
155,938
|
|
|
|
|
$
|
6,157
|
|
|
4
|
%
|
||
Professional services
|
84,889
|
|
|
|
|
72,243
|
|
|
|
|
12,646
|
|
|
18
|
|
|||||
Total cost of revenue
|
$
|
246,984
|
|
|
|
|
$
|
228,181
|
|
|
|
|
$
|
18,803
|
|
|
8
|
%
|
||
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product, subscription and support
|
|
|
70
|
%
|
|
|
|
70
|
%
|
|
|
|
|
|||||||
Professional services
|
|
|
46
|
%
|
|
|
|
45
|
%
|
|
|
|
|
|||||||
Total gross margin
|
|
|
64
|
%
|
|
|
|
65
|
%
|
|
|
|
|
|
Nine Months Ended September 30,
|
|||||||||||||||||||
|
2020
|
|
2019
|
|
Change
|
|||||||||||||||
|
Amount
|
|
% of Total Revenue
|
|
Amount
|
|
% of Total Revenue
|
|
Amount
|
|
%
|
|||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Research and development
|
$
|
189,762
|
|
|
27
|
%
|
|
$
|
203,790
|
|
|
31
|
%
|
|
$
|
(14,028
|
)
|
|
(7
|
)%
|
Sales and marketing
|
284,202
|
|
|
41
|
|
|
303,745
|
|
|
46
|
|
|
(19,543
|
)
|
|
(6
|
)
|
|||
General and administrative
|
75,806
|
|
|
11
|
|
|
83,019
|
|
|
13
|
|
|
(7,213
|
)
|
|
(9
|
)
|
|||
Restructuring charges
|
25,020
|
|
|
4
|
|
|
10,280
|
|
|
2
|
|
|
14,740
|
|
|
143
|
|
|||
Total operating expenses
|
$
|
574,790
|
|
|
83
|
%
|
|
$
|
600,834
|
|
|
92
|
%
|
|
$
|
(26,044
|
)
|
|
(4
|
)%
|
Includes stock-based compensation expense of:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Research and development
|
$
|
33,236
|
|
|
|
|
$
|
35,031
|
|
|
|
|
|
|
|
|||||
Sales and marketing
|
36,202
|
|
|
|
|
38,019
|
|
|
|
|
|
|
|
|||||||
General and administrative
|
18,438
|
|
|
|
|
21,972
|
|
|
|
|
|
|
|
|||||||
Restructuring charges
|
314
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|||||||
Total
|
$
|
88,190
|
|
|
|
|
$
|
95,022
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
Change
|
|||||||||||
|
2020
|
|
2019
|
|
Amount
|
|
%
|
|||||||
|
(Dollars in thousands)
|
|||||||||||||
Interest expense
|
$
|
(45,555
|
)
|
|
$
|
(46,224
|
)
|
|
$
|
669
|
|
|
(1
|
)%
|
|
Nine Months Ended September 30,
|
|
Change
|
|||||||||||
|
2020
|
|
2019
|
|
Amount
|
|
%
|
|||||||
|
(Dollars in thousands)
|
|||||||||||||
Other expense, net
|
$
|
(951
|
)
|
|
$
|
(1,018
|
)
|
|
$
|
67
|
|
|
(7
|
)%
|
|
Nine Months Ended September 30,
|
||||||
|
2020
|
|
2019
|
||||
|
(Dollars in thousands)
|
||||||
Provision for income taxes
|
$
|
2,952
|
|
|
$
|
3,262
|
|
Effective tax rate
|
(1.8
|
)%
|
|
(1.6
|
)%
|
|
As of September 30, 2020
|
|
As of December 31, 2019
|
||||
|
(In thousands)
|
||||||
Cash and cash equivalents
|
$
|
314,250
|
|
|
$
|
334,603
|
|
Short-term investments
|
$
|
627,892
|
|
|
$
|
704,955
|
|
|
Nine Months Ended September 30,
|
||||||
2020
|
|
2019
|
|||||
|
(In thousands)
|
||||||
Cash provided by operating activities
|
$
|
23,501
|
|
|
$
|
28,022
|
|
Cash provided by (used in) investing activities
|
42,770
|
|
|
(156,165
|
)
|
||
Cash provided by (used in) financing activities
|
(86,624
|
)
|
|
15,474
|
|
||
Net decrease in cash and cash equivalents
|
$
|
(20,353
|
)
|
|
$
|
(112,669
|
)
|
•
|
greater name recognition, longer operating histories and larger customer bases;
|
•
|
larger sales and marketing budgets and resources;
|
•
|
broader distribution and established relationships with channel and distribution partners and customers;
|
•
|
greater customer support resources;
|
•
|
greater resources to make acquisitions or enter into strategic partnerships;
|
•
|
lower labor and research and development costs;
|
•
|
larger and more mature intellectual property portfolios; and
|
•
|
substantially greater financial, technical and other resources.
