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☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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54-1956084
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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11955 Democracy Drive, Suite 1700
Reston, VA
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20190
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Class A Common Stock, $0.0001 par value per share
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The Nasdaq Stock Market LLC
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Large accelerated filer
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☐
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Accelerated filer
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☐
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Non-accelerated filer
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☒ (Do not check if a smaller reporting company)
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Smaller reporting company
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☐
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Emerging growth company
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☒
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Page
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PART I.
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV.
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Item 15.
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Item 16.
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•
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our ability to effectively manage or sustain our growth and to achieve profitability;
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our market opportunity and the expansion of our core software markets in general;
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the effects of increased competition as well as innovations by new and existing competitors in our market;
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our ability to adapt to technological change and effectively enhance, innovate and scale our platform and professional services;
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our expected use of proceeds;
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our ability to attract and retain qualified employees and key personnel and further expand our overall headcount;
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our ability to maintain, or strengthen awareness of, our brand;
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perceived or actual problems with the integrity, reliability, quality or compatibility of our platform, including unscheduled downtime or outages;
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potential acquisitions and integration of complementary businesses and technologies;
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future revenue, hiring plans, expenses, capital expenditures, capital requirements and stock performance;
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our ability to stay abreast of new or modified laws and regulations that currently apply or become applicable to our business both in the United States and internationally;
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our ability to maintain, protect and enhance our intellectual property;
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costs associated with defending intellectual property infringement and other claims; and
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the future trading prices of our Class A common stock and the impact of securities analysts’ reports on these prices.
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•
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Packaged software is inadequate.
Packaged software, whether delivered in the cloud or on-premises, is a one-size-fits-all solution that performs industry-agnostic functions, such as customer relationship management or enterprise resource management, or serves specific industry verticals without organization-specific differentiation. Organizations are often unable to use packaged software to address unusual use cases and differentiate themselves and must conform their individual processes, needs and systems of record to standardized frameworks. Moreover, for both cross-industry and industry-specific software, the limited scope of functionality often forces organizations to adopt numerous point solutions that can be difficult to integrate.
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Traditional custom software solutions are expensive and difficult to create.
In contrast, traditional custom solutions are built to address particular organization-specific use cases.
Although this allows organizations to better manage their operations and differentiate their businesses, traditional custom software solutions have historically been hampered by several limitations:
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Traditional application development is a long and cumbersome process, requiring complex coding and an iterative feedback cycle. According to one example cited by Forrester, the coding of custom software took an estimated 2.7 years to complete, and therefore the output from a development project may not meet user needs and intentions even on the first day of deployment. In the same report, Forrester found that the use of low-code software development was six to 20 times faster than traditional software development. Further, traditional custom software projects require on-going maintenance and enhancement, without which the resulting software will not keep pace with future needs.
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•
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The proliferation in mobile devices and the competition among mobile device manufacturers means that device operating systems are continuously being updated, modified and customized for specific hardware configurations. This continual change means that traditional custom software needs to be updated continuously in order to remain relevant across an organization’s entire technology environment. Updating such custom software so that it can be used across devices adds another layer of complexity to the entire process.
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•
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The need for organizations to manage their operations utilizing all of these devices and environments necessitates costly integrations in an attempt to avoid creating information silos. Otherwise, organizations could not effectively share information across applications and processes, which would inhibit collaboration, effective analytics and real-time decision making.
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•
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Developer talent is scarce and hiring developers to create custom software is costly. According to an LTM Research survey of Global 2000 executives, which was commissioned by us, 79% of respondents said they were concerned that their digital transformation initiatives would be impacted by challenges in hiring and retaining skilled developers. Software developer costs can be greater than $100,000 per year, depending on location. Given its labor intensive nature, traditional custom software can be very expensive to design, implement and maintain.
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•
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Rapid and simple innovation through our powerful platform.
Our low-code platform employs an intuitive, visual interface and pre-built development modules that reduce the time required to build powerful and unique applications. Our platform automates the creation of forms, data flows, records, reports and other software elements that would otherwise need to be manually coded or configured. This functionality greatly reduces the iterative development process, allowing for real-time application optimization and ultimately shortening the time from idea to deployment. In turn, organizations can better leverage scarce and costly developer talent to accomplish more digital transformation objectives.
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•
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Powerful applications to solve complex challenges
.
At the core of our platform is an advanced engine that enables the modeling, modification and management of complex processes and business rules. Our heritage as a business process management, or BPM, company provides us with this differentiated understanding of complex processes, and we have incorporated that expertise into our platform to enable the development of powerful applications. Organizations have used our platform to launch new business lines, build large procurement systems, manage retail store layouts, conduct predictive maintenance on field equipment and manage trading platforms, among a range of other use cases. For example, the Defense Information Systems Agency of the U.S. federal government, or DISA, utilizes our platform to manage its large and complex procurement organization, having processed nearly $3.5 billion worth of contract value on our platform since 2009.
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Create once, deploy everywhere.
Our patented SAIL technology allows developers to create an application once and deploy it everywhere with the consistency of experience and optimal performance levels that users expect. Applications developed on our platform can be immediately and natively deployed across a full range of mobile and desktop devices with no additional customization, including desktop web browsers, tablets and mobile phones.
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Seamless integration with existing systems and data.
In contrast to typical enterprise software, our platform does not require that data reside within it in order to enable robust data analysis and cross-department and cross-application insight. Our platform seamlessly integrates with many of the most popular enterprise software applications and data repositories and can be used within many legacy environments. For example, organizations frequently use our platform to extend the life and enhance the functionality of legacy systems of record, such as those used for enterprise resource planning, human capital management and customer relationship management, by building new applications that enhance the functionality of those systems and by leveraging the data within those systems to further optimize and automate operations.
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Deployment flexibility to serve customer needs.
Our platform can be installed in the cloud, on-premises or using a hybrid approach, with organizations able to access the same functionality and data sources in all cases. Our flexible deployment model also preserves a seamless path to future cloud deployments for organizations initially choosing on-premises or hybrid approaches for their most sensitive workloads.
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Industry-leading security.
Our platform is designed to meet the highest demands of our federal government and large enterprise customers. Our cloud platform holds some of the highest security certifications from government agencies and industry organizations, including being one of the first low-code software companies to achieve Federal Risk and Authorization Management Program, or FedRAMP, compliance. Our platform also meets the Payment Card Industry Data Security Standard, or PCI DSS, and the United States Health Insurance Portability and Accountability Act standard.
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Expand our customer base.
As of
December 31, 2017
, we had
356
customers in a wide variety of industries, including financial services, healthcare, government, telecommunications, media, energy, manufacturing and transportation. We believe that the market for our software development platform is in its early stages and that we have a significant opportunity to add additional large enterprise and government customers.
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Grow through our differentiated land and expand model.
Customers receive all of the modules and functionality of our platform with their initial subscription, which facilitates the seamless creation of new applications. Many of our customers begin by building a single application and grow to build dozens of applications on our platform, which implicitly reduces the per-user cost of each application. Generally, the development of new applications results in the expansion of our user base within an organization and a corresponding increase in revenue to us because we usually charge subscription fees on a per-user basis. Every additional application that an organization creates on our platform increases the value of our platform for that organization because it further integrates people, process and data across the organization and facilitates knowledge sharing. Applications built on our platform may be used only on our platform while customers have active subscriptions, creating substantial switching costs for customers to move to a different software platform. We believe that organizations will develop additional applications and add users to our platform as they continue to recognize these benefits.
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Grow revenue from key industry verticals.
While our platform is industry-agnostic, we have recently made, and plan to continue to make, investments to enhance the expertise of our sales and marketing organization within our key industry verticals of financial services, healthcare and U.S. federal government. In
2017
, we generated over 66% of our subscription revenue from customers in these verticals. We believe that focusing on the digital transformation needs of organizations within these industry verticals can help drive adoption of our platform.
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Continue to innovate and enhance our platform
. We have made, and will continue to make, investments in research and development to strengthen our platform and expand the number of features available to our customers. We typically offer multiple upgrades each year that allow our customers to benefit from ongoing innovation. Most recently, we expanded our offering to include Quick Apps, which enables non-professional developers to develop native web and mobile applications in minutes with no coding. In addition, our platform allows our customers to embed artificial intelligence, or AI, concepts into their business processes and to use our pre-built integrations to leading providers of AI services. Our platform also incorporates best practices in the field of data science into a tool for our customers to automate the training, deployment and management of AI predictive models. We are also collaborating with other companies to include cognitive computing and Robotic Process Automation capabilities on our platform, allowing the delivery of even more powerful and intelligent applications using an agile delivery capability. As we continue to increase the functionality of our platform and further reduce the amount of developer skill that is required to build robust applications on our platform, we believe that we have the potential to expand the use of our platform.
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Expand our international footprint.
Our platform is designed to be natively multi-lingual to facilitate collaboration and address challenges in multi-national organizations. In
2017
, approximately
27%
of our total revenue was generated from customers outside of the United States. Today, we operate in 11 countries and believe that we have a significant opportunity to grow our international footprint. We are investing in new geographies, including through investment in direct and indirect sales channels, professional services and customer support and implementation partners.
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Grow our partner base.
We have several strategic partnerships including with Deloitte, KPMG and PricewaterhouseCoopers. These partners work with organizations that are undergoing digital transformation projects and are therefore able to refer potential customers to us. When these partners recognize an opportunity for our platform, they often introduce us to potential customers. We intend to further grow our base of partners to provide broader customer coverage and solution delivery capabilities.
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Current core software markets.
We believe that our platform addresses several key core software markets, as follows:
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Low-code.
