|
|
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
001-36350
(Commission File Number)
|
|
20-2706637
(IRS Employer
Identification No.)
|
|
|
|
PAGE
|
|
PART I: FINANCIAL INFORMATION
|
|
|
|
|
|
Item 1.
|
Financial Statements.
|
|
|
|
|
|
Condensed Consolidated Balance Sheets as of March 31, 2015 (unaudited) and December 31, 2014
|
|
|
|
|
|
Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2015 and 2014 (unaudited)
|
|
|
|
|
|
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2015 and 2014 (unaudited)
|
|
|
|
|
|
Notes to Condensed Consolidated Financial Statements (unaudited)
|
|
|
|
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations.
|
|
|
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
|
|
|
|
Item 4.
|
Controls and Procedures.
|
|
|
|
|
PART II: OTHER INFORMATION
|
|
|
|
|
|
Item 1.
|
Legal Proceedings.
|
|
|
|
|
Item 1A.
|
Risk Factors.
|
|
|
|
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
|
|
|
|
Item 3.
|
Defaults Upon Senior Securities.
|
|
|
|
|
Item 4.
|
Mine Safety Disclosures.
|
|
|
|
|
Item 5.
|
Other Information.
|
|
|
|
|
Item 6.
|
Exhibits.
|
|
|
|
|
SIGNATURES
|
|
|
March 31,
|
|
December 31,
|
||||
|
|
2015
|
|
2014
|
||||
|
|
(unaudited)
|
|
|
||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
94,170
|
|
|
$
|
67,979
|
|
Restricted cash
|
|
829
|
|
|
829
|
|
||
Investments
|
|
25,525
|
|
|
20,956
|
|
||
Accounts receivable, net
|
|
7,225
|
|
|
5,007
|
|
||
Prepaid expenses and other current assets
|
|
3,282
|
|
|
2,695
|
|
||
Deferred solution and other costs, current portion
|
|
4,070
|
|
|
5,060
|
|
||
Deferred implementation costs, current portion
|
|
2,054
|
|
|
1,996
|
|
||
Total current assets
|
|
137,155
|
|
|
104,522
|
|
||
Property and equipment, net
|
|
19,001
|
|
|
18,521
|
|
||
Deferred solution and other costs, net of current portion
|
|
8,192
|
|
|
7,159
|
|
||
Deferred implementation costs, net of current portion
|
|
5,554
|
|
|
5,378
|
|
||
Other long-term assets
|
|
1,141
|
|
|
1,226
|
|
||
Total assets
|
|
$
|
171,043
|
|
|
$
|
136,806
|
|
Liabilities and stockholders' equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
3,444
|
|
|
$
|
1,986
|
|
Accrued liabilities
|
|
10,338
|
|
|
9,268
|
|
||
Accrued compensation
|
|
2,781
|
|
|
3,936
|
|
||
Deferred revenues, current portion
|
|
18,576
|
|
|
17,289
|
|
||
Capital lease obligations, current portion
|
|
338
|
|
|
408
|
|
||
Total current liabilities
|
|
35,477
|
|
|
32,887
|
|
||
Deferred revenues, net of current portion
|
|
21,025
|
|
|
19,436
|
|
||
Capital lease obligations, net of current portion
|
|
105
|
|
|
167
|
|
||
Deferred rent, net of current portion
|
|
4,504
|
|
|
4,694
|
|
||
Other long-term liabilities
|
|
709
|
|
|
682
|
|
||
Total liabilities
|
|
61,820
|
|
|
57,866
|
|
||
Commitments and contingencies (Note 6)
|
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
|
||||
Common stock: $0.0001 par value; 150,000 shares authorized; 37,189 shares issued and 37,188 shares outstanding as of March 31, 2015, and 34,697 shares issued and 34,696 shares outstanding as of December 31, 2014
|
|
4
|
|
|
3
|
|
||
Preferred stock: $0.0001 par value; 5,000 shares authorized; no shares issued or outstanding as of March 31, 2015, and December 31, 2014
|
|
—
|
|
|
—
|
|
||
Treasury stock at cost; 1 shares at each of March 31, 2015 and December 31, 2014
|
|
(27
|
)
|
|
(20
|
)
|
||
Additional paid-in capital
|
|
178,262
|
|
|
143,337
|
|
||
Accumulated other comprehensive loss
|
|
(5
|
)
|
|
(14
|
)
|
||
Accumulated deficit
|
|
(69,011
|
)
|
|
(64,366
|
)
|
||
Total stockholders' equity
|
|
109,223
|
|
|
78,940
|
|
||
Total liabilities and stockholders' equity
|
|
$
|
171,043
|
|
|
$
|
136,806
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Revenues
|
|
$
|
24,157
|
|
|
$
|
16,834
|
|
Cost of revenues
(1)
|
|
13,272
|
|
|
10,212
|
|
||
Gross profit
|
|
10,885
|
|
|
6,622
|
|
||
Operating expenses:
|
|
|
|
|
||||
Sales and marketing
(1)
|
|
6,194
|
|
|
5,509
|
|
||
Research and development
(1)
|
|
4,151
|
|
|
2,736
|
|
||
General and administrative
(1)
|
|
5,125
|
|
|
