x
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Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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¨
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Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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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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Large accelerated filer x
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Accelerated filer ¨
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Non-accelerated filer ¨ (Do not check if a smaller reporting company)
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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 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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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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March 31, 2018
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December 31, 2017
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||||
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*As Adjusted
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|||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
682,854
|
|
|
$
|
726,495
|
|
Short-term investments
|
1,203,105
|
|
|
1,052,803
|
|
||
Accounts receivable, net
|
371,008
|
|
|
437,051
|
|
||
Current portion of deferred commissions
|
115,867
|
|
|
109,643
|
|
||
Prepaid expenses and other current assets
|
117,092
|
|
|
95,959
|
|
||
Total current assets
|
2,489,926
|
|
|
2,421,951
|
|
||
Deferred commissions, less current portion
|
233,715
|
|
|
224,252
|
|
||
Long-term investments
|
451,209
|
|
|
391,442
|
|
||
Property and equipment, net
|
267,454
|
|
|
245,124
|
|
||
Intangible assets, net
|
82,553
|
|
|
86,916
|
|
||
Goodwill
|
128,685
|
|
|
128,728
|
|
||
Other assets
|
50,943
|
|
|
51,832
|
|
||
Total assets
|
$
|
3,704,485
|
|
|
$
|
3,550,245
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
37,715
|
|
|
$
|
32,109
|
|
Accrued expenses and other current liabilities
|
250,738
|
|
|
253,257
|
|
||
Current portion of deferred revenue
|
1,292,638
|
|
|
1,210,695
|
|
||
Current portion of convertible senior notes, net
|
516,925
|
|
|
543,418
|
|
||
Total current liabilities
|
2,098,016
|
|
|
2,039,479
|
|
||
Deferred revenue, less current portion
|
50,244
|
|
|
36,120
|
|
||
Convertible senior notes, net
|
637,795
|
|
|
630,018
|
|
||
Other long-term liabilities
|
53,267
|
|
|
65,884
|
|
||
Total liabilities
|
2,839,322
|
|
|
2,771,501
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock
|
177
|
|
|
174
|
|
||
Additional paid-in capital
|
1,819,410
|
|
|
1,731,367
|
|
||
Accumulated other comprehensive (loss) income
|
(12,970
|
)
|
|
5,767
|
|
||
Accumulated deficit
|
(941,454
|
)
|
|
(958,564
|
)
|
||
Total stockholders’ equity
|
865,163
|
|
|
778,744
|
|
||
Total liabilities and stockholders’ equity
|
$
|
3,704,485
|
|
|
$
|
3,550,245
|
|
|
Three Months Ended March 31,
|
||||||
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2018
|
|
2017
|
||||
|
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*As Adjusted
|
|||||
Revenues:
|
|
|
|
||||
Subscription
|
$
|
543,325
|
|
|
$
|
387,584
|
|
Professional services and other
|
45,897
|
|
|
41,187
|
|
||
Total revenues
|
589,222
|
|
|
428,771
|
|
||
Cost of revenues(1):
|
|
|
|
||||
Subscription
|
95,398
|
|
|
70,375
|
|
||
Professional services and other
|
48,075
|
|
|
45,709
|
|
||
Total cost of revenues
|
143,473
|
|
|
116,084
|
|
||
Gross profit
|
445,749
|
|
|
312,687
|
|
||
Operating expenses(1):
|
|
|
|
||||
Sales and marketing
|
283,701
|
|
|
203,739
|
|
||
Research and development
|
117,268
|
|
|
84,489
|
|
||
General and administrative
|
65,063
|
|
|
46,251
|
|
||
Total operating expenses
|
466,032
|
|
|
334,479
|
|
||
Loss from operations
|
(20,283
|
)
|
|
(21,792
|
)
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Interest expense
|
(17,064
|
)
|
|
(8,678
|
)
|
||
Interest income and other income (expense), net
|
29,987
|
|
|
7,729
|
|
||
Loss before income taxes
|
(7,360
|
)
|
|
(22,741
|
)
|
||
Benefit from income taxes
|
(17,982
|
)
|
|
(1,227
|
)
|
||
Net income (loss)
|
$
|
10,622
|
|
|
$
|
(21,514
|
)
|
Net income (loss) per share - basic and diluted
|
$
|
0.06
|
|
|
$
|
(0.13
|
)
|
Weighted-average shares used to compute net income (loss) per share - basic
|
175,482,833
|
|
|
168,742,366
|
|
||
Weighted-average shares used to compute net income (loss) per share - diluted
|
190,249,786
|
|
|
168,742,366
|
|
||
Other comprehensive loss:
|
|
|
|
||||
Foreign currency translation adjustments
|
$
|
(8,435
|
)
|
|
$
|
2,795
|
|
Unrealized (loss) gain on investments, net of tax
|
(3,068
|
)
|
|
7,583
|
|
||
Other comprehensive (loss) income, net of tax
|
(11,503
|
)
|
|
10,378
|
|
||
Comprehensive loss
|
$
|
(881
|
)
|
|
$
|
(11,136
|
)
|
(1)
|
Includes stock-based compensation as follows:
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
|
*As Adjusted
|
|||||
Cost of revenues:
|
|
|
|
||||
Subscription
|
$
|
11,291
|
|
|
$
|
7,938
|
|
Professional services and other
|
7,561
|
|
|
6,875
|
|
||
Sales and marketing
|
52,082
|
|
|
38,401
|
|
||
Research and development
|
28,598
|
|
|
21,801
|
|
||
General and administrative
|
21,809
|
|
|
14,854
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
|
*As Adjusted
|
|||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
10,622
|
|
|
$
|
(21,514
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
33,411
|
|
|
25,226
|
|
||
Amortization of deferred commissions
|
30,419
|
|
|
22,038
|
|
||
Amortization of debt discount and issuance costs
|
17,064
|
|
|
8,678
|
|
||
Stock-based compensation
|
121,341
|
|
|
89,869
|
|
||
Deferred income tax
|
(24,348
|
)
|
|
(3,291
|
)
|
||
