x
|
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
¨
|
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
Delaware
|
|
20-2056195
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification Number)
|
Large accelerated filer
x
|
Accelerated filer
¨
|
Non-accelerated filer
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
¨
|
|
|
Page
|
|
|
|
Item 1.
|
||
|
Condensed Consolidated Balance Sheets as of
June 30, 2016 (Unaudited) and December 31, 2015
|
|
|
Condensed Consolidated Statements of Comprehensive Loss for the Three
and Six Months Ended June 30, 2016 and 2015 (Unaudited)
|
|
|
Condensed Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 2016 and 2015 (Unaudited)
|
|
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
|
|
|
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Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
|
|
|
|
|
|
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June 30,
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||||
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
289,113
|
|
|
$
|
412,305
|
|
Short-term investments
|
517,601
|
|
|
388,945
|
|
||
Accounts receivable, net
|
197,296
|
|
|
203,333
|
|
||
Current portion of deferred commissions
|
57,232
|
|
|
51,976
|
|
||
Prepaid expenses and other current assets
|
36,647
|
|
|
29,076
|
|
||
Total current assets
|
1,097,889
|
|
|
1,085,635
|
|
||
Deferred commissions, less current portion
|
39,716
|
|
|
33,016
|
|
||
Long-term investments
|
224,439
|
|
|
422,667
|
|
||
Property and equipment, net
|
166,551
|
|
|
144,714
|
|
||
Intangible assets, net
|
64,873
|
|
|
43,005
|
|
||
Goodwill
|
83,115
|
|
|
55,669
|
|
||
Other assets
|
37,755
|
|
|
22,346
|
|
||
Total assets
|
$
|
1,714,338
|
|
|
$
|
1,807,052
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
41,095
|
|
|
$
|
37,369
|
|
Accrued expenses and other current liabilities
|
113,131
|
|
|
101,264
|
|
||
Current portion of deferred revenue
|
697,855
|
|
|
593,003
|
|
||
Total current liabilities
|
852,081
|
|
|
731,636
|
|
||
Deferred revenue, less current portion
|
15,130
|
|
|
10,751
|
|
||
Convertible senior notes, net
|
490,891
|
|
|
474,534
|
|
||
Other long-term liabilities
|
31,954
|
|
|
23,317
|
|
||
Total liabilities
|
1,390,056
|
|
|
1,240,238
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock
|
164
|
|
|
160
|
|
||
Additional paid-in capital
|
1,268,714
|
|
|
1,140,545
|
|
||
Accumulated other comprehensive loss
|
(16,053
|
)
|
|
(16,882
|
)
|
||
Accumulated deficit
|
(928,543
|
)
|
|
(557,009
|
)
|
||
Total stockholders’ equity
|
324,282
|
|
|
566,814
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,714,338
|
|
|
$
|
1,807,052
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Subscription
|
$
|
290,679
|
|
|
$
|
200,461
|
|
|
$
|
558,101
|
|
|
$
|
380,368
|
|
Professional services and other
|
50,633
|
|
|
46,255
|
|
|
89,090
|
|
|
78,312
|
|
||||
Total revenues
|
341,312
|
|
|
246,716
|
|
|
647,191
|
|
|
458,680
|
|
||||
Cost of revenues
(1)
:
|
|
|
|
|
|
|
|
||||||||
Subscription
|
56,360
|
|
|
45,392
|
|
|
109,141
|
|
|
87,836
|
|
||||
Professional services and other
|
40,289
|
|
|
34,325
|
|
|
81,768
|
|
|
68,780
|
|
||||
Total cost of revenues
|
96,649
|
|
|
79,717
|
|
|
190,909
|
|
|
156,616
|
|
||||
Gross profit
|
244,663
|
|
|
166,999
|
|
|
456,282
|
|
|
302,064
|
|
||||
Operating expenses
(1)
:
|
|
|
|
|
|
|
|
||||||||
Sales and marketing
|
186,506
|
|
|
136,574
|
|
|
345,116
|
|
|
246,631
|
|
||||
Research and development
|
70,364
|
|
|
53,276
|
|
|
136,288
|
|
|
103,124
|
|
||||
General and administrative
|
36,071
|
|
|
30,384
|
|
|
77,308
|
|
|
59,776
|
|
||||
Legal settlements
|
—
|
|
|
—
|
|
|
270,000
|
|
|
—
|
|
||||
Total operating expenses
|
292,941
|
|
|
220,234
|
|
|
828,712
|
|
|
409,531
|
|
||||
Loss from operations
|
(48,278
|
)
|
|
(53,235
|
)
|
|
(372,430
|
)
|
|
(107,467
|
)
|
||||
Interest expense
|
(8,248
|
)
|
|
(7,707
|
)
|
|
(16,357
|
)
|
|
(15,285
|
)
|
||||
Interest and other income (expense), net
|
2,260
|
|
|
521
|
|
|
2,962
|
|
|
5,225
|
|
||||
Loss before income taxes
|
(54,266
|
)
|
|
(60,421
|
)
|
|
(385,825
|
)
|
|
(117,527
|
)
|
||||
Provision for (benefit from) income taxes
|
(4,641
|
)
|
|
1,504
|
|
|
(2,868
|
)
|
|
2,491
|
|
||||
Net loss
|
$
|
(49,625
|
)
|
|
$
|
(61,925
|
)
|
|
$
|
(382,957
|
)
|
|
$
|
(120,018
|
)
|
Net loss per share - basic and diluted
|
$
|
(0.30
|
)
|
|
$
|
(0.40
|
)
|
|
$
|
(2.35
|
)
|
|
$
|
(0.78
|
)
|
Weighted-average shares used to compute net loss per share - basic and diluted
|
163,838,755
|
|
|
154,465,367
|
|
|
162,952,721
|
|
|
153,041,433
|
|
||||
Other comprehensive gain (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
$
|
(1,989
|
)
|
|
$
|
3,720
|
|
|
$
|
(1,309
|
)
|
|
$
|
(339
|
)
|
Unrealized gain (loss) on investments, net of tax
|
505
|
|
|
(314
|
)
|
|
2,138
|
|
|
180
|
|
||||
Other comprehensive gain (loss), net of tax
|
(1,484
|
)
|
|
3,406
|
|
|
829
|
|
|
(159
|
)
|
||||
Comprehensive loss
|
$
|
(51,109
|
)
|
|
$
|
(58,519
|
)
|
|
$
|
(382,128
|
)
|
|
$
|
(120,177
|
)
|
(1)
|
Includes stock-based compensation as follows:
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Cost of revenues:
|
|
|
|
|
|
|
|
||||||||
Subscription
|
$
|
6,951
|
|
|
$
|
6,067
|
|
|
$
|
13,558
|
|
|
$
|
11,232
|
|
Professional services and other
|
6,136
|
|
|