|
•
|
a loss of existing or potential customers or channel partners;
|
•
|
delayed or lost revenue and harm to our financial condition and results of operations;
|
•
|
a delay in attaining, or the failure to attain, market acceptance;
|
•
|
the expenditure of significant financial and product development resources in efforts to analyze, correct, eliminate, or work around errors or defects, to address and eliminate vulnerabilities, or to identify and ramp up production with alternative third-party manufacturers;
|
•
|
an increase in warranty and other claims, or an increase in the cost of servicing warranty and other claims, either of which would adversely affect our gross margins;
|
•
|
harm to our reputation or brand; and
|
•
|
claims and litigation, regulatory inquiries, or investigations, enforcement actions, and other claims and liabilities, all of which may be costly and burdensome and further harm our reputation.
|
•
|
our ability to attract new and retain existing customers or sell additional solutions to our existing customers;
|
•
|
our ability to offset decreases in appliance sales (and attached support) with increases in software, subscription and services sales;
|
•
|
potential adverse impacts from our re-allocation of resources from our mature appliance-based products to our cloud security and platform solutions;
|
•
|
changes in our mix of products, subscriptions and services sold, including changes in the average contract length for subscriptions and support;
|
•
|
the timing and success of new platform, subscription or service introductions by us or our competitors;
|
•
|
real or perceived reductions in the efficacy of our solutions by our customers or in the marketplace;
|
•
|
budgeting cycles, seasonal buying patterns and purchasing practices of customers;
|
•
|
the timing of new contracts or shipments of our products and length of our sales cycles;
|
•
|
changes in customer, distributor or reseller requirements or market needs;
|
•
|
changes in the growth rate of the IT security market, particularly the market for advanced threat detection and protection products, solutions that measure security effectiveness, or managed detection and response services;
|
•
|
any change in the competitive landscape of the IT security market, including consolidation among our customers or competitors and strategic partnerships entered into by and between our competitors;
|
•
|
deferral of orders from customers in anticipation of new products or product enhancements announced by us or our competitors;
|
•
|
our ability to successfully and continuously expand our business domestically and internationally;
|
•
|
reductions in customer retention rates for our subscriptions and support;
|
•
|
decisions by organizations to purchase IT security solutions from larger, more established security vendors or from their primary IT equipment vendors;
|
•
|
changes in our pricing policies or those of our competitors;
|
•
|
any disruption in, or termination of, our relationships with channel partners;
|
•
|
our inability to fulfill our customers’ orders due to supply chain delays or events that impact our manufacturers or their suppliers;
|
•
|
the timing and costs related to the development or acquisition of technologies or businesses or strategic partnerships;
|
•
|
the lack of synergy or the inability to realize expected synergies, resulting from acquisitions or strategic partnerships;
|
•
|
our inability to execute, complete or integrate efficiently any acquisition that we may undertake;
|
•
|
increased expenses, unforeseen liabilities, or write-downs and any impact on our operating results from any acquisitions we consummate;
|
•
|
insolvency or credit difficulties confronting our customers, affecting their ability to purchase or pay for our products, subscriptions and services, or confronting our key suppliers, particularly our sole source suppliers, which could disrupt our supply chain;
|
•
|
the cost and potential outcomes of future litigation;
|
•
|
seasonality or cyclical fluctuations in our business;
|
•
|
political, economic and social instability;
|
•
|
public health crises, such as the COVID-19 pandemic, and related measures to protect the public health;
|
•
|
future accounting pronouncements or changes in our accounting policies or practices;
|
•
|
the amount and timing of operating costs and capital expenditures related to the maintenance and expansion of our business, operations and infrastructure;
|
•
|
the amount and timing of costs related to any cost reduction initiatives and the impact of such initiatives; and
|
•
|
increases or decreases in our revenues and expenses caused by fluctuations in foreign currency exchange rates.
