x
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Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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¨
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Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Delaware
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20-2056195
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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Title of each class
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Name of each exchange on which registered
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Common stock, par value $0.001 per share
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New York Stock Exchange, Inc.
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(Do not check if a smaller reporting company)
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Emerging growth company
¨
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Page
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Item 1
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Item 1A
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Item 1B
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Item 2
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Item 3
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Item 4
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Item 5
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Item 6
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Item 7
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Item 7A
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Item 8
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Item 9
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Item 9A
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Item 9B
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Item 10
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Item 11
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Item 12
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Item 13
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Item 14
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Item 15
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Item 16
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Index to Exhibits
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ITEM 1.
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BUSINESS
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ITEM 1A.
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RISK FACTORS
|
•
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our ability to attract new customers, retain and increase sales to existing customers, and satisfy our customers’ requirements;
|
•
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changes in our mix of products and services;
|
•
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changes in foreign currency exchange rates and our ability to effectively hedge our foreign currency exposure;
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•
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the rate of expansion and productivity of our sales force;
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•
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the number of new employees added;
|
•
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the cost, timing and management effort for our development of new products and services;
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•
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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 adversely affect renewal rates;
|
•
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the amount and timing of operating costs and capital expenditures related to the operation and expansion of our business;
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•
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seasonality in terms of when we enter into customer agreements for our services;
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•
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the length of the sales cycle for our services;
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•
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changes to our management team;
|
•
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changes in our pricing policies, whether initiated by us or as a result of competition;
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•
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significant security breaches, technical difficulties or interruptions of our services;
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•
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new solutions, products or changes in pricing policies introduced by our competitors;
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•
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changes in effective tax rates;
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•
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changes in the average contract term of our customer agreements, changes in timing of renewals and changes in billings duration;
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•
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changes in our renewal and upsell rates;
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•
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the timing of customer payments and payment defaults by customers;
|
•
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extraordinary expenses such as litigation costs or damages, including settlement payments;
|
•
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the costs associated with acquiring new businesses and technologies and the follow-on costs of integration, including the tax effects of acquisitions;
|
•
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the impact of new accounting pronouncements, including the new revenue recognition standards that were effective for us beginning January 1, 2018;
|
•
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changes in laws or regulations impacting the delivery of our services;
|
•
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our ability to comply with privacy laws and regulations, including the General Data Protection Regulation (GDPR);
|
•
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the amount and timing of equity awards and the related financial statement expenses; and
|
•
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our ability to accurately estimate the total addressable market for our products and services.
|
•
|
compliance with multiple, conflicting and changing governmental laws and regulations, including employment, tax, competition, privacy and data protection laws and regulations;
|
•
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compliance by us and our business partners with international bribery and anti-corruption laws, including the UK Bribery Act and the Foreign Corrupt Practices Act;
|
•
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the risk that illegal or unethical activities of our business partners will be attributed to or result in liability to us;
|
•
|
longer and potentially more complex sales cycles;
|
•
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longer accounts receivable payment cycles and other collection difficulties;
|
•
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tax 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;
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•
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different pricing and distribution environments;
|
•
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foreign currency fluctuations which may cause transactional and translational remeasurement losses;
|
•
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potential changes in international trade policies and agreements;
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•
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local business practices and cultural norms that may favor local competitors; and
|
•
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localization of our services, including translation into foreign languages and associated expenses.
|
•
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assimilating or integrating the businesses, technologies, products, personnel or operations of the acquired companies;
|
•
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failing to achieve the expected benefits of the acquisition or investment;
|
•
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potential loss of key employees of the acquired company;
|
•
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inability to maintain relationships with customers and partners of the acquired business;
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•
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unanticipated expenses related to acquired technology and its integration into our existing technology;
|
•
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potential adverse tax consequences;
|
•
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inability to generate sufficient revenue to offset acquisition or investment costs;
|
•
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disruption to our business and diversion of management attention and other resources;
|
•
|
potential financial and credit risks associated with acquired customers;
|
•
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dependence on acquired technologies or licenses for which alternatives may not be available to us without significant cost or complexity;
|
•
|
in the case of foreign acquisitions, the challenges associated with integrating operations across different cultures and languages and any currency and regulatory risks associated with specific countries; and
|
•
|
potential unknown liabilities associated with the acquired businesses.
|
•
|
changes in the estimates of our operating results or changes in recommendations by securities analysts that elect to follow our common stock;
|
•
|
announcements of new products, services or technologies, new applications or enhancements to services, strategic alliances, acquisitions, or other significant events by us or by our competitors;
|
•
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fluctuations in the valuation of companies perceived by investors to be comparable to us, such as high-growth or cloud companies;
|
•
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changes to our management team;
|
•
|
trading activity by directors, executive officers and significant stockholders, or the perception in the market that the holders of a large number of shares intend to sell their shares;
|
•
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the size of our market float;
|
•
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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 2022 Notes or 2018 Notes or in connection with the 2022 Note Hedge and 2022 Warrant transactions relating to the 2022 Notes, or 2018 Note Hedge and 2018 Warrant transactions relating to the 2018 Notes;
|
•
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the economy as a whole, market conditions in our industry, and the industries of our customers; and
|
•
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overall performance of the equity markets.
|
•
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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;
|
•
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provide that directors may only be removed “for cause” and only with the approval of 66 2/3% of our stockholders;
|
•
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require super-majority voting to amend some provisions in our restated certificate of incorporation and restated bylaws;
|
•
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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;
|
•
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prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;
|
•
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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 (though our restated bylaws have implemented stockholder proxy access).
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ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
ITEM 2.
|
PROPERTIES
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
High
|
|
Low
|
||||
Year ended December 31, 2017
|
|
|
|
||||
First Quarter
|
$
|
94.72
|
|
|
$
|
74.63
|
|
Second Quarter
|
$
|
110.66
|
|
|
$
|
84.03
|
|
Third Quarter
|
$
|
118.64
|
|
|
$
|
103.00
|
|
Fourth Quarter
|
$
|
131.26
|
|
|
$
|
112.84
|
|
|
|
|
|
||||
Year ended December 31, 2016
|
|
|
|
||||
First Quarter
|
$
|
85.67
|
|
|
$
|
46.00
|
|
Second Quarter
|
$
|
77.76
|
|
|
$
|
60.05
|
|
Third Quarter
|
$
|
80.31
|
|
|
$
|
64.31
|
|
Fourth Quarter
|
$
|
89.79
|
|
|
$
|
72.80
|
|
|
Base Period
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Dec 31, 2012
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|
Dec 31, 2013
|
|
Dec 31, 2014
|
|
Dec 31, 2015
|
|
Dec 31, 2016
|
|
Dec 31, 2017
|
||||||||||||
ServiceNow, Inc.
|
$
|
100.00
|
|
|
$
|
186.51
|
|
|
$
|
225.94
|
|
|
$
|
288.25
|
|
|
$
|
247.55
|
|
|
$
|
434.20
|
|
NYSE Composite
|
100.00
|
|
|
126.28
|
|
|
134.81
|
|
|
129.29
|
|
|
144.73
|
|
|
171.83
|
|
||||||
S&P Systems Software
|
100.00
|
|
|
132.90
|
|
|
163.47
|
|
|
180.59
|
|
|
204.49
|
|
|
280.92
|
|
ITEM 6.
|
SELECTED CONSOLIDATED FINANCIAL DATA
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
(in thousands, except share and per share data)
|
||||||||||||||||||
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Subscription
|
$
|
1,739,795
|
|
|
$
|
1,221,639
|
|
|
$
|
848,278
|
|
|
$
|
567,217
|
|
|
$
|
349,804
|
|
Professional services and other
|
193,231
|
|
|
168,874
|
|
|
157,202
|
|
|
115,346
|
|
|
74,846
|
|
|||||
Total revenues
|
1,933,026
|
|
|
1,390,513
|
|
|
1,005,480
|
|
|
682,563
|
|
|
424,650
|
|
|||||
Cost of revenues
(1)
:
|
|
|
|
|
|
|
|
|
|
||||||||||
Subscription
|
315,570
|
|
|
235,414
|
|
|
183,400
|
|
|
142,687
|
|
|
87,928
|
|
|||||
Professional services and other
|
184,202
|
|
|
163,268
|
|
|
146,013
|
|
|
106,089
|
|
|
67,331
|
|
|||||
Total cost of revenues
|
499,772
|
|
|
398,682
|
|
|
329,413
|
|
|
248,776
|
|
|
155,259
|
|
|||||
Gross profit
|
1,433,254
|
|
|
991,831
|
|
|
676,067
|
|
|
433,787
|
|
|
269,391
|
|
|||||
Operating expenses
(1)
:
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales and marketing
|
946,617
|
|
|
700,464
|
|
|
498,439
|
|
|
341,119
|
|
|
195,190
|
|
|||||
Research and development
|
377,518
|
|
|
285,239
|
|
|
217,389
|
|
|
148,258
|
|
|
78,678
|
|
|||||
General and administrative
|
210,533
|
|
|
158,936
|
|
|
126,604
|
|
|
96,245
|
|
|
61,790
|
|
|||||
Legal settlements
(2)
|
—
|
|
|
270,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total operating expenses
|
1,534,668
|
|
|
1,414,639
|
|
|
842,432
|
|
|
585,622
|
|
|
335,658
|
|
|||||
Loss from operations
|
(101,414
|
)
|
|
(422,808
|
)
|
|
(166,365
|
)
|
|
(151,835
|
)
|
|
(66,267
|
)
|
|||||
Interest expense
|
(53,394
|
)
|
|
(33,278
|
)
|
|
(31,097
|
)
|
|
(29,059
|
)
|
|
(3,498
|
)
|
|||||
Interest income and other income (expense), net
|
5,804
|
|
|
6,035
|
|
|
4,450
|
|
|
5,354
|
|
|
(1,432
|
)
|
|||||
Loss before income taxes
|
(149,004
|
)
|
|
(450,051
|
)
|
|
(193,012
|
)
|
|
(175,540
|
)
|
|
(71,197
|
)
|
|||||
Provision for income taxes
|
126
|
|
|
1,753
|
|
|
5,414
|
|
|
3,847
|
|
|
2,511
|
|
|||||
Net loss
|
$
|
(149,130
|
)
|
|
$
|
(451,804
|
)
|
|
$
|
(198,426
|
)
|
|
$
|
(179,387
|
)
|
|
$
|
(73,708
|
)
|
Net loss per share - basic and diluted
|
$
|
(0.87
|
)
|
|
$
|
(2.75
|
)
|
|
$
|
(1.27
|
)
|
|
$
|
(1.23
|
)
|
|
$
|
(0.54
|
)
|
Weighted-average shares used to compute net loss per share - basic and diluted
|
171,175,577
|
|
|
164,533,823
|
|
|
155,706,643
|
|
|
145,355,543
|
|
|
135,415,809
|
|
(1)
|
Stock-based compensation included in the statements of operations data above was as follows:
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Subscription
|
$
|
35,334
|
|
|
$
|
28,420
|
|
|
$
|
23,416
|
|
|
$
|
14,988
|
|
|
$
|
8,434
|
|
Professional services and other
|
27,475
|
|
|
26,442
|
|
|
23,265
|
|
|
13,116
|
|
|
4,749
|
|
|||||
Sales and marketing
|
170,527
|
|
|
131,571
|
|
|
102,349
|
|
|
54,006
|
|
|
21,609
|
|
|||||
Research and development
|
92,025
|
|
|
81,731
|
|
|
70,326
|
|
|
42,535
|
|
|
16,223
|
|
|||||
General and administrative
|
68,717
|
|
|
49,416
|
|
|
38,357
|
|
|
29,674
|
|
|
14,566
|
|
|||||
Total stock-based compensation
|
$
|
394,078
|
|
|
$
|
317,580
|
|
|
$
|
257,713
|
|
|
$
|
154,319
|
|
|
$
|
65,581
|
|
(2)
|
For details regarding the legal settlements expenses of
$270.0 million
included in the
year ended
December 31, 2016
, refer to Note 16 in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
|
|
As of December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents and investments
|
$
|
2,170,740
|
|
|
$
|
1,162,020
|
|
|
$
|
1,223,917
|
|
|
$
|
935,563
|
|
|
$
|
889,910
|
|
Working capital, excluding current portion of deferred revenue and convertible senior notes, net
|
2,133,850
|
|
|
1,132,819
|
|
|
947,002
|
|
|
809,660
|
|
|
722,214
|
|
|||||
Total assets
|
3,397,904
|
|
|
2,033,767
|
|
|
1,807,052
|
|
|
1,424,752
|
|
|
1,168,077
|
|
|||||
Deferred revenue, current and non-current portion
|
1,320,383
|
|
|
895,101
|
|
|
603,754
|
|
|
422,238
|
|
|
266,722
|
|
|||||
Convertible senior notes, net, current and non-current portion
|
1,173,436
|
|
|
507,812
|
|
|
474,534
|
|
|
443,437
|
|
|
414,378
|
|
|||||
Total stockholders’ equity
|
584,132
|
|
|
386,961
|
|
|
566,814
|
|
|
428,675
|
|
|
394,259
|
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(dollars in thousands)
|
||||||||||
Billings:
|
|
|
|
|
|
||||||
Total revenues
|
$
|
1,933,026
|
|
|
$
|
1,390,513
|
|
|
$
|
1,005,480
|
|
Change in deferred revenue from the consolidated statements of cash flows
|
381,562
|
|
|
300,167
|
|
|
195,900
|
|
|||
Total billings
|
$
|
2,314,588
|
|
|
$
|
1,690,680
|
|
|
$
|
1,201,380
|
|
Year-over-year percentage change in total billings
|
37
|
%
|
|
41
|
%
|
|
41
|
%
|
•
|
Billings duration
. While we typically bill customers annually for our subscription services, customers sometimes request, and we accommodate, billings with durations less than or greater than the typical 12-month term.
