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Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
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001-36350
(Commission File Number)
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20-2706637
(IRS Employer
Identification No.)
|
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Large accelerated filer
ý
|
|
Accelerated filer
o
|
Non-accelerated filer
o
|
|
(Do not check if a smaller reporting company)
|
|
|
Smaller reporting company
o
|
|
|
Emerging growth company
o
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PAGE
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||
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Item 1.
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||
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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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||
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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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|
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March 31, 2018
|
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December 31, 2017
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||||
|
|
(unaudited)
|
|
|
||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
255,411
|
|
|
$
|
57,961
|
|
Restricted cash
|
|
2,315
|
|
|
2,315
|
|
||
Investments
|
|
38,704
|
|
|
41,685
|
|
||
Accounts receivable, net
|
|
16,897
|
|
|
13,203
|
|
||
Contract assets, current portion
|
|
336
|
|
|
—
|
|
||
Prepaid expenses and other current assets
|
|
4,699
|
|
|
3,115
|
|
||
Deferred solution and other costs, current portion
|
|
8,392
|
|
|
9,246
|
|
||
Deferred implementation costs, current portion
|
|
3,740
|
|
|
3,562
|
|
||
Total current assets
|
|
330,494
|
|
|
131,087
|
|
||
Property and equipment, net
|
|
36,592
|
|
|
34,544
|
|
||
Deferred solution and other costs, net of current portion
|
|
16,333
|
|
|
12,973
|
|
||
Deferred implementation costs, net of current portion
|
|
8,374
|
|
|
8,295
|
|
||
Intangible assets, net
|
|
10,556
|
|
|
12,034
|
|
||
Goodwill
|
|
12,876
|
|
|
12,876
|
|
||
Contract assets, net of current portion
|
|
5,539
|
|
|
—
|
|
||
Other long-term assets
|
|
1,090
|
|
|
1,006
|
|
||
Total assets
|
|
$
|
421,854
|
|
|
$
|
212,815
|
|
Liabilities and stockholders' equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
6,375
|
|
|
$
|
7,621
|
|
Accrued liabilities
|
|
10,847
|
|
|
10,562
|
|
||
Accrued compensation
|
|
6,229
|
|
|
11,511
|
|
||
Deferred revenues, current portion
|
|
38,344
|
|
|
38,379
|
|
||
Total current liabilities
|
|
61,795
|
|
|
68,073
|
|
||
Convertible notes, net of current portion
|
|
175,170
|
|
|
—
|
|
||
Deferred revenues, net of current portion
|
|
20,599
|
|
|
28,289
|
|
||
Deferred rent, net of current portion
|
|
9,075
|
|
|
9,393
|
|
||
Other long-term liabilities
|
|
360
|
|
|
438
|
|
||
Total liabilities
|
|
266,999
|
|
|
106,193
|
|
||
Commitments and contingencies (Note 8)
|
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
|
||||
Preferred stock: $0.0001 par value; 5,000 shares authorized; no shares issued or outstanding as of March 31, 2018 and December 31, 2017
|
|
—
|
|
|
—
|
|
||
Common stock: $0.0001 par value; 150,000 shares authorized; 42,404 issued and outstanding as of March 31, 2018 and 41,994 shares issued and 41,967 shares outstanding as of December 31, 2017