3,718
|
|
||
Total operating expenses
|
|
15,470
|
|
|
11,963
|
|
||
Loss from operations
|
|
(4,585
|
)
|
|
(5,341
|
)
|
||
Other income (expense):
|
|
|
|
|
||||
Interest and other income
|
|
44
|
|
|
—
|
|
||
Interest and other expense
|
|
(72
|
)
|
|
(207
|
)
|
||
Total other expense, net
|
|
(28
|
)
|
|
(207
|
)
|
||
Loss before income taxes
|
|
(4,613
|
)
|
|
(5,548
|
)
|
||
Provision for income taxes
|
|
(32
|
)
|
|
(18
|
)
|
||
Net loss
|
|
$
|
(4,645
|
)
|
|
$
|
(5,566
|
)
|
Other comprehensive loss:
|
|
|
|
|
||||
Unrealized gain on available-for-sale investments
|
|
9
|
|
|
—
|
|
||
Comprehensive loss
|
|
$
|
(4,636
|
)
|
|
$
|
(5,566
|
)
|
Net loss per common share, basic and diluted
|
|
$
|
(0.13
|
)
|
|
$
|
(0.39
|
)
|
Weighted average common shares outstanding:
|
|
|
|
|
||||
Basic and diluted
|
|
35,633
|
|
|
14,107
|
|
(1)
|
Includes stock-based compensation expenses as follows:
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Cost of revenues
|
|
$
|
178
|
|
|
$
|
126
|
|
Sales and marketing
|
|
292
|
|
|
167
|
|
||
Research and development
|
|
162
|
|
|
107
|
|
||
General and administrative
|
|
690
|
|
|
518
|
|
||
Total stock-based compensation expenses
|
|
$
|
1,322
|
|
|
$
|
918
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net loss
|
|
$
|
(4,645
|
)
|
|
$
|
(5,566
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
||||
Amortization of deferred implementation, solution and other costs
|
|
1,127
|
|
|
967
|
|
||
Depreciation and amortization
|
|
1,203
|
|
|
999
|
|
||
Amortization of debt issuance costs
|
|
24
|
|
|
24
|
|
||
Amortization of premiums on investments
|
|
89
|
|
|
—
|
|
||
Stock-based compensation expenses
|
|
1,322
|
|
|
918
|
|
||
Allowance for sales credits
|
|
15
|
|
|
15
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
||||
Accounts receivable, net
|
|
(2,232
|
)
|
|
3,314
|
|
||
Prepaid expenses and other current assets
|
|
(585
|
)
|
|
(695
|
)
|
||
Deferred solution and other costs
|
|
(488
|
)
|
|
(1,467
|
)
|
||
Deferred implementation costs
|
|
(918
|
)
|
|
(837
|
)
|
||
Other long-term assets
|
|
41
|
|
|
363
|
|
||
Accounts payable
|
|
917
|
|
|
1,038
|
|
||
Accrued liabilities
|
|
(1,200
|
)
|
|
(4,725
|
)
|
||
Deferred revenues
|
|
2,876
|
|
|
961
|
|
||
Deferred rent and other long-term liabilities
|
|
(190
|
)
|
|
193
|
|
||
Net cash used in operating activities
|
|
(2,644
|
)
|
|
(4,498
|
)
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Purchases of investments
|
|
(6,480
|
)
|
|
—
|
|
||
Redemption of investments
|
|
1,830
|
|
|
—
|
|
||
Purchases of property and equipment
|
|
(436
|
)
|
|
(1,830
|
)
|
||
Net cash used in investing activities
|
|
(5,086
|
)
|
|
(1,830
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Proceeds from borrowings on line of credit
|
|
—
|
|
|
12,500
|
|
||
Payments on line of credit
|
|
—
|
|
|
(12,500
|
)
|
||
Payments on capital lease obligations
|
|
(136
|
)
|
|
(223
|
)
|
||
Proceeds from the issuance of common stock, net of issuance costs
|
|
32,811
|
|
|
73,615
|
|
||
Proceeds from exercise of stock options to purchase common stock
|
|
1,253
|
|
|
934
|
|
||
Shares acquired to settle the exercise of stock options
|
|
(7
|
)
|
|
—
|
|
||
Net cash provided by financing activities
|
|
33,921
|
|
|
74,326
|
|
||
Net increase in cash and cash equivalents
|
|
26,191
|
|
|
67,998
|
|
||
Cash and cash equivalents, beginning of period
|
|
67,979
|
|
|
18,675
|
|
||
Cash and cash equivalents, end of period
|
|
$
|
94,170
|
|
|
$
|
86,673
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
||||
Cash paid for interest
|
|
$
|
23
|
|
|
$
|
102
|
|
Computer hardware and equipment
|
|
3 - 5 years
|
Purchased software and licenses
|
|
3 - 5 years
|
Furniture and fixtures
|
|
7 years
|
Leasehold improvements
|
|
Lesser of estimated useful life or lease term
|
•
|
there is persuasive evidence of an arrangement;
|
•
|
the service has been or is being provided to the customer;
|
•
|
the collection of the fees is reasonably assured; and
|
•
|
the amount of fees to be paid by the customer is fixed or determinable.