Unrealized gain on marketable equity securities
|
(18,455
|
)
|
|
—
|
|
||
Repayments of convertible senior notes attributable to debt discount
|
(8,660
|
)
|
|
—
|
|
||
Other
|
(5,805
|
)
|
|
(1,273
|
)
|
||
Changes in operating assets and liabilities, net of effect of business combinations:
|
|
|
|
||||
Accounts receivable
|
69,502
|
|
|
48,515
|
|
||
Deferred commissions
|
(42,475
|
)
|
|
(30,956
|
)
|
||
Prepaid expenses and other assets
|
(15,808
|
)
|
|
(16,468
|
)
|
||
Accounts payable
|
875
|
|
|
675
|
|
||
Deferred revenue
|
83,733
|
|
|
84,863
|
|
||
Accrued expenses and other liabilities
|
(1,336
|
)
|
|
(18,754
|
)
|
||
Net cash provided by operating activities
|
250,080
|
|
|
187,608
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(35,371
|
)
|
|
(33,186
|
)
|
||
Business combination, net of cash and restricted cash acquired
|
—
|
|
|
(15,035
|
)
|
||
Purchases of other intangibles
|
(7,850
|
)
|
|
—
|
|
||
Purchases of investments
|
(376,130
|
)
|
|
(223,596
|
)
|
||
Sales of investments
|
—
|
|
|
21,789
|
|
||
Maturities of investments
|
182,105
|
|
|
122,263
|
|
||
Net cash used in investing activities
|
(237,246
|
)
|
|
(127,765
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Repayments of convertible senior notes attributable to principal
|
(28,606
|
)
|
|
—
|
|
||
Proceeds from employee stock plans
|
52,657
|
|
|
34,807
|
|
||
Taxes paid related to net share settlement of equity awards
|
(85,555
|
)
|
|
(53,023
|
)
|
||
Payments on financing obligations
|
(288
|
)
|
|
(1,415
|
)
|
||
Net cash used in financing activities
|
(61,792
|
)
|
|
(19,631
|
)
|
||
Foreign currency effect on cash, cash equivalents and restricted cash (1)
|
6,491
|
|
|
(843
|
)
|
||
Net (decrease) increase in cash, cash equivalents and restricted cash
|
(42,467
|
)
|
|
39,369
|
|
||
Cash, cash equivalents and restricted cash at beginning of period (1)
|
727,829
|
|
|
401,932
|
|
||
Cash, cash equivalents and restricted cash at end of period (1)
|
$
|
685,362
|
|
|
$
|
441,301
|
|
Cash, cash equivalents and restricted cash at end of period:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
682,854
|
|
|
$
|
439,915
|
|
Current portion of restricted cash included in prepaid expenses and other current assets
|
2,508
|
|
|
1,386
|
|
||
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows
|
$
|
685,362
|
|
|
$
|
441,301
|
|
Non-cash investing and financing activities:
|
|
|
|
||||
Benefit from 2018 Note Hedges
|
$
|
44,510
|
|
|
$
|
—
|
|
Property and equipment included in accounts payable and accrued expenses
|
24,288
|
|
|
8,857
|
|
||
Financing obligation for property and equipment
|
5,033
|
|
|
—
|
|
(1)
|
During the three months 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. Accordingly, we have recast our prior period condensed consolidated statement of cash flows to conform to the current presentation. The impact of the adoption for the three months ended March 31, 2017 is not material.
|
|
Year Ended December 31, 2017
|
||||||
|
As Previously 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
|
)
|
|
Three months ended March 31, 2017
|
||||||
|
As Previously Reported
|
|
As Adjusted
|
||||
|
|
|
|
||||
Revenues:
|
|
|
|
||||
Subscription
|
$
|
376,135
|
|
|
$
|
387,584
|
|
Professional services and other
|
40,648
|
|
|
41,187
|
|
||
Total revenues
|
416,783
|
|
|
428,771
|
|
||
Cost of revenues:
|
|
|
|
||||
Professional services and other
|
46,072
|
|
|
45,709
|
|
||
Total cost of revenues
|
116,447
|
|
|
116,084
|
|
||
Gross profit
|
300,336
|
|
|
312,687
|
|
||
Operating expenses:
|
|
|
|
||||
Sales and marketing
|
212,086
|
|
|
203,739
|
|
||
Total operating expenses
|
342,826
|
|
|
334,479
|
|
||
Loss from operations
|
(42,490
|
)
|
|
(21,792
|
)
|
||
Interest income and other income (expense), net
|
7,716
|
|
|
7,729
|
|
||
Loss before income taxes
|
(43,452
|
)
|
|
(22,741
|
)
|
||
Provision for income taxes
|
(2,790
|
)
|
|
(1,227
|
)
|
||
Net loss
|
$
|
(40,662
|
)
|
|
$
|
(21,514
|
)
|
Net loss per share - basic and diluted
|
$
|
(0.24
|
)
|
|
$
|
(0.13
|
)
|
Weighted-average shares used to compute net loss per share - basic and diluted
|
168,742,366
|
|
|
168,742,366
|
|
|
Three Months Ended March 31, 2017
|
||||||
|
As Previously Reported
|
|
As Adjusted
|
||||
|
|
|
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(40,662
|
)
|
|
$
|
(21,514
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Amortization of deferred commissions
|
26,180
|
|
|
22,038
|
|
||
Changes in operating assets and liabilities, net of effect of business combinations:
|
|
|
|
||||
Accounts receivable
|
47,021
|
|
|
48,515
|
|
||
Deferred commissions
|
(27,195
|
)
|
|
(30,956
|
)
|
||
Prepaid expenses and other assets
|
(22,772
|
)
|
|
(16,468
|
)
|
||
Deferred revenue
|
112,447
|
|
|
84,863
|
|
||
Accrued expenses and other liabilities
|
(27,553
|
)
|
|
(18,754
|
)
|
||
Net cash provided by operating activities
|
187,424
|
|
|
187,608
|
|
||
Foreign currency effect on cash, cash equivalents and restricted cash
|
(659
|
)
|
|
(843
|
)
|
•
|
Identification of the contract, or contracts, with a customer
|
•
|
Identification of the performance obligations in the contract
|
•
|
Determination of the transaction price
|
•
|
Allocation of the transaction price to the performance obligations in the contract
|
•
|
Recognition of revenue when, or as, we satisfy a performance obligation
|
|
March 31, 2018
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
$
|
320,564
|
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
320,561
|
|
Corporate notes and bonds
|
1,151,991
|
|
|
19
|
|
|
(6,069
|
)
|
|
1,145,941
|
|
||||
Certificates of deposit
|
36,241
|
|
|
2
|
|
|
—
|
|
|
36,243
|
|
||||
U.S. government agency securities
|
113,127
|
|
|
—
|
|
|
(731
|
)
|
|
112,396
|
|
||||
Total available-for-sale securities
|
$
|
1,621,923
|
|
|
$
|
21
|
|