5,771
|
|
|
12,895
|
|
|
10,984
|
|
||||
Sales and marketing
|
32,861
|
|
|
26,105
|
|
|
63,859
|
|
|
48,679
|
|
||||
Research and development
|
21,047
|
|
|
17,935
|
|
|
41,580
|
|
|
33,573
|
|
||||
General and administrative
|
11,070
|
|
|
10,468
|
|
|
21,481
|
|
|
19,952
|
|
||||
Total stock-based compensation
|
$
|
78,065
|
|
|
$
|
66,346
|
|
|
$
|
153,373
|
|
|
$
|
124,420
|
|
|
Six Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(382,957
|
)
|
|
$
|
(120,018
|
)
|
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
37,452
|
|
|
28,857
|
|
||
Amortization of premiums on investments
|
2,799
|
|
|
3,612
|
|
||
Amortization of deferred commissions
|
36,957
|
|
|
31,281
|
|
||
Amortization of debt discount and issuance costs
|
16,357
|
|
|
15,285
|
|
||
Stock-based compensation
|
153,373
|
|
|
124,420
|
|
||
Deferred income tax
|
(6,426
|
)
|
|
—
|
|
||
Other
|
532
|
|
|
(4,240
|
)
|
||
Changes in operating assets and liabilities, net of effect of acquisitions:
|
|
|
|
||||
Accounts receivable
|
6,967
|
|
|
11,339
|
|
||
Deferred commissions
|
(48,397
|
)
|
|
(32,832
|
)
|
||
Prepaid expenses and other assets
|
(10,001
|
)
|
|
(8,026
|
)
|
||
Accounts payable
|
(272
|
)
|
|
1,634
|
|
||
Deferred revenue
|
104,399
|
|
|
90,557
|
|
||
Accrued expenses and other liabilities
|
19,733
|
|
|
5,682
|
|
||
Net cash (used in) provided by operating activities
(1)
|
(69,484
|
)
|
|
147,551
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(52,929
|
)
|
|
(41,820
|
)
|
||
Business combinations, net of cash acquired
|
(34,297
|
)
|
|
(1,100
|
)
|
||
Purchases of other intangibles
|
(14,850
|
)
|
|
—
|
|
||
Purchases of investments
|
(180,365
|
)
|
|
(331,496
|
)
|
||
Purchase of strategic investment
|
—
|
|
|
(10,000
|
)
|
||
Sales of investments
|
92,885
|
|
|
138,362
|
|
||
Maturities of investments
|
158,520
|
|
|
146,660
|
|
||
Restricted cash
|
(611
|
)
|
|
66
|
|
||
Net cash used in investing activities
|
(31,647
|
)
|
|
(99,328
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Deferred payments on purchase of other intangibles
|
4,100
|
|
|
—
|
|
||
Proceeds from employee stock plans
|
34,151
|
|
|
41,684
|
|
||
Taxes paid related to net share settlement of equity awards
|
(59,786
|
)
|
|
(12,446
|
)
|
||
Payments on financing obligation
|
(223
|
)
|
|
—
|
|
||
Net cash (used in) provided by financing activities
(1)
|
(21,758
|
)
|
|
29,238
|
|
||
Foreign currency effect on cash and cash equivalents
|
(303
|
)
|
|
(4,562
|
)
|
||
Net (decrease) increase in cash and cash equivalents
|
(123,192
|
)
|
|
72,899
|
|
||
Cash and cash equivalents at beginning of period
|
412,305
|
|
|
252,455
|
|
||
Cash and cash equivalents at end of period
|
$
|
289,113
|
|
|
$
|
325,354
|
|
Supplemental disclosures of non-cash investing activities:
|
|
|
|
||||
Property and equipment included in accounts payable and accrued expenses
|
$
|
14,058
|
|
|
$
|
13,382
|
|
(1)
|
During the
six months ended
June 30, 2016
, we early adopted Accounting Standards Update 2016-09, "Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting." Refer to Note 2 Recent Accounting Pronouncements for further details. This resulted in a
$0.6 million
increase in net cash provided by operating activities and a corresponding
$0.6 million
decrease in net cash provided by financing activities for the
six months ended
June 30, 2015
.
|
•
|
The standard eliminates additional paid in capital (APIC) pools and requires excess tax benefits and tax deficiencies to be recorded in the income statement as a discrete item when the awards vest or are settled. The adoption of this guidance on a prospective basis resulted in the recognition of excess tax benefits in our provision for income taxes of
$1.7 million
for the
three and six months ended
June 30, 2016
.
|
•
|
The standard requires excess tax benefits to be recognized regardless of whether the benefit reduces taxes payable. The adoption of this guidance on a modified retrospective basis resulted in the recognition of a cumulative-effect adjustment of
$11.4 million
that reduced our accumulated deficit and increased our foreign long-term deferred income tax as of January 1, 2016. The previously unrecognized U.S. excess tax effects were recorded as a deferred tax asset net of a valuation allowance.
|
•
|
We have elected to continue to estimate forfeitures expected to occur to determine the amount of stock-based compensation cost to be recognized in each period. As such, the guidance relating to forfeitures did not have an impact on our accumulated deficit as of January 1, 2016.
|
•
|
We elected to apply the statement of cash flows guidance that cash flows related to excess tax benefits be presented as an operating activity retrospectively, which resulted in a
$0.6 million
increase to net cash provided by operating activities and a corresponding decrease to net cash provided by financing activities in the accompanying condensed consolidated statement of cash flows for the
six months ended
June 30, 2015
, as compared to the amounts previously reported.
|
•
|
The statement of cash flows guidance that cash flows related to employee taxes paid for withheld shares be presented as a financing activity had no impact on our condensed consolidated financial statements as we have historically presented such cash flows as a financing activity.