|
|
|
Three months ended March 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Numerators:
|
|
|
|
|
||||
Net loss attributable to common stockholders
|
|
$
|
(4,645
|
)
|
|
$
|
(5,566
|
)
|
Denominator:
|
|
|
|
|
||||
Weighted-average common shares outstanding, basic and diluted
|
|
35,633
|
|
|
14,107
|
|
||
|
|
|
|
|
||||
Net loss per common share, basic and diluted
|
|
$
|
(0.13
|
)
|
|
$
|
(0.39
|
)
|
|
|
Three months ended March 31,
|
||||
|
|
2015
|
|
2014
|
||
Redeemable convertible preferred stock:
|
|
|
|
|
||
Series A preferred stock
|
|
—
|
|
|
7,293
|
|
Series B preferred stock
|
|
—
|
|
|
1,677
|
|
Series C preferred stock
|
|
—
|
|
|
2,402
|
|
Junior preferred stock
|
|
—
|
|
|
1,154
|
|
Stock options and restricted stock units
|
|
5,927
|
|
|
6,278
|
|
Total anti-dilutive common share equivalents
|
|
5,927
|
|
|
18,804
|
|
•
|
Level I—Unadjusted quoted prices in active markets for identical assets or liabilities;
|
•
|
Level II—Inputs other than quoted prices included within Level I that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data; and
|
•
|
Level III—Unobservable inputs that are supported by little or no market activity, which requires the Company to develop its own assumptions.
|
|
|
|
|
Fair Value Measurements Using:
|
||||||||||||
Cash Equivalents:
|
|
Fair Value
|
|
Quoted Prices
in Active Markets for Identical Assets (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Money market funds
|
|
$
|
17,865
|
|
|
$
|
17,865
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Certificates of deposits
|
|
1,456
|
|
|
—
|
|
|
1,456
|
|
|
—
|
|
||||
|
|
$
|
19,321
|
|
|
$
|
17,865
|
|
|
$
|
1,456
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
Investments:
|
|
Fair Value
|
|
Quoted Prices
in Active Markets for Identical Assets (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
U.S. treasuries and agency bonds
|
|
$
|
7,502
|
|
|
$
|
—
|
|
|
$
|
7,502
|
|
|
$
|
—
|
|
Corporate bonds and commercial paper
|
|
6,192
|
|
|
—
|
|
|
6,192
|
|
|
—
|
|
||||
Certificates of deposit
|
|
7,262
|
|
|
—
|
|
|
7,262
|
|
|
—
|
|
||||
|
|
$
|
20,956
|
|
|
$
|
—
|
|
|
$
|
20,956
|
|
|
$
|
—
|
|
Cash Equivalents:
|
|
Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
||||||||
Money market funds
|
|
$
|
14,059
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,059
|
|
Certificates of deposits
|
|
735
|
|
|
—
|
|
|
—
|
|
|
735
|
|
||||
|
|
$
|
14,794
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,794
|
|
|
|
|
|
|
|
|
|
|
||||||||
Investments:
|
|
Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
||||||||
U.S. government agency bonds
|
|
$
|
10,553
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,553
|
|
Corporate bonds and commercial paper
|
|
8,320
|
|
|
—
|
|
|
(4
|
)
|
|
8,316
|
|
||||
Certificates of deposits
|
|
6,656
|
|
|
—
|
|
|
—
|
|
|
6,656
|
|
||||
|
|
$
|
25,529
|
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
$
|
25,525
|
|
Cash Equivalents:
|
|
Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
||||||||
Money market funds
|
|
$
|
17,865
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17,865
|
|
Certificates of deposits
|
|
1,456
|
|
|
—
|
|
|
—
|
|
|
1,456
|
|
||||
|
|
$
|
19,321
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,321
|
|
|
|
|
|
|
|
|
|
|
||||||||
Investments:
|
|
Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
||||||||
U.S. government agency bonds
|
|
$
|
7,508
|
|
|
$
|
—
|
|
|
$
|
(6
|
)
|
|
$
|
7,502
|
|
Corporate bonds and commercial paper
|
|
6,200
|
|
|
—
|
|
|
(8
|
)
|
|
6,192
|
|
||||
Certificates of deposits
|
|
7,262
|
|
|
—
|
|
|
—
|
|
|
7,262
|
|
||||
|
|
$
|
20,970
|
|
|
$
|
—
|
|
|
$
|
(14
|
)
|
|