According to Forrester, the market for low-code development platforms is expected to total $4.4 billion in 2018 and is expected to grow at a 49% compound annual growth rate to $21.2 billion in 2022. We were included as a “Leader” in the Forrester Wave: Low-Code Development Platforms in 2017, which is an evaluation of current offering, strategy and market presence.
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Case management
.
Case management applications are designed to support complex processes that require a combination of human workflows and collaboration, electronic workflows, data management and processing of files and cases. According to Aite, the market for case management software was expected to total $1.3 billion in 2017 and is expected to grow at a 9% compound annual growth rate to $1.6 billion in 2019. We were included as a “Leader” based on the strength of our current offering, our strategy and our market presence in the Forrester Wave: Dynamic Case Management in 2016.
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BPM
. BPM applications are designed to support the optimization of business processes, including process identification, improvement implementation, and monitoring and analysis. According to Gartner, the market for Business Process Management Suites is expected to total $3.0 billion in 2018 and is expected to grow at a 7% compound annual growth rate to $3.7 billion in 2021 worldwide*. We were included as a "Leader" based on our ability to execute and the completeness of our vision in the Gartner Magic Quadrant for Intelligent Business Process Management Suites 2017.**
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Application PaaS
. Application platform as a service, or application PaaS, is a cloud service that provides the necessary infrastructure to enable the development, deployment and hosting of software applications. We believe that we are well positioned to capture a portion of the application platform-as-a-service, or application PaaS, market, which IDC estimated to reach $14.9 billion in 2018, and which is expected to grow at a 6% compound annual growth rate to $17.9 billion in 2021.
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Traditional custom enterprise software market
.
In addition to our current core software markets, we believe that our platform better meets certain of the needs that have been historically addressed by manually-developed custom enterprise software, which is expected to represent a $169 billion market in 2018, according to Forrester.
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Our internal estimate
.
Based on approximately 140,000 global companies and government institutions in 2017 in relevant industries and revenue-based size segments, and our industry- and size-specific average annual recurring revenue for customers as of
December 31, 2017
, we internally estimate our market opportunity to have been approximately $31 billion in 2017. We determined relevant global companies and government institutions by industry and size by referencing certain independent industry data from S&P Global Market Intelligence. We calculated industry- and size-specific average annual recurring revenue as of
December 31, 2017
by adding the aggregate annual recurring revenue from all existing customers within each industry and size segment and dividing the total by the number of our existing customers in each industry and size segment.
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platform features, reliability, performance and effectiveness;
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ease of use and speed;
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platform extensibility and ability to integrate with other technology infrastructures;
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deployment flexibility;
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robustness of professional services and customer support;
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price and total cost of ownership;
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strength of platform security and adherence to industry standards and certifications;
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strength of sales and marketing efforts; and
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brand awareness and reputation.
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maintain and expand our customer base;
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increase revenue from existing customers through increased or broader use of our platform within their organizations;
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further penetrate the existing industry verticals that we serve and expand into other industry verticals;
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improve the performance and capabilities of our platform through research and development;
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continue to successfully expand our business domestically and internationally; and
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successfully compete with other companies.
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any decline in demand for our platform;
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the failure of our platform to achieve continued market acceptance;
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the market for low-code solutions not continuing to grow, or growing more slowly than we expect;
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the introduction of products and technologies that serve as a replacement or substitute for, or represent an improvement over, our platform;
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technological innovations or new standards that our platform does not address;
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sensitivity to current or future prices offered by us or competing solutions; and
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our inability to release enhanced versions of our platform on a timely basis.
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the level of demand for our platform and our professional services;
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the rate of renewal of subscriptions with, and extent of sales of additional subscriptions to, existing customers;
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large customers failing to renew their subscriptions;
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the size, timing and terms of our subscription agreements with existing and new customers, including revenue recognition issues raised by multiple element arrangements;
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the timing and growth of our business, in particular through our hiring of new employees and international expansion;
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the timing of our adoption of new or revised accounting pronouncements applicable to public companies and the impact on our results of operations;
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the introduction of new products and product enhancements by existing competitors or new entrants into our market, and changes in pricing for solutions offered by us or our competitors;
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network outages, security breaches, technical difficulties or interruptions with our platform;
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changes in the growth rate of the markets in which we compete;
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the mix of subscriptions to our platform and professional services sold during a period;
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customers delaying purchasing decisions in anticipation of new developments or enhancements by us or our competitors or otherwise;
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changes in customers’ budgets;
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seasonal variations related to sales and marketing and other activities, such as expenses related to our customers;
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our ability to increase, retain and incentivize the strategic partners that market and sell our platform;
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our ability to control costs, including our operating expenses;
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our ability to hire, train and maintain our direct sales force;
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unforeseen litigation and intellectual property infringement;
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fluctuations in our effective tax rate; and
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general economic and political conditions, both domestically and internationally, as well as economic conditions specifically affecting industries in which our customers operate.
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loss or delayed market acceptance and sales;
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breach of warranty claims;
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sales credits or refunds for prepaid amounts related to unused subscription services;
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loss of customers;
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diversion of development and support resources; and/or
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injury to our reputation.
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changes in a specific country’s or region’s political or economic conditions;
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unexpected changes in regulatory requirements, taxes or trade laws;
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more stringent regulations relating to data security and the unauthorized use of, or access to, commercial and personal information, particularly in the European Union;
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differing labor regulations, especially in the European Union, where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations;
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challenges inherent in efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits and compliance programs;
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difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems and regulatory systems;
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increased travel, real estate, infrastructure and legal compliance costs associated with international operations;
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currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into hedging transactions if we choose to do so in the future;
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limitations on our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries;
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laws and business practices favoring local competitors or general preferences for local vendors;
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limited or insufficient intellectual property protection;
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political instability or terrorist activities;
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exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S. Foreign Corrupt Practices Act and similar laws and regulations in other jurisdictions; and
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adverse tax burdens and foreign exchange controls that could make it difficult to repatriate earnings and cash.
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•
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an acquisition may negatively affect our financial results because it may require us to incur charges or assume substantial debt or other liabilities, may cause adverse tax consequences or unfavorable accounting treatment, may expose us to claims and disputes by third parties, including intellectual property claims and disputes, or may not generate sufficient financial return to offset additional costs and expenses related to the acquisition;
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•
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we may encounter difficulties or unforeseen expenditures in integrating the business, technologies, products, personnel or operations of any company that we acquire, particularly if key personnel of the acquired company decide not to work for us;
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an acquisition may disrupt our ongoing business, divert resources, increase our expenses and distract our management;
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an acquisition may result in a delay or reduction of customer purchases for both us and the company acquired due to customer uncertainty about continuity and effectiveness of service from either company;
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we may encounter difficulties in successfully selling, or may be unable to successfully sell, any acquired solutions;
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an acquisition may involve the entry into geographic or business markets in which we have little or no prior experience or where competitors have stronger market positions;
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our use of cash to pay for an acquisition would limit other potential uses for our cash; and
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if we incur debt to fund such acquisition, such debt may subject us to material restrictions on our ability to conduct our business as well as financial maintenance covenants.
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actual or anticipated fluctuations in our financial condition and operating results;
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variance in our financial performance from expectations of securities analysts;
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changes in the prices of subscriptions to our platform;
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changes in our projected operating and financial results;
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changes in laws or regulations applicable to our platform;
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announcements by us or our competitors of significant business developments, acquisitions or new offerings;
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our involvement in any litigation;
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our sale of our Class A common stock or other securities in the future;
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changes in senior management or key personnel;
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the trading volume of our Class A common stock;
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changes in the anticipated future size and growth rate of our market; and
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general economic, regulatory and market conditions.