|
•
|
maintain, renew and expand our existing customer base;
|
•
|
continue to attract new customers;
|
•
|
increase revenues from existing customers through increased use of our products, subscriptions and services within their organizations;
|
•
|
improve the capabilities of our products and subscriptions through research and development;
|
•
|
continue to develop our cloud-based solutions;
|
•
|
maintain the rate at which customers purchase our subscriptions and support;
|
•
|
continue to successfully expand our business domestically and internationally; and
|
•
|
successfully compete with other companies.
|
•
|
diversion of management time and focus from operating our business to addressing acquisition integration challenges;
|
•
|
our ability to successfully achieve billings and revenue targets of acquired businesses;
|
•
|
coordination of research and development and sales and marketing functions;
|
•
|
integration of product and service offerings;
|
•
|
retention of key employees from the acquired company;
|
•
|
changes in relationships with strategic partners as a result of product acquisitions or strategic positioning resulting from the acquisition;
|
•
|
cultural challenges associated with integrating employees from the acquired company into our organization;
|
•
|
integration of the acquired company’s accounting, management information, human resources and other administrative systems, as well as the acquired operations, technology and rights into our offerings, and any unanticipated expenses related to such integration;
|
•
|
the need to implement or improve controls, procedures, and policies at a business that prior to the acquisition may have lacked sufficiently effective controls, procedures and policies;
|
•
|
financial reporting, revenue recognition or other financial or control deficiencies of the acquired company that we don’t adequately address and that cause our reported results to be incorrect;
|
•
|
liability for activities of the acquired company before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities;
|
•
|
completing the transaction and achieving or utilizing the anticipated benefits of the acquisition within the expected timeframe, or at all;
|
•
|
unanticipated write-offs or charges; and
|
•
|
litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former stockholders or other third parties which may differ from or be more significant than the risks our business faces.
|
•
|
effectively hiring, training and integrating new employees, particularly members of our sales and management teams;
|
•
|
further improving our key business applications, processes and IT infrastructure, including our data centers, to support our business needs;
|
•
|
continuing to refine our ability to forecast our bookings, billings, revenues, expenses and cash flows;
|
•
|
enhancing our information and communication systems to ensure that our employees and offices around the world are well coordinated and can effectively communicate with each other and our growing base of channel partners and customers;
|
•
|
improving our internal control over financial reporting and disclosure controls and procedures to ensure timely and accurate reporting of our operational and financial results; and
|
•
|
appropriately documenting and testing our IT systems and business processes.
|
•
|
increased purchasing power and leverage held by large customers in negotiating contractual arrangements with us;
|
•
|
more stringent or costly requirements imposed upon us in our support service contracts with such customers, including stricter support response times and penalties for any failure to meet support requirements;
|
•
|
more complicated implementation processes;
|
•
|
longer sales cycles and the associated risk that substantial time and resources may be spent on a potential customer that ultimately elects not to purchase our platform or purchases less than we hoped;
|
•
|
closer relationships with, and dependence upon, large technology companies who offer competitive products; and
|
•
|
more pressure for discounts and write-offs.
|
•
|
develop or enhance our products and subscriptions;
|
•
|
continue to expand our sales and marketing and research and development organizations;
|
•
|
acquire complementary technologies, products or businesses;
|
•
|
expand operations, in the United States or internationally;
|
•
|
hire, train and retain employees; or
|
•
|
respond to competitive pressures or unanticipated working capital requirements.