$
|
20,956
|
|
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
Due within one year or less
|
|
$
|
12,749
|
|
|
$
|
9,095
|
|
Due after one year through five years
|
|
12,776
|
|
|
11,861
|
|
||
Total
|
|
$
|
25,525
|
|
|
$
|
20,956
|
|
|
|
Fair Value
|
|
Gross Unrealized Loss
|
||||
U.S. government agency bonds
|
|
$
|
10,553
|
|
|
$
|
—
|
|
Corporate bonds and commercial paper
|
|
8,320
|
|
|
(4
|
)
|
||
Total
|
|
$
|
18,873
|
|
|
$
|
(4
|
)
|
|
|
Fair Value
|
|
Gross Unrealized Loss
|
||||
U.S. government agency bonds
|
|
$
|
7,508
|
|
|
$
|
(6
|
)
|
Corporate bonds and commercial paper
|
|
6,200
|
|
|
(8
|
)
|
||
Total
|
|
$
|
13,708
|
|
|
$
|
(14
|
)
|
|
|
Prior to Conversion
|
|
Subsequent to Conversion
|
||
Convertible preferred stock
|
|
|
|
|
||
Series A
|
|
7,908
|
|
|
—
|
|
Series B
|
|
1,818
|
|
|
—
|
|
Series C
|
|
2,605
|
|
|
—
|
|
Redeemable common stock
|
|
3,829
|
|
|
—
|
|
Junior preferred stock
|
|
1,251
|
|
|
—
|
|
Undesignated common stock
|
|
—
|
|
|
17,412
|
|
|
|
Three Months Ended March 31,
|
||
|
|
2015
|
|
2014
|
Risk-free interest rate
|
|
1.5%
|
|
1.2 - 2.1%
|
Expected life (in years)
|
|
4.8
|
|
3.8 - 6.8
|
Expected volatility
|
|
46.1 - 46.9%
|
|
45.1 - 45.2%
|
Dividend yield
|
|
—
|
|
—
|
Weighted-average grant date fair value per share
|
|
$8.25
|
|
$5.39
|
|
|
Number of
Options
|
|
Weighted
Average
Exercise Price
|
|||
Balance as of January 1, 2015
|
|
6,111
|
|
|
$
|
5.90
|
|
Granted
|
|
375
|
|
|
20.25
|
|
|
Exercised
|
|
(735
|
)
|
|
1.71
|
|
|
Forfeited
|
|
(49
|
)
|
|
8.58
|
|
|
Balance as of March 31, 2015
|
|
5,702
|
|
|
$
|
7.36
|
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||||
Range of Exercise Prices
|
|
Number of
Options
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual Life
(in years)
|
|
Number of
Options
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual Life
(in years)
|
||||||
$0.29 - $0.35
|
|
561
|
|
|
$
|
0.33
|
|
|
2.9
|
|
561
|
|
|
$
|
0.33
|
|
|
2.9
|
$0.54 - $0.84
|
|
358
|
|
|
0.71
|
|
|
4.7
|
|
358
|
|
|
0.71
|
|
|
4.7
|
||
$1.74 - $3.10
|
|
952
|
|
|
2.86
|
|
|
6.3
|
|
788
|
|
|
2.81
|
|
|
6.2
|
||
$4.00 - $7.82
|
|
1,198
|
|
|
6.98
|
|
|
5.4
|
|
542
|
|
|
6.67
|
|
|
5.4
|
||
$8.35
|
|
1,692
|
|
|
8.35
|
|
|
5.8
|
|
91
|
|
|
8.35
|
|
|
5.8
|
||
$13.00 - $21.37
|
|
941
|
|
|
17.34
|
|
|
6.6
|
|
27
|
|
|
13.00
|
|
|
6.0
|
||
|
|
5,702
|
|
|
$
|
7.36
|
|
|
5.6
|
|
2,367
|
|
|
$
|
3.12
|
|
|
5.0
|
|
|
Number of
Shares
|
|
Weighted
Average
Grant Date Fair Value
|
|||
Nonvested as of January 1, 2015
|
|
28
|
|
|
$
|
19.44
|
|
Granted
|
|
198
|
|
|
20.43
|
|
|
Vested
|
|
—
|
|
|
—
|
|
|
Forfeited
|
|
(1
|
)
|
|
20.91
|
|
|
Nonvested as of March 31, 2015
|
|
225
|
|
|
$
|
20.30
|
|
•
|
adjusted EBITDA is widely used by investors and securities analysts to measure a company's operating performance without regard to items that can vary substantially from company to company depending upon their financing, capital structures and the method by which assets were acquired;
|
•
|
our management uses adjusted EBITDA in conjunction with GAAP financial measures for planning purposes, in the preparation of our annual operating budget, as a measure of our operating performance, to assess the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance;
|
•
|
adjusted EBITDA provides more consistency and comparability with our past financial performance, facilitates period-to-period comparisons of our operations and also facilitates comparisons with other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results; and
|
•
|
our investor and analyst presentations include adjusted EBITDA as a supplemental measure of our overall operating performance.