|
•
|
Contract start date
. From time to time, we enter into contracts with a contract start date in the future, and we exclude these amounts from billings as these amounts are not included in our consolidated balance sheets, unless such amounts have been paid as of the balance sheet date.
|
•
|
Foreign currency exchange rates
. While a majority of our billings have historically been in U.S. Dollars, an increasing percentage of our billings in recent periods has been in foreign currencies, particularly the Euro and British Pound Sterling.
|
•
|
Timing of contract renewals
. While customers typically renew their contracts at the end of the contract term, from time to time customers may do so either before or after the scheduled expiration date. For example, in cases where we are successful in upselling additional products or services, a customer may decide to renew its existing contract early to ensure that all its contracts expire on the same date. In other cases, prolonged negotiations or other factors may result in a contract not being renewed until after it has expired.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(dollars in thousands)
|
||||||||||
Free cash flow:
|
|
|
|
|
|
||||||
Net cash provided by operating activities
|
$
|
642,825
|
|
|
$
|
159,921
|
|
|
$
|
317,754
|
|
Purchases of property and equipment
|
(150,510
|
)
|
|
(105,562
|
)
|
|
(87,481
|
)
|
|||
Free cash flow
(1)
|
$
|
492,315
|
|
|
$
|
54,359
|
|
|
$
|
230,273
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in thousands)
|
||||||||||
Revenues:
|
|
|
|
|
|
||||||
Subscription
|
$
|
1,739,795
|
|
|
$
|
1,221,639
|
|
|
$
|
848,278
|
|
Professional services and other
|
193,231
|
|
|
168,874
|
|
|
157,202
|
|
|||
Total revenues
|
1,933,026
|
|
|
1,390,513
|
|
|
1,005,480
|
|
|||
Cost of revenues
(1)
:
|
|
|
|
|
|
||||||
Subscription
|
315,570
|
|
|
235,414
|
|
|
183,400
|
|
|||
Professional services and other
|
184,202
|
|
|
163,268
|
|
|
146,013
|
|
|||
Total cost of revenues
|
499,772
|
|
|
398,682
|
|
|
329,413
|
|
|||
Gross profit
|
1,433,254
|
|
|
991,831
|
|
|
676,067
|
|
|||
Operating expenses
(1)
:
|
|
|
|
|
|
||||||
Sales and marketing
|
946,617
|
|
|
700,464
|
|
|
498,439
|
|
|||
Research and development
|
377,518
|
|
|
285,239
|
|
|
217,389
|
|
|||
General and administrative
|
210,533
|
|
|
158,936
|
|
|
126,604
|
|
|||
Legal settlements
(2)
|
—
|
|
|
270,000
|
|
|
—
|
|
|||
Total operating expenses
|
1,534,668
|
|
|
1,414,639
|
|
|
842,432
|
|
|||
Loss from operations
|
(101,414
|
)
|
|
(422,808
|
)
|
|
(166,365
|
)
|
|||
Interest expense
|
(53,394
|
)
|
|
(33,278
|
)
|
|
(31,097
|
)
|
|||
Interest income and other income (expense), net
|
5,804
|
|
|
6,035
|
|
|
4,450
|
|
|||
Loss before income taxes
|
(149,004
|
)
|
|
(450,051
|
)
|
|
(193,012
|
)
|
|||
Provision for income taxes
|
126
|
|
|
1,753
|
|
|
5,414
|
|
|||
Net loss
|
$
|
(149,130
|
)
|
|
$
|
(451,804
|
)
|
|
$
|
(198,426
|
)
|
(1)
|
Stock-based compensation included in the statements of operations data above was as follows:
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in thousands)
|
||||||||||
Cost of revenues:
|
|
|
|
|
|
||||||
Subscription
|
$
|
35,334
|
|
|
$
|
28,420
|
|
|
$
|
23,416
|
|
Professional services and other
|
27,475
|
|
|
26,442
|
|
|
23,265
|
|
|||
Sales and marketing
|
170,527
|
|
|
131,571
|
|
|
102,349
|
|
|||
Research and development
|
92,025
|
|
|
81,731
|
|
|
70,326
|
|
|||
General and administrative
|
68,717
|
|
|
49,416
|
|
|
38,357
|
|
|||
Total stock-based compensation
|
$
|
394,078
|
|
|
$
|
317,580
|
|
|
$
|
257,713
|
|
(2)
|
For details regarding the legal settlements expenses of
$270.0 million
included in the year ended
December 31, 2016, refer to Note 16 in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
|
(1)
|
Stock-based compensation included in the statements of operations above as a percentage of revenues was as follows:
|
|
Year Ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
|
(in thousands)
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|||
Subscription
|
2
|
%
|
|
2
|
%
|
|
2
|
%
|
Professional services and other
|
1
|
|
|
2
|
|
|
2
|
|
Sales and marketing
|
9
|
|
|
9
|
|
|
10
|
|
Research and development
|
5
|
|
|
6
|
|
|
8
|
|
General and administrative
|
3
|
|
|
4
|
|
|
4
|
|
Total stock-based compensation
|
20
|
%
|
|
23
|
%
|
|
26
|
%
|
(2)
|
For details regarding the legal settlements expenses of
$270.0 million
included in the year ended
December 31, 2016, refer to Note 16 in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
|
|
Year Ended December 31,
|
|
% Change
|
|||||||
|
2017
|
|
2016
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Revenues:
|
|
|
|
|
|
|||||
Subscription
|
$
|
1,739,795
|
|
|
$
|
1,221,639
|
|
|
42
|
%
|
Professional services and other
|
193,231
|
|
|
168,874
|
|
|
14
|
%
|
||
Total revenues
|
$
|
1,933,026
|
|
|
$
|
1,390,513
|
|
|
39
|
%
|
Percentage of revenues:
|
|
|
|
|
|
|||||
Subscription
|
90
|
%
|
|
88
|
%
|
|
|
|||
Professional services and other
|
10
|
|
|
12
|
|
|
|
|||
Total
|
100
|
%
|
|
100
|
%
|
|
|
|
Year Ended December 31,
|
|
% Change
|
|||||||
|
2017
|
|
2016
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Service management products
|
$
|
1,526,382
|
|
|
$
|
1,108,846
|
|
|
38
|
%
|
ITOM products
|
213,413
|
|
|
112,793
|
|
|
89
|
%
|
||
Total subscription revenues
|
$
|
1,739,795
|
|
|
$
|
1,221,639
|
|
|
42
|
%
|
|
Year Ended December 31,
|
|
% Change
|
|||||||
|
2017
|
|
2016
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|||||
Subscription
|
$
|
315,570
|
|
|
$
|
235,414
|
|
|
34
|
%
|
Professional services and other
|
184,202
|
|
|
163,268
|
|
|
13
|
%
|
||
Total cost of revenues
|
$
|
499,772
|
|
|
$
|
398,682
|
|
|
25
|
%
|
Gross profit percentage:
|
|
|
|
|
|
|||||
Subscription
|
82
|
%
|
|
81
|
%
|
|
|
|||
Professional services and other
|
5
|
%
|
|
3
|
%
|
|
|
|||
Total gross profit percentage
|
74
|
%
|
|
71
|
%
|
|
|
|||
Gross profit:
|
$
|
1,433,254
|
|
|
$
|
991,831
|
|
|
45
|
%
|
Headcount (at period end)
|
|
|
|
|
|
|||||
Subscription
|
936
|
|
|
729
|
|
|
28
|
%
|
||
Professional services and other
|
562
|
|
|
496
|
|
|
13
|
%
|
||
Total headcount
|
1,498
|
|
|
1,225
|
|
|
22
|
%
|
|
Year Ended December 31
|
|
% Change
|
|||||||
|
2017
|
|
2016
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Sales and marketing
|
$
|
946,617
|
|
|
$
|
700,464
|
|
|
35
|
%
|
Percentage of revenues
|
49
|
%
|
|
50
|
%
|
|
|
|||
Headcount (at period end)
|
2,413
|
|
|
1,875
|
|
|
29
|
%
|
|
Year Ended December 31
|
|
% Change
|
|||||||
|
2017
|
|
2016
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Research and development
|
$
|
377,518
|
|
|
$
|
285,239
|
|
|
32
|
%
|
Percentage of revenues
|
19
|
%
|
|
21
|
%
|
|
|
|||
Headcount (at period end)
|
1,419
|
|
|
1,054
|
|
|
35
|
%
|
|
Year Ended December 31
|
|
% Change
|
|||||||
|
2017
|
|
2016
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
General and administrative
|
$
|
210,533
|
|
|
$
|
158,936
|
|
|
32
|
%
|
Percentage of revenues
|
11
|
%
|
|
11
|
%
|
|
|
|||
Headcount (at period end)
|
892
|
|
|
647
|
|
|
38
|
%
|
|
Year Ended December 31
|
|
% Change
|
||||||
|
2017
|
|
2016
|
|
|||||
|
(dollars in thousands)
|
|
|
||||||
Legal settlements
|
$
|
—
|
|
|
$
|
270,000
|
|
|
NM
|
Percentage of revenues
|
—
|
%
|
|
19
|
%
|
|
|
|
Year Ended December 31
|
|
% Change
|
|||||||
|
2017
|
|
2016
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|||||
Subscription
|
$
|
35,334
|
|
|
$
|
28,420
|
|
|
24
|
%
|
Professional services and other
|
27,475
|
|
|
26,442
|
|
|
4
|
%
|
||
Sales and marketing
|
170,527
|
|
|
131,571
|
|
|
30
|
%
|
||
Research and development
|
92,025
|
|
|
81,731
|
|
|
13
|
%
|
||
General and administrative
|
68,717
|
|
|
49,416
|
|
|
39
|
%
|
||
Total stock-based compensation
|
$
|
394,078
|
|
|
$
|
317,580
|
|
|
24
|
%
|
Percentage of revenues
|
20
|
%
|
|
23
|
%
|
|
|
|
Year Ended December 31
|
|
% Change
|
|||||||
|
2017
|
|
2016
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Interest expense
|
$
|
(53,394
|
)
|
|
$
|
(33,278
|
)
|
|
60
|
%
|
Percentage of revenues
|
(3
|
)%
|
|
(2
|
)%
|
|
|
|
Year Ended December 31
|
|
% Change
|
|||||||
|
2017
|
|
2016
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Interest income
|
$
|
16,677
|
|
|
$
|
8,528
|
|
|
96
|
%
|
Foreign currency exchange loss
|
(11,117
|
)
|
|
(2,248
|
)
|
|
NM
|
|
||
Other
|
244
|
|
|
(245
|
)
|
|
NM
|
|
||
Interest income and other income (expense), net
|
$
|
5,804
|
|
|
$
|
6,035
|
|
|
(4
|
)%
|
Percentage of revenues
|
—
|
%
|
|
—
|
%
|
|
|
|
Year Ended December 31
|
|
% Change
|
|||||||
|
2017
|
|
2016
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Loss before income taxes
|
$
|
(149,004
|
)
|
|
$
|
(450,051