|
|
4
|
|
|
4
|
|
||
Treasury stock at cost: Zero shares at March 31, 2018 and 27 shares at December 31, 2017
|
|
—
|
|
|
(855
|
)
|
||
Additional paid-in capital
|
|
298,087
|
|
|
259,726
|
|
||
Accumulated other comprehensive loss
|
|
(163
|
)
|
|
(139
|
)
|
||
Accumulated deficit
|
|
(143,073
|
)
|
|
(152,114
|
)
|
||
Total stockholders' equity
|
|
154,855
|
|
|
106,622
|
|
||
Total liabilities and stockholders' equity
|
|
$
|
421,854
|
|
|
$
|
212,815
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Revenues
|
|
$
|
54,808
|
|
|
$
|
44,534
|
|
Cost of revenues
(1)
|
|
26,977
|
|
|
22,772
|
|
||
Gross profit
|
|
27,831
|
|
|
21,762
|
|
||
Operating expenses:
|
|
|
|
|
||||
Sales and marketing
(1)
|
|
10,966
|
|
|
9,878
|
|
||
Research and development
(1)
|
|
11,157
|
|
|
9,651
|
|
||
General and administrative
(1)
|
|
10,296
|
|
|
8,452
|
|
||
Acquisition related costs
|
|
256
|
|
|
348
|
|
||
Amortization of acquired intangibles
|
|
368
|
|
|
371
|
|
||
Total operating expenses
|
|
33,043
|
|
|
28,700
|
|
||
Loss from operations
|
|
(5,212
|
)
|
|
(6,938
|
)
|
||
Other income (expense):
|
|
|
|
|
||||
Interest and other income
|
|
199
|
|
|
108
|
|
||
Interest and other expense
|
|
(1,222
|
)
|
|
(74
|
)
|
||
Total other income (expense), net
|
|
(1,023
|
)
|
|
34
|
|
||
Loss before income taxes
|
|
(6,235
|
)
|
|
(6,904
|
)
|
||
Benefit from (provision for) income taxes
|
|
187
|
|
|
(136
|
)
|
||
Net loss
|
|
$
|
(6,048
|
)
|
|
$
|
(7,040
|
)
|
Other comprehensive loss:
|
|
|
|
|
||||
Unrealized loss on available-for-sale investments
|
|
(24
|
)
|
|
(1
|
)
|
||
Comprehensive loss
|
|
$
|
(6,072
|
)
|
|
$
|
(7,041
|
)
|
Net loss per common share, basic and diluted
|
|
$
|
(0.14
|
)
|
|
$
|
(0.17
|
)
|
Weighted average common shares outstanding:
|
|
|
|
|
||||
Basic and diluted
|
|
42,170
|
|
|
40,630
|
|
(1)
|
Includes stock-based compensation expenses as follows:
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Cost of revenues
|
|
$
|
1,015
|
|
|
$
|
724
|
|
Sales and marketing
|
|
1,226
|
|
|
631
|
|
||
Research and development
|
|
1,356
|
|
|
945
|
|
||
General and administrative
|
|
2,498
|
|
|
1,897
|
|
||
Total stock-based compensation expenses
|
|
$
|
6,095
|
|
|
$
|
4,197
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net loss
|
|
$
|
(6,048
|
)
|
|
$
|
(7,040
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
||||
Amortization of deferred implementation, solution and other costs
|
|
2,218
|
|
|
1,719
|
|
||
Depreciation and amortization
|
|
3,878
|
|
|
3,525
|
|
||
Amortization of debt issuance costs
|
|
123
|
|
|
24
|
|
||
Amortization of premiums on investments
|
|
56
|
|
|
69
|
|
||
Amortization of debt discount
|
|
1,099
|
|
|
—
|
|
||
Stock-based compensation expenses
|
|
6,095
|
|
|
4,197
|
|
||
Deferred income taxes
|
|
36
|
|
|
117
|
|
||
Allowance for sales credits
|
|
22
|
|
|
(10
|
)
|
||
Loss on disposal of long-lived assets
|
|
—
|
|
|
4
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
||||
Accounts receivable, net
|
|
(3,717
|
)
|
|
3,802
|
|
||
Prepaid expenses and other current assets
|
|
(1,727
|
)
|
|
(2,805
|
)
|
||
Deferred solution and other costs
|
|
(3,493
|
)
|
|
(2,066
|
)
|
||
Deferred implementation costs
|
|
(1,181
|
)
|
|
(1,314
|
)
|
||
Contract assets
|
|
(816
|
)
|
|
—
|
|
||
Other long-term assets
|
|
(220
|
)
|
|
(28
|
)
|
||
Accounts payable
|
|
(1,054
|
)
|
|
1,293