|
•
|
depreciation and amortization are non-cash charges, and the assets being depreciated or amortized will often have to be replaced in the future and adjusted EBITDA does not reflect cash requirements for such replacements;
|
•
|
adjusted EBITDA may not reflect changes in, or cash requirements for, our working capital needs or contractual commitments;
|
•
|
adjusted EBITDA does not reflect the potentially dilutive impact of stock-based compensation;
|
•
|
adjusted EBITDA does not reflect interest or tax payments that could reduce cash available for use; and
|
•
|
other companies, including companies in our industry, might calculate adjusted EBITDA or similarly titled measures differently, which reduces their usefulness as comparative measures.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Reconciliation of net loss to adjusted EBITDA:
|
|
|
|
|
||||
Net loss
|
|
$
|
(4,645
|
)
|
|
$
|
(5,566
|
)
|
Depreciation and amortization
|
|
1,203
|
|
|
999
|
|
||
Stock-based compensation expense
|
|
1,322
|
|
|
918
|
|
||
Provision for income taxes
|
|
32
|
|
|
18
|
|
||
Interest (income) expense, net
|
|
28
|
|
|
207
|
|
||
Adjusted EBITDA
|
|
$
|
(2,060
|
)
|
|
$
|
(3,424
|
)
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Revenues
|
|
$
|
24,157
|
|
|
$
|
16,834
|
|
Cost of revenues
(1)(2)
|
|
13,272
|
|
|
10,212
|
|
||
Gross profit
|
|
10,885
|
|
|
6,622
|
|
||
Operating expenses:
|
|
|
|
|
||||
Sales and marketing
(2)
|
|
6,194
|
|
|
5,509
|
|
||
Research and development
(2)
|
|
4,151
|
|
|
2,736
|
|
||
General and administrative
(2)
|
|
5,125
|
|
|
3,718
|
|
||
Total operating expenses
|
|
15,470
|
|
|
11,963
|
|
||
Loss from operations
|
|
(4,585
|
)
|
|
(5,341
|
)
|
||
Total other expense, net
|
|
(28
|
)
|
|
(207
|
)
|
||
Loss before income taxes
|
|
(4,613
|
)
|
|
(5,548
|
)
|
||
Provision for income taxes
|
|
(32
|
)
|
|
(18
|
)
|
||
Net loss
|
|
$
|
(4,645
|
)
|
|
$
|
(5,566
|
)
|
(1)
|
Includes reclassified costs of research and development personnel who performed certain implementation and customer support services as follows (in thousands):
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Research and development costs reclassified into cost of revenues
|
|
$
|
311
|
|
|
$
|
368
|
|
(2)
|
Includes stock-based compensation expenses as follows (in thousands):
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Cost of revenues
|
|
$
|
178
|
|
|
$
|
126
|
|
Sales and marketing
|
|
292
|
|
|
167
|
|
||
Research and development
|
|
162
|
|
|
107
|
|
||
General and administrative
|
|
690
|
|
|
518
|
|
||
Total stock-based compensation expenses
|
|
$
|
1,322
|
|
|
$
|
918
|
|
(1)
|
Includes reclassified costs of research and development personnel who performed certain implementation and customer support services as follows:
|
|
|
Three Months Ended March 31,
|
||||
|
|
2015
|
|
2014
|
||
Research and development costs reclassified into cost of revenues
|
|
1.3
|
%
|
|
2.2
|
%
|
(2)
|
Includes stock-based compensation expenses as follows:
|
|
|
Three Months Ended March 31,
|
||||
|
|
2015
|
|
2014
|
||
Cost of revenues
|
|
0.7
|
%
|
|
0.8
|
%
|
Sales and marketing
|
|
1.2
|
|
|
1.0
|
|
Research and development
|
|
0.7
|
|
|
0.6
|
|
General and administrative
|
|
2.9
|
|
|
3.1
|
|
Total stock-based compensation expenses
|
|
5.5
|
%
|
|
5.5
|
%
|
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
|
|
2015
|
|
2014
|
|
$
|
|
(%)
|
|||||||
Revenues
|
|
$
|
24,157
|
|
|
$
|
16,834
|
|
|
$
|
7,323
|
|
|
43.5
|
%
|
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
|
|
2015
|
|
2014
|
|
$
|
|
(%)
|
|||||||
Cost of revenues
|
|
$
|
13,272
|
|
|
$
|
10,212
|
|
|
$
|
3,060
|
|
|
30.0
|
%
|
Percentage of revenues
|
|
54.9
|
%
|
|
60.7
|
%
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
|
|
2015
|
|
2014
|
|
$
|
|
(%)
|
|||||||
Sales and marketing
|
|
$
|
6,194
|
|
|
$
|
5,509
|
|
|
$
|
685
|
|
|
12.4
|
%
|
Percentage of revenues
|
|
25.7
|
%
|
|
32.7
|
%
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
|
|
2015
|
|
2014
|
|
$
|
|
(%)
|
|||||||
Research and development
|
|
$
|
4,151
|
|
|
$
|
2,736
|
|
|
$
|
1,415
|
|
|
51.7
|
%
|
Percentage of revenues
|
|
17.2
|
%
|
|
16.3
|
%
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
|
|
2015
|
|
2014
|
|
$
|
|
(%)
|
|||||||
General and administrative
|
|
$
|
5,125
|
|
|
$
|
3,718
|
|
|
$
|
1,407
|
|
|
37.8
|
%
|
Percentage of revenues
|
|
21.2
|
%
|
|
22.1
|
%
|
|
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Net cash provided by (used in):
|
|
|
|
|
||||
Operating activities
|
|
$
|
(2,644
|
)
|
|
$
|
(4,498
|
)
|
Investing activities
|
|
(5,086
|
)
|
|
(1,830
|
)
|
||
Financing activities
|
|
33,921
|
|
|
74,326
|
|
||
Net increase in cash and cash equivalents
|
|
$
|
26,191
|
|
|
$
|
67,998
|
|
•
|
Revenue recognition;
|
•
|
Deferred revenues;
|
•
|
Deferred implementation costs;
|
•
|
Deferred solution and other costs;
|
•
|
Accounts receivable, net;
|
•
|
Stock-based compensation; and
|
•
|
Income taxes.