|
|
June 30, 2016
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
$
|
30,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
30,000
|
|
Corporate notes and bonds
|
613,680
|
|
|
1,014
|
|
|
(131
|
)
|
|
614,563
|
|
||||
Certificates of deposit
|
14,467
|
|
|
—
|
|
|
—
|
|
|
14,467
|
|
||||
U.S. government agency securities
|
82,945
|
|
|
67
|
|
|
(2
|
)
|
|
83,010
|
|
||||
Total available-for-sale securities
|
$
|
741,092
|
|
|
$
|
1,081
|
|
|
$
|
(133
|
)
|
|
$
|
742,040
|
|
|
December 31, 2015
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
$
|
32,430
|
|
|
$
|
2
|
|
|
$
|
(38
|
)
|
|
$
|
32,394
|
|
Corporate notes and bonds
|
617,054
|
|
|
7
|
|
|
(2,027
|
)
|
|
615,034
|
|
||||
Certificates of deposit
|
29,610
|
|
|
2
|
|
|
(17
|
)
|
|
29,595
|
|
||||
U.S. government agency securities
|
134,962
|
|
|
1
|
|
|
(374
|
)
|
|
134,589
|
|
||||
Total available-for-sale securities
|
$
|
814,056
|
|
|
$
|
12
|
|
|
$
|
(2,456
|
)
|
|
$
|
811,612
|
|
|
June 30, 2016
|
||
Due in 1 year or less
|
$
|
517,601
|
|
Due in 1 year through 2 years
|
224,439
|
|
|
Total
|
$
|
742,040
|
|
|
June 30, 2016
|
||||||||||||||||||||||
|
Less than 12 Months
|
|
12 Months or Greater
|
|
Total
|
||||||||||||||||||
|
Fair Value
|
|
Gross
Unrealized Losses |
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
||||||||||||
Corporate notes and bonds
|
$
|
201,213
|
|
|
$
|
(130
|
)
|
|
$
|
1,099
|
|
|
$
|
(1
|
)
|
|
$
|
202,312
|
|
|
$
|
(131
|
)
|
U.S. government agency securities
|
13,058
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
13,058
|
|
|
(2
|
)
|
||||||
Total
|
$
|
214,271
|
|
|
$
|
(132
|
)
|
|
$
|
1,099
|
|
|
$
|
(1
|
)
|
|
$
|
215,370
|
|
|
$
|
(133
|
)
|
|
December 31, 2015
|
||||||||||||||||||||||
|
Less than 12 Months
|
|
12 Months or Greater
|
|
Total
|
||||||||||||||||||
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
||||||||||||
Commercial paper
|
$
|
24,913
|
|
|
$
|
(38
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24,913
|
|
|
$
|
(38
|
)
|
Corporate notes and bonds
|
539,586
|
|
|
(1,897
|
)
|
|
60,099
|
|
|
(130
|
)
|
|
599,685
|
|
|
(2,027
|
)
|
||||||
Certificates of deposit
|
19,750
|
|
|
(17
|
)
|
|
—
|
|
|
—
|
|
|
19,750
|
|
|
(17
|
)
|
||||||
U.S. government agency securities
|
132,581
|
|
|
(374
|
)
|
|
—
|
|
|
—
|
|
|
132,581
|
|
|
(374
|
)
|
||||||
Total
|
$
|
716,830
|
|
|
$
|
(2,326
|
)
|
|
$
|
60,099
|
|
|
$
|
(130
|
)
|
|
$
|
776,929
|
|
|
$
|
(2,456
|
)
|
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Cash equivalents:
|
|
|
|
|
|
||||||
Money market funds
|
$
|
100,329
|
|
|
$
|
—
|
|
|
$
|
100,329
|
|
Short-term investments:
|
|
|
|
|
|
||||||
Commercial paper
|
—
|
|
|
30,000
|
|
|
30,000
|
|
|||
Corporate notes and bonds
|
—
|
|
|
416,099
|
|
|
416,099
|
|
|||
Certificates of deposit
|
—
|
|
|
9,362
|
|
|
9,362
|
|
|||
U.S. government agency securities
|
—
|
|
|
62,140
|
|
|
62,140
|
|
|||
Long-term investments:
|
|
|
|
|
|
||||||
Corporate notes and bonds
|
—
|
|
|
198,464
|
|
|
198,464
|
|
|||
Certificates of deposit
|
—
|
|
|
5,105
|
|
|
5,105
|
|
|||
U.S. government agency securities
|
—
|
|
|
20,870
|
|
|
20,870
|
|
|||
Total
|
$
|
100,329
|
|
|
$
|
742,040
|
|
|
$
|
842,369
|
|
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Cash equivalents:
|
|
|
|
|
|
||||||
Money market funds
|
$
|
263,515
|
|
|
$
|
—
|
|
|
$
|
263,515
|
|
Commercial paper
|
—
|
|
|
2,000
|
|
|
2,000
|
|
|||
Corporate notes and bonds
|
—
|
|
|
1,119
|
|
|
1,119
|
|
|||
Short-term investments:
|
|
|
|
|
|
||||||
Commercial paper
|
—
|
|
|
32,394
|
|
|
32,394
|
|
|||
Corporate notes and bonds
|
—
|
|
|
303,567
|
|
|
303,567
|
|
|||
Certificates of deposit
|
—
|
|
|
23,736
|
|
|
23,736
|
|
|||
U.S. government agency securities
|
—
|
|
|
29,248
|
|
|
29,248
|
|
|||
Long-term investments:
|
|
|
|
|
|
||||||
Corporate notes and bonds
|
—
|
|
|
311,467
|
|
|
311,467
|
|
|||
Certificates of deposit
|
—
|
|
|
5,859
|
|
|
5,859
|
|
|||
U.S. government agency securities
|
—
|
|
|
105,341
|
|
|
105,341
|
|
|||
Total
|
$
|
263,515
|
|
|
$
|
814,731
|
|
|
$
|
1,078,246
|
|
|
Purchase Price Allocation
(in thousands)
|
|
Useful Life
(in years)
|
||
Intangible assets:
|
|
|
|
||
Developed technology
|
$
|
8,100
|
|
|
6
|
Customer contracts and related relationships
|
500
|
|
|
1.5
|
|
Goodwill
|
15,258
|
|
|
|
|
Net tangible liabilities acquired
|
(1,339
|
)
|
|
|
|
Net deferred tax liabilities
(1)
|
(2,890
|
)
|
|
|
|
Total purchase price
|
$
|
19,629
|
|
|
|
(1)
|
Deferred tax liabilities, net primarily relates to purchased identifiable intangible assets and is shown net of deferred tax assets.
|
|
Purchase Price Allocation
(in thousands)
|
|
Useful Life
(in years)
|
||
Net tangible assets acquired
|
$
|
140
|
|
|
|
Intangible assets:
|
|
|
|
||
Developed technology
|
4,700
|
|
|
5
|
|
Customer contracts and related relationships
|
200
|
|
|
1.5
|
|
Goodwill
|
11,437
|
|
|
|
|
Net deferred tax liabilities
|
(2,015
|
)
|
|
|
|
Total purchase price
|
$
|
14,462
|
|
|
|
|
Carrying Amount
|
||
Balance as of December 31, 2015
|
$
|
55,669
|
|
Goodwill acquired
|
26,695
|
|
|
Foreign currency translation adjustments
|
751
|
|
|
Balance as of June 30, 2016
|
$
|
83,115
|
|
|
June 30, 2016
|
||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
Developed technology
|
$
|
80,265
|
|
|
$
|
(23,665
|
)
|
|
$
|
56,600
|
|
Other
|
9,275
|
|
|
(1,002
|
)
|
|
8,273
|
|
|||
Total intangible assets
|
$
|
89,540
|
|
|
$
|
(24,667
|
)
|
|
$
|
64,873
|
|
|
December 31, 2015
|
||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
Developed technology
|
$
|
58,144
|
|
|
$
|
(17,463
|
)
|
|
$
|
40,681
|
|
Other
|
3,695
|
|
|
(1,371
|
)
|
|
2,324
|
|
|||
Total intangible assets
|
$
|
61,839
|
|
|
$
|
(18,834
|
)
|
|
$
|
43,005
|
|
|
June 30,
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||||
Computer equipment and software
|
$
|
221,631
|
|
|
$
|
180,197
|
|
Leasehold improvements
|
33,853
|
|
|
31,659
|
|
||
Furniture and fixtures
|
28,972
|
|
|
26,017
|
|
||
Building
|
6,404
|
|
|
6,318
|
|
||
Construction in progress
|
2,626
|
|
|
1,886
|
|
||
|
293,486
|
|
|
246,077
|
|
||
Less: Accumulated depreciation
|
(126,935
|
)
|
|
(101,363
|
)
|
||
Total property and equipment, net
|
$
|
166,551
|
|
|
$
|
144,714
|
|
|
June 30,
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||||
Taxes payable
|
$
|
9,840
|
|
|
$
|
9,080
|
|
Bonuses and commissions
|
37,678
|
|
|
33,124
|
|
||
Accrued compensation
|
19,442
|
|
|
17,089
|
|
||
Other employee related liabilities
|
22,086
|
|
|
21,529
|
|
||
Other
|
24,085
|
|
|
20,442
|
|
||
Total accrued expenses and other current liabilities
|
$
|
113,131
|
|
|
$
|
101,264
|
|
•
|
during any calendar quarter commencing after the calendar quarter ending on
March 31, 2014
(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 the 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 on each applicable trading day;
|
•
|
during the
five
business day period after any
five
consecutive trading day period, or the measurement period, in which the trading price per
$1,000
principal amount of the 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 on each such trading day; or
|
•
|
upon the occurrence of specified corporate events.