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Year Ended December 31, 2017:
|
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High
|
|
Low
|
||||
Second quarter (from May 25, 2017 to June 30, 2017)
|
|
$
|
19.58
|
|
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$
|
15.01
|
|
Third Quarter
|
|
$
|
28.46
|
|
|
$
|
17.63
|
|
Fourth Quarter
|
|
$
|
33.60
|
|
|
$
|
19.69
|
|
Company/Index
|
|
May 25, 2017
|
|
May 31, 2017
|
|
June 30, 2017
|
|
July 31, 2017
|
|
August 31, 2017
|
|
September 30, 2017
|
|
October 31, 2017
|
|
November 30, 2017
|
|
December 31, 2017
|
||||||||||||||||||
Appian Corporation
|
|
$
|
100.00
|
|
|
$
|
117.59
|
|
|
$
|
120.92
|
|
|
$
|
130.31
|
|
|
$
|
152.50
|
|
|
$
|
189.61
|
|
|
$
|
153.90
|
|
|
$
|
146.70
|
|
|
$
|
209.73
|
|
Nasdaq Global Market Composite
|
|
100.00
|
|
|
98.76
|
|
|
105.12
|
|
|
104.62
|
|
|
106.14
|
|
|
112.43
|
|
|
110.73
|
|
|
113.68
|
|
|
117.68
|
|
|||||||||
Nasdaq Computer
|
|
100.00
|
|
|
99.87
|
|
|
96.18
|
|
|
100.73
|
|
|
104.10
|
|
|
104.59
|
|
|
113.09
|
|
|
113.70
|
|
|
113.49
|
|
|
Year Ended December 31,
|
||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||
|
(in thousands, except share and per share data)
|
||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Subscriptions, software and support
|
$
|
91,514
|
|
|
$
|
69,972
|
|
|
$
|
53,207
|
|
|
$
|
37,076
|
|
Professional services
|
85,223
|
|
|
62,951
|
|
|
57,997
|
|
|
51,920
|
|
||||
Total revenue
|
176,737
|
|
|
132,923
|
|
|
111,204
|
|
|
88,996
|
|
||||
Cost of revenue
(1)
:
|
|
|
|
|
|
|
|
||||||||
Subscriptions, software and support
|
9,379
|
|
|
7,437
|
|
|
6,079
|
|
|
4,273
|
|
||||
Professional services
|
55,218
|
|
|
42,686
|
|
|
42,402
|
|
|
32,524
|
|
||||
Total cost of revenue
|
64,597
|
|
|
50,123
|
|
|
48,481
|
|
|
36,797
|
|
||||
Gross profit
|
112,140
|
|
|
82,800
|
|
|
62,723
|
|
|
52,199
|
|
||||
Operating expenses
(1)
:
|
|
|
|
|
|
|
|
||||||||
Sales and marketing
|
81,966
|
|
|
54,137
|
|
|
38,300
|
|
|
29,088
|
|
||||
Research and development
|
34,835
|
|
|
22,994
|
|
|
16,750
|
|
|
13,488
|
|
||||
General and administrative
|
27,150
|
|
|
17,039
|
|
|
12,515
|
|
|
23,373
|
|
||||
Total operating expenses
|
143,951
|
|
|
94,170
|
|
|
67,565
|
|
|
65,949
|
|
||||
Operating loss
|
(31,811
|
)
|
|
(11,370
|
)
|
|
(4,842
|
)
|
|
(13,750
|
)
|
||||
Other (income) expense:
|
|
|
|
|
|
|
|
||||||||
Other (income) expense, net
|
(2,038
|
)
|
|
1,792
|
|
|
1,579
|
|
|
2,086
|
|
||||
Interest (income) expense
|
473
|
|
|
982
|
|
|
188
|
|
|
19
|
|
||||
Total other (income) expense
|
(1,565
|
)
|
|
2,774
|
|
|
1,767
|
|
|
2,105
|
|
||||
Net loss before income taxes
|
(30,246
|
)
|
|
(14,144
|
)
|
|
(6,609
|
)
|
|
(15,855
|
)
|
||||
Income tax expense (benefit)
|
761
|
|
|
(1,683
|
)
|
|
378
|
|
|
1,204
|
|
||||
Net loss
|
(31,007
|
)
|
|
(12,461
|
)
|
|
(6,987
|
)
|
|
(17,059
|
)
|
||||
Accretion of dividends on convertible preferred stock
(2)
|
357
|
|
|
857
|
|
|
861
|
|
|
856
|
|
||||
Net loss attributable to common stockholders
|
$
|
(31,364
|
)
|
|
$
|
(13,318
|
)
|
|
$
|
(7,848
|
)
|
|
$
|
(17,915
|
)
|
Net loss per share attributable to common stockholders:
|
|
|
|
|
|
|
|
||||||||
Basic and diluted
|
$
|
(0.63
|
)
|
|
$
|
(0.39
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.50
|
)
|
Weighted average common shares outstanding
(3)
:
|
|
|
|
|
|
|
|
||||||||
Basic and diluted
|
49,529,833
|
|
|
34,274,718
|
|
|
34,274,718
|
|
|
35,717,803
|
|
|
Year Ended December 31,
|
||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||
|
(in thousands)
|
||||||||||||||
Cost of revenue
|
|
|
|
|
|
|
|
||||||||
Subscriptions, software and support
|
$
|
575
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Professional services
|
1,295
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Sales and marketing
|
3,233
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Research and development
|
2,822
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
General and administrative
|
5,051
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total stock-based compensation expense
|
$
|
12,976
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
As of December 31,
|
||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||
|
(in thousands)
|
||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
||||||||
Cash
|
$
|
73,758
|
|
|
$
|
31,143
|
|
|
$
|
31,393
|
|
|
$
|
24,991
|
|
Working capital
|
50,107
|
|
|
12,365
|
|
|
19,463
|
|
|
13,166
|
|
||||
Total assets
|
161,052
|
|
|
102,738
|
|
|
83,400
|
|
|
65,448
|
|
||||
Total deferred revenue
|
89,087
|
|
|
70,108
|
|
|
53,110
|
|
|
34,288
|
|
||||
Total debt
|
—
|
|
|
20,000
|
|
|
10,000
|
|
|
—
|
|
||||
Convertible preferred stock
|
—
|
|
|
55,415
|
|
|
54,558
|
|
|
53,577
|
|
||||
Total stockholders' equity (deficit)
|
45,524
|
|
|
(63,492
|
)
|
|
(50,533
|
)
|
|
(42,723
|
)
|
•
|
Market Adoption of Our Platform.
Our ability to grow our customer base and drive market adoption of our platform is affected by the pace at which organizations digitally transform. We expect that our revenue growth will be primarily driven by the pace of adoption and penetration of our platform. We offer a leading custom software development platform and intend to continue to invest to expand our customer base. The degree to which prospective customers
|
•
|
Growth of Our Customer Base.
We believe we have a substantial opportunity to grow our customer base. We define a customer as an entity with an active subscription or maintenance and support contract related to a perpetual software license as of the specified measurement date. To the extent we contract with one or more entities under common control, we count those entities as separate customers. We have aggressively invested, and intend to continue to invest, in our sales force in order to drive sales to new customers. In particular, we have recently made, and plan to continue to make, investments to enhance the expertise of our sales and marketing organization within our key industry verticals of financial services, healthcare and government. In addition, we have established relationships with strategic partners who work with organizations undergoing digital transformations. We had a total customer count of
356
,
280
and
266
as of
December 31, 2017
,
2016
and
2015
, respectively, which includes customers with active software subscription agreements or with maintenance and support contracts, and our number of customers with active software subscription agreements was
291
,
206
and
178
as of
December 31, 2017
,
2016
and
2015
, respectively. As of
December 31, 2017
, 29% of our commercial customers were Global 2000 organizations and included 44 Fortune 500 companies. Our ability to continue to grow our customer base is dependent, in part, upon our ability to compete within the increasingly competitive markets in which we participate.
|
•
|
Further Penetration of Existing Customers.
Our sales force seeks to generate additional revenue from existing customers by adding new users to our platform. Many of our customers begin by building a single application and then grow to build dozens of applications on our platform. Generally, the development of new applications on our platform results in the expansion of our user base within an organization and a corresponding increase in revenue to us because we charge subscription fees on a per-user basis for the significant majority of our customer contracts. As a result of this “land and expand” strategy, we have generated significant additional revenue from our customer base. Our ability to increase sales to existing customers will depend on a number of factors, including the size of our sales force and professional services teams, customers’ level of satisfaction with our platform and professional services, pricing, economic conditions and our customers’ overall spending levels.
|
•
|
Mix of Subscription and Professional Services Revenue.
We believe our professional services have driven customer success and facilitated the adoption of our platform by customers. During the initial period of deployment by a customer, we generally provide a greater amount of support in building applications and training than later in the deployment, with a typical engagement extending from two to six months. At the same time, many of our customers have historically purchased subscriptions only for a limited set of their total potential end users. As a result of these factors, the proportion of total revenue for a customer associated with professional services is relatively high during the initial deployment period. Over time, as the need for professional services associated with user deployments decreases and the number of end users increases, we expect the mix of total revenue to shift more toward subscription revenue. In addition, we intend to further grow our base of strategic partners to provide broader customer coverage and solution delivery capabilities. These partners perform professional services with respect to any new service contracts they sign. As we expand the network of strategic partners, we expect the proportion of our total revenue from subscriptions to increase over time relative to professional services. In
2017
,
2016
and
2015
,
51.8%
,
52.6%
and
47.8%
of our revenue, respectively, was derived from sales of subscriptions, software and support, while the remaining
48.2%
,
47.4%
and
52.2%
, respectively, was derived from the sale of professional services.
|
•
|
Investments in Growth.