|
$
|
(6,803
|
)
|
|
$
|
1,615,141
|
|
|
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
|
|
||||
Total available-for-sale securities
|
$
|
1,427,228
|
|
|
$
|
27
|
|
|
$
|
(3,727
|
)
|
|
$
|
1,423,528
|
|
|
March 31, 2018
|
||
Due within 1 year
|
$
|
1,163,932
|
|
Due in 1 year through 5 years
|
451,209
|
|
|
Total
|
$
|
1,615,141
|
|
|
March 31, 2018
|
||||||||||||||||||||||
|
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
|
$
|
14,870
|
|
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,870
|
|
|
$
|
(3
|
)
|
Corporate notes and bonds
|
$
|
1,010,573
|
|
|
$
|
(5,704
|
)
|
|
$
|
121,328
|
|
|
$
|
(365
|
)
|
|
$
|
1,131,901
|
|
|
$
|
(6,069
|
)
|
U.S. government agency securities
|
92,780
|
|
|
(653
|
)
|
|
19,616
|
|
|
(78
|
)
|
|
112,396
|
|
|
(731
|
)
|
||||||
Total
|
$
|
1,118,223
|
|
|
$
|
(6,360
|
)
|
|
$
|
140,944
|
|
|
$
|
(443
|
)
|
|
$
|
1,259,167
|
|
|
$
|
(6,803
|
)
|
|
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
|
)
|
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Cash equivalents:
|
|
|
|
|
|
||||||
Money market funds
|
$
|
131,149
|
|
|
$
|
—
|
|
|
$
|
131,149
|
|
Commercial paper
|
—
|
|
|
99,647
|
|
|
99,647
|
|
|||
Corporate notes and bonds
|
—
|
|
|
7,923
|
|
|
7,923
|
|
|||
Certificates of deposit
|
—
|
|
|
3,750
|
|
|
3,750
|
|
|||
Short-term investments:
|
|
|
|
|
|
||||||
Commercial paper
|
—
|
|
|
320,561
|
|
|
320,561
|
|
|||
Corporate notes and bonds
|
—
|
|
|
750,337
|
|
|
750,337
|
|
|||
Certificates of deposit
|
—
|
|
|
30,448
|
|
|
30,448
|
|
|||
U.S. government agency securities
|
—
|
|
|
62,586
|
|
|
62,586
|
|
|||
Marketable equity securities
|
39,173
|
|
|
—
|
|
|
39,173
|
|
|||
Long-term investments:
|
|
|
|
|
|
||||||
Corporate notes and bonds
|
—
|
|
|
395,604
|
|
|
395,604
|
|
|||
Certificates of deposit
|
—
|
|
|
5,795
|
|
|
5,795
|
|
|||
U.S. government agency securities
|
—
|
|
|
49,810
|
|
|
49,810
|
|
|||
Total
|
$
|
170,322
|
|
|
$
|
1,726,461
|
|
|
$
|
1,896,783
|
|
|
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
|
|
|
Carrying Amount
|
||
Balance as of December 31, 2017
|
$
|
128,728
|
|
Foreign currency translation adjustments
|
(43
|
)
|
|
Balance as of March 31, 2018
|
$
|
128,685
|
|
|
March 31, 2018
|
||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
Developed technology
|
$
|
75,271
|
|
|
$
|
(34,388
|
)
|
|
$
|
40,883
|
|
Patents
|
32,130
|
|
|
(4,092
|
)
|
|
28,038
|
|
|||
Other
|
16,831
|
|
|
(3,199
|
)
|
|
13,632
|
|
|||
Total intangible assets
|
$
|
124,232
|
|
|
$
|
(41,679
|
)
|
|
$
|
82,553
|
|
|
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
|
|
Years Ending December 31,
|
|||||||
2018
|
|
$
|
17,231
|
|
|||
2019
|
|
22,920
|
|
||||
2020
|
|
12,895
|
|
||||
2021
|
|
10,959
|
|
||||
2022
|
|
7,066
|
|
||||
Thereafter
|
|
11,482
|
|
||||
Total future amortization expense
|
|
$
|
82,553
|
|
|
March 31,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
Computer equipment
|
$
|
360,506
|
|
|
$
|
326,378
|
|
Computer software
|
48,108
|
|
|
46,413
|
|
||
Leasehold improvements
|
63,082
|
|
|
56,232
|
|
||
Furniture and fixtures
|
39,844
|
|
|
38,789
|
|
||
Building
|
7,044
|
|
|
7,084
|
|
||
Construction in progress
|
11,083
|
|
|
5,341
|
|
||
|
529,667
|
|
|
480,237
|
|
||
Less: accumulated depreciation
|
(262,213
|
)
|
|
(235,113
|
)
|
||
Total property and equipment, net
|
$
|
267,454
|
|
|
$
|
245,124
|
|
|
Condensed Consolidated Balance Sheets Location
|
|
March 31, 2018
|
||
Derivative Assets:
|
|
|
|
||
Foreign currency derivative contracts
|
Prepaid expenses and other current assets
|
|
$
|
1,457
|
|
Derivative Liabilities
|
|
|
|
||
Foreign currency derivative contracts
|
Accrued expenses and other current liabilities
|
|
$
|
3,283
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
|
|
*As Adjusted
|
|||||
Taxes payable
|
$
|
21,673
|
|
|
$
|
25,617
|
|
Bonuses and commissions
|
58,323
|
|
|
84,972
|
|
||
Accrued compensation
|
53,969
|
|
|
45,428
|
|
||
Other employee related liabilities
|
33,867
|
|
|
44,284
|
|
||
Other
|
82,906
|
|
|
52,956
|
|
||
Total accrued expenses and other current liabilities
|
$
|
250,738
|
|
|
$
|
253,257
|
|
|
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 (in each case, the Conversion Condition); 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.
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Liability component:
|
|
|
|
||||
Principal:
|
|
|
|
||||
2022 Notes
|
$
|
782,500
|
|
|
$
|
782,500
|
|
2018 Notes
|
537,728
|
|
|
574,994
|
|
||
Less: debt issuance cost and debt discount, net of amortization
|
|
|
|
||||
2022 Notes
|
(144,705
|
)
|
|
(152,482
|
)
|
||
2018 Notes
|
(20,803
|
)
|
|
(31,576
|
)
|
||
Net carrying amount
|
$
|
1,154,720
|
|
|
$
|
1,173,436
|
|
|
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
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
2022 Notes
|
$
|
1,035,130
|
|
|
$
|
897,778
|
|
2018 Notes
|
$
|
1,196,192
|
|
|
$
|
1,015,554
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Amortization of debt issuance cost
|
|
|
|
||||
2022 Notes
|
$
|
376
|
|
|
$
|
—
|
|
2018 Notes
|
498
|
|
|
465
|
|
||
Amortization of debt discount
|
|
|
|
||||
2022 Notes
|
7,402
|
|
|
—
|
|
||
2018 Notes
|
8,788
|
|
|
8,213
|
|
||
Total
|
$
|
17,064
|
|
|
$
|
8,678
|
|
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
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
|
|
*As Adjusted
|
|||||
Foreign currency translation adjustment
|
$
|
(6,189
|
)
|
|
$
|
2,246
|
|
Net unrealized gain (loss) on investments, net of tax(1)
|
(6,781
|
)
|
|
3,521
|
|
||
Accumulated other comprehensive (loss) income
|
$
|
(12,970
|
)
|
|
$
|
5,767
|
|
(1)
|
The net unrealized loss on investments as of March 31, 2018 includes a cumulative-effect adjustment, net of tax of $7.2 million resulting from our adoption of ASU 2016-01. See Note 2 for further details.