|
|
||
Accrued liabilities
|
|
(4,307
|
)
|
|
(8,756
|
)
|
||
Deferred revenues
|
|
2,250
|
|
|
(3,114
|
)
|
||
Deferred rent and other long-term liabilities
|
|
(317
|
)
|
|
(285
|
)
|
||
Net cash used in operating activities
|
|
(7,103
|
)
|
|
(10,668
|
)
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Purchases of investments
|
|
—
|
|
|
(2,939
|
)
|
||
Maturities of investments
|
|
2,901
|
|
|
5,709
|
|
||
Purchases of property and equipment
|
|
(5,396
|
)
|
|
(5,361
|
)
|
||
Business combinations and asset acquisitions, net of cash acquired
|
|
(150
|
)
|
|
(1,316
|
)
|
||
Capitalized software development costs
|
|
—
|
|
|
(532
|
)
|
||
Net cash used in investing activities
|
|
(2,645
|
)
|
|
(4,439
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Proceeds from issuance of convertible notes, net of issuance costs
|
|
223,675
|
|
|
—
|
|
||
Purchase of convertible notes bond hedge
|
|
(41,699
|
)
|
|
—
|
|
||
Proceeds from issuance of warrants
|
|
22,379
|
|
|
—
|
|
||
Proceeds from exercise of stock options to purchase common stock
|
|
2,843
|
|
|
2,990
|
|
||
Net cash provided by financing activities
|
|
207,198
|
|
|
2,990
|
|
||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
|
197,450
|
|
|
(12,117
|
)
|
||
Cash, cash equivalents, and restricted cash, beginning of period
|
|
60,276
|
|
|
56,188
|
|
||
Cash, cash equivalents, and restricted cash end of period
|
|
$
|
257,726
|
|
|
$
|
44,071
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
||||
Cash paid for interest
|
|
$
|
—
|
|
|
$
|
43
|
|
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
|
||||
Shares acquired to settle the exercise of stock options
|
|
$
|
(62
|
)
|
|
$
|
(39
|
)
|
Reconciliation of cash, cash equivalents, and restricted cash as shown in the statement of cash flows:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
255,411
|
|
|
$
|
42,756
|
|
Restricted cash
|
|
2,315
|
|
|
1,315
|
|
||
Total cash, cash equivalents, and restricted cash
|
|
$
|
257,726
|
|
|
$
|
44,071
|
|
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
|
|
|
Three Months Ended March 31, 2018
|
||||||||||||||
|
|
Subscription
|
|
Transactional
|
|
Services and Other
|
|
Consolidated
|
||||||||
Total Revenues
|
|
$
|
38,203
|
|
|
$
|
8,617
|
|
|
$
|
7,988
|
|
|
$
|
54,808
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Numerators:
|
|
|
|
|
||||
Net loss
|
|
$
|
(6,048
|
)
|
|
$
|
(7,040
|
)
|
Denominators:
|
|
|
|
|
||||
Weighted-average common shares outstanding, basic and diluted
|
|
42,170
|
|
|
40,630
|
|
||
Net loss per common share, basic and diluted
|
|
$
|
(0.14
|
)
|
|
$
|
(0.17
|
)
|
|
|
Three Months Ended March 31,
|
||||
|
|
2018
|
|
2017
|
||
Stock options, restricted stock units, and market stock units
|
|
5,458
|
|
|
5,909
|
|
|
|
Balance at December 31, 2017
|
|
Adjustments due to the new revenue standard
|
|
Balance at January 1, 2018
|
||||||
Balance sheet
|
|
|
|
|
|
|
||||||
Assets
|
|
|
|
|
|
|
||||||
Contract assets, current portion
|
|
$
|
—
|
|
|
$
|
517
|
|
|
$
|
517
|
|
Deferred solution and other costs, current portion
|
|
9,246
|
|
|
64
|
|
|
9,310
|
|
|||
Deferred solution and other costs, net of current portion
|
|
12,973
|
|
|
265
|
|
|
13,238
|
|
|||
Deferred implementation costs, net of current portion
|
|
8,295
|
|
|
(93
|
)
|
|
8,202
|
|
|||
Contract assets, net of current portion
|
|
—
|
|
|
4,541
|
|
|
4,541
|
|
|||
|
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