|
•
|
the last day of its fiscal year following the fifth anniversary of the date of its initial public offering of common equity securities;
|
•
|
the last day of its fiscal year in which it has annual gross revenue of $1.0 billion or more;
|
•
|
the date on which it has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; and
|
•
|
the date on which it is deemed to be a "large accelerated filer," which will occur at such time as the company (a) has an aggregate worldwide market value of common equity securities held by non-affiliates of $700 million or more as of the last business day of its most recently completed second fiscal quarter, (b) has been required to file annual and quarterly reports under the Exchange Act for a period of at least 12 months and (c) has filed at least one annual report pursuant to the Exchange Act.
|
•
|
change the features or functionality of their applications and platforms in a manner adverse to us;
|
•
|
discontinue or limit our solutions' access to their systems;
|
•
|
terminate or do not allow us to renew or replace our existing contractual relationships on the same or better terms;
|
•
|
modify their terms of service or other policies, including fees charged to, or other restrictions on, us or our customers;
|
•
|
establish more favorable relationships with one or more of our competitors, or acquire one or more of our competitors and offer competing services; or
|
•
|
otherwise have or develop their own competitive offerings.
|
•
|
the addition or loss of customers, including through acquisitions, consolidations or failures;
|
•
|
the amount of use of our solutions in a period and the amount of any associated revenues and expenses;
|
•
|
budgeting cycles of our customers and changes in spending on virtual banking solutions by our current or prospective customers;
|
•
|
seasonal variations in sales of our solutions, which may be lowest in the first quarter of the calendar year;
|
•
|
changes in the competitive dynamics of our industry, including consolidation among competitors, changes to pricing or the introduction of new products and services that limit demand for our virtual banking solutions or cause customers to delay purchasing decisions;
|
•
|
the amount and timing of cash collections from our customers;
|
•
|
long or delayed implementation times for new customers, including larger customers, or other changes in the levels of customer support we provide;
|
•
|
the timing of customer payments and payment defaults by customers, including any buyouts by customers of the remaining term of their contracts with us in a lump sum payment that we would have otherwise recognized over the term of those contracts;
|
•
|
the amount and timing of our operating costs and capital expenditures;
|
•
|
changes in tax rules or the impact of new accounting pronouncements;
|
•
|
general economic conditions that may adversely affect our customers' ability or willingness to purchase solutions, delay a prospective customer's purchasing decision, reduce our revenues from customers or affect renewal rates;
|
•
|
unexpected expenses such as those related to litigation or other disputes;
|
•
|
the timing of stock awards to employees and related adverse financial statement impact of having to expense those stock awards over their vesting schedules; and
|
•
|
the amount and timing of costs associated with recruiting, hiring, training and integrating new employees, many of whom we hire in advance of anticipated needs.
|
•
|
our inability to integrate or benefit from acquired technologies or services;
|
•
|
unanticipated costs or liabilities associated with the acquisition;
|
•
|
incurrence of acquisition-related costs;
|
•
|
difficulty integrating the accounting systems, operations and personnel of the acquired business;
|
•
|
difficulties and additional expenses associated with supporting legacy solutions and hosting infrastructure of the acquired business;
|
•
|
difficulty converting the customers of the acquired business to our solutions and contract terms, including disparities in the revenues, licensing, support or professional services model of the acquired company;
|
•
|
diversion of management's attention from other business concerns;
|
•
|
adverse effects to our existing business relationships with business partners and customers as a result of the acquisition;
|
•
|
use of resources that are needed in other parts of our business;
|
•
|
the issuance of additional equity securities that would dilute the ownership interests of our stockholders;
|
•
|
the use of a substantial portion of our cash that we may need to operate our business;
|
•
|
incurrence of debt on terms unfavorable to us or that we are unable to repay;
|
•
|
incurrence of large charges or substantial liabilities;
|
•
|
difficulties retaining key employees of the acquired company or integrating diverse software codes or business culture; and
|
•
|
become subject to adverse tax consequences, substantial depreciation or deferred compensation charges.