|
|
March 31, 2018
|
|
Stock plans:
|
|
|
Options outstanding
|
2,687,234
|
|
RSUs(1)
|
13,278,152
|
|
Shares of common stock available for future grants:
|
|
|
2012 Equity Incentive Plan(2)
|
31,423,949
|
|
2012 Employee Stock Purchase Plan(2)
|
10,948,982
|
|
Total shares of common stock reserved for future issuance
|
58,338,317
|
|
(1)
|
Represents the number of shares issuable upon settlement of outstanding RSUs and performance-based RSUs, assuming 100% of the target number of shares for the 2018 performance-based RSUs, as discussed under the section entitled “RSUs” in Note 14.
|
(2)
|
Refer to Note 14 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, 2017
|
3,369,732
|
|
|
$
|
38.43
|
|
|
|
|
|
||
Exercised
|
(621,330
|
)
|
|
27.83
|
|
|
|
|
$
|
77,936
|
|
|
Canceled
|
(61,168
|
)
|
|
68.12
|
|
|
|
|
|
|||
Outstanding at March 31, 2018
|
2,687,234
|
|
|
$
|
40.21
|
|
|
5.56
|
|
$
|
336,572
|
|
Vested and expected to vest as of March 31, 2018
|
2,665,675
|
|
|
$
|
39.93
|
|
|
5.54
|
|
$
|
334,594
|
|
Vested and exercisable as of March 31, 2018
|
1,949,267
|
|
|
$
|
24.40
|
|
|
4.41
|
|
$
|
274,948
|
|
|
Number of
Shares
|
|
Weighted Average Grant Date Fair Value
(Per Share)
|
|
Aggregate
Intrinsic Value
(in thousands)
|
|||||
Unvested at December 31, 2017
|
11,403,341
|
|
|
$
|
81.50
|
|
|
|
||
Granted
|
4,078,322
|
|
|
151.13
|
|
|
|
|||
Vested
|
(1,854,662
|
)
|
|
73.94
|
|
|
$
|
281,822
|
|
|
Forfeited
|
(348,849
|
)
|
|
87.01
|
|
|
|
|||
Unvested at March 31, 2018
|
13,278,152
|
|
|
$
|
103.80
|
|
|
$
|
2,196,870
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
|
*As Adjusted
|
|||||
Numerator:
|
|
|
|
||||
Net income (loss)
|
$
|
10,622
|
|
|
$
|
(21,514
|
)
|
Denominator:
|
|
|
|
||||
Weighted-average shares outstanding - basic
|
175,482,833
|
|
|
168,742,366
|
|
||
Weighted-average effect of potentially dilutive securities:
|
|
|
|
||||
Common stock options
|
1,995,185
|
|
|
—
|
|
||
Restricted stock units
|
5,869,792
|
|
|
—
|
|
||
ESPP obligations
|
7,510
|
|
|
—
|
|
||
In-the-money portion of 2018 Notes
|
3,794,221
|
|
|
—
|
|
||
2018 Warrants
|
2,363,658
|
|
|
—
|
|
||
In-the-money portion of 2022 Notes
|
736,587
|
|
|
—
|
|
||
Weighted-average shares outstanding - diluted
|
190,249,786
|
|
|
168,742,366
|
|
||
Net income (loss) per share - basic
|
$
|
0.06
|
|
|
$
|
(0.13
|
)
|
Net income (loss) per share - diluted
|
$
|
0.06
|
|
|
$
|
(0.13
|
)
|
|
March 31,
|
||||
|
2018
|
|
2017
|
||
Common stock options
|
—
|
|
|
5,649,375
|
|
Restricted stock units
|
38,114
|
|
|
14,129,353
|
|
ESPP obligations
|
—
|
|
|
290,102
|
|
2018 convertible senior notes
|
—
|
|
|
7,783,023
|
|
Warrants related to the issuance of 2018 convertible senior notes
|
—
|
|
|
7,783,023
|
|
Warrants related to the issuance of 2022 convertible senior notes
|
5,806,933
|
|
|
—
|
|
Total potentially dilutive securities
|
5,845,047
|
|
|
35,634,876
|
|
|
Operating Leases
|
|
Purchase
Obligations(1)
|
|
Other
|
|
Total
|
||||||||
Years Ending December 31,
|
|
|
|
|
|
|
|
||||||||
Remainder of 2018
|
$
|
37,317
|
|
|
$
|
28,656
|
|
|
$
|
145
|
|
|
$
|
66,118
|
|
2019
|
49,294
|
|
|
28,158
|
|
|
571
|
|
|
78,023
|
|
||||
2020
|
50,495
|
|
|
15,948
|
|
|
979
|
|
|
67,422
|
|
||||
2021
|
47,837
|
|
|
7,153
|
|
|
1,018
|
|
|
56,008
|
|
||||
2022
|
45,700
|
|
|
3,526
|
|
|
1,038
|
|
|
50,264
|
|
||||
Thereafter
|
126,897
|
|
|
4,185
|
|
|
1,471
|
|
|
132,553
|
|
||||
Total
|
$
|
357,540
|
|
|
$
|
87,626
|
|
|
$
|
5,222
|
|
|
$
|
450,388
|
|
(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. If we were to cancel these contractual commitments as of March 31, 2018, we would have been obligated to pay cancellation penalties of approximately $14.0 million in aggregate, of which $7.9 million is related to our Knowledge user conference in May 2019.