|
•
|
selling to governmental agencies can be highly competitive, expensive and time consuming, often requiring significant upfront time and expense without any assurance that such efforts will generate a sale;
|
•
|
government certification requirements applicable to our products may change and, in doing so, restrict our ability to sell into the U.S. federal government sector until we have attained the revised certification;
|
•
|
government demand and payment for our products and services may be impacted by government shutdowns, public sector budgetary cycles, contracting requirements and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our products and services;
|
•
|
we sell our platform to governmental agencies through our indirect channel partners, and these agencies may have statutory, contractual or other legal rights to terminate contracts with our distributors and resellers for convenience or due to a default, and any such termination may adversely impact our future results of operations;
|
•
|
governments routinely investigate and audit government contractors’ administrative processes, and any unfavorable audit could result in the government refusing to continue buying our platform, which would adversely impact our revenue and
|
•
|
governments may require certain products purchased by it to be manufactured in the United States and other relatively high-cost manufacturing locations, and we may not manufacture all products in locations that meet these requirements, affecting our ability to sell these products to governmental agencies.
|
•
|
maintain and expand our customer base and the ways in which customers use our products and services;
|
•
|
expand revenue from existing customers through increased or broader use of our products, subscriptions and services within their organizations;
|
•
|
grow our revenues from software, subscriptions and recent offerings from acquisitions such as Verodin;
|
•
|
convince customers to allocate a fixed portion of their annual IT budgets to our products and services;
|
•
|
improve the performance and capabilities of our platform through research and development;
|
•
|
effectively expand our business domestically and internationally; and
|
•
|
successfully compete with other companies that currently provide, or may in the future provide, solutions like ours that protect against advanced cyber attacks, measure security effectiveness, or investigate and respond to attacks.
|
•
|
greater difficulty in enforcing contracts and managing collections, as well as longer collection periods;
|
•
|
higher costs of doing business internationally, including costs incurred in establishing and maintaining office space and equipment for our international operations;
|
•
|
fluctuations in exchange rates between the U.S. dollar and foreign currencies in markets where we do business, such as the British Pound Sterling, which experienced a sharp decline in value compared to the U.S. dollar and other currencies;
|
•
|
management communication and integration problems resulting from cultural and geographic dispersion;
|
•
|
risks associated with trade restrictions and foreign legal requirements, including any importation, certification, and localization of our platform that may be required in foreign countries and any changes in trade relations and restrictions;
|
•
|
greater risk of unexpected changes in foreign and domestic regulatory practices, tariffs and tax laws and treaties, including regulatory and trade policy changes adopted by the current administration;
|
•
|
compliance with anti-bribery laws, including, without limitation, compliance with the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.S. Travel Act and the U.K. Bribery Act 2010, violations of which could lead to significant fines, penalties and collateral consequences for our Company;
|
•
|
heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, financial statements;
|
•
|
the uncertainty of protection for intellectual property rights in some countries;
|
•
|
foreign exchange controls or tax regulations that might prevent us from repatriating cash earned outside the United States;
|
•
|
general economic, political and social conditions in these foreign markets, including the perception of doing business with U.S. based companies and changes in regulatory requirements that impact our operating strategies, access to global markets or hiring;
|
•
|
political and economic instability in some countries, such as those caused by the 2016 U.S. presidential election and the withdrawal of the United Kingdom from the European Union, commonly referred to as "Brexit";
|
•
|
increased exposure to public health issues such as the current COVID-19 pandemic, and related industry and governmental actions to address these issues; and
|
•
|
double taxation of our international earnings and potentially adverse tax consequences due to changes in the tax laws of the United States or the foreign jurisdictions in which we operate.
|
•
|
we may be more vulnerable to economic downturns, less able to withstand competitive pressures and less flexible in responding to changing business and economic conditions;
|
•
|
our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate or other purposes may be limited;
|
•
|
a substantial portion of our cash flows from operations in the future may be required for the payment of the principal amount of our existing indebtedness when it becomes due; and
|
•
|
we may elect to make cash payments upon any conversion of the convertible notes, which would reduce our cash on hand.