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
Liability:
|
|
|
|
||||
Principal
|
$
|
575,000
|
|
|
$
|
575,000
|
|
Less: debt issuance cost and debt discount, net of amortization
|
(84,109
|
)
|
|
(100,466
|
)
|
||
Net carrying amount
|
$
|
490,891
|
|
|
$
|
474,534
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Amortization of debt issuance cost
|
$
|
442
|
|
|
$
|
413
|
|
|
$
|
877
|
|
|
$
|
820
|
|
Amortization of debt discount
|
7,806
|
|
|
7,294
|
|
|
15,480
|
|
|
14,465
|
|
||||
Total
|
$
|
8,248
|
|
|
$
|
7,707
|
|
|
$
|
16,357
|
|
|
$
|
15,285
|
|
Effective interest rate of the liability component
|
6.5%
|
|
June 30,
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||||
Foreign currency translation adjustment
|
$
|
(15,747
|
)
|
|
$
|
(14,438
|
)
|
Net unrealized loss on investments, net of tax
|
(306
|
)
|
|
(2,444
|
)
|
||
Accumulated other comprehensive loss
|
$
|
(16,053
|
)
|
|
$
|
(16,882
|
)
|
|
June 30, 2016
|
|
Stock option plans:
|
|
|
Options outstanding
|
6,902,902
|
|
RSUs
|
13,274,438
|
|
Stock awards available for future grants:
|
|
|
2012 Equity Incentive Plan
(1)
|
21,414,823
|
|
2012 Employee Stock Purchase Plan
(1)
|
8,850,836
|
|
Total reserved shares of common stock for future issuance
|
50,442,999
|
|
(1)
|
Refer to Note 12 for a description of these plans.
|
|
Number of
Shares
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual
Term (Years)
|
|
Aggregate
Intrinsic Value
(in thousands)
|
|||||
Outstanding at December 31, 2015
|
8,255,554
|
|
|
$
|
16.65
|
|
|
|
|
|
||
Granted
|
169,400
|
|
|
65.92
|
|
|
|
|
|
|||
Exercised
|
(579,504
|
)
|
|
5.28
|
|
|
|
|
$
|
35,876
|
|
|
Canceled
|
(126,735
|
)
|
|
58.05
|
|
|
|
|
|
|||
Outstanding at March 31, 2016
|
7,718,715
|
|
|
17.90
|
|
|
|
|
|
|||
Granted
|
131,835
|
|
|
68.36
|
|
|
|
|
|
|||
Exercised
|
(828,327
|
)
|
|
17.18
|
|
|
|
|
$
|
43,757
|
|
|
Canceled
|
(119,321
|
)
|
|
52.26
|
|
|
|
|
|
|||
Outstanding at June 30, 2016
|
6,902,902
|
|
|
$
|
18.36
|
|
|
5.73
|
|
$
|
335,012
|
|
Vested and expected to vest as of June 30, 2016
|
6,802,214
|
|
|
$
|
17.66
|
|
|
5.68
|
|
$
|
334,577
|
|
Vested and exercisable as of June 30, 2016
|
5,863,745
|
|
|
$
|
11.27
|
|
|
5.25
|
|
$
|
323,962
|
|
|
Number of
Shares
|
|
Weighted Average Grant Date Fair Value
(Per Share)
|
|
Aggregate
Intrinsic Value
(in thousands)
|
|||||
Outstanding at December 31, 2015
|
12,417,805
|
|
|
$
|
63.38
|
|
|
|
||
Granted
|
3,822,832
|
|
|
51.11
|
|
|
|
|||
Vested
|
(1,708,179
|
)
|
|
58.42
|
|
|
$
|
89,516
|
|
|
Forfeited
|
(370,545
|
)
|
|
64.43
|
|
|
|
|||
Outstanding at March 31, 2016
|
14,161,913
|
|
|
60.64
|
|
|
|
|||
Granted
|
805,680
|
|
|
67.75
|
|
|
|
|||
Vested
|
(1,285,704
|
)
|
|
53.70
|
|
|
$
|
86,693
|
|
|
Forfeited
|
(407,451
|
)
|
|
63.31
|
|
|
|
|||
Non-vested and outstanding at June 30, 2016
|
13,274,438
|
|
|
$
|
61.66
|
|
|
$
|
881,423
|
|
Expected to vest as of June 30, 2016
|
11,055,763
|
|
|
|
|
$
|
734,103
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(49,625
|
)
|
|
$
|
(61,925
|
)
|
|
$
|
(382,957
|
)
|
|
$
|
(120,018
|
)
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding—basic and diluted
|
163,838,755
|
|
|
154,465,367
|
|
|
162,952,721
|
|
|
153,041,433
|
|
||||
Net loss per share—basic and diluted:
|
$
|
(0.30
|
)
|
|
$
|
(0.40
|
)
|
|
$
|
(2.35
|
)
|
|
$
|
(0.78
|
)
|
|
June 30,
|
||||
|
2016
|
|
2015
|
||
Common stock options
|
6,902,902
|
|
|
12,017,564
|
|
Restricted stock units
|
13,274,438
|
|
|
13,079,988
|
|
Common stock subject to repurchase
|
—
|
|
|
21
|
|
ESPP obligations
|
288,467
|
|
|
196,836
|
|
Convertible senior notes
|
7,783,023
|
|
|
7,783,023
|
|
Warrants related to the issuance of convertible senior notes
|
7,783,023
|
|
|
7,783,023
|
|
Total potentially dilutive securities
|
36,031,853
|
|
|
40,860,455
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
North America
(1)
|
$
|
234,009
|
|
|
$
|
174,387
|
|
|
$
|
444,526
|
|
|
$
|
323,033
|
|
EMEA
(2)
|
82,065
|
|
|
55,803
|
|
|
156,346
|
|
|
104,333
|
|
||||
Asia Pacific and other
|
25,238
|
|
|
16,526
|
|
|
46,319
|
|
|
31,314
|
|
||||
Total revenues
|
$
|
341,312
|
|
|
$
|
246,716
|
|
|
$
|
647,191
|
|
|
$
|
458,680
|
|
|
June 30,
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||||
North America
(3)
|
$
|
120,909
|
|
|
$
|
104,085
|
|
EMEA
(2)
|
33,665
|
|
|
32,027
|
|
||
Asia Pacific and other
|
11,977
|
|
|
8,602
|
|
||
Total property and equipment, net
|
$
|
166,551
|
|
|
$
|
144,714
|
|
(1)
|
Revenues attributed to the United States were approximately
95%
of North America revenues for the three months ended
June 30, 2016
and
2015
, and
95%
and
94%
for the
six months ended
June 30, 2016
and
2015
, respectively.