|
)
|
|
(67
|
)%
|
Provision for income taxes
|
126
|
|
|
1,753
|
|
|
(93
|
)%
|
||
Effective tax rate
|
—
|
%
|
|
—
|
%
|
|
|
|
Year Ended December 31
|
|
% Change
|
|||||||
|
2017
|
|
2016
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Net loss
|
$
|
(149,130
|
)
|
|
$
|
(451,804
|
)
|
|
(67
|
)%
|
Percentage of revenues
|
(8
|
)%
|
|
(32
|
)%
|
|
|
|
Year Ended December 31,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Revenues:
|
|
|
|
|
|
|||||
Subscription
|
$
|
1,221,639
|
|
|
$
|
848,278
|
|
|
44
|
%
|
Professional services and other
|
168,874
|
|
|
157,202
|
|
|
7
|
%
|
||
Total revenues
|
$
|
1,390,513
|
|
|
$
|
1,005,480
|
|
|
38
|
%
|
Percentage of revenues:
|
|
|
|
|
|
|||||
Subscription
|
88
|
%
|
|
84
|
%
|
|
|
|||
Professional services and other
|
12
|
|
|
16
|
|
|
|
|||
Total
|
100
|
%
|
|
100
|
%
|
|
|
|
Year Ended December 31,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Service management products
|
$
|
1,108,846
|
|
|
$
|
783,603
|
|
|
42
|
%
|
ITOM products
|
112,793
|
|
|
64,675
|
|
|
74
|
%
|
||
Total subscription revenues
|
$
|
1,221,639
|
|
|
$
|
848,278
|
|
|
44
|
%
|
|
Year Ended December 31,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|||||
Subscription
|
$
|
235,414
|
|
|
$
|
183,400
|
|
|
28
|
%
|
Professional services and other
|
163,268
|
|
|
146,013
|
|
|
12
|
%
|
||
Total cost of revenues
|
$
|
398,682
|
|
|
$
|
329,413
|
|
|
21
|
%
|
Gross profit percentage:
|
|
|
|
|
|
|||||
Subscription
|
81
|
%
|
|
78
|
%
|
|
|
|||
Professional services and other
|
3
|
%
|
|
7
|
%
|
|
|
|||
Total gross profit percentage
|
71
|
%
|
|
67
|
%
|
|
|
|||
Gross profit:
|
$
|
991,831
|
|
|
$
|
676,067
|
|
|
47
|
%
|
Headcount (at period end)
|
|
|
|
|
|
|||||
Subscription
|
729
|
|
|
579
|
|
|
26
|
%
|
||
Professional services and other
|
496
|
|
|
486
|
|
|
2
|
%
|
||
Total headcount
|
1,225
|
|
|
1,065
|
|
|
15
|
%
|
|
Year Ended December 31
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Sales and marketing
|
$
|
700,464
|
|
|
$
|
498,439
|
|
|
41
|
%
|
Percentage of revenues
|
50
|
%
|
|
50
|
%
|
|
|
|||
Headcount (at period end)
|
1,875
|
|
|
1,416
|
|
|
32
|
%
|
|
Year Ended December 31
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Research and development
|
$
|
285,239
|
|
|
$
|
217,389
|
|
|
31
|
%
|
Percentage of revenues
|
21
|
%
|
|
22
|
%
|
|
|
|||
Headcount (at period end)
|
1,054
|
|
|
756
|
|
|
39
|
%
|
|
Year Ended December 31
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
General and administrative
|
$
|
158,936
|
|
|
$
|
126,604
|
|
|
26
|
%
|
Percentage of revenues
|
11
|
%
|
|
12
|
%
|
|
|
|||
Headcount (at period end)
|
647
|
|
|
449
|
|
|
44
|
%
|
|
Year Ended December 31
|
|
% Change
|
||||||
|
2016
|
|
2015
|
|
|||||
|
(dollars in thousands)
|
|
|
||||||
Legal settlements
|
$
|
270,000
|
|
|
$
|
—
|
|
|
NM
|
Percentage of revenues
|
19
|
%
|
|
NM
|
|
|
|
|
Year Ended December 31
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|||||
Subscription
|
$
|
28,420
|
|
|
$
|
23,416
|
|
|
21
|
%
|
Professional services and other
|
26,442
|
|
|
23,265
|
|
|
14
|
%
|
||
Sales and marketing
|
131,571
|
|
|
102,349
|
|
|
29
|
%
|
||
Research and development
|
81,731
|
|
|
70,326
|
|
|
16
|
%
|
||
General and administrative
|
49,416
|
|
|
38,357
|
|
|
29
|
%
|
||
Total stock-based compensation
|
$
|
317,580
|
|
|
$
|
257,713
|
|
|
23
|
%
|
Percentage of revenues
|
23
|
%
|
|
26
|
%
|
|
|
|
Year Ended December 31
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Interest expense
|
$
|
(33,278
|
)
|
|
$
|
(31,097
|
)
|
|
7
|
%
|
Percentage of revenues
|
(2
|
)%
|
|
(3
|
)%
|
|
|
|
Year Ended December 31
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Interest income
|
$
|
8,528
|
|
|
$
|
4,858
|
|
|
76
|
%
|
Foreign currency exchange gain (loss)
|
(2,248
|
)
|
|
51
|
|
|
NM
|
|
||
Other
|
(245
|
)
|
|
(459
|
)
|
|
(47
|
)%
|
||
Interest income and other income (expense), net
|
$
|
6,035
|
|
|
$
|
4,450
|
|
|
36
|
%
|
Percentage of revenues
|
—
|
%
|
|
1
|
%
|
|
|
|
Year Ended December 31
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Loss before income taxes
|
$
|
(450,051
|
)
|
|
$
|
(193,012
|
)
|
|
133
|
%
|
Provision for income taxes
|
1,753
|
|
|
5,414
|
|
|
(68
|
)%
|
||
Effective tax rate
|
—
|
%
|
|
(3
|
)%
|
|
|
|
Year Ended December 31
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Net loss
|
$
|
(451,804
|
)
|
|
$
|
(198,426
|
)
|
|
128
|
%
|
Percentage of revenues
|
(32
|
)%
|
|
(20
|
)%
|
|
|
|
For the Three Months Ended
|
||||||||||||||||||||||||||||||
|
Dec 31,
2017 |
|
Sep 30,
2017 |
|
June 30,
2017 |
|
March 31,
2017 |
|
Dec 31,
2016 |
|
Sep 30,
2016 |
|
June 30,
2016 |
|
March 31,
2016 |
||||||||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Subscription
|
$
|
497,232
|
|
|
$
|
455,421
|
|
|
$
|
411,007
|
|
|
$
|
376,135
|
|
|
$
|
344,604
|
|
|
$
|
318,934
|
|
|
$
|
290,679
|
|
|
$
|
267,422
|
|
Professional services and other
|
49,138
|
|
|
42,749
|
|
|
60,696
|
|
|
40,648
|
|
|
41,062
|
|
|
38,722
|
|
|
50,633
|
|
|
38,457
|
|
||||||||
Total revenues
|
546,370
|
|
|
498,170
|
|
|
471,703
|
|
|
416,783
|
|
|
385,666
|
|
|
357,656
|
|
|
341,312
|
|
|
305,879
|
|
||||||||
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Subscription
|
87,524
|
|
|
81,878
|
|
|
75,793
|
|
|
70,375
|
|
|
64,707
|
|
|
61,566
|
|
|
56,360
|
|
|
52,781
|
|
||||||||
Professional services and other
|
46,836
|
|
|
45,402
|
|
|
45,892
|
|
|
46,072
|
|
|
40,229
|
|
|
41,271
|
|
|
40,289
|
|
|
41,479
|
|
||||||||
Total cost of revenues
|
134,360
|
|
|
127,280
|
|
|
121,685
|
|
|
116,447
|
|
|
104,936
|
|
|
102,837
|
|
|
96,649
|
|
|
94,260
|
|
||||||||
Gross profit
|
412,010
|
|
|
370,890
|
|
|
350,018
|
|
|
300,336
|
|
|
280,730
|
|
|
254,819
|
|
|
244,663
|
|
|
211,619
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Sales and marketing
|
260,292
|
|
|
227,015
|
|
|
247,224
|
|
|
212,086
|
|
|
188,857
|
|
|
166,491
|
|
|
186,506
|
|
|
158,610
|
|
||||||||
Research and development
|
104,559
|
|
|
98,465
|
|
|
90,005
|
|
|
84,489
|
|
|
73,933
|
|
|
75,018
|
|
|
70,364
|
|
|
65,924
|
|
||||||||
General and administrative
|
60,291
|
|
|
52,465
|
|
|
51,526
|
|
|
46,251
|
|
|
41,543
|
|
|
40,085
|
|
|
36,071
|
|
|
41,237
|
|
||||||||
Legal settlements
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
270,000
|
|
||||||||
Total operating expenses
|
425,142
|
|
|
377,945
|
|
|
388,755
|
|
|
342,826
|
|
|
304,333
|
|
|
281,594
|
|
|
292,941
|
|
|
535,771
|
|
||||||||
Loss from operations
|
(13,132
|
)
|
|
(7,055
|
)
|
|
(38,737
|
)
|
|
(42,490
|
)
|
|
(23,603
|
)
|
|
(26,775
|
)
|
|
(48,278
|
)
|
|
(324,152
|
)
|
||||||||
Interest expense
|
(16,813
|
)
|
|
(16,566
|
)
|
|
(11,337
|
)
|
|
(8,678
|
)
|
|
(8,532
|
)
|
|
(8,389
|
)
|
|
(8,248
|
)
|
|
(8,109
|
)
|
||||||||
Interest income and other income (expense), net
|
5,065
|
|
|
853
|
|
|
(7,830
|
)
|
|
7,716
|
|
|
1,290
|
|
|
1,783
|
|
|
2,260
|
|
|
702
|
|
||||||||
Loss before income taxes
|
(24,880
|
)
|
|
(22,768
|
)
|
|
(57,904
|
)
|
|
(43,452
|
)
|
|
(30,845
|
)
|
|
(33,381
|
)
|
|
(54,266
|
)
|
|
(331,559
|
)
|
||||||||
Provision for (benefit from) income taxes
|
2,927
|
|
|
1,420
|
|
|
(1,431
|
)
|
|
(2,790
|
)
|
|
1,744
|
|
|
2,877
|
|
|
(4,641
|
)
|
|
1,773
|
|
||||||||
Net loss
|
$
|
(27,807
|
)
|
|
$
|
(24,188
|
)
|
|
$
|
(56,473
|
)
|
|
$
|
(40,662
|
)
|
|
$
|
(32,589
|
)
|
|
$
|
(36,258
|
)
|
|
$
|
(49,625
|
)
|
|
$
|
(333,332
|
)
|
Net loss per share - basic and diluted
|
$
|
(0.16
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
(0.33
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
(2.06
|
)
|
(1)
|
For details regarding the legal settlements expenses of
$270.0 million
included in the three months ended March 31, 2016, refer to Note 16 in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(dollars in thousands)
|
||||||||||
Net cash provided by operating activities
|
$
|
642,825
|
|
|
$
|
159,921
|
|
|
$
|
317,754
|
|
Net cash used in investing activities
(1)
|
(883,948
|
)
|
|
(108,238
|
)
|
|
(231,521
|
)
|
|||
Net cash provided by (used in) financing activities
|
538,892
|
|
|
(55,752
|
)
|
|
80,330
|
|
|||
Net increase (decrease) in cash, cash equivalents and restricted cash net of foreign currency effect
|
325,897
|
|
|
(10,854
|
)
|
|
160,050
|
|
(1)
|
During the year ended December 31, 2017, we adopted Accounting Standards Update 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” which requires that amounts generally described as restricted cash or restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. We have adopted changes to the consolidated statements of cash flows on a retrospective basis. The impact of the adoption for the years ended December 31, 2016 and 2015 is not material.