We have made and plan to continue to make investments for long-term growth, including investment in our platform and infrastructure to continuously maximize the power and simplicity of the platform to meet the evolving needs of our customers and to take advantage of our market opportunity. We intend to continue to increase our investment in sales and marketing, as we further expand our sales teams, increase our marketing activities and grow our international operations. We expect to use a portion of the proceeds from our IPO to fund these growth strategies.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Subscription Revenue
|
$
|
82,771
|
|
|
$
|
59,993
|
|
|
$
|
41,497
|
|
|
As of December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Subscription Revenue Retention Rate
|
122
|
%
|
|
112
|
%
|
|
128
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
GAAP operating loss
|
$
|
(31,811
|
)
|
|
$
|
(11,370
|
)
|
|
$
|
(4,842
|
)
|
Add back:
|
|
|
|
|
|
||||||
Stock-based compensation expense
|
12,976
|
|
|
—
|
|
|
—
|
|
|||
Non-GAAP operating loss
|
$
|
(18,835
|
)
|
|
$
|
(11,370
|
)
|
|
$
|
(4,842
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
GAAP net loss
|
$
|
(31,007
|
)
|
|
$
|
(12,461
|
)
|
|
$
|
(6,987
|
)
|
Add back:
|
|
|
|
|
|
||||||
Stock-based compensation expense
|
12,976
|
|
|
—
|
|
|
—
|
|
|||
Change in fair value of warrant liability
|
341
|
|
|
200
|
|
|
299
|
|
|||
Loss on extinguishment of debt
|
384
|
|
|
—
|
|
|
—
|
|
|||
Non-GAAP net loss
|
$
|
(17,306
|
)
|
|
$
|
(12,261
|
)
|
|
$
|
(6,688
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Non-GAAP net loss
|
$
|
(17,306
|
)
|
|
$
|
(12,261
|
)
|
|
$
|
(6,688
|
)
|
Non-GAAP weighted average shares used to compute net loss per share attributable to common stockholders, basic and diluted
|
57,043,906
|
|
|
52,437,876
|
|
|
52,437,876
|
|
|||
Non-GAAP net loss per share, basic and diluted
|
$
|
(0.30
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.13
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
GAAP net loss per share attributable to common stockholders, basic and diluted
|
$
|
(0.63
|
)
|
|
$
|
(0.39
|
)
|
|
$
|
(0.23
|
)
|
Add back:
|
|
|
|
|
|
||||||
Non-GAAP adjustments to net loss per share
|
0.33
|
|
|
0.16
|
|
|
0.10
|
|
|||
Non-GAAP net loss per share, basic and diluted
|
$
|
(0.30
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.13
|
)
|
|
Year Ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
GAAP weighted average shares used to compute net loss per share attributable to common stockholders, basic and diluted
|
49,529,833
|
|
|
34,274,718
|
|
|
34,274,718
|
|
Add back:
|
|
|
|
|
|
|||
Additional weighted average shares giving effect to conversion of preferred stock at the beginning of the period
|
7,514,073
|
|
|
18,163,158
|
|
|
18,163,158
|
|
Non-GAAP weighted average shares used to compute net loss per share, basic and diluted
|
57,043,906
|
|
|
52,437,876
|
|
|
52,437,876
|
|
•
|
SaaS subscriptions bundled with maintenance and support and hosting services; and
|
•
|
on-premises term license subscriptions bundled with maintenance and support.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in thousands)
|
||||||||||
Consolidated Statements of Operations Data:
|
|
|
|
|
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Subscriptions, software and support
|
$
|
91,514
|
|
|
$
|
69,972
|
|
|
$
|
53,207
|
|
Professional services
|
85,223
|
|
|
62,951
|
|
|
57,997
|
|
|||
Total revenue
|
176,737
|
|
|
132,923
|
|
|
111,204
|
|
|||
Cost of revenue
(1)
:
|
|
|
|
|
|
|
|||||
Subscriptions, software and support
|
9,379
|
|
|
7,437
|
|
|
6,079
|
|
|||
Professional services
|
55,218
|
|
|
42,686
|
|
|
42,402
|
|
|||
Total cost of revenue
|
64,597
|
|
|
50,123
|
|
|
48,481
|
|
|||
Gross profit
|
112,140
|
|
|
82,800
|
|
|
62,723
|
|
|||
Operating expenses
(1)
:
|
|
|
|
|
|
||||||
Sales and marketing
|
81,966
|
|
|
54,137
|
|
|
38,300
|
|
|||
Research and development
|
34,835
|
|
|
22,994
|
|
|
16,750
|
|
|||
General and administrative
|
27,150
|
|
|
17,039
|
|
|
12,515
|
|
|||
Total operating expenses
|
143,951
|
|
|
94,170
|
|
|
67,565
|
|
|||
Operating loss
|
(31,811
|
)
|
|
(11,370
|
)
|
|
(4,842
|
)
|
|||
Other (income) expense:
|
|
|
|
|
|
|
|||||
Other (income) expense, net
|
(2,038
|
)
|
|
1,792
|
|
|
1,579
|
|
|||
Interest expense
|
473
|
|
|
982
|
|
|
188
|
|
|||
Total other (income) expense
|
(1,565
|
)
|
|
2,774
|
|
|
1,767
|
|
|||
Net loss before income taxes
|
(30,246
|
)
|
|
(14,144
|
)
|
|
(6,609
|
)
|
|||
Income tax expense (benefit)
|
761
|
|
|
(1,683
|
)
|
|
378
|
|
|||
Net loss
|
$
|
(31,007
|
)
|
|
$
|
(12,461
|
)
|
|
$
|
(6,987
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in thousands)
|
||||||||||
Cost of revenue
|
|
|
|
|
|
||||||
Subscriptions, software and support
|
$
|
575
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Professional services
|
1,295
|
|
|
—
|
|
|
—
|
|
|||
Operating expenses
|
|
|
|
|
|
||||||
Sales and marketing
|
3,233
|
|
|
—
|
|
|
—
|
|
|||
Research and development
|
2,822
|
|
|
—
|
|
|
—
|
|
|||
General and administrative
|
5,051
|
|
|
—
|
|
|
—
|
|
|||
Total stock-based compensation expense
|
$
|
12,976
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Year Ended December 31,
|
|
% Change
|
|||||||
|
2017
|
|
2016
|
|
|
|||||
|
(dollars in thousands)
|
|
|
|||||||
Revenue
|
|
|
|
|
|
|||||
Subscriptions, software and support
|
$
|
91,514
|
|
|
$
|
69,972
|
|
|
30.8
|
%
|
Professional services
|
85,223
|
|
|
62,951
|
|
|
35.4
|
|
||
Total revenue
|
$
|
176,737
|
|
|
$
|
132,923
|
|
|
33.0
|
|
|
Year Ended December 31,
|
|
% Change
|
|||||||
|
2017
|
|
2016
|
|
|
|||||
|
(dollars in thousands)
|
|
|
|||||||
Cost of revenue:
|
|
|
|
|
|
|||||
Subscriptions, software and support
|
$
|
9,379
|
|
|
$
|
7,437
|
|
|
26.1
|
%
|
Professional services
|
55,218
|
|
|
42,686
|
|
|
29.4
|
|
||
Total cost of revenue
|
$
|
64,597
|
|
|
$
|
50,123
|
|
|
28.9
|
%
|
Subscriptions, software and support gross margin
|
89.8
|
%
|
|
89.4
|
%
|
|
|
|||
Professional services gross margin
|
35.2
|
|
|
32.2
|
|
|
|
|||
Total gross margin
|
63.5
|
|
|
62.3
|
|
|
|
|
Year Ended December 31,
|
|
% Change
|
|||||||
|
2017
|
|
2016
|
|
|
|||||
|
(dollars in thousands)
|
|
|
|||||||
Sales and marketing
|
$
|
81,966
|
|
|
$
|
54,137
|
|
|
51.4
|
%
|
% of revenue
|
46.4
|
%
|
|
40.7
|
%
|
|
|
|
Year Ended December 31,
|
|
% Change
|
|||||||
|
2017
|
|
2016
|
|
|
|||||
|
(dollars in thousands)
|
|
|
|||||||
Research and development
|
$
|
34,835
|
|
|
$
|
22,994
|
|
|
51.5
|
%
|
% of revenue
|
19.7
|
%
|
|
17.3
|
%
|
|
|
|
Year Ended December 31,
|
|
% Change
|
|||||||
|
2017
|
|
2016
|
|
|
|||||
|
(dollars in thousands)
|
|
|
|||||||
General and administrative expense
|
$
|
27,150
|
|
|
$
|
17,039
|
|
|
59.3
|
%
|
% of revenue
|
15.4
|
%
|
|
12.8
|
%
|
|
|
|
Year Ended December 31,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
|
|||||
|
(dollars in thousands)
|
|
|
|||||||
Revenue
|
|
|
|
|
|
|||||
Subscriptions, software and support
|
$
|
69,972
|
|
|
$
|
53,207
|
|
|
31.5
|
%
|
Professional services
|
62,951
|
|
|
57,997
|
|
|
8.5
|
|
||
Total revenue
|
$
|
132,923
|
|
|
$
|
111,204
|
|
|
19.5
|
|
|
Year Ended December 31,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
|
|||||
|
(dollars in thousands)
|
|
|
|||||||
Cost of revenue:
|
|
|
|
|
|
|||||
Subscriptions, software and support
|
$
|
7,437
|
|
|
$
|
6,079
|
|
|
22.3
|
%
|
Professional services
|
42,686
|
|
|
42,402
|
|
|
0.7
|
|
||
Total cost of revenue
|
$
|
50,123
|
|
|
$
|
48,481
|
|
|
3.4
|
|
Subscriptions, software and support gross margin
|
89.4
|
%
|
|
88.6
|
%
|
|
|
|||
Professional services gross margin
|
32.2
|
|
|
26.9
|
|
|
|
|||
Total gross margin
|
62.3
|
|
|
56.4
|
|
|
|
|
Year Ended December 31,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
|
|||||
|
(dollars in thousands)
|
|
|
|||||||
Sales and marketing
|
$
|
54,137
|
|
|
$
|
38,300
|
|
|
41.3
|
%
|
% of revenue
|
40.7
|
%
|
|
34.4
|
%
|
|
|
|
Year Ended December 31,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
|
|||||
|
(dollars in thousands)
|
|
|
|||||||
Research and development
|
$
|
22,994
|
|
|
$
|
16,750
|
|
|
37.3
|
%
|
% of revenue
|
17.3
|
%
|
|
15.1
|
%
|
|
|
|
|
Year Ended December 31,
|
|
% Change
|
|||||||
|
2016
|
|
2015
|
|
|
|||||
|
(dollars in thousands)
|
|
|
|||||||
General and administrative expense
|
$
|
17,039
|
|
|
$
|
12,515
|
|
|
36.1
|
%
|
% of revenue
|
12.8