|
||||||
Accrued compensation
|
|
11,511
|
|
|
(571
|
)
|
|
10,940
|
|
|||
Deferred revenues, current portion
|
|
38,379
|
|
|
(1,803
|
)
|
|
36,576
|
|
|||
Deferred revenues, net of current portion
|
|
28,289
|
|
|
(8,174
|
)
|
|
20,115
|
|
|||
|
|
|
|
|
|
|
||||||
Stockholders' equity
|
|
|
|
|
|
|
||||||
Accumulated deficit
|
|
$
|
(152,114
|
)
|
|
$
|
15,842
|
|
|
$
|
(136,272
|
)
|
|
|
Three Months Ended March 31, 2018
|
||||||||||
|
|
As Reported
|
|
Balances without new revenue standard
|
|
Effect of Change Higher/(Lower)
|
||||||
Income statement
|
|
|
|
|
|
|
||||||
Revenues
|
|
$
|
54,808
|
|
|
$
|
52,543
|
|
|
$
|
2,265
|
|
|
|
|
|
|
|
|
||||||
Costs and expenses
|
|
|
|
|
|
|
||||||
Cost of revenues
|
|
26,977
|
|
|
27,033
|
|
|
(56
|
)
|
|||
Sales and marketing
|
|
10,966
|
|
|
11,228
|
|
|
(262
|
)
|
|||
Interest and other income
|
|
199
|
|
|
175
|
|
|
24
|
|
|||
|
|
|
|
|
|
|
||||||
Net loss
|
|
$
|
(6,048
|
)
|
|
$
|
(8,655
|
)
|
|
$
|
2,607
|
|
|
|
|
|
|
|
|
||||||
Net loss per common share, basic and diluted
|
|
$
|
(0.14
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
0.06
|
|
|
|
As of March 31, 2018
|
||||||||||
|
|
As Reported
|
|
Balances without new revenue standard
|
|
Effect of Change Higher/(Lower)
|
||||||
Balance sheet
|
|
|
|
|
|
|
||||||
Assets
|
|
|
|
|
|
|
||||||
Accounts receivable, net
|
|
$
|
16,897
|
|
|
$
|
14,157
|
|
|
$
|
2,740
|
|
Contract assets, current portion
|
|
336
|
|
|
—
|
|
|
336
|
|
|||
Deferred solution and other costs, current portion
|
|
8,392
|
|
|
8,314
|
|
|
78
|
|
|||
Deferred solution and other costs, net of current portion
|
|
16,333
|
|
|
16,089
|
|
|
244
|
|
|||
Deferred implementation costs, net of current portion
|
|
8,374
|
|
|
8,418
|
|
|
(44
|
)
|
|||
Contract assets, net of current portion
|
|
5,539
|
|
|
—
|
|
|
5,539
|
|
|||
|
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
|
||||||
Accrued compensation
|
|
6,229
|
|
|
7,076
|
|
|
(847
|
)
|
|||
Deferred revenues, current portion
|
|
38,344
|
|
|
36,930
|
|
|
1,414
|
|
|||
Deferred revenues, net of current portion
|
|
20,599
|
|
|
30,722
|
|
|
(10,123
|
)
|
|||
|
|
|
|
|
|
|
||||||
Stockholders' equity
|
|
|
|
|
|
|
||||||
Accumulated deficit
|
|
$
|
(143,073
|
)
|
|
$
|
(161,522
|
)
|
|
$
|
(18,449
|
)
|
•
|
Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities;
|
•
|
Level 2—Inputs other than quoted prices included within Level 1 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 3—Unobservable inputs that are supported by little or no market activity, which requires the Company to develop its own assumptions.
|
Cash Equivalents:
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
Money market funds
|
|
$
|
12,393
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,393
|
|
|
|
|
|
|
|
|
|
|
||||||||
Investments:
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
U.S. government agency bonds
|
|
$
|
15,278
|
|
|
$
|
—
|
|
|
$
|
(89
|
)
|
|
$
|
15,189
|
|
Corporate bonds and commercial paper
|
|
15,824
|
|
|
—
|
|
|
(74
|
)
|
|
15,750
|
|
||||
Certificates of deposit
|
|
7,765
|
|
|
—
|
|
|
—
|
|
|
7,765
|
|
||||
|
|
$
|
38,867
|
|
|
$
|
—
|
|
|
$
|
(163
|
)
|
|
$
|
38,704
|
|
Cash Equivalents:
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
Money market funds
|
|
$
|
9,279
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,279
|
|
|
|
|
|
|
|
|
|
|
||||||||
Investments:
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
U.S. government agency bonds
|
|
$
|
16,277
|
|
|
$
|
—
|
|
|
$
|
(83
|
)
|
|
$
|
16,194
|
|
Corporate bonds and commercial paper
|
|
15,871
|
|
|
—
|
|
|
(56
|
)
|
|
15,815
|
|
||||
Certificates of deposit
|
|
9,676
|
|
|
—
|
|
|
—
|
|
|
9,676
|
|
||||
|
|
$
|
41,824
|
|
|
$
|
—
|
|
|
$
|
(139
|
)
|
|
$
|
41,685
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Due within one year or less
|
|
$
|
31,083
|
|
|
$
|
27,324
|
|
Due after one year through five years
|
|
7,621
|
|
|
14,361
|
|
||
|
|
$
|
38,704
|
|
|
$
|
41,685
|
|
|
|
Adjusted Cost
|
|
Gross Unrealized Loss
|
|
Fair Value
|
||||||
U.S. government agency bonds
|
|
$
|
15,278
|
|
|
$
|
(89
|
)
|
|
$
|
15,189
|
|
Corporate bonds and commercial paper
|
|
15,824
|
|
|
(74
|
)
|
|
15,750
|
|
|||
|
|
$
|
31,102
|
|
|
$
|
(163
|
)
|
|
$
|
30,939
|
|
|
|
Adjusted Cost
|
|
Gross Unrealized Loss
|
|
Fair Value
|
||||||
U.S. government agency bonds
|
|
$
|
16,277
|
|
|
$
|
(83
|
)
|
|
$
|
16,194
|
|
Corporate bonds and commercial paper
|
|
15,871
|
|
|
(56
|
)
|
|
15,815
|
|
|||
|
|
$
|
32,148
|
|
|
$
|
(139
|
)
|
|
$
|
32,009
|
|
|
|
As of March 31, 2018
|
|
As of December 31, 2017
|
||||||||||||||||||||
|
|
Gross Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Gross Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||||||||
Customer relationships
|
|
$
|
3,130
|
|
|
$
|
(1,430
|
)
|
|
$
|
1,700
|
|
|
$
|
3,130
|
|
|
$
|
(1,294
|
)
|
|
$
|
1,836
|
|
Non-compete agreements
|
|
884
|
|
|
(494
|
)
|
|
390
|
|
|
884
|
|
|
(451
|
)
|
|
433
|
|
||||||
Trademarks
|
|
2,140
|
|
|
(1,902
|
)
|
|
238
|
|
|
2,140
|
|
|
(1,724
|
)
|
|
416
|
|
||||||
Acquired technology
|
|
13,293
|
|
|
(8,375
|
)
|
|
4,918
|
|
|
13,293
|
|
|
(7,464
|
)
|
|
5,829
|
|
||||||
Assembled workforce
|
|
121
|
|
|
(48
|
)
|
|
73
|
|
|
121
|
|
|
(38
|
)
|
|
83
|
|
||||||
Capitalized software development costs
|
|
3,975
|
|
|
(738
|
)
|
|
3,237
|
|
|
3,975
|
|
|
(538
|
)
|
|
3,437
|
|
||||||
|
|
$
|
23,543
|
|
|
$
|
(12,987
|
)
|
|
$
|
10,556
|
|
|
$
|
23,543
|
|
|
$
|
(11,509
|
)
|
|
$
|
12,034
|
|
|
|
Contractual Commitments
|
||
Year Ended December 31,
|
|
|
||
2018 (from April 1 to December 31)
|
|
$
|
9,869
|
|
2019
|
|
13,376
|
|
|
2020
|
|
9,666
|
|
|
2021
|
|
9,080
|
|
|
2022
|
|
9,080
|
|
|
Thereafter
|
|
236,379
|
|
|
Total commitments
|
|
$
|
287,450
|
|
•
|
during any calendar quarter commencing after the calendar quarter ending on June 30, 2018 (and only during such calendar quarter), if the last reported sale price of the common stock for at least
20
trading days (whether or not consecutive) during a period of
30
consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to
130%
of the conversion price on each applicable trading day;
|
•
|
during the
five
consecutive business day period after any five consecutive trading day period in which the trading price per
$1,000
principal amount of Convertible Notes for each trading day of the measurement period was less than
98%
of the product of the last reported sale price of the Company's common stock and the conversion rate on each such trading day; or
|
•
|
upon the occurrence of specified corporate events.
|
|
|
As of March 31, 2018
|
||
Liability component:
|
|
|
||
Principal
|
|
$
|
230,000
|
|
Unamortized debt discount
|
|
(49,553
|
)
|
|
Unamortized debt issuance costs
|
|
(5,277
|
)
|
|
Net carrying amount
|
|
175,170
|
|
|
|
|
|
||
Equity component
|
|
|
||