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
|
*As Adjusted
|
|||||
North America (1)
|
$
|
387,473
|
|
|
$
|
293,855
|
|
EMEA (2)
|
152,426
|
|
|
101,685
|
|
||
Asia Pacific and other
|
49,323
|
|
|
33,231
|
|
||
Total revenues
|
$
|
589,222
|
|
|
$
|
428,771
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
North America(3)
|
$
|
173,900
|
|
|
$
|
164,040
|
|
EMEA(2)
|
61,668
|
|
|
50,028
|
|
||
Asia Pacific and other
|
31,886
|
|
|
31,056
|
|
||
Total property and equipment, net
|
$
|
267,454
|
|
|
$
|
245,124
|
|
(1)
|
Revenues attributed to the United States were approximately 95% and 94% of North America revenues for the three months ended March 31, 2018 and 2017, respectively.
|
(2)
|
Europe, the Middle East and Africa
|
(3)
|
Property and equipment, net attributed to the United States were approximately 88% and 89% of property and equipment, net attributable to North America as of March 31, 2018 and December 31, 2017, respectively.
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
|
*As Adjusted
|
|||||
Service management products
|
$
|
462,562
|
|
|
$
|
343,792
|
|
ITOM products
|
80,763
|
|
|
43,792
|
|
||
Total subscription revenues
|
$
|
543,325
|
|
|
$
|
387,584
|
|
|
Three Months Ended March 31,
|
|
% Change
|
|||||||
|
2018
|
|
2017
|
|
||||||
|
|
*As Adjusted
|
|
|||||||
|
(dollars in thousands)
|
|
|
|||||||
Billings:
|
|
|
|
|
|
|||||
Total revenues
|
$
|
589,222
|
|
|
$
|
428,771
|
|
|
37
|
%
|
Change in total deferred revenue, unbilled receivables and customer deposits(1)
|
100,164
|
|
|
90,700
|
|
|
10
|
%
|
||
Total billings
|
$
|
689,386
|
|
|
$
|
519,471
|
|
|
33
|
%
|
(1)
|
As presented on or derived from our condensed consolidated statements of cash flows.
|
•
|
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 selling additional products or services to an existing customer, 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.
|
|
Three Months Ended March 31,
|
|
% Change
|
|||||||
|
2018
|
|
2017
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Free cash flow:
|
|
|
|
|
|
|||||
Net cash provided by operating activities
|
$
|
250,080
|
|
|
$
|
187,608
|
|
|
33
|
%
|
Purchases of property and equipment
|
(35,371
|
)
|
|
(33,186
|
)
|
|
7
|
%
|
||
Free cash flow(1)
|
$
|
214,709
|
|
|
$
|
154,422
|
|
|
39
|
%
|
(1)
|
Free cash flow for the three months ended March 31, 2018 includes the effect of $8.7 million relating to the repayments of convertible senior notes attributable to debt discount.
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
|
*As Adjusted
|
|||||
|
(in thousands)
|
||||||
Revenues:
|
|
|
|
||||
Subscription
|
$
|
543,325
|
|
|
$
|
387,584
|
|
Professional services and other
|
45,897
|
|
|
41,187
|
|
||
Total revenues
|
589,222
|
|
|
428,771
|
|
||
Cost of revenues(1):
|
|
|
|
||||
Subscription
|
95,398
|
|
|
70,375
|
|
||
Professional services and other
|
48,075
|
|
|
45,709
|
|
||
Total cost of revenues
|
143,473
|
|
|
116,084
|
|
||
Gross profit
|
445,749
|
|
|
312,687
|
|
||
Operating expenses(1):
|
|
|
|
||||
Sales and marketing
|
283,701
|
|
|
203,739
|
|
||
Research and development
|
117,268
|
|
|
84,489
|
|
||
General and administrative
|
65,063
|
|
|
46,251
|
|
||
Total operating expenses
|
466,032
|
|
|
334,479
|
|
||
Loss from operations
|
(20,283
|
)
|
|
(21,792
|
)
|
||
Interest expense
|
(17,064
|
)
|
|
(8,678
|
)
|
||
Interest income and other income (expense), net
|
29,987
|
|
|
7,729
|
|
||
Loss before income taxes
|
(7,360
|
)
|
|
(22,741
|
)
|
||
Benefit from income taxes
|
(17,982
|
)
|
|
(1,227
|
)
|
||
Net income (loss)
|
$
|
10,622
|
|
|
$
|
(21,514
|
)
|
(1)
|
Stock-based compensation included in the statements of operations above was as follows:
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
|
*As Adjusted
|
|||||
|
(in thousands)
|
||||||
Cost of revenues:
|
|
|
|
||||
Subscription
|
$
|
11,291
|
|
|
$
|
7,938
|
|
Professional services and other
|
7,561
|
|
|
6,875
|
|
||
Sales and marketing
|
52,082
|
|
|
38,401
|
|
||
Research and development
|
28,598
|
|
|
21,801
|
|
||
General and administrative
|
21,809
|
|
|
14,854
|
|
||
Total stock-based compensation
|
$
|
121,341
|
|
|
$
|
89,869
|
|
|
Three Months Ended March 31,
|
||||
|
2018
|
|
2017
|
||
|
|
*As Adjusted
|
|||
Revenues:
|
|
|
|
||
Subscription
|
92
|
%
|
|
90
|
%
|
Professional services and other
|
8
|
|
|
10
|
|
Total revenues
|
100
|
|
|
100
|
|
Cost of revenues(1):
|
|
|
|
|
|
Subscription
|
16
|
|
|
16
|
|
Professional services and other
|
8
|
|
|
11
|
|
Total cost of revenues
|
24
|
|
|
27
|
|
Gross profit
|
76
|
|
|
73
|
|
Operating expenses(1):
|
|
|
|
|
|
Sales and marketing
|
48
|
|
|
48
|
|
Research and development
|
20
|
|
|
20
|
|
General and administrative
|
11
|
|
|
11
|
|
Total operating expenses
|
79
|
|
|
79
|
|
Loss from operations
|
(3
|
)
|
|
(6
|
)
|
Interest expense
|
(3
|
)
|
|
(2
|
)
|
Interest income and other income (expense), net
|
5
|
|
|
2
|
|
Loss before income taxes
|
(1
|
)
|
|
(5
|
)
|
Benefit from income taxes
|
(3
|
)
|
|
—
|
|
Net income (loss)
|
2
|
%
|
|
(5
|
)%
|
(1)
|
Stock-based compensation included in the statements of operations above as a percentage of revenues was as follows:
|
|
Three Months Ended March 31,
|
||||
|
2018
|
|
2017
|
||
|
|
*As Adjusted
|
|||
Cost of revenues:
|
|
|
|
||
Subscription
|
2
|
%
|
|
2
|
%
|
Professional services and other
|
1
|
|
|
2
|
|
Sales and marketing
|
9
|
|
|
9
|
|
Research and development
|
5
|
|
|
5
|
|
General and administrative
|
4
|
|
|
3
|
|
Total stock-based compensation
|
21
|
%
|
|
21
|
%
|
|
Three Months Ended March 31,
|
|
% Change
|
|||||||
|
2018
|
|
2017
|
|
||||||
|
|
*As Adjusted
|
|
|||||||
|
(dollars in thousands)
|
|
|
|||||||
Revenues:
|
|
|
|
|
|
|||||
Subscription
|
$
|
543,325
|
|
|
$
|
387,584
|
|
|
40
|
%
|
Professional services and other
|
45,897
|
|
|
41,187
|
|
|
11
|
%
|
||
Total revenues
|
$
|
589,222
|
|
|
$
|
428,771
|
|
|
37
|
%
|
Percentage of revenues:
|
|
|
|
|
|
|||||
Subscription
|