|
%
|
|
11.3
|
%
|
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in thousands)
|
||||||||||
Cash used in operating activities
|
$
|
(9,128
|
)
|
|
$
|
(7,756
|
)
|
|
$
|
(2,145
|
)
|
Cash used in investing activities
|
(433
|
)
|
|
(984
|
)
|
|
(524
|
)
|
|||
Cash provided by financing activities
|
50,948
|
|
|
10,000
|
|
|
10,000
|
|
|
Payments Due By Period
|
||||||||||||||||||
|
Total
|
|
Less than 1 Year
|
|
1 to 3 Years
|
|
3 to 5 Years
|
|
More than 5 Years
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Operating lease commitments
|
$
|
25,165
|
|
|
$
|
8,127
|
|
|
$
|
13,109
|
|
|
$
|
2,883
|
|
|
$
|
1,046
|
|
Purchase obligations
(1)
|
1,650
|
|
|
330
|
|
|
660
|
|
|
660
|
|
|
—
|
|
|||||
Total contractual obligations
|
26,815
|
|
|
8,457
|
|
|
13,769
|
|
|
3,543
|
|
|
1,046
|
|
Consolidated Financial Statements:
|
|
|
As of
December 31, 2017 |
|
As of
December 31, 2016 |
||||
|
|
|
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
73,758
|
|
|
$
|
31,143
|
|
Accounts receivable, net of allowance of $400
|
55,315
|
|
|
46,814
|
|
||
Deferred commissions, current
|
9,117
|
|
|
7,146
|
|
||
Prepaid expenses and other current assets
|
7,032
|
|
|
3,281
|
|
||
Total current assets
|
145,222
|
|
|
88,384
|
|
||
Property and equipment, net
|
2,663
|
|
|
3,101
|
|
||
Deferred commissions, net of current portion
|
12,376
|
|
|
10,860
|
|
||
Deferred tax assets
|
281
|
|
|
12
|
|
||
Other assets
|
510
|
|
|
381
|
|
||
Total assets
|
$
|
161,052
|
|
|
$
|
102,738
|
|
Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit)
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
5,226
|
|
|
$
|
5,057
|
|
Accrued expenses
|
6,467
|
|
|
2,860
|
|
||
Accrued compensation and related benefits
|
12,075
|
|
|
9,554
|
|
||
Deferred revenue, current
|
70,165
|
|
|
52,000
|
|
||
Current portion of long-term debt
|
—
|
|
|
6,111
|
|
||
Other current liabilities
|
1,182
|
|
|
437
|
|
||
Total current liabilities
|
95,115
|
|
|
76,019
|
|
||
Long-term debt, net of current portion
|
—
|
|
|
13,889
|
|
||
Deferred tax liabilities
|
87
|
|
|
32
|
|
||
Deferred revenue, net of current portion
|
18,922
|
|
|
18,108
|
|
||
Preferred stock warrant liability
|
—
|
|
|
850
|
|
||
Other long-term liabilities
|
1,404
|
|
|
1,917
|
|
||
Total liabilities
|
115,528
|
|
|
110,815
|
|
||
Convertible preferred stock
|
|
|
|
||||
Series A convertible preferred stock—par value $0.0001; no shares authorized, issued or outstanding as of December 31, 2017; 12,127,468 shares authorized and 12,043,108 shares issued and outstanding as of December 31, 2016
|
—
|
|
|
17,915
|
|
||
Series B convertible preferred stock—par value $0.0001; no shares authorized, issued or outstanding as of December 31, 2017; 6,120,050 shares authorized, issued and outstanding as of December 31, 2016
|
—
|
|
|
37,500
|
|
||
Stockholders’ equity (deficit)
|
|
|
|
||||
Common stock—par value $0.0001; no shares authorized, issued or outstanding as of December 31, 2017; 61,462,320 shares authorized and 34,274,718 shares issued and outstanding as of December 31, 2016
|
—
|
|
|
3
|
|
||
Class A common stock—par value $0.0001; 500,000,000 shares authorized and 13,030,081 shares issued and outstanding as of December 31, 2017; no shares authorized, issued or outstanding as of December 31, 2016
|
1
|
|
|
—
|
|
||
Class B common stock—par value $0.0001; 100,000,000 shares authorized and 47,569,796 shares issued and outstanding as of December 31, 2017; no shares authorized, issued or outstanding as of December 31, 2016
|
5
|
|
|
—
|
|
||
Additional paid-in capital
|
141,268
|
|
|
—
|
|
||
Accumulated other comprehensive income
|
439
|
|
|
1,330
|
|
||
Accumulated deficit
|
(96,189
|
)
|
|
(64,825
|
)
|
||
Total stockholders’ equity (deficit)
|
45,524
|
|
|
(63,492
|
)
|
||
Total liabilities, convertible preferred stock and stockholders’ equity (deficit)
|
$
|
161,052
|
|
|
$
|
102,738
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Subscriptions, software and support
|
$
|
91,514
|
|
|
$
|
69,972
|
|
|
$
|
53,207
|
|
Professional services
|
85,223
|
|
|
62,951
|
|
|
57,997
|
|
|||
Total revenue
|
176,737
|
|
|
132,923
|
|
|
111,204
|
|
|||
Cost of revenue:
|
|
|
|
|
|
|
|||||
Subscriptions, software and support
|
9,379
|
|
|
7,437
|
|
|
6,079
|
|
|||
Professional services
|
55,218
|
|
|
42,686
|
|
|
42,402
|
|
|||
Total cost of revenue
|
64,597
|
|
|
50,123
|
|
|
48,481
|
|
|||
Gross profit
|
112,140
|
|
|
82,800
|
|
|
62,723
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
|||||
Sales and marketing
|
81,966
|
|
|
54,137
|
|
|
38,300
|
|
|||
Research and development
|
34,835
|
|
|
22,994
|
|
|
16,750
|
|
|||
General and administrative
|
27,150
|
|
|
17,039
|
|
|
12,515
|
|
|||
Total operating expenses
|
143,951
|
|
|
94,170
|
|
|
67,565
|
|
|||
Operating loss
|
(31,811
|
)
|
|
(11,370
|
)
|
|
(4,842
|
)
|
|||
Other (income) expense:
|
|
|
|
|
|
|
|||||
Other (income) expense, net
|
(2,038
|
)
|
|
1,792
|
|
|
1,579
|
|
|||
Interest expense
|
473
|
|
|
982
|
|
|
188
|
|
|||
Total other (income) expense
|
(1,565
|
)
|
|
2,774
|
|
|
1,767
|
|
|||
Net loss before income taxes
|
(30,246
|
)
|
|
(14,144
|
)
|
|
(6,609
|
)
|
|||
Income tax expense (benefit)
|
761
|
|
|
(1,683
|
)
|
|
378
|
|
|||
Net loss
|
(31,007
|
)
|
|
(12,461
|
)
|
|
(6,987
|
)
|
|||
Accretion of dividends on convertible preferred stock
|
357
|
|
|
857
|
|
|
861
|
|
|||
Net loss attributable to common stockholders
|
$
|
(31,364
|
)
|
|
$
|
(13,318
|
)
|
|
$
|
(7,848
|
)
|
Net loss per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|||
Basic and diluted
|
$
|
(0.63
|
)
|
|
$
|
(0.39
|
)
|
|
$
|
(0.23
|
)
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|||
Basic and diluted
|
49,529,833
|
|
|
34,274,718
|
|
|
34,274,718
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net loss
|
$
|
(31,007
|
)
|
|
$
|
(12,461
|
)
|
|
$
|
(6,987
|
)
|
Comprehensive loss, net of income taxes:
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
(891
|
)
|
|
359
|
|
|
159
|
|
|||
Total other comprehensive loss, net of income taxes
|
$
|
(31,898
|
)
|
|
$
|
(12,102
|
)
|
|
$
|
(6,828
|
)
|
|
|
|
|
|
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
|
|
Total Stockholders' Equity (Deficit)
|
|||||||||||
|
Common Stock
|
|
Additional
Paid-In Capital
|
|
|
Accumulated Deficit
|
|
|||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
Balance, January 1, 2015
|
34,274,718
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
812
|
|
|
$
|
(43,659
|
)
|
|
$
|
(42,844
|
)
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,987
|
)
|
|
(6,987
|
)
|
|||||
Accretion of dividends on convertible preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(861
|
)
|
|
(861
|
)
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
159
|
|
|
—
|
|
|
159
|
|
|||||
Balance, December 31, 2015
|
34,274,718
|
|
|
3
|
|
|
—
|
|
|
971
|
|
|
(51,507
|
)
|
|
(50,533
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,461
|
)
|
|
(12,461
|
)
|
|||||
Accretion of dividends on convertible preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(857
|
)
|
|
(857
|
)
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
359
|
|
|
—
|
|
|
359
|
|
|||||
Balance, December 31, 2016
|
34,274,718
|
|
|
3
|
|
|
—
|
|
|
1,330
|
|
|
(64,825
|
)
|
|
(63,492
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(31,007
|
)
|
|
(31,007
|
)
|
|||||
Accretion of dividends on convertible preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(357
|
)
|
|
(357
|
)
|
|||||
Conversion of convertible preferred stock to common stock
|
18,163,158
|
|
|
2
|
|
|
48,205
|
|
|
—
|
|
|
—
|
|
|
48,207
|
|
|||||
Conversion of convertible preferred stock warrant to common stock warrant
|
—
|
|
|
—
|
|
|
1,191
|
|
|
—
|
|
|
—
|
|
|
1,191
|
|
|||||
Issuance of common stock from initial public offering, net of issuance costs
|
7,187,500
|
|
|
1
|
|
|
77,788
|
|
|
—
|
|
|
—
|
|
|
77,789
|
|
|||||
Exercise of common stock warrant
|
79,363
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Issuance of common stock to directors
|
14,087
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Vesting of restricted stock units
|
4,930
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Exercise of stock options
|
876,121
|
|
|
—
|
|
|
1,108
|
|
|
—
|
|
|
—
|
|
|
1,108
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
12,976
|
|
|
—
|
|
|
—
|
|
|
12,976
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(891
|
)
|
|
—
|
|
|
(891
|
)
|