|
(2)
|
Europe, the Middle East and Africa
|
(3)
|
Property and equipment, net attributed to the United States were approximately
97%
and
98%
of property and equipment, net attributable to North America as of
June 30, 2016
and
December 31, 2015
, respectively.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Enterprise Service Management solutions
|
$
|
264,667
|
|
|
$
|
186,082
|
|
|
$
|
510,529
|
|
|
$
|
353,286
|
|
IT Operations Management solutions
|
26,012
|
|
|
14,379
|
|
|
47,572
|
|
|
27,082
|
|
||||
Total subscription revenues
|
$
|
290,679
|
|
|
$
|
200,461
|
|
|
$
|
558,101
|
|
|
$
|
380,368
|
|
|
Three Months Ended June 30,
|
|
% Change
|
|
Six Months Ended June 30,
|
|
% Change
|
||||||||||||||
|
2016
|
|
2015
|
|
|
2016
|
|
2015
|
|
||||||||||||
|
(dollars in thousands)
|
|
|
|
(dollars in thousands)
|
|
|
||||||||||||||
Billings:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenues
|
$
|
341,312
|
|
|
$
|
246,716
|
|
|
38
|
%
|
|
$
|
647,191
|
|
|
$
|
458,680
|
|
|
41
|
%
|
Change in deferred revenue from the condensed consolidated statements of cash flows
|
33,596
|
|
|
34,696
|
|
|
(3
|
)%
|
|
104,399
|
|
|
90,557
|
|
|
15
|
%
|
||||
Total billings
|
$
|
374,908
|
|
|
$
|
281,412
|
|
|
33
|
%
|
|
$
|
751,590
|
|
|
$
|
549,237
|
|
|
37
|
%
|
|
Six Months Ended June 30,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Free cash flow:
|
|
|
|
|
|
|||||
Net cash (used in) provided by operating activities
|
$
|
(69,484
|
)
|
|
$
|
147,551
|
|
|
(147
|
)%
|
Purchases of property and equipment
|
(52,929
|
)
|
|
(41,820
|
)
|
|
27
|
%
|
||
Free cash flow
(1)
|
$
|
(122,413
|
)
|
|
$
|
105,731
|
|
|
(216
|
)%
|
•
|
The standard eliminates additional paid in capital (APIC) pools and requires excess tax benefits and tax deficiencies to be recorded in the income statement as a discrete item when the awards vest or are settled. The adoption of this guidance on a prospective basis resulted in the recognition of excess tax benefits in our provision for income taxes of
$1.7 million
for the
three and six months ended
June 30, 2016
.
|
•
|
The standard requires excess tax benefits be recognized regardless of whether the benefit reduces taxes payable. The adoption of this guidance on a modified retrospective basis resulted in the recognition of a cumulative-effect adjustment of
$11.4 million
that reduced our accumulated deficit and increased our foreign long-term deferred income tax as of January 1, 2016. The previously unrecognized domestic excess tax effects were recorded as a deferred tax asset net of a valuation allowance.
|
•
|
We have elected to continue to estimate forfeitures expected to occur to determine the amount of stock-based compensation cost to be recognized in each period. As such, the guidance relating to forfeitures did not have an impact on our accumulated deficit as of January 1, 2016.
|
•
|
We elected to apply the statement of cash flows guidance that cash flows related to excess tax benefits be presented as an operating activity retrospectively, which resulted in a
$0.6 million
increase to net cash provided by operating activities and a corresponding decrease to net cash provided by financing activities in the accompanying condensed consolidated statement of cash flows for the
six months ended
June 30, 2015
, as compared to the amounts previously reported.
|
•
|
The statement of cash flows guidance that cash flows related to employee taxes paid for withheld shares be presented as a financing activity had no impact on our condensed consolidated financial statements as we have historically presented such cash flows as a financing activity.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Subscription
|
$
|
290,679
|
|
|
$
|
200,461
|
|
|
$
|
558,101
|
|
|
$
|
380,368
|
|
Professional services and other
|
50,633
|
|
|
46,255
|
|
|
89,090
|
|
|
78,312
|
|
||||
Total revenues
|
341,312
|
|
|
246,716
|
|
|
647,191
|
|
|
458,680
|
|
||||
Cost of revenues
(1)
:
|
|
|
|
|
|
|
|
||||||||
Subscription
|
56,360
|
|
|
45,392
|
|
|
109,141
|
|
|
87,836
|
|
||||
Professional services and other
|
40,289
|
|
|
34,325
|
|
|
81,768
|
|
|
68,780
|
|
||||
Total cost of revenues
|
96,649
|
|
|
79,717
|
|
|
190,909
|
|
|
156,616
|
|
||||
Gross profit
|
244,663
|
|
|
166,999
|
|
|
456,282
|
|
|
302,064
|
|
||||
Operating expenses
(1)
:
|
|
|
|
|
|
|
|
||||||||
Sales and marketing
|
186,506
|
|
|
136,574
|
|
|
345,116
|
|
|
246,631
|
|
||||
Research and development
|
70,364
|
|
|
53,276
|
|
|
136,288
|
|
|
103,124
|
|
||||
General and administrative
|
36,071
|
|
|
30,384
|
|
|
77,308
|
|
|
59,776
|
|
||||
Legal settlements
|
—
|
|
|
—
|
|
|
270,000
|
|
|
—
|
|
||||
Total operating expenses
|
292,941
|
|
|
220,234
|
|
|
828,712
|
|
|
409,531
|
|
||||
Loss from operations
|
(48,278
|
)
|
|
(53,235
|
)
|
|
(372,430
|
)
|
|
(107,467
|
)
|
||||
Interest expense
|
(8,248
|
)
|
|
(7,707
|
)
|
|
(16,357
|
)
|
|
(15,285
|
)
|
||||
Interest income and other income (expense), net
|
2,260
|
|
|
521
|
|
|
2,962
|
|
|
5,225
|
|
||||
Loss before income taxes
|
(54,266
|
)
|
|
(60,421
|
)
|
|
(385,825
|
)
|
|
(117,527
|
)
|
||||
Provision for (benefit from) income taxes
|
(4,641
|
)
|
|
1,504
|
|
|
(2,868
|
)
|
|
2,491
|
|
||||
Net loss
|
$
|
(49,625
|
)
|
|
$
|
(61,925
|
)
|
|
$
|
(382,957
|
)
|
|
$
|
(120,018
|
)
|
(1)
|
Stock-based compensation included in the statements of operations above was as follows:
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Cost of revenues:
|
|
|
|
|
|
|
|
||||||||
Subscription
|
$
|
6,951
|
|
|
$
|
6,067
|
|
|
$
|
13,558
|
|
|
$
|
11,232
|
|
Professional services and other
|
6,136
|
|
|
5,771
|
|
|
12,895
|
|
|
10,984
|
|
||||
Sales and marketing
|
32,861
|
|
|