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less
Than
1 Year
|
|
1 – 3
Years
|
|
3 – 5
Years
|
|
More
Than
5 Years
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Operating leases
(1)
|
$
|
353,859
|
|
|
$
|
44,713
|
|
|
$
|
96,204
|
|
|
$
|
88,828
|
|
|
$
|
124,114
|
|
Purchase obligations
(2)
|
80,974
|
|
|
31,394
|
|
|
34,434
|
|
|
11,053
|
|
|
4,093
|
|
|||||
Principal amount payable on our convertible senior notes
(3)
|
1,357,494
|
|
|
574,994
|
|
|
—
|
|
|
782,500
|
|
|
—
|
|
|||||
Other
|
3,923
|
|
|
574
|
|
|
1,148
|
|
|
1,148
|
|
|
1,053
|
|
|||||
Total contractual obligations
|
$
|
1,796,250
|
|
|
$
|
651,675
|
|
|
$
|
131,786
|
|
|
$
|
883,529
|
|
|
$
|
129,260
|
|
(1)
|
Consists of future non-cancelable minimum rental payments under operating leases for some of our offices and data centers.
|
(2)
|
Consists of future minimum payments under non-cancelable purchase commitments primarily related to data center and IT operations and sales and marketing activities. Not included in the table above are certain purchase commitments related to our future annual Knowledge user conferences and other customer or sales conferences to be held in 2019 and 2020. If we were to cancel these contractual commitments as of
December 31, 2017
, we would have been obligated to pay cancellation penalties of approximately
$13.9 million
in aggregate.
|
(3)
|
For additional information regarding our convertible senior notes, refer to Note 9 in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
|
ITEM 7A.
|
QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
Page
|
|
|
Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
726,495
|
|
|
$
|
401,238
|
|
Short-term investments
|
1,052,803
|
|
|
498,124
|
|
||
Accounts receivable, net
|
434,895
|
|
|
322,757
|
|
||
Current portion of deferred commissions
|
118,690
|
|
|
76,780
|
|
||
Prepaid expenses and other current assets
|
77,681
|
|
|
43,636
|
|
||
Total current assets
|
2,410,564
|
|
|
1,342,535
|
|
||
Deferred commissions, less current portion
|
85,530
|
|
|
61,990
|
|
||
Long-term investments
|
391,442
|
|
|
262,658
|
|
||
Property and equipment, net
|
245,124
|
|
|
181,620
|
|
||
Intangible assets, net
|
86,916
|
|
|
65,854
|
|
||
Goodwill
|
128,728
|
|
|
82,534
|
|
||
Other assets
|
49,600
|
|
|
36,576
|
|
||
Total assets
|
$
|
3,397,904
|
|
|
$
|
2,033,767
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
32,109
|
|
|
$
|
38,080
|
|
Accrued expenses and other current liabilities
|
244,605
|
|
|
171,636
|
|
||
Current portion of deferred revenue
|
1,280,499
|
|
|
861,782
|
|
||
Current portion of convertible senior notes, net
|
543,418
|
|
|
—
|
|
||
Total current liabilities
|
2,100,631
|
|
|
1,071,498
|
|
||
Deferred revenue, less current portion
|
39,884
|
|
|
33,319
|
|
||
Convertible senior notes, net
|
630,018
|
|
|
507,812
|
|
||
Other long-term liabilities
|
43,239
|
|
|
34,177
|
|
||
Total liabilities
|
2,813,772
|
|
|
1,646,806
|
|
||
Commitments and contingencies
|
|
|
|
|
|||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding
|
—
|
|
|
—
|
|
||
Common stock $0.001 par value; 600,000,000 shares authorized; 174,275,864 and 167,430,773 shares issued and outstanding at December 31, 2017 and 2016, respectively
|
174
|
|
|
167
|
|
||
Additional paid-in capital
|
1,731,367
|
|
|
1,405,317
|
|
||
Accumulated other comprehensive loss
|
(889
|
)
|
|
(21,133
|
)
|
||
Accumulated deficit
|
(1,146,520
|
)
|
|
(997,390
|
)
|
||
Total stockholders’ equity
|
584,132
|
|
|
386,961
|
|
||
Total liabilities and stockholders’ equity
|
$
|
3,397,904
|
|
|
$
|
2,033,767
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Subscription
|
$
|
1,739,795
|
|
|
$
|
1,221,639
|
|
|
$
|
848,278
|
|
Professional services and other
|
193,231
|
|
|
168,874
|
|
|
157,202
|
|
|||
Total revenues
|
1,933,026
|
|
|
1,390,513
|
|
|
1,005,480
|
|
|||
Cost of revenues
(1)
:
|
|
|
|
|
|
||||||
Subscription
|
315,570
|
|
|
235,414
|
|
|
183,400
|
|
|||
Professional services and other
|
184,202
|
|
|
163,268
|
|
|
146,013
|
|
|||
Total cost of revenues
|
499,772
|
|
|
398,682
|
|
|
329,413
|
|
|||
Gross profit
|
1,433,254
|
|
|
991,831
|
|
|
676,067
|
|
|||
Operating expenses
(1)
:
|
|
|
|
|
|
||||||
Sales and marketing
|
946,617
|
|
|
700,464
|
|
|
498,439
|
|
|||
Research and development
|
377,518
|
|
|
285,239
|
|
|
217,389
|
|
|||
General and administrative
|
210,533
|
|
|
158,936
|
|
|
126,604
|
|
|||
Legal settlements
|
—
|
|
|
270,000
|
|
|
—
|
|
|||
Total operating expenses
|
1,534,668
|
|
|
1,414,639
|
|
|
842,432
|
|
|||
Loss from operations
|
(101,414
|
)
|
|
(422,808
|
)
|
|
(166,365
|
)
|
|||
Interest expense
|
(53,394
|
)
|
|
(33,278
|
)
|
|
(31,097
|
)
|
|||
Interest income and other income (expense), net
|
5,804
|
|
|
6,035
|
|
|
4,450
|
|
|||
Loss before income taxes
|
(149,004
|
)
|
|
(450,051
|
)
|
|
(193,012
|
)
|
|||
Provision for income taxes
|
126
|
|
|
1,753
|
|
|
5,414
|
|
|||
Net loss
|
$
|
(149,130
|
)
|
|
$
|
(451,804
|
)
|
|
$
|
(198,426
|
)
|
Net loss per share - basic and diluted
|
$
|
(0.87
|
)
|
|
$
|
(2.75
|
)
|
|
$
|
(1.27
|
)
|
Weighted-average shares used to compute net loss per share - basic and diluted
|
171,175,577
|
|
|
164,533,823
|
|
|
155,706,643
|
|
|||
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
$
|
14,867
|
|
|
$
|
(4,839
|
)
|
|
$
|
(3,177
|
)
|
Unrealized gains (losses) on investments, net of tax
|
5,377
|
|
|
588
|
|
|
(1,592
|
)
|
|||
Other comprehensive income (loss)
|
20,244
|
|
|
(4,251
|
)
|
|
(4,769
|
)
|
|||
Comprehensive loss
|
$
|
(128,886
|
)
|
|
$
|
(456,055
|
)
|
|
$
|
(203,195
|
)
|
(1)
|
Includes stock-based compensation as follows:
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cost of revenues:
|
|
|
|
|
|
||||||
Subscription
|
$
|
35,334
|
|
|
$
|
28,420
|
|
|
$
|
23,416
|
|
Professional services and other
|
27,475
|
|
|
26,442
|
|
|
23,265
|
|
|||
Sales and marketing
|
170,527
|
|
|
131,571
|
|
|
102,349
|
|
|||
Research and development
|
92,025
|
|
|
81,731
|
|
|
70,326
|
|
|||
General and administrative
|
68,717
|
|
|
49,416
|
|
|
38,357
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive Loss
|
|
Total
Stockholders’
Equity
|
|||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||
Balance at December 31, 2014
|
149,509,092
|
|
|
$
|
150
|
|
|
$
|
799,221
|
|
|
$
|
(358,583
|
)
|
|
$
|
(12,113
|
)
|
|
$
|
428,675
|
|
Common stock issued under employee stock plans
|
11,276,672
|
|
|
10
|
|
|
93,338
|
|
|
—
|
|
|
—
|
|
|
93,348
|
|
|||||
Tax benefit from employee stock plans
|
—
|
|
|
—
|
|
|
2,663
|
|
|
—
|
|
|
—
|
|
|
2,663
|
|
|||||
Taxes paid related to net share settlement of equity awards
|
—
|
|
|
—
|
|
|
(12,795
|
)
|
|
—
|
|
|
—
|
|
|
(12,795
|
)
|
|||||
Vesting of early exercised stock options
|
—
|
|
|
—
|
|
|
44
|
|
|
—
|
|
|
—
|
|
|
44
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
258,074
|
|
|
—
|
|
|
—
|
|
|
258,074
|
|
|||||
Other comprehensive loss, net
|
|
|
|
|
—
|
|
|
—
|
|
|
(4,769
|
)
|
|
(4,769
|
)
|
|||||||
Net loss
|
|
|
|
|
—
|
|
|
(198,426
|
)
|
|
—
|
|
|
(198,426
|
)
|
|||||||
Balance at December 31, 2015
|
160,785,764
|
|
|
$
|
160
|
|
|
$
|
1,140,545
|
|
|
$
|
(557,009
|
)
|
|
$
|
(16,882
|
)
|
|
$
|
566,814
|
|
Cumulative effect adjustment for ASU 2016-09 adoption
|
—
|
|
|
—
|
|
|
—
|
|
|
11,423
|
|
|
—
|
|
|
11,423
|
|
|||||
Common stock issued under employee stock plans
|
6,645,009
|
|
|
7
|
|
|
66,361
|
|
|
—
|
|
|
—
|
|
|
66,368
|
|
|||||
Taxes paid related to net share settlement of equity awards
|
—
|
|
|
—
|
|
|
(119,914
|
)
|
|
—
|
|
|
—
|
|
|
(119,914
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
318,325
|
|
|
—
|
|
|
—
|
|
|
318,325
|
|
|||||
Other comprehensive loss, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,251
|
)
|
|
(4,251
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(451,804
|
)
|
|
—
|
|
|
(451,804
|
)
|
|||||
Balance at December 31, 2016
|
167,430,773
|
|
|
$
|
167
|
|
|
$
|
1,405,317
|
|
|
$
|
(997,390
|
)
|
|
$
|
(21,133
|
)
|
|
$
|
386,961
|
|
Common stock issued under employee stock plans
|
7,385,897
|
|
|
7
|
|
|
82,552
|
|
|
—
|
|
|
—
|
|
|
82,559
|
|
|||||
Repurchases and retirement of common stock
|
(540,806
|
)
|
|
—
|
|
|
(55,000
|
)
|
|
—
|
|
|
—
|
|
|
(55,000
|
)
|
|||||
Taxes paid related to net share settlement of equity awards
|
—
|
|
|
—
|
|
|
(182,127
|
)
|
|
—
|
|
|
—
|
|
|
(182,127
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
394,680
|
|
|
—
|
|
|
—
|
|
|