|
•
|
variations in our operating results or the operating results of similar companies;
|
•
|
announcements of technological innovations, new solutions or enhancements or strategic partnerships or agreements by us or by our competitors;
|
•
|
changes in the estimates of our operating results, our financial guidance or changes in recommendations by any securities analysts that follow our common stock;
|
•
|
the gain or loss of customers, particularly our larger customers;
|
•
|
adoption or modification of regulations, policies, procedures or programs applicable to our business and our customers' business;
|
•
|
marketing and advertising initiatives by us or our competitors;
|
•
|
threatened or actual litigation;
|
•
|
changes in our senior management;
|
•
|
recruitment or departure of key personnel;
|
•
|
market conditions in our industry, the industries of our customers and the economy as a whole;
|
•
|
the overall performance of the equity markets;
|
•
|
sales of shares of our common stock by existing stockholders;
|
•
|
volatility in our stock price, which may lead to higher stock-based compensation expenses under applicable accounting standards; and
|
•
|
the market's reaction to our reduced disclosure as a result of being an emerging growth company under the JOBS Act.
|
•
|
have an auditor report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;
|
•
|
comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (auditor discussion and analysis); and
|
•
|
submit certain executive compensation matters to stockholder advisory votes, such as "say on pay" and "say on frequency."
|
•
|
authorize the issuance of "blank check" preferred stock that could be issued by our board of directors to help defend against a takeover attempt;
|
•
|
establish a classified board of directors, as a result of which the successors to the directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following their election;
|
•
|
require that directors only be removed from office for cause and only upon a supermajority stockholder vote;
|
•
|
provide that vacancies on the board of directors, including newly created directorships, may be filled only by a majority vote of directors then in office rather than by stockholders;
|
•
|
prevent stockholders from calling special meetings;
|
•
|
include advance notice procedures for stockholders to nominate candidates for election as directors or bring matters before an annual meeting of stockholders;
|
•
|
prohibit stockholder action by written consent, requiring all actions to be taken at a meeting of the stockholders; and
|
•
|
provide that certain litigation against us can only be brought in Delaware.
|
|
|
Total Number of Shares Purchased
(1)
|
|
Average Price Paid Per Share
(2)
|
|
Total Number of Shares Purchased as Part of a Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares That May Be Purchased Under the Plans or Programs
|
||||||
January 1 - 31, 2015
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
February 1 - 28, 2015
|
|
359
|
|
|
20.31
|
|
|
—
|
|
|
—
|
|
||
March 1 - 31, 2015
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Total
|
|
359
|
|
|
$
|
20.31
|
|
|
—
|
|
|
$
|
—
|
|
(1)
|
Total shares purchased are attributable to shares of common stock tendered to us by one or more holders of common stock options to cover the exercise price of options exercised.
|
(2)
|
Reflects the closing price of Q2 shares as reported on the New York Stock Exchange on the date of exercise.
|
|
|
Q2 HOLDINGS, INC.
|
||
May 8, 2015
|
|
By:
|
|
/s/ MATTHEW P. FLAKE
Matthew P. Flake
President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|
May 8, 2015
|
|
By:
|
|
/s/ JENNIFER N. HARRIS
Jennifer N. Harris
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
Exhibit Number
|
|
Description of Document
|
3.1
|
*
|
Fourth Amended and Restated Certificate of Incorporation of the Registrant (filed as Exhibit 3.2 of the Registrant’s Form S-1 Registration Statement (Registration No. 333-193911)).
|
|
|
|
3.2
|
*
|
Amended and Restated Bylaws of the Registrant (filed as Exhibit 3.4 of the Registrant’s Form S-1 Registration Statement (Registration No. 333-193911)).
|
|
|
|
31.1
|
**
|
Certification of Chief Executive Officer pursuant to Exchange Act Rule, 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
**
|
Certification of Chief Financial Officer pursuant to Exchange Act Rule, 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1
|
#
|
Certification pursuant to 18 U.S.C. 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Executive Officer.
|
|
|
|
32.2
|
#
|
Certification pursuant to 18 U.S.C. 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Financial Officer.
|
|
|
|
10.1
|
**
|
First Amendment to Lease Agreement and Tri-Party Agreement, dated February 27, 2015, by and among Q2 Software, Inc., FPG Aspen Lake Owner, L.P. and FPG TOH Owner, L.P., amending the Lease Agreement, dated November 20, 2012, by and among the Q2 Software, Inc. and 13785 Research Blvd, LLC
|
|
|
|
10.2
|
**
|
Second Amendment to Lease Agreement and Tri-Party Agreement, dated April 1, 2015, by and among Q2 Software, Inc., FPG Aspen Lake Owner, L.P. and FPG TOH Owner, L.P., amending the Lease Agreement, dated November 20, 2012, by and among the Q2 Software, Inc. and 13785 Research Blvd, LLC
|
|
|
|
101.INS
|
**
|
XBRL Instance Document.