Net allocation of proceeds
|
|
31,116
|
|
|
Net issuance costs
|
|
(1,517
|
)
|
|
Net carrying amount
|
|
$
|
29,599
|
|
|
|
Three Months Ended March 31, 2018
|
||
Amortization of debt issuance costs
|
|
$
|
123
|
|
Amortization of debt discount
|
|
1,099
|
|
|
Total
|
|
$
|
1,222
|
|
|
|
Number of Options
|
|
Weighted Average Exercise Price
|
|||
Balance as of January 1, 2018
|
|
3,692
|
|
|
$
|
17.63
|
|
Granted
|
|
12
|
|
|
47.00
|
|
|
Exercised
|
|
(267
|
)
|
|
10.33
|
|
|
Forfeited
|
|
(1
|
)
|
|
15.07
|
|
|
Balance as of March 31, 2018
|
|
3,436
|
|
|
$
|
18.30
|
|
|
|
Number of Shares
|
|
Weighted Average Grant Date Fair Value
|
|||
Nonvested as of January 1, 2018
|
|
1,680
|
|
|
$
|
32.65
|
|
Granted
|
|
311
|
|
|
47.00
|
|
|
Vested
|
|
(170
|
)
|
|
27.69
|
|
|
Forfeited
|
|
(33
|
)
|
|
34.90
|
|
|
Nonvested as of March 31, 2018
|
|
1,788
|
|
|
$
|
35.58
|
|
|
|
Number of Shares
|
|
Weighted Average Grant Date Fair Value
|
|||
Nonvested as of January 1, 2018
|
|
—
|
|
|
$
|
—
|
|
Granted
|
|
234
|
|
|
21.77
|
|
|
Vested
|
|
—
|
|
|
—
|
|
|
Forfeited
|
|
—
|
|
|
—
|
|
|
Nonvested as of March 31, 2018
|
|
234
|
|
|
$
|
21.77
|
|
|
|
As of March 31, 2018
|
|
Volatility
|
|
36.6
|
%
|
Risk-free interest rate
|
|
2.4
|
%
|
Dividend yield
|
|
—
|
|
Longest remaining performance period (in years)
|
|
3
|
|
•
|
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,
|
||||||
|
|
2018
|
|
2017
|
||||
Reconciliation of net loss to adjusted EBITDA:
|
|
|
|
|
||||
Net loss
|
|
$
|
(6,048
|
)
|
|
$
|
(7,040
|
)
|
Depreciation and amortization
|
|
3,878
|
|
|
3,525
|
|
||
Stock-based compensation expense
|
|
6,095
|
|
|
4,197
|
|
||
(Benefit from) provision for income taxes
|
|
(187
|
)
|
|
136
|
|
||
Interest and other (income) expense, net
|
|
1,023
|
|
|
(34
|
)
|
||
Acquisition related costs
|
|
256
|
|
|
348
|
|
||
Adjusted EBITDA
|
|
$
|
5,017
|
|
|
$
|
1,132
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Revenues
|
|
$
|
54,808
|
|
|
$
|
44,534
|
|
Cost of revenues
(1)(2)
|
|
26,977
|
|
|
22,772
|
|
||
Gross profit
|
|
27,831
|
|
|
21,762
|
|
||
Operating expenses:
|
|
|
|
|
||||
Sales and marketing
(2)
|
|
10,966
|
|
|
9,878
|
|
||
Research and development
(2)
|
|
11,157
|
|
|
9,651
|
|
||
General and administrative
(2)
|
|
10,296
|
|
|
8,452
|
|
||
Acquisition related costs
|
|
256
|
|
|
348
|
|
||
Amortization of acquired intangibles
|
|
368
|
|
|
371
|
|
||
Total operating expenses
|
|
33,043
|
|
|
28,700
|
|
||
Loss from operations
|
|
(5,212
|
)
|
|
(6,938
|
)
|
||
Total other income (expense), net
|
|
(1,023
|
)
|
|
34
|
|
||
Loss before income taxes
|
|
(6,235
|
)
|
|
(6,904
|
)
|
||
Benefit from (provision for) income taxes
|
|
187
|
|
|
(136
|
)
|
||
Net loss
|
|
$
|
(6,048
|
)
|
|
$
|
(7,040
|
)
|
(1)
|
Includes amortization of acquired technology of
$0.9 million
for each of the
three months ended March 31, 2018
and
2017
.
|
(2)
|
Includes stock-based compensation expenses as follows (in thousands):
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Cost of revenues
|
|
$
|
1,015
|
|
|
$
|
724
|
|
Sales and marketing
|
|
1,226
|
|
|
631
|
|
||
Research and development
|
|
1,356
|
|
|
945
|
|
||
General and administrative
|
|
2,498
|
|
|
1,897
|
|
||
Total stock-based compensation expenses
|
|
$
|
6,095
|
|
|
$
|
4,197
|
|
(1)
|
Includes amortization of acquired technology of
1.7%
and
2.0%
for the
three months ended March 31, 2018
and
2017
, respectively.