92
|
%
|
|
90
|
%
|
|
|
|||
Professional services and other
|
8
|
%
|
|
10
|
%
|
|
|
|||
Total
|
100
|
%
|
|
100
|
%
|
|
|
|
Three Months Ended March 31,
|
|
% Change
|
|||||||
|
2018
|
|
2017
|
|
||||||
|
|
*As Adjusted
|
|
|||||||
|
(dollars in thousands)
|
|
|
|||||||
Service management products
|
$
|
462,562
|
|
|
$
|
343,792
|
|
|
35
|
%
|
ITOM products
|
80,763
|
|
|
43,792
|
|
|
84
|
%
|
||
Total subscription revenues
|
$
|
543,325
|
|
|
$
|
387,584
|
|
|
40
|
%
|
|
Three Months Ended March 31,
|
|
% Change
|
|||||||
|
2018
|
|
2017
|
|
||||||
|
|
*As Adjusted
|
|
|||||||
|
(dollars in thousands)
|
|
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|||||
Subscription
|
$
|
95,398
|
|
|
$
|
70,375
|
|
|
36
|
%
|
Professional services and other
|
48,075
|
|
|
45,709
|
|
|
5
|
%
|
||
Total cost of revenues
|
$
|
143,473
|
|
|
$
|
116,084
|
|
|
24
|
%
|
Gross profit (loss) percentage:
|
|
|
|
|
|
|||||
Subscription
|
82
|
%
|
|
82
|
%
|
|
|
|||
Professional services and other
|
(5
|
)%
|
|
(11
|
)%
|
|
|
|||
Total gross profit percentage
|
76
|
%
|
|
73
|
%
|
|
|
|||
Gross profit
|
$
|
445,749
|
|
|
$
|
312,687
|
|
|
|
|
Headcount (at period end)
|
|
|
|
|
|
|||||
Subscription
|
1,003
|
|
|
785
|
|
|
28
|
%
|
||
Professional services and other
|
568
|
|
|
528
|
|
|
8
|
%
|
||
Total headcount
|
1,571
|
|
|
1,313
|
|
|
20
|
%
|
|
Three Months Ended March 31,
|
|
% Change
|
|||||||
|
2018
|
|
2017
|
|
||||||
|
|
*As Adjusted
|
|
|||||||
|
(dollars in thousands)
|
|
|
|||||||
Sales and marketing
|
$
|
283,701
|
|
|
$
|
203,739
|
|
|
39
|
%
|
Percentage of revenues
|
48
|
%
|
|
48
|
%
|
|
|
|||
Headcount (at period end)
|
2,616
|
|
|
2,089
|
|
|
25
|
%
|
|
Three Months Ended March 31,
|
|
% Change
|
|||||||
|
2018
|
|
2017
|
|
||||||
|
|
*As Adjusted
|
|
|||||||
|
(dollars in thousands)
|
|
|
|||||||
Research and development
|
$
|
117,268
|
|
|
$
|
84,489
|
|
|
39
|
%
|
Percentage of revenues
|
20
|
%
|
|
20
|
%
|
|
|
|||
Headcount (at period end)
|
1,509
|
|
|
1,123
|
|
|
34
|
%
|
|
Three Months Ended March 31,
|
|
% Change
|
|||||||
|
2018
|
|
2017
|
|
||||||
|
|
*As Adjusted
|
|
|||||||
|
(dollars in thousands)
|
|
|
|||||||
General and administrative
|
$
|
65,063
|
|
|
$
|
46,251
|
|
|
41
|
%
|
Percentage of revenues
|
11
|
%
|
|
11
|
%
|
|
|
|||
Headcount (at period end)
|
979
|
|
|
698
|
|
|
40
|
%
|
|
Three Months Ended March 31,
|
|
% Change
|
|||||||
|
2018
|
|
2017
|
|
||||||
|
|
*As Adjusted
|
|
|||||||
|
(dollars in thousands)
|
|
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|||||
Subscription
|
$
|
11,291
|
|
|
$
|
7,938
|
|
|
42
|
%
|
Professional services and other
|
7,561
|
|
|
6,875
|
|
|
10
|
%
|
||
Sales and marketing
|
52,082
|
|
|
38,401
|
|
|
36
|
%
|
||
Research and development
|
28,598
|
|
|
21,801
|
|
|
31
|
%
|
||
General and administrative
|
21,809
|
|
|
14,854
|
|
|
47
|
%
|
||
Total stock-based compensation
|
$
|
121,341
|
|
|
$
|
89,869
|
|
|
35
|
%
|
Percentage of revenues
|
21
|
%
|
|
21
|
%
|
|
|
|
Three Months Ended March 31,
|
|
% Change
|
|||||||
|
2018
|
|
2017
|
|
||||||
|
(dollars in thousands)
|
|
|
|||||||
Interest expense
|
$
|
(17,064
|
)
|
|
$
|
(8,678
|
)
|
|
97
|
%
|
Percentage of revenues
|
3
|
%
|
|
2
|
%
|
|
|
|
Three Months Ended March 31,
|
|
% Change
|
|||||||
|
2018
|
|
2017
|
|
||||||
|
|
*As Adjusted
|
|
|||||||
|
(dollars in thousands)
|
|
|
|||||||
Interest income
|
$
|
7,168
|
|
|
$
|
2,713
|
|
|
164
|
%
|
Foreign currency exchange gain
|
6,397
|
|
|
5,048
|
|
|
27
|
%
|
||
Unrealized gain on marketable equity securities
|
18,455
|
|
|
—
|
|
|
NM
|
|
||
Other
|
(2,033
|
)
|
|
(32
|
)
|
|
NM
|
|
||
Interest and other income (expense), net
|
$
|
29,987
|
|
|
$
|
7,729
|
|
|
288
|
%
|
Percentage of revenues
|
5
|
%
|
|
2
|
%
|
|
|
|
Three Months Ended March 31,
|
|
% Change
|
|||||||
|
2018
|
|
2017
|
|
||||||
|
|
*As Adjusted
|
|
|||||||
|
(dollars in thousands)
|
|
|
|||||||
Loss before income taxes
|
$
|
(7,360
|
)
|
|
$
|
(22,741
|
)
|
|
(68
|
)%
|
Benefit from income taxes
|
(17,982
|
)
|
|
(1,227
|
)
|
|
NM
|
|
||
Effective tax rate
|
244
|
%
|
|
5
|
%
|
|
|
|
Three Months Ended March 31,
|
|
% Change
|
|||||||
|
2018
|
|
2017
|
|
||||||
|
|
*As Adjusted
|
|
|||||||
|
(dollars in thousands)
|
|
|
|||||||
Net income (loss)
|
$
|
10,622
|
|
|
$
|
(21,514
|
)
|
|
(149
|
)%
|
Percentage of revenues
|
2
|
%
|
|
(5
|
)%
|
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
|
*As Adjusted
|
|||||
|
(dollars in thousands)
|
||||||
Net cash provided by operating activities
|
$
|
250,080
|
|
|
$
|
187,608
|
|
Net cash used in investing activities
|
(237,246
|
)
|
|
(127,765
|
)
|
||
Net cash used in financing activities
|
(61,792
|
)
|
|
(19,631
|
)
|
||
Net (decrease) increase in cash, cash equivalents and restricted cash, net of foreign currency effect on cash, cash equivalents and restricted cash
|
(42,467
|
)
|
|
39,369
|
|
•
|
Identification of the contract, or contracts, with a customer
|
•
|
Identification of the performance obligations in the contract
|
•
|
Determination of the transaction price
|
•
|
Allocation of the transaction price to the performance obligations in the contract
|
•
|
Recognition of revenue when, or as, we satisfy a performance obligation
|
•
|
our ability to attract new customers, retain and increase sales to existing customers, and satisfy our customers’ requirements;
|
•
|
changes in our mix of products and services;
|
•
|
changes in foreign currency exchange rates and our ability to effectively hedge our foreign currency exposure;
|
•
|
the rate of expansion and productivity of our sales force;
|
•
|
the number of new employees added;
|
•
|
the cost, timing and management effort for our development of new products and services;
|
•
|
general economic conditions that may adversely affect either our customers’ ability or willingness to purchase additional subscriptions, delay a prospective customer’s purchasing decision, reduce the value of new subscription contracts or adversely affect renewal rates;