394,680
|
|
|||||
Equity component of the convertible notes, net
|
—
|
|
|
—
|
|
|
159,891
|
|
|
—
|
|
|
—
|
|
|
159,891
|
|
|||||
Purchase of convertible note hedge
|
—
|
|
|
—
|
|
|
(128,017
|
)
|
|
—
|
|
|
—
|
|
|
(128,017
|
)
|
|||||
Issuance of warrants
|
—
|
|
|
—
|
|
|
54,071
|
|
|
—
|
|
|
—
|
|
|
54,071
|
|
|||||
Other comprehensive loss, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,244
|
|
|
20,244
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(149,130
|
)
|
|
—
|
|
|
(149,130
|
)
|
|||||
Balance at December 31, 2017
|
174,275,864
|
|
|
$
|
174
|
|
|
$
|
1,731,367
|
|
|
$
|
(1,146,520
|
)
|
|
$
|
(889
|
)
|
|
$
|
584,132
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(149,130
|
)
|
|
$
|
(451,804
|
)
|
|
$
|
(198,426
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
113,875
|
|
|
83,082
|
|
|
60,356
|
|
|||
Amortization of premiums on investments
|
3,092
|
|
|
4,725
|
|
|
7,064
|
|
|||
Amortization of deferred commissions
|
115,262
|
|
|
81,217
|
|
|
65,541
|
|
|||
Amortization of debt discount and issuance costs
|
53,394
|
|
|
33,278
|
|
|
31,097
|
|
|||
Stock-based compensation
|
394,078
|
|
|
317,580
|
|
|
257,713
|
|
|||
Deferred income tax
|
(9,078
|
)
|
|
(3,424
|
)
|
|
(1,282
|
)
|
|||
Other
|
(3,997
|
)
|
|
(962
|
)
|
|
(6,223
|
)
|
|||
Changes in operating assets and liabilities, net of effect of business combinations:
|
|
|
|
|
|
||||||
Accounts receivable
|
(98,432
|
)
|
|
(125,106
|
)
|
|
(50,855
|
)
|
|||
Deferred commissions
|
(174,503
|
)
|
|
(136,459
|
)
|
|
(80,142
|
)
|
|||
Prepaid expenses and other assets
|
(46,138
|
)
|
|
(21,500
|
)
|
|
(10,961
|
)
|
|||
Accounts payable
|
(5,504
|
)
|
|
(3,554
|
)
|
|
14,785
|
|
|||
Deferred revenue
|
381,562
|
|
|
300,167
|
|
|
195,900
|
|
|||
Accrued expenses and other liabilities
|
68,344
|
|
|
82,681
|
|
|
33,187
|
|
|||
Net cash provided by operating activities
|
642,825
|
|
|
159,921
|
|
|
317,754
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(150,510
|
)
|
|
(105,562
|
)
|
|
(87,481
|
)
|
|||
Business combinations, net of cash and restricted cash acquired
|
(58,203
|
)
|
|
(34,297
|
)
|
|
(1,100
|
)
|
|||
Purchases of other intangibles
|
(6,670
|
)
|
|
(18,750
|
)
|
|
(1,750
|
)
|
|||
Purchases of investments
|
(1,189,511
|
)
|
|
(518,664
|
)
|
|
(712,782
|
)
|
|||
Purchases of strategic investments
|
(4,750
|
)
|
|
(500
|
)
|
|
(10,500
|
)
|
|||
Sales of investments
|
85,106
|
|
|
297,998
|
|
|
277,045
|
|
|||
Maturities of investments
|
440,590
|
|
|
271,537
|
|
|
305,047
|
|
|||
Net cash used in investing activities
(1)
|
(883,948
|
)
|
|
(108,238
|
)
|
|
(231,521
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Net proceeds from borrowings on convertible senior notes
|
772,127
|
|
|
—
|
|
|
—
|
|
|||
Principal payments on convertible senior notes
|
(4
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of warrants
|
54,071
|
|
|
—
|
|
|
—
|
|
|||
Purchases of convertible note hedges
|
(128,017
|
)
|
|
—
|
|
|
—
|
|
|||
Repurchases and retirement of common stock
|
(55,000
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from employee stock plans
|
82,567
|
|
|
66,378
|
|
|
93,348
|
|
|||
Taxes paid related to net share settlement of equity awards
|
(181,938
|
)
|
|
(119,907
|
)
|
|
(12,795
|
)
|
|||
Payments on financing obligations
|
(4,914
|
)
|
|
(2,223
|
)
|
|
(223
|
)
|
|||
Net cash provided by (used in) financing activities
|
538,892
|
|
|
(55,752
|
)
|
|
80,330
|
|
|||
Foreign currency effect on cash, cash equivalents and restricted cash
(1)
|
28,128
|
|
|
(6,785
|
)
|
|
(6,513
|
)
|
|||
Net increase (decrease) in cash, cash equivalents and restricted cash
(1)
|
325,897
|
|
|
(10,854
|
)
|
|
160,050
|
|
|||
Cash, cash equivalents and restricted cash at beginning of period
(1)
|
401,932
|
|
|
412,786
|
|
|
252,736
|
|
|||
Cash, cash equivalents and restricted cash at end of period
(1)
|
$
|
727,829
|
|
|
$
|
401,932
|
|
|
$
|
412,786
|
|
Cash, cash equivalents and restricted cash at end of period:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
726,495
|
|
|
$
|
401,238
|
|
|
$
|
412,305
|
|
Current portion of restricted cash included in prepaid expenses and other current assets
|
1,301
|
|
|
694
|
|
|
481
|
|
|||
Non-current portion of restricted cash included in other assets
|
33
|
|
|
—
|
|
|
—
|
|
|||
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows
|
$
|
727,829
|
|
|
$
|
401,932
|
|
|
$
|
412,786
|
|
Supplemental disclosures of other cash flow information:
|
|
|
|
|
|
||||||
Income taxes paid, net of refunds
|
$
|
7,899
|
|
|
$
|
4,338
|
|
|
$
|
3,630
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Property and equipment included in accounts payable and accrued expenses
|
$
|
15,007
|
|
|
$
|
15,381
|
|
|
$
|
14,427
|
|
Intangible assets included in accrued expenses and other liabilities
|
$
|
6,750
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Financing obligations for purchases of other intangibles
|
$
|
—
|
|
|
$
|
6,210
|
|
|
$
|
—
|
|
(1)
|
During the year ended December 31, 2017, we adopted Accounting Standards Update 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” which requires that amounts generally described as restricted cash or restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. We have adopted changes to the consolidated statements of cash flows on a retrospective basis. The impact of the adoption for the years ended December 31, 2016 and 2015 is not material.
|
Building
|
|
39 years
|
Computer equipment and software
|
|
3—5 years
|
Furniture and fixtures
|
|
3—7 years
|
Leasehold and other improvements
|
|
shorter of the lease term or estimated useful life
|
|
Balance at Beginning of Year
|
|
Additions (Deductions): Charged to Operations
|
|
Additions (Deductions): Charged to Deferred Revenue
|
|
Less:
Write-offs
|
|
Balance at End of Year
|
|||||||
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|||||||
Allowance for doubtful accounts
|
$
|
2,323
|
|
|
1,688
|
|
|
194
|
|
|
1,090
|
|
|
$
|
3,115
|
|
Year ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|||||||
Allowance for doubtful accounts
|
$
|
1,179
|
|
|
2,219
|
|
|
(391
|
)
|
|
684
|
|
|
$
|
2,323
|
|
Year ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|||||||
Allowance for doubtful accounts
|
$
|
809
|
|
|
841
|
|
|
(70
|
)
|
|
401
|
|
|
$
|
1,179
|
|
|
Year Ended December 31,
|
||||||||||||||
|
2017
|
|
2016
|
||||||||||||
|
As Reported
|
|
As Adjusted
|
|
As Reported
|
|
As Adjusted
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Subscription and software
|
$
|
1,739,795
|
|
|
$
|
1,739,500
|
|
|
$
|
1,221,639
|
|
|
$
|
1,234,070
|
|
Professional services and other
|
193,231
|
|
|
178,994
|
|
|
168,874
|
|
|
156,915
|
|
||||
Total revenues
|
1,933,026
|
|
|
1,918,494
|
|
|
1,390,513
|
|
|
1,390,985
|
|
||||
Cost of revenues:
|
|
|
|
|
|
|
|
||||||||
Professional services and other
|
184,202
|
|
|
184,292
|
|
|
163,268
|
|
|
163,581
|
|
||||
Total cost of revenues
|
499,772
|
|
|
499,862
|
|
|
398,682
|
|
|
398,995
|
|
||||
Gross profit
|
1,433,254
|
|
|
1,418,632
|
|
|
991,831
|
|
|
991,990
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Sales and marketing
|
946,617
|
|
|
894,977
|
|
|
700,464
|
|
|
659,983
|
|
||||
Total operating expenses
|
1,534,668
|
|
|
1,483,028
|
|
|
1,414,639
|
|
|
1,374,158
|
|
||||
Loss from operations
|
(101,414
|
)
|
|
(64,396
|
)
|
|
(422,808
|
)
|
|
(382,168
|
)
|
||||
Interest income and other income (expense), net
|
5,804
|
|
|
4,384
|
|
|
6,035
|
|
|
5,027
|
|
||||
Loss before income taxes
|
(149,004
|
)
|
|
(113,406
|
)
|
|
(450,051
|
)
|
|
(410,419
|
)
|
||||
Provision for income taxes
|
126
|
|
|
3,440
|
|
|
1,753
|
|
|
3,830
|
|
||||
Net loss
|
$
|
(149,130
|
)
|
|
$
|
(116,846
|
)
|
|
$
|
(451,804
|
)
|
|
$
|
(414,249
|
)
|
Net loss per share - basic and diluted
|
$
|
(0.87
|
)
|
|
$
|
(0.68
|
)
|
|
$
|
(2.75
|
)
|
|
$
|
(2.52
|
)
|
Weighted-average shares used to compute net loss per share - basic and diluted
|
171,175,577
|
|
|
171,175,577
|
|
|
164,533,823
|
|
|
164,533,823
|
|
|
Year Ended December 31, 2017
|
||||||
|
As Reported
|
|
As Adjusted
|
||||
Assets
|
|
|
|
||||
Accounts receivable, net
|
$
|
434,895
|
|
|
$
|
437,051
|
|
Current portion of deferred commissions
|
118,690
|
|
|
109,643
|
|
||
Prepaid expenses and other current assets
|
77,681
|
|
|
95,959
|
|
||
Deferred commissions, less current portion
|
85,530
|
|
|
224,252
|
|
||
Other assets
|
49,600
|
|
|
51,832
|
|
||