|
•
|
whether our results of operations, and in particular, our revenue growth rates, meet the expectations of securities analysts or investors;
|
•
|
actual or anticipated changes in the expectations of investors or securities analysts, whether as a result of our forward-looking statements, our failure to meet such expectation or otherwise;
|
•
|
announcements of new products, services or technologies, commercial relationships, acquisitions or other events by us or our competitors;
|
•
|
changes in how customers perceive the effectiveness of our platform in protecting against advanced cyber attacks or other reputational harm;
|
•
|
publicity concerning cyber attacks in general or high profile cyber attacks against specific organizations;
|
•
|
price and volume fluctuations in the overall stock market from time to time;
|
•
|
significant volatility in the market price and trading volume of technology and/or growth companies in general and of companies in the IT security industry in particular;
|
•
|
fluctuations in the trading volume of our shares or the size of our public float;
|
•
|
actual or anticipated changes or fluctuations in our results of operations;
|
•
|
litigation involving us, our industry, or both;
|
•
|
regulatory developments in the United States, foreign countries or both;
|
•
|
general economic conditions and trends;
|
•
|
natural disasters or other catastrophic events;
|
•
|
public health crises and related measures to protect the public health, such as the COVID-19 pandemic;
|
•
|
actual or perceived security breaches that we or our service providers may suffer;
|
•
|
sales of large blocks of our common stock or substantial future sales by our directors, executive officers, employees and significant stockholders; and
|
•
|
departures of key personnel.
|
•
|
a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our board of directors;
|
•
|
the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror;
|
•
|
the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;
|
•
|
a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;
|
•
|
the requirement that a special meeting of stockholders may be called only by our board of directors, the chairperson of our board of directors, our Chief Executive Officer or our President (in the absence of a Chief Executive Officer), which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;
|
•
|
the requirement for the affirmative vote of holders of at least 66 2/3% of the voting power of all of the then outstanding shares of the voting stock, voting together as a single class, to amend the provisions of our amended and restated certificate of incorporation relating to the management of our business (including our classified board structure) or certain provisions of our amended and restated bylaws, which may inhibit the ability of an acquiror to effect such amendments to facilitate an unsolicited takeover attempt;
|
•
|
the ability of our board of directors to amend the bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquiror to amend the bylaws to facilitate an unsolicited takeover attempt; and
|
•
|
advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of us.
|
Exhibit No.
|
Description of Exhibit
|
|
|
|
|
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
|
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document
|
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
|
101.LAB
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Inline XBRL Taxonomy Extension Label Linkbase Document
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101.PRE
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Inline XBRL Taxonomy Extension Presentation Linkbase Document
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104
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Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
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*
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Furnished herewith.
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FIREEYE, INC.
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Dated: October 30, 2020
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By:
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/s/ Frank E. Verdecanna
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Frank E. Verdecanna
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Executive Vice President, Chief Financial Officer and Chief Accounting Officer
(Principal Financial and Accounting Officer and duly authorized signatory)
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1.
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I have reviewed this Quarterly Report on Form 10-Q of FireEye, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: October 30, 2020
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/s/ Kevin R. Mandia
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Kevin R. Mandia
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Chief Executive Officer
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(Principal Executive Officer)
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1.
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I have reviewed this Quarterly Report on Form 10-Q of FireEye, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: October 30, 2020
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/s/ Frank E. Verdecanna
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Frank E. Verdecanna
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Executive Vice President, Chief Financial Officer and Chief Accounting Officer
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(Principal Financial and Accounting Officer)
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Date: October 30, 2020
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/s/ Kevin R. Mandia
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Kevin R. Mandia
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Chief Executive Officer
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(Principal Executive Officer)
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Date: October 30, 2020
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/s/ Frank E. Verdecanna
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Frank E. Verdecanna
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Executive Vice President, Chief Financial Officer and Chief Accounting Officer
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(Principal Financial and Accounting Officer)
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