|
•
|
the amount and timing of operating costs and capital expenditures related to the operation and expansion of our business;
|
•
|
seasonality in terms of when we enter into customer agreements for our services;
|
•
|
the length of the sales cycle for our services;
|
•
|
changes to our management team;
|
•
|
changes in our pricing policies, whether initiated by us or as a result of competition;
|
•
|
significant security breaches, technical difficulties or interruptions of our services;
|
•
|
new solutions, products or changes in pricing policies introduced by our competitors;
|
•
|
changes in effective tax rates;
|
•
|
changes in the average contract term of our customer agreements, changes in timing of renewals and changes in billings duration;
|
•
|
changes in our renewal and expansion rates;
|
•
|
the timing of customer payments and payment defaults by customers;
|
•
|
extraordinary expenses such as litigation costs or damages, including settlement payments;
|
•
|
the costs associated with acquiring new businesses and technologies and the follow-on costs of integration, including the tax effects of acquisitions;
|
•
|
the impact of new accounting pronouncements, including the new revenue recognition standards that were effective for us beginning January 1, 2018;
|
•
|
changes in laws or regulations impacting the delivery of our services;
|
•
|
our ability to comply with privacy laws and regulations, including the General Data Protection Regulation (GDPR);
|
•
|
the amount and timing of equity awards and the related financial statement expenses; and
|
•
|
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, including the GDPR;
|
•
|
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;
|
•
|
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;
|
•
|
longer accounts receivable payment cycles and other collection difficulties;
|
•
|
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;
|
•
|
different pricing and distribution environments;
|
•
|
foreign currency fluctuations which may cause transactional and translational remeasurement losses;
|
•
|
potential changes in international trade policies and agreements;
|
•
|
local business practices and cultural norms that may favor local competitors; and
|
•
|
localization of our services, including translation into foreign languages and associated expenses.
|
•
|
assimilating or integrating the businesses, technologies, products, personnel or operations of the acquired companies;
|
•
|
failing to achieve the expected benefits of the acquisition or investment;
|
•
|
potential loss of key employees of the acquired company;
|
•
|
inability to maintain relationships with customers and partners of the acquired business;
|
•
|
unanticipated expenses related to acquired technology and its integration into our existing technology;
|
•
|
potential adverse tax consequences;
|
•
|
inability to generate sufficient revenue to offset acquisition or investment costs;
|
•
|
disruption to our business and diversion of management attention and other resources;
|
•
|
potential financial and credit risks associated with acquired customers;
|
•
|
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;
|
•
|
fluctuations in the valuation of companies perceived by investors to be comparable to us, such as high-growth or cloud companies;
|
•
|
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;
|
•
|
the size of our market float;
|
•
|
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;
|
•
|
the economy as a whole, market conditions in our industry, and the industries of our customers; and
|
•
|
overall performance of the equity markets.
|
•
|
establish a classified board of directors so that not all members of our board are elected at one time;
|
•
|
permit the board of directors to establish the number of directors;
|
•
|
provide that directors may only be removed “for cause” and only with the approval of 66 2/3% of our stockholders;
|
•
|
require super-majority voting to amend some provisions in our restated certificate of incorporation and restated bylaws;
|
•
|
authorize the issuance of “blank check” preferred stock that our board could use to implement a stockholder rights plan;
|
•
|
eliminate the ability of our stockholders to call special meetings of stockholders;
|
•
|
prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;
|
•
|
provide that the board of directors is expressly authorized to make, alter or repeal our restated bylaws; and
|
•
|
establish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders at annual stockholder meetings (though our restated bylaws have implemented stockholder proxy access).
|
•
|
a Third Amendment to Lease (the Amendment), pursuant to which we will extend the term of the Lease, dated as of December 12, 2014, as amended (the Lease) for approximately 328,867 square feet of space located at 2215 Lawson Lane and 2225 Lawson Lane, Santa Clara, California (collectively, the Premises). The Amendment extends the term of the Lease by approximately 7.5 years through February 28, 2035. We have three options to renew the Lease for additional terms of five years each and also have a right of first offer to purchase the Premises.
|
•
|
an expansion lease (the First Expansion Lease), pursuant to which we will lease approximately 268,556 square feet of space comprising an entire building to be located at Lawson Lane, Santa Clara, California (the First Expansion Building). The initial term of the First Expansion Lease is expected to commence on March 1, 2021, although the commencement date may be extended in certain circumstances if specified improvements to the First Expansion Building have not been completed by such date. The initial term shall be for 14 years following the commencement date. We have three options to renew the First Expansion Lease for additional terms of five years each and also have a right of first offer to purchase the First Expansion Building.