|||||
Balance, December 31, 2017
|
60,599,877
|
|
|
$
|
6
|
|
|
$
|
141,268
|
|
|
$
|
439
|
|
|
$
|
(96,189
|
)
|
|
$
|
45,524
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(31,007
|
)
|
|
$
|
(12,461
|
)
|
|
$
|
(6,987
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
886
|
|
|
764
|
|
|
763
|
|
|||
Bad debt expense
|
62
|
|
|
7
|
|
|
(22
|
)
|
|||
Deferred income taxes
|
(251
|
)
|
|
(1,122
|
)
|
|
(291
|
)
|
|||
Stock-based compensation
|
12,976
|
|
|
—
|
|
|
|
||||
Fair value adjustment for warrant liability
|
341
|
|
|
200
|
|
|
299
|
|
|||
Loss on extinguishment of debt
|
384
|
|
|
—
|
|
|
—
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
|
|||||
Accounts receivable
|
(9,716
|
)
|
|
(11,154
|
)
|
|
(6,639
|
)
|
|||
Prepaid expenses and other assets
|
(4,162
|
)
|
|
(1,665
|
)
|
|
(988
|
)
|
|||
Deferred commissions
|
(3,487
|
)
|
|
(5,335
|
)
|
|
(3,965
|
)
|
|||
Accounts payable and accrued expenses
|
4,128
|
|
|
1,287
|
|
|
1,058
|
|
|||
Accrued compensation and related benefits
|
2,365
|
|
|
3,717
|
|
|
(968
|
)
|
|||
Other current liabilities
|
383
|
|
|
19
|
|
|
(251
|
)
|
|||
Deferred revenue
|
18,344
|
|
|
17,410
|
|
|
15,490
|
|
|||
Other long-term liabilities
|
(374
|
)
|
|
577
|
|
|
356
|
|
|||
Net cash used in operating activities
|
(9,128
|
)
|
|
(7,756
|
)
|
|
(2,145
|
)
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
|||||
Purchases of property and equipment
|
(433
|
)
|
|
(984
|
)
|
|
(524
|
)
|
|||
Net cash used in investing activities
|
(433
|
)
|
|
(984
|
)
|
|
(524
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
|||||
Proceeds from initial public offering, net of underwriting discounts
|
80,213
|
|
|
—
|
|
|
—
|
|
|||
Payment of initial public offering costs
|
(2,424
|
)
|
|
—
|
|
|
—
|
|
|||
Payment of dividend to Series A preferred stockholders
|
(7,565
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from exercise of common stock options
|
1,108
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of long-term debt, net of debt issuance costs
|
19,616
|
|
|
20,000
|
|
|
10,000
|
|
|||
Repayment of long-term debt
|
(40,000
|
)
|
|
(10,000
|
)
|
|
—
|
|
|||
Net cash provided by financing activities
|
50,948
|
|
|
10,000
|
|
|
10,000
|
|
|||
Effect of foreign exchange rate changes on cash and cash equivalents
|
1,228
|
|
|
(1,510
|
)
|
|
(930
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
42,615
|
|
|
(250
|
)
|
|
6,401
|
|
|||
Cash and cash equivalents, beginning of period
|
31,143
|
|
|
31,393
|
|
|
24,992
|
|
|||
Cash and cash equivalents, end of period
|
$
|
73,758
|
|
|
$
|
31,143
|
|
|
$
|
31,393
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|||||
Cash paid for interest
|
$
|
515
|
|
|
$
|
895
|
|
|
$
|
193
|
|
Cash paid for income taxes
|
$
|
615
|
|
|
$
|
610
|
|
|
$
|
1,055
|
|
Supplemental disclosure of non-cash financing activities:
|
|
|
|
|
|
|
|||||
Conversion of convertible preferred stock to common stock
|
$
|
48,207
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Conversion of convertible preferred stock warrant to common stock warrant
|
$
|
1,191
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Accretion of dividends on convertible preferred stock
|
$
|
357
|
|
|
$
|
857
|
|
|
$
|
861
|
|
1.
|
Organization and Description of Business
|
2.
|
Significant Accounting Policies
|
Asset Category
|
|
Useful Life (in years)
|
Computer software
|
|
3
|
Computer hardware
|
|
3
|
Equipment
|
|
5
|
Office furniture and fixtures
|
|
10
|
Leasehold improvements
|
|
Shorter of useful life of assets or lease term
|
•
|
Level 1.
Observable inputs based on unadjusted quoted prices in active markets for identical assets or liabilities;
|
•
|
Level 2.
Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
|
•
|
Level 3.
Unobservable inputs for which there is little or no market data, which require us to develop our own assumptions.
|
|
December 31, 2016
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Series A convertible preferred stock warrant(1)
|
$
|
850
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
850
|
|
|
$
|
850
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
850
|
|
(1)
|
In order to determine the fair value of the convertible preferred stock warrant, we used the Black-Scholes option pricing model (“OPM”). Significant inputs for the OPM included an estimate of the fair value of the Series A convertible preferred stock, the remaining contractual life of the warrant, an estimate of the timing of a liquidity event, a risk-free rate of interest and an estimate of our stock volatility using the volatilities of guideline peer companies.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Balance as of January 1,
|
$
|
850
|
|
|
$
|
650
|
|
|
$
|
351
|
|
Change in fair value of warrant liability
|
341
|
|
|
200
|
|
|
299
|
|
|||
Reclassification of warrant liability to equity
|
(1,191
|
)
|
|
—
|
|
|
—
|
|
|||
Balance as of December 31,
|
$
|
—
|
|
|
$
|
850
|
|
|
$
|
650
|
|
3.
|
Property and Equipment
|
|
2017
|
|
2016
|
||||
Computer software
|
$
|
1,727
|
|
|
$
|
1,701
|
|
Computer hardware
|
1,644
|
|
|
1,408
|
|
||
Leasehold improvements
|
4,226
|
|
|
4,098
|
|
||
Office furniture and fixtures
|
510
|
|
|
464
|
|
||
Equipment
|
131
|
|
|
116
|
|
||
|
8,238
|
|
|
7,787
|
|
||
Less: accumulated depreciation
|
(5,575
|
)
|
|
(4,686
|
)
|
||
Property and equipment, net
|
$
|
2,663
|
|
|
$
|
3,101
|
|
4.
|
Accrued Expenses
|
|
2017
|
|
2016
|
||||
Accrued contract labor costs
|
$
|
3,424
|
|
|
$
|
743
|
|
Accrued hosting costs
|
466
|
|
|
—
|
|
||
Accrued audit and tax expenses
|
248
|
|
|
358
|
|
||
Accrued reimbursable employee expenses
|
286
|
|
|
134
|
|
||
Accrued marketing and tradeshow expenses
|
128
|
|
|
111
|
|
||
Other accrued expenses
|
1,915
|
|
|
1,514
|
|
||
Total
|
$
|
6,467
|
|
|
$
|
2,860
|
|
5.
|
Debt
|
6.
|
Income Taxes
|
|
2017
|
|
2016
|
|
2015
|
||||||
Domestic
|
$
|
(23,093
|
)
|
|
$
|
(4,524
|
)
|
|
$
|
1,079
|
|
Foreign
|
(7,153
|
)
|
|
(9,620
|
)
|
|
(7,688
|
)
|
|||
Total
|
$
|
(30,246
|
)
|
|
$
|
(14,144
|
)
|
|
$
|
(6,609
|
)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
(65
|
)
|
|
$
|
(627
|
)
|
|
$
|
390
|
|
State
|
68
|
|
|
(200
|
)
|
|
62
|
|
|||
Foreign
|
1,009
|
|
|
266
|
|
|
217
|
|
|||
Total current expense (benefit)
|
1,012
|
|
|
(561
|
)
|
|
669
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
(42
|
)
|
|
(922
|
)
|
|
(334
|
)
|
|||
State
|
—
|
|
|
(230
|
)
|
|
43
|
|
|||
Foreign
|
(209
|
)
|
|
30
|
|
|
—
|
|
|||
Total deferred expense (benefit)
|
(251
|
)
|
|
(1,122
|
)
|
|
(291
|
)
|
|||
Total income tax expense (benefit)
|
$
|
761
|
|
|
$
|
(1,683
|
)
|
|
$
|
378
|
|
•
|
Establishment of a flat corporate income tax rate of 21% on U.S. earnings;
|
•
|
Imposition of a one-time tax on unremitted cumulative non-U.S. earnings of foreign subsidiaries, or the Transition Tax;
|
•
|
The imposition of a new minimum tax on certain non-U.S. earnings, irrespective of the territorial system of taxation, and generally allows for the repatriation of future earnings of foreign subsidiaries without incurring additional U.S. taxes by transitioning to a territorial system of taxation;
|
•
|
Imposition of minimum taxes on certain payments made by a U.S. company to a related foreign company, or the Base Erosion Anti-Abuse Tax;
|
•
|
Elimination of the alternative minimum tax and allowance of a refund for previous alternative minimum tax credits;
|
•
|
Allowance for immediate expensing of the cost of investments in certain depreciable assets acquired and placed in service after September 27, 2017; and
|
•
|
Reduction in tax deductions with respect to certain compensation paid to certain executive officers.
|
•
|
Deferred tax assets and liabilities: U.S. deferred tax assets and liabilities were remeasured based on the rates at which they are expected to reverse in the future, which is generally 21.0%, resulting in an income tax expense of approximately
$2.1 million
. This expense is fully offset by the tax benefit from the reduction in our U.S. valuation allowance. We will continue to analyze certain aspects of the TCJA which could potentially affect the tax basis of the reported amounts. Additionally, our U.S. tax returns for 2017 will be filed during the fourth quarter of 2018 and any changes to the tax positions for temporary differences compared to the estimates used will result in an adjustment of the estimated tax expense recorded as of December 31, 2017.