26,105
|
|
|
63,859
|
|
|
48,679
|
|
||||
Research and development
|
21,047
|
|
|
17,935
|
|
|
41,580
|
|
|
33,573
|
|
||||
General and administrative
|
11,070
|
|
|
10,468
|
|
|
21,481
|
|
|
19,952
|
|
||||
Total stock-based compensation
|
$
|
78,065
|
|
|
$
|
66,346
|
|
|
$
|
153,373
|
|
|
$
|
124,420
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Revenues by geography
|
|
|
|
|
|
|
|
||||||||
North America
|
$
|
234,009
|
|
|
$
|
174,387
|
|
|
$
|
444,526
|
|
|
$
|
323,033
|
|
EMEA
(1)
|
82,065
|
|
|
55,803
|
|
|
156,346
|
|
|
104,333
|
|
||||
Asia Pacific and other
|
25,238
|
|
|
16,526
|
|
|
46,319
|
|
|
31,314
|
|
||||
Total revenues
|
$
|
341,312
|
|
|
$
|
246,716
|
|
|
$
|
647,191
|
|
|
$
|
458,680
|
|
|
Three Months Ended June 30,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Revenues:
|
|
|
|
|
|
|||||
Subscription
|
$
|
290,679
|
|
|
$
|
200,461
|
|
|
45
|
%
|
Professional services and other
|
50,633
|
|
|
46,255
|
|
|
9
|
%
|
||
Total revenues
|
$
|
341,312
|
|
|
$
|
246,716
|
|
|
38
|
%
|
Percentage of revenues:
|
|
|
|
|
|
|||||
Subscription
|
85
|
%
|
|
81
|
%
|
|
|
|||
Professional services and other
|
15
|
%
|
|
19
|
%
|
|
|
|||
Total
|
100
|
%
|
|
100
|
%
|
|
|
|
Three Months Ended June 30,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Enterprise Service Management solutions
|
$
|
264,667
|
|
|
$
|
186,082
|
|
|
42
|
%
|
IT Operations Management solutions
|
26,012
|
|
|
14,379
|
|
|
81
|
%
|
||
Total subscription revenues
|
$
|
290,679
|
|
|
$
|
200,461
|
|
|
45
|
%
|
|
Three Months Ended June 30,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|||||
Subscription
|
$
|
56,360
|
|
|
$
|
45,392
|
|
|
24
|
%
|
Professional services and other
|
40,289
|
|
|
34,325
|
|
|
17
|
%
|
||
Total cost of revenues
|
$
|
96,649
|
|
|
$
|
79,717
|
|
|
21
|
%
|
Gross profit percentage:
|
|
|
|
|
|
|||||
Subscription
|
81
|
%
|
|
77
|
%
|
|
|
|||
Professional services and other
|
20
|
%
|
|
26
|
%
|
|
|
|||
Total gross profit percentage
|
71
|
%
|
|
68
|
%
|
|
|
|||
Gross Profit
|
$
|
244,663
|
|
|
$
|
166,999
|
|
|
|
|
Headcount (at period end)
|
|
|
|
|
|
|||||
Subscription
|
646
|
|
|
513
|
|
|
26
|
%
|
||
Professional services and other
|
493
|
|
|
443
|
|
|
11
|
%
|
||
Total headcount
|
1,139
|
|
|
956
|
|
|
19
|
%
|
|
Three Months Ended June 30,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Sales and marketing
|
$
|
186,506
|
|
|
$
|
136,574
|
|
|
37
|
%
|
Percentage of revenues
|
55
|
%
|
|
55
|
%
|
|
|
|||
Headcount (at period end)
|
1,669
|
|
|
1,169
|
|
|
43
|
%
|
|
Three Months Ended June 30,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Research and development
|
$
|
70,364
|
|
|
$
|
53,276
|
|
|
32
|
%
|
Percentage of revenues
|
21
|
%
|
|
22
|
%
|
|
|
|||
Headcount (at period end)
|
897
|
|
|
681
|
|
|
32
|
%
|
|
Three Months Ended June 30,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
General and administrative
|
$
|
36,071
|
|
|
$
|
30,384
|
|
|
19
|
%
|
Percentage of revenues
|
11
|
%
|
|
12
|
%
|
|
|
|||
Headcount (at period end)
|
536
|
|
|
381
|
|
|
41
|
%
|
|
Three Months Ended June 30,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|||||
Subscription
|
$
|
6,951
|
|
|
$
|
6,067
|
|
|
15
|
%
|
Professional services and other
|
6,136
|
|
|
5,771
|
|
|
6
|
%
|
||
Sales and marketing
|
32,861
|
|
|
26,105
|
|
|
26
|
%
|
||
Research and development
|
21,047
|
|
|
17,935
|
|
|
17
|
%
|
||
General and administrative
|
11,070
|
|
|
10,468
|
|
|
6
|
%
|
||
Total stock-based compensation
|
$
|
78,065
|
|
|
$
|
66,346
|
|
|
18
|
%
|
Percentage of revenues
|
23
|
%
|
|
27
|
%
|
|
|
|
Three Months Ended June 30,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Interest expense
|
$
|
8,248
|
|
|
$
|
7,707
|
|
|
7
|
%
|
Percentage of revenues
|
2
|
%
|
|
3
|
%
|
|
|
|
Three Months Ended June 30,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Interest income
|
$
|
1,964
|
|
|
$
|
1,074
|
|
|
83
|
%
|
Foreign currency exchange gain/(loss)
|
374
|
|
|
(534
|
)
|
|
NM
|
|
||
Other
|
(78
|
)
|
|
(19
|
)
|
|
NM
|
|
||
Interest and other income (expense), net
|
$
|
2,260
|
|
|
$
|
521
|
|
|
NM
|
|
Percentage of revenues
|
1
|
%
|
|
—
|
%
|
|
|
|
Three Months Ended June 30,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Loss before income taxes
|
$
|
(54,266
|
)
|
|
$
|
(60,421
|
)
|
|
(10
|
)%
|
Provision for (benefit from) income taxes
|
(4,641
|
)
|
|
1,504
|
|
|
NM
|
|
||
Effective tax rate
|
9
|
%
|
|
(2
|
)%
|
|
|
|
Three Months Ended June 30,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Net loss
|
$
|
(49,625
|
)
|
|
$
|
(61,925
|
)
|
|
(20
|
)%
|
Percentage of revenues
|
(16
|
)%
|
|
(25
|
)%
|
|
|
|
Six Months Ended June 30,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Revenues:
|
|
|
|
|
|
|||||
Subscription
|
$
|
558,101
|
|
|
$
|
380,368
|
|
|
47
|
%
|
Professional services and other
|
89,090
|
|
|
78,312
|
|
|
14
|
%
|
||
Total revenues
|
$
|
647,191
|
|
|
$
|
458,680
|
|
|
41
|
%
|
Percentage of revenues:
|
|
|
|
|
|
|||||
Subscription
|
86
|
%
|
|
83
|
%
|
|
|
|||
Professional services and other
|
14
|
%
|
|
17
|
%
|
|
|
|||
Total
|
100
|
%
|
|
100
|
%
|
|
|
|
Six Months Ended June 30,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Enterprise Service Management solutions
|
$
|
510,529
|
|
|
$
|
353,286
|
|
|
45
|
%
|
IT Operations Management solutions
|
47,572
|
|
|
27,082
|
|
|
76
|
%
|
||
Total subscription revenues
|
$
|
558,101
|
|
|
$
|
380,368
|
|
|
47
|
%
|
|
Six Months Ended June 30,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|||||
Subscription
|
$
|
109,141
|
|
|
$
|
87,836
|
|
|
24
|
%
|
Professional services and other
|
81,768
|
|
|
68,780
|
|
|
19
|
%
|
||
Total cost of revenues
|
$
|