Liabilities
|
|
|
|
||||
Accrued expenses and other current liabilities
|
244,605
|
|
|
253,257
|
|
||
Current portion of deferred revenue
|
1,280,499
|
|
|
1,210,695
|
|
||
Deferred revenue, less current portion
|
39,884
|
|
|
36,120
|
|
||
Other long-term liabilities
|
43,239
|
|
|
65,884
|
|
||
Stockholder's equity
|
|
|
|
||||
Accumulated other comprehensive (loss) income
|
(889
|
)
|
|
5,767
|
|
||
Accumulated deficit
|
(1,146,520
|
)
|
|
(958,564
|
)
|
|
December 31, 2017
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
$
|
258,348
|
|
|
$
|
1
|
|
|
$
|
(5
|
)
|
|
$
|
258,344
|
|
Corporate notes and bonds
|
1,006,302
|
|
|
26
|
|
|
(3,084
|
)
|
|
1,003,244
|
|
||||
Certificates of deposit
|
33,084
|
|
|
—
|
|
|
—
|
|
|
33,084
|
|
||||
U.S. government agency securities
|
129,494
|
|
|
—
|
|
|
(638
|
)
|
|
128,856
|
|
||||
Marketable equity securities
|
10,000
|
|
|
10,717
|
|
|
—
|
|
|
20,717
|
|
||||
Total available-for-sale securities
|
$
|
1,437,228
|
|
|
$
|
10,744
|
|
|
$
|
(3,727
|
)
|
|
$
|
1,444,245
|
|
|
December 31, 2016
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
$
|
56,839
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
56,839
|
|
Corporate notes and bonds
|
628,054
|
|
|
91
|
|
|
(1,590
|
)
|
|
626,555
|
|
||||
Certificates of deposit
|
35,355
|
|
|
—
|
|
|
—
|
|
|
35,355
|
|
||||
U.S. government agency securities
|
42,088
|
|
|
7
|
|
|
(62
|
)
|
|
42,033
|
|
||||
Total available-for-sale securities
|
$
|
762,336
|
|
|
$
|
98
|
|
|
$
|
(1,652
|
)
|
|
$
|
760,782
|
|
|
December 31, 2017
|
||
Due in one year or less
|
$
|
1,032,086
|
|
Due in one year through two years
|
391,442
|
|
|
Total
|
$
|
1,423,528
|
|
|
December 31, 2017
|
||||||||||||||||||||||
|
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
|
$
|
14,809
|
|
|
$
|
(5
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,809
|
|
|
$
|
(5
|
)
|
Corporate notes and bonds
|
819,113
|
|
|
(2,703
|
)
|
|
141,874
|
|
|
(381
|
)
|
|
960,987
|
|
|
(3,084
|
)
|
||||||
U.S. government agency securities
|
106,301
|
|
|
(593
|
)
|
|
22,555
|
|
|
(45
|
)
|
|
128,856
|
|
|
(638
|
)
|
||||||
Total
|
$
|
940,223
|
|
|
$
|
(3,301
|
)
|
|
$
|
164,429
|
|
|
$
|
(426
|
)
|
|
$
|
1,104,652
|
|
|
$
|
(3,727
|
)
|
|
December 31, 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
|
$
|
492,503
|
|
|
$
|
(1,530
|
)
|
|
$
|
47,940
|
|
|
$
|
(60
|
)
|
|
$
|
540,443
|
|
|
$
|
(1,590
|
)
|
U.S. government agency securities
|
30,033
|
|
|
(62
|
)
|
|
—
|
|
|
—
|
|
|
30,033
|
|
|
(62
|
)
|
||||||
Total
|
$
|
522,536
|
|
|
$
|
(1,592
|
)
|
|
$
|
47,940
|
|
|
$
|
(60
|
)
|
|
$
|
570,476
|
|
|
$
|
(1,652
|
)
|
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Cash equivalents:
|
|
|
|
|
|
||||||
Money market funds
|
$
|
282,507
|
|
|
$
|
—
|
|
|
$
|
282,507
|
|
Commercial paper
|
—
|
|
|
100,456
|
|
|
100,456
|
|
|||
Corporate notes and bonds
|
—
|
|
|
50,437
|
|
|
50,437
|
|
|||
Short-term investments:
|
|
|
|
|
|
||||||
Commercial paper
|
—
|
|
|
258,344
|
|
|
258,344
|
|
|||
Corporate notes and bonds
|
—
|
|
|
688,316
|
|
|
688,316
|
|
|||
Certificates of deposit
|
—
|
|
|
17,950
|
|
|
17,950
|
|
|||
U.S. government agency securities
|
—
|
|
|
67,476
|
|
|
67,476
|
|
|||
Marketable equity securities
|
20,717
|
|
|
—
|
|
|
20,717
|
|
|||
Long-term investments:
|
|
|
|
|
|
||||||
Corporate notes and bonds
|
—
|
|
|
314,928
|
|
|
314,928
|
|
|||
Certificates of deposit
|
—
|
|
|
15,134
|
|
|
15,134
|
|
|||
U.S. government agency securities
|
—
|
|
|
61,380
|
|
|
61,380
|
|
|||
Total
|
$
|
303,224
|
|
|
$
|
1,574,421
|
|
|
$
|
1,877,645
|
|
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Cash equivalents:
|
|
|
|
|
|
||||||
Money market funds
|
$
|
165,627
|
|
|
$
|
—
|
|
|
$
|
165,627
|
|
Short-term investments:
|
|
|
|
|
|
||||||
Commercial paper
|
—
|
|
|
56,839
|
|
|
56,839
|
|
|||
Corporate notes and bonds
|
—
|
|
|
388,429
|
|
|
388,429
|
|
|||
Certificates of deposit
|
—
|
|
|
35,355
|
|
|
35,355
|
|
|||
U.S. government agency securities
|
—
|
|
|
17,501
|
|
|
17,501
|
|
|||
Long-term investments:
|
|
|
|
|
|
||||||
Corporate notes and bonds
|
—
|
|
|
238,125
|
|
|
238,125
|
|
|||
U.S. government agency securities
|
—
|
|
|
24,533
|
|
|
24,533
|
|
|||
Total
|
$
|
165,627
|
|
|
$
|
760,782
|
|
|
$
|
926,409
|
|
|
Purchase Price Allocation
(in thousands)
|
|
Useful Life
(in years)
|
||
Net tangible assets acquired
|
$
|
675
|
|
|
|
Intangible assets:
|
|
|
|
||
Developed technology
|
15,600
|
|
|
5
|
|
Goodwill
|
19,386
|
|
|
|
|
Net deferred tax liabilities
(1)
|
(3,341
|
)
|
|
|
|
Total purchase price
|
$
|
32,320
|
|
|
|
(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
|
$
|
37
|
|
|
|
Intangible assets:
|
|
|
|
||
Developed technology
|
6,400
|
|
|
5
|
|
Goodwill
|
11,159
|
|
|
|
|
Net deferred tax liabilities
(1)
|
(2,561
|
)
|
|
|
|
Total purchase price
|
$
|
15,035
|
|
|
|
(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)
|
||
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
(1)
|
(2,015
|
)
|
|
|
|
Total purchase price
|
$
|
14,462
|
|
|
|
(1)
|
Deferred tax liabilities, net primarily relates to purchased identifiable intangible assets and is shown net of deferred tax assets.
|
|
Year Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(Unaudited)
|
||||||
Revenue
|
$
|
1,937,374
|
|
|
$
|
1,397,600
|
|
Net loss
|
$
|
(153,218
|
)
|
|
$
|
(467,578
|
)
|
Weighted-average shares used to compute net loss per share - basic and diluted
|
171,175,577
|
|
|
164,533,823
|
|
||
Net loss per share - basic and diluted
|
$
|
(0.90
|
)
|
|
$
|
(2.84
|
)
|
|
|
Carrying Amount
|
|||||
Balance as of December 31, 2015
|
|
$
|
55,669
|
|
|||
Goodwill acquired
|
|
26,695
|
|
||||
Foreign currency translation adjustments
|
|
170
|
|
||||
Balance as of December 31, 2016
|
|
82,534
|
|
||||
Goodwill acquired
|
|
39,668
|
|
||||
Foreign currency translation adjustments
|
|
6,526
|
|
||||
Balance as of December 31, 2017
|
|
$
|
128,728
|
|
|
December 31, 2017
|
||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
Developed technology
|
$
|
102,349
|
|
|
$
|
(43,382
|
)
|
|
$
|
58,967
|
|
Patents
|
31,030
|
|
|
(3,239
|
)
|
|
27,791
|
|
|||
Other
|
1,575
|
|
|
(1,417
|
)
|
|
158
|
|
|||
Total intangible assets
|
$
|
134,954
|
|
|
$
|
(48,038
|
)
|
|
$
|
86,916
|
|
|
December 31, 2016
|
||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
Developed technology
|
$
|
79,206
|
|
|
$
|
(30,858
|
)
|
|
$
|
48,348
|
|
Patents
|
17,610
|
|
|
(867
|
)
|
|
16,743
|
|
|||
Other
|
1,775
|
|
|
(1,012
|
)
|
|
763
|
|
|||
Total intangible assets
|
$
|
98,591
|
|
|
$
|
(32,737
|
)
|
|
$
|
65,854
|
|
Years Ending December 31,
|
|||||||
2018
|
|
$
|
22,772
|
|
|||
2019
|
|
22,691
|
|
||||
2020
|
|
12,736
|
|
||||
2021
|
|
10,805
|
|
||||
2022
|
|
6,974
|
|
||||
Thereafter
|
|
10,938
|
|
||||
Total future amortization expense
|
|
$
|
86,916
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Computer equipment
|
$
|
326,378
|
|
|
$
|
222,648
|
|
Computer software
|
46,413
|
|
|
32,132
|
|
||
Leasehold and other improvements
|
56,232
|
|
|
37,095
|
|
||
Furniture and fixtures
|
38,789
|
|
|
31,574
|
|
||
Building
|
7,084
|
|
|
6,379
|
|
||
Construction in progress
|
5,341
|
|
|
2,535
|
|
||
|
480,237
|
|
|
332,363
|
|
||
Less: Accumulated depreciation
|
(235,113
|
)
|
|
(150,743
|
)
|
||
Total property and equipment, net
|
$
|
245,124
|
|
|
$
|
181,620
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Taxes payable
|
$
|
25,617
|
|
|
$
|
19,472
|
|
Bonuses and commissions
|
84,972
|
|
|
67,259
|
|
||
Accrued compensation
|
45,428
|
|
|
30,816
|
|
||
Other employee related liabilities
|
44,284
|
|
|
28,812
|
|
||
Other
|
44,304
|
|
|
25,277
|
|
||
Total accrued expenses and other current liabilities
|
$
|
244,605
|
|
|
$
|
171,636
|
|
|
Convertible Date
|
|
Initial Conversion Price per Share
|
|
Initial Conversion Rate per $1,000 Par Value
|
|
Initial Number of Shares
|
|||
2022 Notes
|
February 1, 2022
|
|
$
|
134.75
|
|
|
7.42 shares
|
|
5,806,936
|
|
2018 Notes
|
July 1, 2018
|
|
$
|
73.88
|
|
|
13.54 shares
|
|
7,783,023
|
|
•
|
during any calendar quarter (and only during such calendar quarter) if the last reported sale price of our 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 applicable conversion price on each applicable trading day; or
|
•
|
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 applicable conversion rate on each such trading day; or
|
•
|
upon the occurrence of specified corporate events.