|
•
|
Transition Tax effects: The Transition Tax is based on our total post-1986 earnings and profits that was previously deferred from U.S. income taxes. Our provisional estimate for the Transition Tax is zero because we have post-1986 accumulated deficits. We will continue to evaluate the TCJA and any future guidance from the U.S. Treasury Department and Internal Revenue Service (“IRS”) in the determination of the Transition Tax which could result in adjustment of the estimate recorded as of December 31, 2017.
|
•
|
Indefinite reinvestment: Following enactment of the TCJA and the associated Transition Tax, in general, repatriation of cash to the United States can be completed with no incremental U.S. tax; however, repatriation of cash could subject the Company to non-U.S. jurisdictional taxes on distributions. The cash that our non-U.S. subsidiaries hold for indefinite reinvestment is generally used to finance foreign operations and investments, including acquisitions. The income taxes applicable to such earnings are not readily determinable given the various tax planning strategies we could employ if we repatriated these earnings. We will continue to evaluate the impact of the TCJA on our election to indefinitely reinvest our non-U.S. earnings, if any.
|
|
2017
|
|
2016
|
||||
Deferred tax assets:
|
|
|
|
||||
Accrued vacation
|
$
|
967
|
|
|
$
|
529
|
|
Bad debt
|
109
|
|
|
159
|
|
||
Deferred revenue
|
1,248
|
|
|
2,176
|
|
||
Deferred rent
|
473
|
|
|
834
|
|
||
Tax credits
|
4,169
|
|
|
2,401
|
|
||
Net operating losses
|
10,413
|
|
|
2,939
|
|
||
Equity compensation
|
1,207
|
|
|
—
|
|
||
Other
|
287
|
|
|
929
|
|
||
Gross deferred tax assets
|
18,873
|
|
|
9,967
|
|
||
Less: Valuation allowance
|
(12,328
|
)
|
|
(2,642
|
)
|
||
Total deferred tax assets
|
6,545
|
|
|
7,325
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Depreciation
|
(174
|
)
|
|
(349
|
)
|
||
Unbilled receivables
|
(555
|
)
|
|
(491
|
)
|
||
Prepaid expenses
|
(5,614
|
)
|
|
(6,505
|
)
|
||
Other
|
(8
|
)
|
|
—
|
|
||
Total deferred tax liabilities
|
(6,351
|
)
|
|
(7,345
|
)
|
||
Net deferred tax asset (liability)
|
$
|
194
|
|
|
$
|
(20
|
)
|
Balance as of December 31, 2014
|
$
|
286
|
|
Additions for tax positions in current years
|
98
|
|
|
Additions for tax positions in prior years
|
—
|
|
|
Reductions due to lapse in statutes of limitations
|
—
|
|
|
Settlements
|
—
|
|
|
Balance as of December 31, 2015
|
384
|
|
|
Additions for tax positions in current years
|
171
|
|
|
Additions for tax positions in prior years
|
—
|
|
|
Reductions due to lapse in statutes of limitations
|
(136
|
)
|
|
Settlements
|
—
|
|
|
Balance as of December 31, 2016
|
419
|
|
|
Additions for tax positions in current years
|
232
|
|
|
Additions for tax positions in prior years
|
—
|
|
|
Reductions due to lapse in statutes of limitations
|
—
|
|
|
Settlements
|
—
|
|
|
Balance as of December 31, 2017
|
$
|
651
|
|
7.
|
Stock-Based Compensation
|
|
2017
|
|
2016
|
|
2015
|
|
Risk-free interest rate
|
1.9% - 2.2%
|
|
1.3% - 1.5%
|
|
1.7% - 1.9%
|
|
Expected term (in years)
|
6.5
|
|
6.5
|
|
6.5
|
|
Expected volatility
|
38.1% - 40.6%
|
|
40.9% - 42.0%
|
|
39.7% - 44.4%
|
|
Expected dividend yield
|
—%
|
|
—%
|
|
—%
|
|
|
Number of
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term (Years)
|
|
Aggregate
Intrinsic
Value
(in thousands)
|
|||||
Outstanding at January 1, 2017
|
6,784,448
|
|
|
$
|
4.65
|
|
|
6.5
|
|
$
|
44,259
|
|
Granted
|
1,256,200
|
|
|
11.92
|
|
|
|
|
|
|||
Exercised
|
(876,121
|
)
|
|
1.27
|
|
|
|
|
14,807
|
|
||
Canceled
|
(153,640
|
)
|
|
7.29
|
|
|
|
|
|
|||
Outstanding at December 31, 2017
|
7,010,887
|
|
|
6.36
|
|
|
6.6
|
|
176,122
|
|
||
Exercisable at December 31, 2017
|
2,800,447
|
|
|
2.07
|
|
|
3.9
|
|
82,367
|
|
|
Number of Shares
|
|
Weighted Average Grant Date Fair Value
|
|||
Non-vested outstanding at January 1, 2017
|
—
|
|
|
$
|
—
|
|
Granted
|
738,055
|
|
|
22.15
|
|
|
Vested
|
(4,930
|
)
|
|
20.24
|
|
|
Canceled
|
(1,150
|
)
|
|
21.40
|
|
|
Non-vested outstanding at December 31, 2017
|
731,975
|
|
|
22.16
|
|
|
2017
|
||
Stock-based compensation expense related to stock option modifications
|
$
|
2,394
|
|
Cumulative stock-based compensation expense related to stock options recorded upon effectiveness of our IPO
|
6,236
|
|
|
Post-IPO stock-based compensation expense related to stock options
|
3,371
|
|
|
Stock-based compensation expense related to the issuance of common stock to directors
|
222
|
|
|
Stock-based compensation expense related to restricted stock units
|
753
|
|
|
Total stock-based compensation expense
|
$
|
12,976
|
|
|
2017
|
||
Cost of revenue
|
|
|
|
Subscriptions, software and support
|
$
|
575
|
|
Professional services
|
1,295
|
|
|
Operating expenses
|
|
||
Sales and marketing
|
3,233
|
|
|
Research and development
|
2,822
|
|
|
General and administrative
|
5,051
|
|
|
Total stock-based compensation expense
|
$
|
12,976
|
|
8.
|
Convertible Preferred Stock and Stockholders’ Equity (Deficit)
|
|
Series A Convertible
Preferred Stock
|
|
Series B Convertible
Preferred Stock
|
||||||||||
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
||||||
Balance as of January 1, 2015
|
$
|
16,197
|
|
|
12,043,108
|
|
|
$
|
37,500
|
|
|
6,120,050
|
|
Accretion of dividends on convertible preferred stock
|
861
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Balance as of December 31, 2015
|
$
|
17,058
|
|
|
12,043,108
|
|
|
$
|
37,500
|
|
|
6,120,050
|
|
Accretion of dividends on convertible preferred stock
|
857
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Balance as of December 31, 2016
|
$
|
17,915
|
|
|
12,043,108
|
|
|
$
|
37,500
|
|
|
6,120,050
|
|
Accretion of dividends on convertible preferred stock
|
357
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Payment of accrued dividend to Series A convertible preferred stockholders
|
(7,565
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Conversion of convertible preferred stock to common stock
|
(10,707
|
)
|
|
(12,043,108
|
)
|
|
(37,500
|
)
|
|
(6,120,050
|
)
|
||
Balance as of December 31, 2017
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
9.
|
Warrants
|
10.
|
Basic and Diluted Loss per Common Share
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(31,007
|
)
|
|
$
|
(12,461
|
)
|
|
$
|
(6,987
|
)
|
Accretion of dividends on convertible preferred stock
|
357
|
|
|
857
|
|
|
861
|
|
|||
Net loss attributable to common stockholders
|
$
|
(31,364
|
)
|
|
$
|
(13,318
|
)
|
|
$
|
(7,848
|
)
|
Denominator
|
|
|
|
|
|
||||||
Weighted average common shares outstanding, basic and diluted
|
49,529,833
|
|
|
34,274,718
|
|
|
34,274,718
|
|
|||
Net loss per share attributable to common stockholders, basic and diluted
|
$
|
(0.63
|
)
|
|
$
|
(0.39
|
)
|
|
$
|
(0.23
|
)
|
|
Year Ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Convertible preferred stock:
|
|
|
|
|
|
|||
Series A convertible preferred stock
|
—
|
|
|
12,043,108
|
|
|
12,043,108
|
|
Series B convertible preferred stock
|
—
|
|
|
6,120,050
|
|
|
6,120,050
|
|
Warrant to purchase Series A convertible preferred stock
|
—
|
|
|
84,360
|
|
|
84,360
|
|
Stock options
|
7,010,887
|
|
|
6,784,448
|
|
|
4,589,988
|
|
Restricted stock units
|
731,975
|
|
|
—
|
|
|
—
|
|
11.
|
Commitments and Contingencies
|
|
Office Leases
|
|
Equipment Leases
|
||||
2018
|
$
|
7,722
|
|
|
$
|
405
|
|
2019
|
8,043
|
|
|
216
|
|
||
2020
|
4,828
|
|
|
22
|
|
||
2021
|
2,503
|
|
|
—
|
|
||
2022
|
380
|
|
|
—
|
|
||
Thereafter
|
1,046
|
|
|
—
|
|
||
Total
|
$
|
24,522
|
|
|
$
|
643
|
|
12.
|
Segment and Geographic Information
|
|
2017
|
|
2016
|
|
2015
|
||||||
Domestic
|
$
|
128,997
|
|
|
$
|
107,069
|
|
|
$
|
89,043
|
|
International
|
47,740
|
|
|
25,854
|
|
|
22,161
|
|
|||
Total
|
$
|
176,737
|
|
|
$
|
132,923
|
|
|
$
|
111,204
|
|
13.