190,909
|
|
|
$
|
156,616
|
|
|
22
|
%
|
Gross profit percentage:
|
|
|
|
|
|
|||||
Subscription
|
80
|
%
|
|
77
|
%
|
|
|
|||
Professional services and other
|
8
|
%
|
|
12
|
%
|
|
|
|||
Total gross profit percentage
|
70
|
%
|
|
66
|
%
|
|
|
|||
Gross Profit
|
$
|
456,282
|
|
|
$
|
302,064
|
|
|
|
|
Headcount (at period end)
|
|
|
|
|
|
|||||
Subscription
|
646
|
|
|
513
|
|
|
26
|
%
|
||
Professional services and other
|
493
|
|
|
443
|
|
|
11
|
%
|
||
Total headcount
|
1,139
|
|
|
956
|
|
|
19
|
%
|
|
Six Months Ended June 30,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Sales and marketing
|
$
|
345,116
|
|
|
$
|
246,631
|
|
|
40
|
%
|
Percentage of revenues
|
53
|
%
|
|
54
|
%
|
|
|
|||
Headcount (at period end)
|
1,669
|
|
|
1,169
|
|
|
43
|
%
|
|
Six Months Ended June 30,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Research and development
|
$
|
136,288
|
|
|
$
|
103,124
|
|
|
32
|
%
|
Percentage of revenues
|
21
|
%
|
|
22
|
%
|
|
|
|||
Headcount (at period end)
|
897
|
|
|
681
|
|
|
32
|
%
|
|
Six Months Ended June 30,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
General and administrative
|
$
|
77,308
|
|
|
$
|
59,776
|
|
|
29
|
%
|
Percentage of revenues
|
12
|
%
|
|
13
|
%
|
|
|
|||
Headcount (at period end)
|
536
|
|
|
381
|
|
|
41
|
%
|
|
Six Months Ended June 30,
|
|
% Change
|
||||||
|
2016
|
|
2015
|
|
|||||
|
(dollars in thousands)
|
|
|
||||||
Legal settlements
|
$
|
270,000
|
|
|
$
|
—
|
|
|
NM
|
Percentage of revenues
|
42
|
%
|
|
—
|
%
|
|
|
|
Six Months Ended June 30,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|||||
Subscription
|
$
|
13,558
|
|
|
$
|
11,232
|
|
|
21
|
%
|
Professional services and other
|
12,895
|
|
|
10,984
|
|
|
17
|
%
|
||
Sales and marketing
|
63,859
|
|
|
48,679
|
|
|
31
|
%
|
||
Research and development
|
41,580
|
|
|
33,573
|
|
|
24
|
%
|
||
General and administrative
|
21,481
|
|
|
19,952
|
|
|
8
|
%
|
||
Total stock-based compensation
|
$
|
153,373
|
|
|
$
|
124,420
|
|
|
23
|
%
|
Percentage of revenues
|
24
|
%
|
|
27
|
%
|
|
|
|
Six Months Ended June 30,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Interest expense
|
$
|
16,357
|
|
|
$
|
15,285
|
|
|
7
|
%
|
Percentage of revenues
|
3
|
%
|
|
2
|
%
|
|
|
|
Six Months Ended June 30,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Interest income
|
$
|
3,789
|
|
|
$
|
2,022
|
|
|
87
|
%
|
Foreign currency exchange gain/(loss)
|
(959
|
)
|
|
3,292
|
|
|
(129
|
)%
|
||
Other
|
132
|
|
|
(89
|
)
|
|
NM
|
|
||
Interest and other income (expense), net
|
$
|
2,962
|
|
|
$
|
5,225
|
|
|
(43
|
)%
|
Percentage of revenues
|
—
|
%
|
|
—
|
%
|
|
|
|
Six Months Ended June 30,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Loss before income taxes
|
$
|
(385,825
|
)
|
|
$
|
(117,527
|
)
|
|
228
|
%
|
Provision for (benefit from) income taxes
|
(2,868
|
)
|
|
2,491
|
|
|
NM
|
|
||
Effective tax rate
|
1
|
%
|
|
(2
|
)%
|
|
|
|
Six Months Ended June 30,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Net loss
|
$
|
(382,957
|
)
|
|
$
|
(120,018
|
)
|
|
219
|
%
|
Percentage of revenues
|
(61
|
)%
|
|
(26
|
)%
|
|
|
|
Six Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
|
(dollars in thousands)
|
||||||
Net cash (used in) provided by operating activities
|
$
|
(69,484
|
)
|
|
$
|
147,551
|
|
Net cash used in investing activities
|
(31,647
|
)
|
|
(99,328
|
)
|
||
Net cash (used in) provided by financing activities
|
(21,758
|
)
|
|
29,238
|
|
||
Net (decrease) increase in cash and cash equivalents, net of foreign currency effect on cash and cash equivalents
|
(123,192
|
)
|
|
72,899
|
|
•
|
our ability to retain and increase sales to existing customers, attract new customers and satisfy our customers’ requirements;
|
•
|
changes in foreign currency exchange rates;
|
•
|
the rate of expansion and productivity of our sales force;
|
•
|
the number of new employees added;
|
•
|
the cost, timing and management effort for our development of new services;
|
•
|
general economic conditions that may adversely affect either our customers’ ability or willingness to purchase additional subscriptions, delay a prospective customer’s purchasing decision, reduce the value of new subscription contracts or affect renewal rates;
|
•
|
the amount and timing of operating costs and capital expenditures related to the operation and expansion of our business;
|
•
|
seasonality in terms of when we enter into customer agreements for our services;
|
•
|
the length of the sales cycle for our services;
|
•
|
changes in our pricing policies, whether initiated by us or as a result of competition;
|
•
|
significant security breaches, technical difficulties or interruptions of our services;
|
•
|
new solutions, products or changes in pricing policies introduced by our competitors;
|
•
|
changes in effective tax rates;
|
•
|
changes in the average duration of our customer agreements and changes in billing cycle;
|
•
|
changes in our renewal and upsell rates;
|
•
|
the timing of customer payments and payment defaults by customers;
|
•
|
extraordinary expenses such as litigation costs or damages, including settlement payments;
|
•
|
the costs associated with acquiring new businesses and technologies and the follow-on costs of integration, including the tax effects of acquisitions;
|
•
|
the impact of new accounting pronouncements; including the new revenue recognition standards that are effective for us beginning January 1, 2018;
|
•
|
changes in laws or regulations impacting the delivery of our services;
|
•
|
the amount and timing of stock awards and the related financial statement expenses; and
|
•
|
our ability to accurately estimate the total addressable market for our products and services.