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Liability component:
|
|
|
|
||||
Principal:
|
|
|
|
||||
2022 Notes
|
$
|
782,500
|
|
|
$
|
—
|
|
2018 Notes
|
574,994
|
|
|
575,000
|
|
||
Less: debt issuance cost and debt discount, net of amortization
|
|
|
|
||||
2022 Notes
|
(152,482
|
)
|
|
—
|
|
||
2018 Notes
|
(31,576
|
)
|
|
(67,188
|
)
|
||
Net carrying amount
|
$
|
1,173,436
|
|
|
$
|
507,812
|
|
|
2022 Notes
|
|
2018 Notes
|
||||
Equity component recorded at issuance:
|
|
|
|
||||
Note
|
$
|
162,039
|
|
|
$
|
155,319
|
|
Issuance cost
|
(2,148
|
)
|
|
(3,257
|
)
|
||
Net amount recorded in equity
|
$
|
159,891
|
|
|
$
|
152,062
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
2022 Notes
|
$
|
897,778
|
|
|
N/A
|
|
|
2018 Notes
|
$
|
1,015,554
|
|
|
$
|
681,375
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Amortization of debt issuance cost
|
|
|
|
|
|
||||||
2022 Notes
|
$
|
860
|
|
|
$
|
—
|
|
|
$
|
—
|
|
2018 Notes
|
1,911
|
|
|
1,785
|
|
|
1,668
|
|
|||
Amortization of debt discount
|
|
|
|
|
|
||||||
2022 Notes
|
16,921
|
|
|
—
|
|
|
—
|
|
|||
2018 Notes
|
33,702
|
|
|
31,493
|
|
|
29,429
|
|
|||
Total
|
$
|
53,394
|
|
|
$
|
33,278
|
|
|
$
|
31,097
|
|
Effective interest rate of the liability component
|
|
||||||||||
2022 Notes
|
4.75%
|
||||||||||
2018 Notes
|
6.50%
|
|
Purchase
|
|
Shares
|
|||
|
(in thousands)
|
|
|
|||
2022 Note Hedge
|
$
|
128,017
|
|
|
5,806,936
|
|
2018 Note Hedge
|
$
|
135,815
|
|
|
7,783,023
|
|
|
Proceeds
|
|
Shares
|
|
Strike Price
|
|
First Expiration Date
|
|||||
|
(in thousands)
|
|
|
|
|
|
|
|||||
2022 Warrants
|
$
|
54,071
|
|
|
5,806,936
|
|
|
$
|
203.40
|
|
|
September 2022
|
2018 Warrants
|
$
|
84,525
|
|
|
7,783,023
|
|
|
$
|
107.46
|
|
|
February 2019
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Foreign currency translation adjustment
|
$
|
(4,410
|
)
|
|
$
|
(19,277
|
)
|
Net unrealized gain (loss) on investments, net of tax
|
3,521
|
|
|
(1,856
|
)
|
||
Accumulated other comprehensive loss
|
$
|
(889
|
)
|
|
$
|
(21,133
|
)
|
|
|
December 31, 2017
|
||
Stock plans:
|
|
|
||
Options outstanding
|
|
3,369,732
|
|
|
RSUs
(1)
|
|
11,403,341
|
|
|
Stock awards available for future grants:
|
|
|
||
2012 Equity Incentive Plan
(2)
|
|
25,813,848
|
|
|
2012 Employee Stock Purchase Plan
(2)
|
|
9,581,944
|
|
|
Total reserved shares of common stock for future issuance
|
|
50,168,865
|
|
(1)
|
Represents the number of shares issuable upon settlement of outstanding RSUs and performance RSUs, assuming
100%
of the target number of shares for performance RSUs, as discussed under the section entitled “RSUs” in Note 12.
|
(2)
|
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
|
617,985
|
|
|
71.17
|
|
|
|
|
|
|||
Exercised
|
(2,587,173
|
)
|
|
13.36
|
|
|
|
|
$
|
157,774
|
|
|
Canceled
|
(467,931
|
)
|
|
58.01
|
|
|
|
|
|
|||
Outstanding at December 31, 2016
|
5,818,435
|
|
|
20.57
|
|
|
|
|
|
|||
Granted
|
616,720
|
|
|
86.33
|
|
|
|
|
|
|||
Exercised
|
(2,970,914
|
)
|
|
12.44
|
|
|
|
|
$
|
277,670
|
|
|
Canceled
|
(94,509
|
)
|
|
68.88
|
|
|
|
|
|
|||
Outstanding at December 31, 2017
|
3,369,732
|
|
|
$
|
38.43
|
|
|
5.62
|
|
$
|
309,892
|
|
Vested and expected to vest as of December 31, 2017
|
3,283,791
|
|
|
$
|
37.62
|
|
|
5.54
|
|
$
|
304,651
|
|
Vested and exercisable as of December 31, 2017
|
2,426,777
|
|
|
$
|
21.96
|
|
|
4.38
|
|
$
|
263,144
|
|
|
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
|
6,870,285
|
|
|
61.22
|
|
|
|
|||
Vested
|
(5,213,662
|
)
|
|
59.95
|
|
|
$
|
354,320
|
|
|
Forfeited
|
(1,852,146
|
)
|
|
63.18
|
|
|
|
|||
Outstanding at December 31, 2016
|
12,222,282
|
|
|
63.66
|
|
|
|
|||
Granted
|
6,320,457
|
|
|
95.70
|
|
|
|
|||
Vested
|
(5,502,004
|
)
|
|
60.79
|
|
|
$
|
573,861
|
|
|
Forfeited
|
(1,637,394
|
)
|
|
72.69
|
|
|
|
|||
Outstanding at December 31, 2017
|
11,403,341
|
|
|
$
|
81.50
|
|
|
$
|
1,486,882
|
|
Expected to vest as of December 31, 2017
|
10,191,316
|
|
|
|
|
$
|
1,328,846
|
|
|
Year Ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
|
|
|
|
|
|
|||
Stock Options:
|
|
|
|
|
|
|||
Expected volatility
|
39% - 42%
|
|
|
41% - 42%
|
|
|
41% - 46%
|
|
Expected term (in years)
|
4.89
|
|
|
4.89 - 5.60
|
|
|
5.50 - 6.08
|
|
Risk-free interest rate
|
1.78% - 2.47%
|
|
|
1.18% - 1.87%
|
|
|
1.48% - 1.94%
|
|
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
Year Ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
|
|
|
|
|
|
|||
ESPP:
|
|
|
|
|
|
|||
Expected volatility
|
28% - 49%
|
|
|
31% - 49%
|
|
|
31% - 49%
|
|
Expected term (in years)
|
0.50
|
|
|
0.50
|
|
|
0.50
|
|
Risk-free interest rate
|
0.40% - 1.15%
|
|
|
0.17% - 0.47%
|
|
|
0.05% - 0.17%
|
|
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(149,130
|
)
|
|
$
|
(451,804
|
)
|
|
$
|
(198,426
|
)
|
Denominator:
|
|
|
|
|
|
||||||
Weighted-average shares outstanding - basic and diluted
|
171,175,577
|
|
|
164,533,823
|
|
|
155,706,643
|
|
|||
Net loss per share - basic and diluted
|
$
|
(0.87
|
)
|
|
$
|
(2.75
|
)
|
|
$
|
(1.27
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Current provision:
|
|
|
|
|
|
||||||
Federal
|
$
|
(445
|
)
|
|
$
|
(55
|
)
|
|
$
|
682
|
|
State
|
137
|
|
|
135
|
|
|
211
|
|
|||
Foreign
|
9,512
|
|
|
5,097
|
|
|
6,125
|
|
|||
|
9,204
|
|
|
5,177
|
|
|
7,018
|
|
|||
Deferred provision:
|
|
|
|
|
|
||||||
Federal
|
(5,934
|
)
|
|
(4,462
|
)
|
|
—
|
|
|||
State
|
(886
|
)
|
|
(746
|
)
|
|
—
|
|
|||
Foreign
|
(2,258
|
)
|
|
1,784
|
|
|
(1,604
|
)
|
|||
|
(9,078
|
)
|
|
(3,424
|
)
|
|
(1,604
|
)
|
|||
Provision for income taxes
|
$
|
126
|
|
|
$
|
1,753
|
|
|
$
|
5,414
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Tax computed at U.S. federal statutory rate
|
$
|
(50,661
|
)
|
|
$
|
(153,017
|
)
|
|
$
|
(65,624
|
)
|
State taxes, net of federal benefit
|
64
|
|
|
37
|
|
|
53
|
|
|||
Tax rate differential for international subsidiaries
|
29,312
|
|
|
10,910
|
|
|
18,681
|
|
|||
Stock-based compensation
|
(116,953
|
)
|
|
(27,133
|
)
|
|
13,597
|
|
|||
Tax credits
|
(21,038
|
)
|
|
(16,452
|
)
|
|
(11,961
|
)
|
|||
Other
|
7,337
|
|
|
7,850
|
|
|
2,865
|
|
|||
Valuation allowance
|
152,065
|
|
|
179,558
|
|
|
47,803
|
|
|||
Provision for income taxes
|
$
|
126
|
|
|
$
|
1,753
|
|
|
$
|
5,414
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carryforwards
|
$
|
518,620
|
|
|
$
|
640,312
|
|
Accrued expenses
|
10,613
|
|
|
10,424
|
|
||
Credit carryforwards
|
75,879
|
|
|
50,559
|
|
||
Stock-based compensation
|
35,782
|
|
|
46,530
|
|
||
Note hedge
|
35,181
|
|
|
20,520
|
|
||
Other
|
14,771
|
|
|
13,733
|
|
||
Total deferred tax assets
|
690,846
|
|
|
782,078
|
|
||
Less valuation allowance
|
(614,177
|
)
|
|
(728,870
|
)
|
||
|
76,669
|
|
|
53,208
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Depreciation and amortization
|
(20,708
|
)
|
|
(18,914
|
)
|
||
Convertible notes
|
(43,616
|
)
|
|
(23,605
|
)
|
||
Other
|
(1,759
|
)
|
|
—
|
|
||
Net deferred tax assets
|
$
|
10,586
|
|
|
$
|
10,689
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Balance, beginning period
|
$
|
18,440
|
|
|
$
|
11,737
|
|
|
$
|
9,158
|
|
Tax positions taken in prior period:
|
|
|
|
|
|
||||||
Gross increases
|
398
|
|
|
1,122
|
|
|
2
|
|
|||
Gross decreases
|
—
|
|
|
(50
|
)
|
|
(1,017
|
)
|
|||
Tax positions taken in current period:
|
|
|
|
|
|
||||||
Gross increases
|
8,810
|
|
|
5,673
|
|
|
3,768
|
|
|||
Gross decreases
|
—
|
|
|
—
|
|
|
(73
|
)
|
|||
Lapse of statute of limitations
|
—
|
|
|
(42
|
)
|
|
(101
|
)
|
|||
Balance, end of period
|
$
|
27,648
|
|
|
$
|
18,440
|
|
|
$
|
11,737
|
|
|
Operating Leases
|
|
Purchase Obligations
(1)
|
|
Other
|
|
Total
|
||||||||
Years Ending December 31,
|
|
|
|
|
|
|
|
||||||||
2018
|
$
|
44,713
|
|
|
$
|
31,394
|
|
|
$
|
574
|
|
|
$
|
76,681
|
|
2019
|
47,986
|
|
|
22,698
|
|
|
574
|
|
|
71,258
|
|
||||
2020
|
48,218
|
|
|
11,736
|
|
|
574
|
|
|
60,528
|
|
||||
2021
|
45,590
|
|
|
7,248
|
|
|
574
|
|
|
53,412
|
|
||||
2022
|
43,238
|
|
|
3,805
|
|
|
574
|
|
|
47,617
|
|
||||
Thereafter
|
124,114
|
|
|
4,093
|
|
|
1,053
|
|
|
129,260
|
|
||||
Total
|
$
|
353,859
|
|
|
$
|
80,974
|
|
|
$
|
3,923
|
|
|
$
|
438,756
|
|
(1)
|
Consists of future minimum payments under non-cancelable purchase commitments primarily related to data center and IT operations and sales and marketing activities. Not included in the table above are certain purchase commitments related to our future annual Knowledge user conferences and other customer or sales conferences to be held in 2019 and 2020. If we were to cancel these contractual commitments as of
December 31, 2017
, we would have been obligated to pay cancellation penalties of approximately
$13.9 million
in aggregate.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues by geography
|
|
|
|
|
|
||||||
North America
(1)
|
$
|
1,299,950
|
|
|
$
|
946,956
|
|
|
$
|
702,985
|
|
EMEA
(2)
|
478,686
|
|
|
339,341
|
|
|
233,378
|
|
|||
Asia Pacific and other
|
154,390
|
|
|
104,216
|
|
|
69,117
|
|
|||
Total revenues
|
$
|
1,933,026
|
|
|
$
|
1,390,513
|
|
|
$
|
1,005,480
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Property and equipment, net:
|
|
|
|
||||
North America
(3)
|
$
|
164,040
|
|
|
$
|
132,671
|
|
EMEA
(2)
|
50,028
|
|
|
37,449
|
|
||
Asia Pacific and other
|
31,056
|
|
|
11,500
|
|
||
Total property and equipment, net
|
$
|
245,124
|
|
|
$
|
181,620
|
|
(1)
|
Revenues attributed to the United States were approximately
94%
of North America revenues for the years ended
December 31, 2017
, and
95%
for the year ended
December 31, 2016
and
2015
.