|
|
|
|
101.SCH
|
**
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
101.CAL
|
**
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
101.DEF
|
**
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
101.LAB
|
**
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
101.PRE
|
**
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
(a)
|
the Lease shall be a direct lease between Additional Landlord and Tenant with respect to the Expansion Premises, except to the extent modified herein and provided that the following defined terms in the Lease shall have the following meanings as they relate to the lease of the Expansion Premises to Tenant by Additional Landlord:
|
(iv)
|
“Project” shall mean the Tower Point Building, the Land described on
Exhibit “A”
attached hereto and the Parking Facilities and Public Areas located thereon;
|
(b)
|
Except as expressly set forth herein, all terms, covenants, provisions and conditions of the Lease are incor-porated into this Amendment by this reference with the same force and effect as if fully set forth in this Amendment and the same shall be binding upon Tenant, Original Landlord and Additional Landlord;
|
(c)
|
Tenant shall fully perform, and be fully responsible and liable for, all obligations arising on behalf of the “Tenant” under the Lease with respect to the Expansion Premises, except as modified herein, from and after the Expansion Date;
|
(d)
|
Additional Landlord shall fully perform, and be fully responsible and liable for, all obligations arising on behalf of the “Landlord” under the Lease with respect to the Expansion Premises, except as modified herein, from and after the Expansion Date;
|
(e)
|
From and after the Effective Date, all references in the Lease to the Premises shall be deemed to be references to the Original Premises and the Expansion Premises, except to the extent otherwise relating solely to the Original Premises or the Expansion Premises; and
|
(f)
|
From and after the Effective Date, all references in the Lease to the Building shall be deemed to be references to the Aspen Lake Building when relating to the Original Premises and the Expansion Premises, except to the extent otherwise provided herein.
|
Time period
|
Annual rate per square foot of Rentable Area
|
Monthly amount of Base Rent
|
|
|
|
Year 1
|
$18.50
|
$12,254.71
|
Landlord:
|
FPG TOH Owner, LP
|
with a copy to:
|
Bloodworth Carroll, P.C.
|
a.
|
Effective as of April 1, 2015, Additional Landlord hereby leases to Tenant, and Tenant hereby leases from Additional Landlord, the April Expansion Premises on the terms and conditions of the Lease, as
|
b.
|
Effective as of May 1, 2015, Additional Landlord hereby leases to Tenant, and Tenant hereby leases from Additional Landlord, the May Expansion Premises on the terms and conditions of the Lease, as amended by this Amendment, for a period of time beginning on May 1, 2015 and ending on the Expansion Termination Date.
|
c.
|
Effective as of the Effective Date and continuing through the Expansion Termination Date, Landlord shall make available to Tenant up to sixty-two (62) parking permits for unassigned surface parking spaces in the parking areas of the Tower Point Building, at no charge to Tenant.
|
(a)
|
the Lease shall be a direct lease between Additional Landlord and Tenant with respect to the Expansion Premises, except to the extent modified herein and provided that the following defined terms in the Lease shall have the following meanings as they relate to the lease of the Expansion Premises to Tenant by Additional Landlord:
|
(iv)
|
“Project” shall mean the Tower Point Building, the Land described on
Exhibit “A”
attached hereto and the Parking Facilities and Public Areas located thereon;
|
(v)
|
“Rentable Area” shall mean 17,913 rentable square feet as of April 1, 2015 and 19,187 rentable square feet as of May 1, 2015; and
|
(vi)
|
“Tenant’s Proportionate Share” shall mean 93.36% as of April 1, 2015 and 100% as of May 1, 2015.
|
(b)
|
Except as expressly set forth herein, all terms, covenants, provisions and conditions of the Lease are incor-porated into this Amendment by this reference with the same force and effect as if fully set forth in this Amendment and the same shall be binding upon Tenant, Original Landlord and Additional Landlord;
|
(c)
|
Tenant shall fully perform, and be fully responsible and liable for, all obligations arising on behalf of the “Tenant” under the Lease with respect to the Expansion Premises, except as modified herein, from and after the Effective Date;
|
(d)
|
Additional Landlord shall fully perform, and be fully responsible and liable for, all obligations arising on behalf of the “Landlord” under the Lease with respect to the Expansion Premises, except as modified herein, from and after the Effective Date;
|
(e)
|
From and after the Effective Date, all references in the Lease to the Premises shall be deemed to be references to the Original Premises and the Expansion Premises, except to the extent otherwise relating solely to the Original Premises or the Expansion Premises; and
|
(f)
|
From and after the Effective Date, all references in the Lease to the Building shall be deemed to be references to the Aspen Lake Building when relating to the Original Premises and references to the Tower Point Building when relating to the Expansion Premises, except to the extent otherwise provided herein.
|
Time period
|
Annual rate per square foot of Rentable Area
|
Monthly amount of Base Rent
|
|
|
|
April 1, 2015 -
April 30, 2015
|
$18.50
|
$27,615.88
|
May 1, 2015 - February 26, 2016
|
$18.50
|
$29,579.96
|
Date: May 8, 2015
|
|
/s/ MATTHEW P. FLAKE
|
|
|
Matthew P. Flake
|
|
|
President and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
Date: May 8, 2015
|
|
/s/ JENNIFER N. HARRIS
|
|
|
Jennifer N. Harris
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|
Date: May 8, 2015
|
|
/s/ MATTHEW P. FLAKE
|
|
|
Matthew P. Flake
|
|
|
President and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
Date: May 8, 2015
|
|
/s/ JENNIFER N. HARRIS
|
|
|
Jennifer N. Harris
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|