|
(2)
|
Includes stock-based compensation expenses as follows:
|
|
|
Three Months Ended March 31,
|
||||
|
|
2018
|
|
2017
|
||
Cost of revenues
|
|
1.9
|
%
|
|
1.6
|
%
|
Sales and marketing
|
|
2.2
|
|
|
1.4
|
|
Research and development
|
|
2.5
|
|
|
2.1
|
|
General and administrative
|
|
4.6
|
|
|
4.3
|
|
Total stock-based compensation expenses
|
|
11.1
|
%
|
|
9.4
|
%
|
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
|
|
2018
|
|
2017
|
|
$
|
|
(%)
|
|||||||
Revenues
|
|
$
|
54,808
|
|
|
$
|
44,534
|
|
|
$
|
10,274
|
|
|
23.1
|
%
|
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
|
|
2018
|
|
2017
|
|
$
|
|
(%)
|
|||||||
Cost of revenues
|
|
$
|
26,977
|
|
|
$
|
22,772
|
|
|
$
|
4,205
|
|
|
18.5
|
%
|
Percentage of revenues
|
|
49.2
|
%
|
|
51.1
|
%
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
|
|
2018
|
|
2017
|
|
$
|
|
(%)
|
|||||||
Sales and marketing
|
|
$
|
10,966
|
|
|
$
|
9,878
|
|
|
$
|
1,088
|
|
|
11.0
|
%
|
Percentage of revenues
|
|
20.0
|
%
|
|
22.2
|
%
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
|
|
2018
|
|
2017
|
|
$
|
|
(%)
|
|||||||
Research and development
|
|
$
|
11,157
|
|
|
$
|
9,651
|
|
|
$
|
1,506
|
|
|
15.6
|
%
|
Percentage of revenues
|
|
20.4
|
%
|
|
21.7
|
%
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
|
|
2018
|
|
2017
|
|
$
|
|
(%)
|
|||||||
General and administrative
|
|
$
|
10,296
|
|
|
$
|
8,452
|
|
|
$
|
1,844
|
|
|
21.8
|
%
|
Percentage of revenues
|
|
18.8
|
%
|
|
19.0
|
%
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
|
|
2018
|
|
2017
|
|
$
|
|
(%)
|
|||||||
Acquisition related costs
|
|
$
|
256
|
|
|
$
|
348
|
|
|
$
|
(92
|
)
|
|
(26.4
|
)%
|
Percentage of revenues
|
|
0.5
|
%
|
|
0.8
|
%
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
|
|
2018
|
|
2017
|
|
$
|
|
(%)
|
|||||||
Amortization of acquired intangibles
|
|
$
|
368
|
|
|
$
|
371
|
|
|
$
|
(3
|
)
|
|
(0.8
|
)%
|
Percentage of revenues
|
|
0.7
|
%
|
|
0.8
|
%
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
|
|
2018
|
|
2017
|
|
$
|
|
(%)
|
|||||||
Total other income (expense), net
|
|
$
|
(1,023
|
)
|
|
$
|
34
|
|
|
$
|
(1,057
|
)
|
|
(3,108.8
|
)%
|
Percentage of revenues
|
|
(1.9
|
)%
|
|
0.1
|
%
|
|
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Net cash provided by (used in):
|
|
|
|
|
||||
Operating activities
|
|
$
|
(7,103
|
)
|
|
$
|
(10,668
|
)
|
Investing activities
|
|
(2,645
|
)
|
|
(4,439
|
)
|
||
Financing activities
|
|
207,198
|
|
|
2,990
|
|
||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
|
$
|
197,450
|
|
|
$
|
(12,117
|
)
|
|
|
Payment due by period
|
||||||||||||||||||
|
|
Less Than 1 Year
|
|
1 to 3 Years
|
|
3 to 5 Years
|
|
More Than 5 Years
|
|
Total
|
||||||||||
Convertible Notes, including interest
|
|
$
|
1,725
|
|
|
$
|
5,175
|
|
|
$
|
231,725
|
|
|
$
|
—
|
|
|
$
|
238,625
|
|
Operating lease obligations
|
|
5,670
|
|
|
11,416
|
|
|
8,728
|
|
|
19,351
|
|
|
45,165
|
|
|||||
Purchase commitments
|
|
14,171
|
|
|
16,265
|
|
|
14,711
|
|
|
3,678
|
|
|
48,825
|
|
|||||
|
|
$
|
21,566
|
|
|
$
|
32,856
|
|
|
$
|
255,164
|
|
|
$
|
23,029
|
|
|
$
|
332,615
|
|
•
|
Revenue recognition;
|
•
|
Contract balances;
|
•
|
Accounts receivable;
|
•
|
Deferred revenues;
|
•
|
Deferred implementation costs;
|
•
|
Deferred solution and other costs;
|
•
|
Stock-based compensation;
|
•
|
Convertible senior notes;
|
•
|
Purchase price allocation, intangible assets and goodwill;
|
•
|
Capitalization of software development costs; and
|
•
|
Income taxes.
|
|
|
Total Number of Shares Purchased(1)
|
|
Average Price Paid Per Share(2)
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares That May Be Purchased Under the Plans or Programs
|
|||||||
January 1 - 31, 2018
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
February 1 - 28, 2018
|
|
823
|
|
|
45.53
|
|
|
—
|
|
|
—
|
|
|||
March 1 - 31, 2018
|
|
519
|
|
|
47.80
|
|
|
—
|
|
|
—
|
|
|||
Total
|
|
1,342
|
|
|
$
|
46.41
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(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 Holdings, Inc. shares as reported on the New York Stock Exchange on the date of exercise.
|
Exhibit Number
|
|
Description of Document
|
|
|
|
*
|
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)).
|
|
|
|
|
*
|
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)).