|
(2)
|
Europe, the Middle East and Africa (EMEA)
|
(3)
|
Property and equipment, net attributed to the United States were approximately
89%
and
92%
of property and equipment, net attributable to North America for the years ended
December 31, 2017
and
2016
, respectively.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Service management products
|
$
|
1,526,382
|
|
|
$
|
1,108,846
|
|
|
$
|
783,603
|
|
ITOM products
|
213,413
|
|
|
112,793
|
|
|
64,675
|
|
|||
Total subscription revenues
|
$
|
1,739,795
|
|
|
$
|
1,221,639
|
|
|
$
|
848,278
|
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINACIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
ITEM 16.
|
FORM 10-K SUMMARY
|
Exhibit
Number
|
Description of Document
|
|
Incorporated by Reference
|
|
Filed
Herewith
|
||||||
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
||||
|
10-Q
|
|
001-35580
|
|
3.1
|
|
8/10/2012
|
|
|
||
|
8-K
|
|
001-35580
|
|
3.1
|
|
10/25/2017
|
|
|
||
|
S-1/A
|
|
333-180486
|
|
4.1
|
|
6/19/2012
|
|
|
||
|
8-K
|
|
001-35580
|
|
4.1
|
|
11/13/2013
|
|
|
||
|
8-K
|
|
001-35580
|
|
4.1
|
|
5/30/2017
|
|
|
||
|
10-K
|
|
001-35580
|
|
10.1
|
|
2/27/2015
|
|
|
||
|
S-1
|
|
333-180486
|
|
10.2
|
|
3/30/2012
|
|
|
||
|
|
|
|
|
|
|
|
|
X
|
||
|
10-Q
|
|
001-35580
|
|
10.3
|
|
8/8/2017
|
|
|
||
|
10-Q
|
|
001-35580
|
|
10.4
|
|
8/8/2017
|
|
|
||
|
10-K
|
|
001-35580
|
|
10.4
|
|
3/8/2013
|
|
|
||
|
10-Q
|
|
001-35580
|
|
10.5
|
|
8/8/2017
|
|
|
||
|
S-1
|
|
333-180486
|
|
10.5
|
|
3/30/2012
|
|
|
||
|
10-Q
|
|
001-35580
|
|
10.1
|
|
8/7/2014
|
|
|
||
|
S-1
|
|
333-180486
|
|
10.6
|
|
3/30/2012
|
|
|
||
|
10-Q
|
|
001-35580
|
|
10.2
|
|
11/5/2014
|
|
|
||
|
10-Q
|
|
001-35580
|
|
10.2
|
|
8/8/2017
|
|
|
Exhibit
Number
|
Description of Document
|
|
Incorporated by Reference
|
|
Filed
Herewith
|
||||||
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
||||
|
S-1
|
|
333-180486
|
|
10.7
|
|
3/30/2012
|
|
|
||
|
10-Q
|
|
001-35580
|
|
10.1
|
|
11/5/2014
|
|
|
||
|
10-Q
|
|
001-35580
|
|
10.1
|
|
8/8/2017
|
|
|
||
|
8-K
|
|
001-35580
|
|
10.1
|
|
2/27/2017
|
|
|
||
|
10-Q
|
|
001-35580
|
|
10.1
|
|
11/6/2017
|
|
|
||
|
S-1/A
|
|
333-184674
|
|
10.12
|
|
11/9/2012
|
|
|
||
|
8-K
|
|
001-35580
|
|
10.1
|
|
12/15/2014
|
|
|
||
|
8-K
|
|
001-32224
|
|
99.1
|
|
11/13/2013
|
|
|
||
|
8-K
|
|
001-35580
|
|
99.1
|
|
5/30/2017
|
|
|
||
|
8-K
|
|
001-32224
|
|
99.2
|
|
11/13/2013
|
|
|
||
|
8-K
|
|
001-35580
|
|
99.2
|
|
5/30/2017
|
|
|
||
|
8-K
|
|
001-32224
|
|
99.3
|
|
11/13/2013
|
|
|
||
|
8-K
|
|
001-35580
|
|
99.1
|
|
6/22/2017
|
|
|
||
|
8-K
|
|
001-32224
|
|
99.4
|
|
11/13/2013
|
|
|
||
|
8-K
|
|
001-35580
|
|
99.2
|
|
6/22/2017
|
|
|
||
|
|
10-Q
|
|
001-35580
|
|
10.1
|
|
8/3/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
X
|
Exhibit
Number
|
Description of Document
|
|
Incorporated by Reference
|
|
Filed
Herewith
|
||||||
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
||||
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
X
|
||
101.INS**
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
|
|
|
|
|
|
|
|
|
|
X
|
101.SCH**
|
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
.
|
||
|
|
|
|
|
By:
|
|
/s/ John J. Donahoe
|
|
|
|
John J. Donahoe
President and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ John J. Donahoe
|
|
President, Chief Executive Officer and Director
(Principal Executive Officer)
|
|
February 28, 2018
|
John J. Donahoe
|
|
|
|
|
|
|
|
|
|
/s/ Michael P. Scarpelli
|
|
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
|
|
February 28, 2018
|
Michael P. Scarpelli
|
|
|
|
|
|
|
|
|
|
/s/ Frank Slootman
|
|
Chairman of the Board of Directors
|
|
February 28, 2018
|
Frank Slootman
|
|
|
|
|
|
|
|
|
|
/s/ Susan L. Bostrom
|
|
Director
|
|
February 28, 2018
|
Susan L. Bostrom
|
|
|
|
|
|
|
|
|
|
/s/ Jonathan C. Chadwick
|
|
Director
|
|
February 28, 2018
|
Jonathan C. Chadwick
|
|
|
|
|
|
|
|
|
|
/s/ Paul E. Chamberlain
|
|
Director
|
|
February 28, 2018
|
Paul E. Chamberlain
|
|
|
|
|
|
|
|
|
|
/s/ Ronald E.F. Codd
|
|
Director
|
|
February 28, 2018
|
Ronald E. F. Codd
|
|
|
|
|
|
|
|
|
|
/s/ Frederic B. Luddy
|
|
Director
|
|
February 28, 2018
|
Frederic B. Luddy
|
|
|
|
|
|
|
|
|
|
/s/ Jeffrey A. Miller
|
|
Director
|
|
February 28, 2018
|
Jeffrey A. Miller
|
|
|
|
|
|
|
|
|
|
/s/ Anita M. Sands
|
|
Director
|
|
February 28, 2018
|
Anita M. Sands
|
|
|
|
|
|
|
|
|
|
Name of Subsidiary
|
|
Jurisdiction of Incorporation or Organization
|
|
|
|
ServiceNow Australia Pty Ltd
|
|
Australia
|
ServiceNow GmbH
|
|
Austria
|
ServiceNow Belgium BVBA
|
|
Belgium
|
SN Europe C.V.
|
|
Bermuda
|
ServiceNow Brasil Gerenciamento de Servicos Ltda
|
|
Brazil
|
ServiceNow Canada Inc.
|
|
Canada
|
Brightpoint Security, Inc.
|
|
Delaware
|
DxContinuum, Inc.
|
|
Delaware
|
ITapp Inc.
|
|
Delaware
|
Qlue, Inc.
|
|
Delaware
|
ServiceNow Delaware LLC
|
|
Delaware
|
SkyGiraffe Inc.
|
|
Delaware
|
ServiceNow Denmark ApS
|
|
Denmark
|
ServiceNow Finland Oy
|
|
Finland
|
ServiceNow France SAS
|
|
France
|
Service-now.com GmbH
|
|
Germany
|
ServiceNow Hong Kong Limited
|
|
Hong Kong
|
ServiceNow Software Development India Private Limited
|
|
India
|
ITapp Software Private Limited
|
|
India
|
ServiceNow Ireland Limited
|
|
Ireland
|
Service Now A.B Israel 2012 Ltd
|
|
Israel
|
SkyGiraffe Ltd
|
|
Israel
|
ServiceNow Italy S.R.L.
|
|
Italy
|
ServiceNow Japan K.K.
|
|
Japan
|
ServiceNow Operations Mexico S DE RL DE CV
|
|
Mexico
|
ServiceNow Nederland B.V.
|
|
Netherlands
|
ServiceNow Norway AS
|
|
Norway
|
ServiceNow Poland Sp. Z o.o.
|
|
Poland
|
ServiceNow Portugal, Unipessoal LDA
|
|
Portugal
|
ServiceNow Pte. Ltd.
|
|
Singapore
|
ServiceNow South Africa (Pty) Ltd
|
|
South Africa
|
ServiceNow Spain SL
|
|
Spain
|
ServiceNow Sweden AB
|
|
Sweden
|
ServiceNow Switzerland GmbH
|
|
Switzerland
|
ServiceNow Turkey Bilisim Sanayi Ve Ticaret Limited Sirketi
|
|
Turkey
|
ServiceNow UK Limited
|
|
United Kingdom
|
1.
|
I have reviewed this annual report on Form 10-K 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: February 28, 2018
|
|
|
/s/ John J. Donahoe
|
|
John J. Donahoe
President and Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this annual report on Form 10-K 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: February 28, 2018
|
|
|
/s/ Michael P. Scarpelli
|
|
Michael P. Scarpelli
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
•
|
the Annual Report on Form 10-K of the Company for the period ended
December 31, 2017
(the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
•
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods presented therein.
|
Date: February 28, 2018
|
|
|
/s/ John J. Donahoe
|
|
John J. Donahoe
President and Chief Executive Officer
(Principal Executive Officer)
|
•
|
the Annual Report on Form 10-K of the Company for the period ended
December 31, 2017
(the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
•
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods presented therein.
|
Date: February 28, 2018
|
|
|
/s/ Michael P. Scarpelli
|
|
Michael P. Scarpelli
Chief Financial Officer
(Principal Financial and Accounting Officer)
|