|
•
|
an expansion lease (the Second Expansion Lease), pursuant to which we will lease, contingent on the Landlord achieving certain approvals, approximately 241,100 square feet of space, comprising an entire building to be located at Lawson Lane, Santa Clara, California (the Second Expansion Building). Should the Landlord fail to achieve certain approvals, we will have the right under the Second Expansion Lease to either accept a building with a total area of less than 175,000 square feet or to terminate the Second Expansion lease without penalty or delay. The initial term of the Second Expansion Lease is expected to commence on March 1, 2023, although the commencement date may be extended in certain circumstances if specified improvements to the Second Expansion Building have not been completed by such date. The initial term shall be for 10 years following the commencement date but may be extended to be coterminous with the First Expansion Lease. We have three options to renew the Second Expansion Lease for additional terms of five years each and also have a right of first offer to purchase the Second Expansion Building.
|
Exhibit
Number
|
|
Description of Document
|
|
Incorporated by Reference
|
|
Filed
|
||||
Form
|
|
File No.
|
|
Exhibit
|
|
Herewith
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
SERVICENOW, INC.
|
||
|
|
|
|
Date: May 8, 2018
|
By:
|
|
/s/ John J. Donahoe
|
|
|
|
John J. Donahoe
|
|
|
|
President and Chief Executive Officer
|
|
|
|
(On behalf of the Registrant)
|
|
|
|
|
Date: May 8, 2018
|
By:
|
|
/s/ Michael P. Scarpelli
|
|
|
|
Michael P. Scarpelli
|
|
|
|
Chief Financial Officer
|
|
|
|
(As Principal Financial and Accounting Officer)
|
Period
|
Base Monthly Rent
|
September 1, 2027 - August 31, 2028
|
One Million Two Hundred Twenty Six Thousand Two Hundred Thirteen Dollars and Fifty Cents ($1,226,213.50)
|
September 1, 2028 - August 31, 2029
|
One Million Two Hundred Sixty Two Thousand Nine Hundred Ninety Nine Dollars and Ninety Cents ($1,262,999.90)
|
September 1, 2029 - August 31, 2030
|
One Million Three Hundred Thousand Eight Hundred Eighty Nine Dollars and Ninety Cents ($1,300,889.90)
|
September 1, 2030 - August 31, 2031
|
One Million Three Hundred Thirty Nine Thousand Nine Hundred Sixteen Dollars and Sixty Cents ($1,339,916.60)
|
September 1, 2031 - August 31, 2032
|
One Million Three Hundred Eighty Thousand One Hundred Fourteen Dollars and Nine Cents ($1,380,114.09)
|
September 1, 2032 - August 31, 2033
|
One Million Four Hundred Twenty One Thousand Five Hundred Seventeen Dollars and Fifty Two Cents ($1,421,517.52)
|
September 1, 2033 - August 31, 2034
|
One Million Four Hundred Sixty Four Thousand One Hundred Sixty Three Dollars and Four Cents ($1,464,163.04)
|
September 1, 2034 - February 28, 2035
|
One Million Five Hundred Eight Thousand Eighty Seven Dollars and Ninety Three Cents ($1,508,087.93)
|
LANDLORD:
|
|
SI 55, LLC,
|
a California limited liability company
|
By: Sobrato Interests 3,
|
a California limited partnership
|
Its: Sole Member
|
By: Sobrato Development Companies, LLC,
|
a California limited liability company
|
Its: General Partner
|
By: /s/ Johh Michael Sobrato
|
John Michael Sobrato
|
Its:: Manager
|
Dated: May 3, 2018
|
|
|
TENANT:
|
|
ServiceNow, Inc., a Delaware corporation
|
|
By: /s/ Robert Teed
|
Robert Teed
|
Its: Vice President, Real Estate
|
Dated: May 1, 2018
|
|
|
By: /s/ Michael Scarpelli
|
Michael Scarpelli
|
Its: CFO
|
Dated: May 1, 2018
|
|
|
LANDLORD:
|
|
SI 55, LLC,
|
a California limited liability company
|
By: Sobrato Interests 3,
|
a California limited partnership
|
Its: Sole Member
|
By: Sobrato Development Companies, LLC,
|
a California limited liability company
|
Its: General Partner
|
By: /s/ Johh Michael Sobrato
|
John Michael Sobrato
|
Its:: Manager
|
Dated: May 3, 2018
|
|
|
TENANT:
|
|
ServiceNow, Inc., a Delaware corporation
|
|
By: /s/ Robert Teed
|
Robert Teed
|
Its: Vice President, Real Estate
|
Dated: May 1, 2018
|
|
|
By: /s/ Michael Scarpelli
|
Michael Scarpelli
|
Its: CFO
|
Dated: May 1, 2018
|
|
|
LANDLORD:
|
|
SI 55, LLC,
|
a California limited liability company
|
By: Sobrato Interests 3,
|
a California limited partnership
|
Its: Sole Member
|
By: Sobrato Development Companies, LLC,
|
a California limited liability company
|
Its: General Partner
|
By: /s/ Johh Michael Sobrato
|
John Michael Sobrato
|
Its:: Manager
|
Dated: May 3, 2018
|
|
|
TENANT:
|
|
ServiceNow, Inc., a Delaware corporation
|
|
By: /s/ Robert Teed
|
Robert Teed
|
Its: Vice President, Real Estate
|
Dated: May 1, 2018
|
|
|
By: /s/ Michael Scarpelli
|
Michael Scarpelli
|
Its: CFO
|
Dated: May 1, 2018
|
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of ServiceNow, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: May 8, 2018
|
|
|
/s/ John J. Donahoe
|
|
John J. Donahoe
President and Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of ServiceNow, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
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: May 8, 2018
|
|
|
/s/ Michael P. Scarpelli
|
|
Michael P. Scarpelli
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
•
|
the Quarterly Report on Form 10-Q of the Company for the period ended March 31, 2018 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 for the periods presented therein.
|
Date: May 8, 2018
|
|
|
/s/ John J. Donahoe
|
|
John J. Donahoe
President and Chief Executive Officer
(Principal Executive Officer)
|
•
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the Quarterly Report on Form 10-Q of the Company for the period ended March 31, 2018 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.
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Date: May 8, 2018
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/s/ Michael P. Scarpelli
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Michael P. Scarpelli
Chief Financial Officer
(Principal Financial and Accounting Officer)
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