|
|
|
|
|
*
|
Indenture, dated February 26, 2018 between Q2 Holdings, Inc. and Wilmington Trust, National Association, as trustee (filed as Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on February 26, 2018).
|
|
|
|
|
*
|
Form of Global Note, dated February 26, 2018 between Q2 Holdings, Inc. and Wilmington Trust, National Association, as trustee (filed as Exhibit 4.2 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on February 26, 2018).
|
|
|
|
|
*
|
Purchase Agreement, dated February 21, 2018 by and among Q2 Holdings, Inc., Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC and Stifel, Nicolaus & Company, Incorporated, as representatives of the several initial purchasers named therein (filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on February 26, 2018).
|
|
|
|
|
*
|
Form of Bond Hedge Confirmation (filed as Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on February 26, 2018).
|
|
|
|
|
*
|
Form of Warrant Confirmation (filed as Exhibit 10.3 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on February 26, 2018).
|
|
|
|
|
**
|
Form of Market Stock Units Agreement under the Registrant's 2014 Equity Incentive Plan.
|
|
|
|
|
**
|
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.
|
|
|
|
|
**
|
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.
|
|
|
|
|
#
|
Certification pursuant to 18 U.S.C. 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Executive Officer.
|
|
|
|
|
#
|
Certification pursuant to 18 U.S.C. 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Financial Officer.
|
|
|
|
|
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.
|
|
|
Q2 HOLDINGS, INC.
|
||
May 3, 2018
|
|
By:
|
|
/s/ MATTHEW P. FLAKE
Matthew P. Flake
Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|
May 3, 2018
|
|
By:
|
|
/s/ JENNIFER N. HARRIS
Jennifer N. Harris
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
Participant:
|
|
Grant Date:
|
|
Target Units:
|
___________, subject to adjustment as provided by the Agreement.
|
Maximum Units:
|
___________, which is 200% of the Target Units, subject to adjustment as provided by the Agreement.
|
Performance Metric:
|
For each Performance Period, the Company TSR Percentile Rank.
|
Benchmark Index:
|
The Russell 2000 Index.
|
First Performance Period:
|
The one-year period beginning on the Grant Date and ending on the first anniversary of the Grant Date.
|
Second Performance Period:
|
The two-year period beginning on the Grant Date and ending on the second anniversary of the Grant Date.
|
Third Performance Period:
|
The three-year period beginning on the Grant Date and ending on the third anniversary of the Grant Date.
|
Earned Units:
|
For each Performance Period, the number of Units determined in accordance with Section 4 of the Agreement.
|
Vesting Date:
|
Except as otherwise provided by the Agreement, the Vesting Date for each Performance Period will be the date on which the Committee certifies the Company TSR Percentile Rank achieved and the resulting number of Earned Units.
|
Vested Units:
|
For each Performance Period, the Earned Units, if any, will become Vested Units on the Vesting Date, provided that the Participant’s Service has not terminated prior to the Vesting Date.
|
Settlement Date:
|
Except as otherwise provided by the Agreement, the Settlement Date for each Vested Unit will be as soon as practicable following the Vesting Date but in any event no later than the 15th day of the third calendar month following the end of the calendar year in which the Vesting Date occurs.
|
Q2 HOLDINGS, INC.
|
|
PARTICIPANT
|
||
By:
|
|
|
By:
|
|
Print Name:
|
|
|
Print Name:
|
|
Title:
|
|
|
|
|
Address:
|
|
|
Address:
|
|
|
|
|
|
|
ATTACHMENTS:
|
2014 Equity Incentive Plan, as amended to the Date of Grant; Market Stock Units Agreement and Plan Prospectus
|
Company TSR Percentile Rank
|
Performance Multiplier
|
Less than 30
th
percentile
|
Zero
|
30
th
percentile
|
50%
|
Greater than 30
th
percentile but less than 60
th
percentile
|
50% + (5/3 x (Company TSR Percentile Rank minus 30%))
|
60
th
percentile
|
100%
|
Greater than 60
th
percentile but less than 90
th
percentile
|
100% + (10/3 x (Company TSR Percentile Rank minus 60%))
|
Equal to or greater than 90
th
percentile
|
200%
|
Date: May 3, 2018
|
|
/s/ MATTHEW P. FLAKE
|
|
|
Matthew P. Flake
|
|
|
Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
Date: May 3, 2018
|
|
/s/ JENNIFER N. HARRIS
|
|
|
Jennifer N. Harris
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|
Date: May 3, 2018
|
|
/s/ MATTHEW P. FLAKE
|
|
|
Matthew P. Flake
|
|
|
Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
Date: May 3, 2018
|
|
/s/ JENNIFER N. HARRIS
|
|
|
Jennifer N. Harris
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|