|
•
|
issue additional equity securities that would dilute our stockholders;
|
•
|
use cash that we may need in the future to operate our business;
|
•
|
incur debt on terms unfavorable to us or that we are unable to repay;
|
•
|
incur large charges or substantial liabilities;
|
•
|
encounter difficulties retaining key employees of the acquired company or integrating diverse technologies, software or business cultures; and
|
•
|
become subject to adverse tax consequences, substantial depreciation or deferred compensation charges.
|
•
|
foreign currency fluctuations which may cause exchange and translation losses;
|
•
|
compliance with multiple, conflicting and changing governmental laws and regulations, including employment, tax, competition, privacy and data protection laws and regulations;
|
•
|
compliance by us and our business partners with international bribery and corruption laws, including the UK Bribery Act and the Foreign Corrupt Practices Act;
|
•
|
the risk that illegal or unethical activities of our business partners will be attributed to or result in liability to us;
|
•
|
compliance with regional data privacy laws that apply to the transmission of our customers’ data across international borders, many of which are stricter than the equivalent U.S. laws;
|
•
|
difficulties in staffing and managing foreign operations;
|
•
|
different or lesser protection of our intellectual property;
|
•
|
longer and potentially more complex sales cycles;
|
•
|
longer accounts receivable payment cycles and other collection difficulties;
|
•
|
treatment of revenues from international sources and changes to tax codes, including being subject to foreign tax laws and being liable for paying withholding, income or other taxes in foreign jurisdictions;
|
•
|
different pricing and distribution environments;
|
•
|
local business practices and cultural norms that may favor local competitors;
|
•
|
localization of our services, including translation into foreign languages and associated expenses; and
|
•
|
regional economic and political conditions.
|
•
|
variations in our growth rate, operating results, earnings per share, cash flows from operating activities, deferred revenue, and other financial metrics and non-financial metrics, and how those results compare to analyst expectations;
|
•
|
forward-looking statements related to future revenues and earnings per share;
|
•
|
the net increases in the number of customers, either independently or as compared with published expectations of industry, financial or other analysts that cover our company;
|
•
|
changes in the estimates of our operating results or changes in recommendations by securities analysts that elect to follow our common stock;
|
•
|
announcements of technological innovations, new solutions or enhancements to services, strategic alliances or significant agreements by us or by our competitors;
|
•
|
our ability to expand our IT operations management, customer service and security incident management product offerings and the use of our platform for service management outside of enterprise IT;
|
•
|
announcements by us or by our competitors of mergers or other strategic acquisitions, or rumors of such transactions involving us or our competitors;
|
•
|
announcements of customer additions and customer cancellations or delays in customer purchases;
|
•
|
recruitment or departure of key personnel;
|
•
|
disruptions in our services due to computer hardware, software or network problems, security breaches, or other man-made or natural disasters;
|
•
|
the economy as a whole, and market conditions in our industry and the industries of our customers;
|
•
|
trading activity by a limited number of stockholders who together beneficially own a majority of our outstanding common stock;
|
•
|
the size of our market float and the volume of trading in our common stock, including sales upon exercise of outstanding options or vesting of equity awards or sales and purchases of any common stock issued upon conversion of the Notes or in connection with the Note Hedge and Warrant transactions relating to the Notes; and
|
•
|
any other factors discussed herein.
|
•
|
establish a classified board of directors so that not all members of our board are elected at one time;
|
•
|
permit the board of directors to establish the number of directors;
|
•
|
provide that directors may only be removed “for cause” and only with the approval of 66 2/3% of our stockholders;
|
•
|
require super-majority voting to amend some provisions in our restated certificate of incorporation and restated bylaws;
|
•
|
authorize the issuance of “blank check” preferred stock that our board could use to implement a stockholder rights plan;
|
•
|
eliminate the ability of our stockholders to call special meetings of stockholders;
|
•
|
prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;
|
•
|
provide that the board of directors is expressly authorized to make, alter or repeal our restated bylaws; and
|
•
|
establish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
|
Exhibit
Number
|
|
Description of Document
|
|
Incorporated by Reference
|
|
Filed
|
||||
Form
|
|
File No.
|
|
Exhibit
|
|
Herewith
|
||||
|
|
|
|
|
|
|
|
|
|
|
10.1+
|
|
Settlement Agreement between ServiceNow, Inc. and BMC Software, Inc., as executed on April 8, 2016
|
|
|
|
|
|
|
|
X
|
31.1
|
|
Certification of Periodic Report by Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
X
|
31.2
|
|
Certification of Periodic Report by Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
X
|
32.1*
|
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
X
|
32.2*
|
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
X
|
101.INS**
|
|
XBRL Instance Document.
|
|
|
|
|
|
|
|
X
|
101.SCH**
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
|
|
|
|
X
|
101.CAL**
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
|
|
|
|
X
|
101.DEF**
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
|
|
|
|
X
|
101.LAB**
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
|
|
|
|
X
|
101.PRE**
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
|
|
|
|
X
|
|
S
ERVICE
N
OW
, I
NC
.
|
||
|
|
|
|
Date: August 3, 2016
|
By:
|
|
/s/ Frank Slootman
|
|
|
|
Frank Slootman
|
|
|
|
President and Chief Executive Officer
|
|
|
|
(On behalf of the Registrant)
|
|
|
|
|
Date: August 3, 2016
|
By:
|
|
/s/ Michael P. Scarpelli
|
|
|
|
Michael P. Scarpelli
|
|
|
|
Chief Financial Officer
|
|
|
|
(As Principal Financial and Accounting Officer)
|
(a)
|
To ServiceNow: ServiceNow, Inc.
|
S
ERVICE
N
OW
, I
NC
.
|
|
BMC SOFTWARE, INC.
|
||
|
|
|
|
|
By:
|
/s/ Michael P. Scarpelli
|
|
By:
|
/s/ Patrick Tagtow
|
Name:
|
Michael P. Scarpelli
|
|
Name:
|
Patrick Tagtow
|
Title:
|
Chief Financial Officer
|
|
Title:
|
Sr. VP, General Counsel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of ServiceNow, Inc.;
|
2.
|
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;
|
3.
|
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;
|
4.
|
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:
|
a.
|
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;
|
b.
|
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;
|
c.
|
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
|
d.
|
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
|
5.
|
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):
|
a.
|
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
|
b.
|
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.
|
Date: August 3, 2016
|
|
|
/s/ Frank Slootman
|
|
Frank Slootman
Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of ServiceNow, Inc.;
|
2.
|
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;
|
3.
|
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;
|
4.
|
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:
|
a.
|
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;
|
b.
|
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;
|
c.
|
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
|
d.
|
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
|
5.
|
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):
|
a.
|
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: August 3, 2016
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/s/ Michael P. Scarpelli
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Michael P. Scarpelli
Chief Financial Officer
(Principal Financial and Accounting Officer)
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•
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the Quarterly Report on Form 10-Q of the Company for the period ended
June 30, 2016
fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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•
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.
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Date: August 3, 2016
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/s/ Frank Slootman
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Frank Slootman
Chief Executive Officer
(Principal Executive Officer)
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•
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the Quarterly Report on Form 10-Q of the Company for the period ended
June 30, 2016
fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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•
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.
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Date: August 3, 2016
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/s/ Michael P. Scarpelli
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Michael P. Scarpelli
Chief Financial Officer
(Principal Financial and Accounting Officer)
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