|
Retirement Plans
|
14.
|
Selected Quarterly Information (Unaudited)
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
Dec 31, 2017
|
|
Sep 30, 2017
|
|
Jun 30, 2017
|
|
Mar 31, 2017
|
|
Dec 31, 2016
|
|
Sep 30, 2016
|
|
Jun 30, 2016
|
|
Mar 31, 2016
|
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||
|
(unaudited)
|
||||||||||||||||||||||||||||||
Consolidated Statement of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Subscriptions, software and support
|
$
|
25,398
|
|
|
$
|
22,660
|
|
|
$
|
22,012
|
|
|
$
|
21,444
|
|
|
$
|
19,365
|
|
|
$
|
17,668
|
|
|
$
|
17,321
|
|
|
$
|
15,618
|
|
Professional services
|
25,164
|
|
|
21,988
|
|
|
21,186
|
|
|
16,885
|
|
|
14,382
|
|
|
13,077
|
|
|
15,146
|
|
|
20,346
|
|
||||||||
Total revenue
|
50,562
|
|
|
44,648
|
|
|
43,198
|
|
|
38,329
|
|
|
33,747
|
|
|
30,745
|
|
|
32,467
|
|
|
35,964
|
|
||||||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Subscriptions, software and support
|
2,488
|
|
|
2,341
|
|
|
2,488
|
|
|
2,062
|
|
|
1,929
|
|
|
1,890
|
|
|
1,836
|
|
|
1,782
|
|
||||||||
Professional services
|
16,169
|
|
|
14,272
|
|
|
14,149
|
|
|
10,628
|
|
|
8,670
|
|
|
9,315
|
|
|
11,723
|
|
|
12,978
|
|
||||||||
Total cost of revenue
|
18,657
|
|
|
16,613
|
|
|
16,637
|
|
|
12,690
|
|
|
10,599
|
|
|
11,205
|
|
|
13,559
|
|
|
14,760
|
|
||||||||
Gross profit
|
31,905
|
|
|
28,035
|
|
|
26,561
|
|
|
25,639
|
|
|
23,148
|
|
|
19,540
|
|
|
18,908
|
|
|
21,204
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Sales and marketing
|
22,463
|
|
|
19,725
|
|
|
22,775
|
|
|
17,003
|
|
|
14,660
|
|
|
14,480
|
|
|
13,831
|
|
|
11,166
|
|
||||||||
Research and development
|
8,968
|
|
|
8,596
|
|
|
9,971
|
|
|
7,300
|
|
|
6,069
|
|
|
6,702
|
|
|
5,296
|
|
|
4,927
|
|
||||||||
General and administrative
|
7,429
|
|
|
6,237
|
|
|
8,635
|
|
|
4,849
|
|
|
4,260
|
|
|
4,531
|
|
|
4,318
|
|
|
3,930
|
|
||||||||
Total operating expenses
|
38,860
|
|
|
34,558
|
|
|
41,381
|
|
|
29,152
|
|
|
24,989
|
|
|
25,713
|
|
|
23,445
|
|
|
20,023
|
|
||||||||
Operating (loss) income
|
(6,955
|
)
|
|
(6,523
|
)
|
|
(14,820
|
)
|
|
(3,513
|
)
|
|
(1,841
|
)
|
|
(6,173
|
)
|
|
(4,537
|
)
|
|
1,181
|
|
||||||||
Other (income) expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Other (income) expense, net
|
(380
|
)
|
|
(425
|
)
|
|
(734
|
)
|
|
(499
|
)
|
|
1,663
|
|
|
(67
|
)
|
|
733
|
|
|
(537
|
)
|
||||||||
Interest expense (income)
|
22
|
|
|
(2
|
)
|
|
197
|
|
|
256
|
|
|
256
|
|
|
243
|
|
|
241
|
|
|
242
|
|
||||||||
Total other (income) expense
|
(358
|
)
|
|
(427
|
)
|
|
(537
|
)
|
|
(243
|
)
|
|
1,919
|
|
|
176
|
|
|
974
|
|
|
(295
|
)
|
||||||||
Net (loss) income before income taxes
|
(6,597
|
)
|
|
(6,096
|
)
|
|
(14,283
|
)
|
|
(3,270
|
)
|
|
(3,760
|
)
|
|
(6,349
|
)
|
|
(5,511
|
)
|
|
1,476
|
|
||||||||
Income tax expense (benefit)
|
272
|
|
|
188
|
|
|
176
|
|
|
125
|
|
|
423
|
|
|
(1,610
|
)
|
|
(1,217
|
)
|
|
721
|
|
||||||||
Net (loss) income
(1)
|
$
|
(6,869
|
)
|
|
$
|
(6,284
|
)
|
|
$
|
(14,459
|
)
|
|
$
|
(3,395
|
)
|
|
$
|
(4,183
|
)
|
|
$
|
(4,739
|
)
|
|
$
|
(4,294
|
)
|
|
$
|
755
|
|
15.
|
Subsequent Events
|
Exhibit
Number
|
|
Description
|
|
|
|
|
Amended and Restated Certificate of Incorporation of Appian Corporation.
|
|
|
|
|
|
Amended and Restated Bylaws of Appian Corporation.
|
|
|
|
|
|
Form of Class A common stock certificate of Appian Corporation.
|
|
|
|
|
|
Amended and Restated Investors' Rights Agreement by and among Appian Corporation and certain of its stockholders, dated February 21, 2014.
|
|
|
|
|
|
2007 Stock Option Plan and Form of Option Agreement and Exercise Notice thereunder, as amended to date.
|
|
|
|
|
|
2017 Equity Incentive Plan and Forms of Stock Option Agreement, Notice of Exercise and Stock Option Grant Notice thereunder.
|
|
|
|
|
|
Non-Employee Director Compensation Plan.
|
|
|
|
|
|
Form of Indemnification Agreement by and between Appian Corporation and each of its directors and executive officers.
|
|
|
|
|
|
Employment Agreement, dated as of September 7, 2012, by and between Appian Corporation and Matthew Calkins.
|
|
|
|
|
|
Employment Agreement, dated as of September 8, 2009, by and between Appian Corporation and Edward Hughes.
|
|
|
|
|
|
Form of Amended and Restated Employment Agreement, dated as of April 27, 2017, by and between Appian Corporation and each of Mark Lynch and Chris Winters.
|
|
|
|
|
|
Sublease Agreement, dated as of December 10, 2013, by and between Appian Corporation and College Entrance Examination Board, as amended to date.
|
|
|
|
|
|
Software Enterprise OEM License Agreement, dated as of June 15, 2016, by and between Appian Corporation and Kx Systems, Inc.
|
|
|
|
|
|
Third Amended and Restated Loan and Security Agreement, dated as of November 1, 2017, by and between Appian Corporation and Silicon Valley Bank.
|
|
|
|
|
|
Senior Executive Cash Incentive Bonus Plan.
|
|
|
|
|
Forms of Restricted Stock Unit Grant Notices and Restricted Stock Unit Award Agreements under 2017 Equity Incentive Plan.
|
|
|
|
|
|
Forms of Restricted Stock Award Grant Notice and Restricted Stock Award Agreement under 2017 Equity Incentive Plan.
|
|
|
|
|
|
2017 Equity Incentive Plan French Qualifying Sub-Plan, with Forms of Restricted Stock Unit Grant Notice and Restricted Stock Unit Award Agreement thereunder.
|
|
|
|
|
|
2017 Equity Incentive Plan CSOP Sub-Plan for UK Eligible Employees, with Forms of CSOP Stock Option Grant Notice and CSOP Option Agreement thereunder.
|
|
|
|
|
|
Subsidiaries of Appian Corporation.
|
|
|
|
|
|
Consent of BDO USA, LLP, independent registered public accounting firm.
|
|
|
|
|
|
Power of Attorney. Reference is made to the signature page hereto.
|
|
|
|
|
|
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
Certifications of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
Forrester Research Consent.
|
|
|
|
|
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
|
|
(1)
|
Previously filed as Exhibit 3.2 to Amendment No. 3 to the Company’s Registration Statement on Form S-1 (File No. 333-217510), filed with the Securities and Exchange Commission on May 12, 2017, and incorporated herein by reference.
|
(2)
|
Previously filed as Exhibit 3.4 to Amendment No. 2 to the Company’s Registration Statement on Form S-1 (File No. 333-217510), filed with the Securities and Exchange Commission on May 10, 2017, and incorporated herein by reference.
|
(3)
|
Previously filed as Exhibit 4.1 to Amendment No. 3 to the Registrant’s Registration Statement on Form S-1 (File No. 333-217510), filed with the Securities and Exchange Commission on May 12, 2017, and incorporated herein by reference.
|
(4)
|
Previously filed as Exhibit 4.2 to the Company’s Registration Statement on Form S-1 (File No. 333-217510), filed with the Securities and Exchange Commission on April 27, 2017, and incorporated herein by reference.
|
(5)
|
Previously filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-1 (File No. 333-217510), filed with the Securities and Exchange Commission on April 27, 2017, and incorporated herein by reference.
|
(6)
|
Previously filed as Exhibit 10.2 to Amendment No. 2 to the Company’s Registration Statement on Form S-1 (File No. 333-217510), filed with the Securities and Exchange Commission on May 10, 2017, and incorporated herein by reference.
|
(7)
|
Previously filed as Exhibit 10.3 to Amendment No. 3 to the Company’s Registration Statement on Form S-1 (File No. 333-217510), filed with the Securities and Exchange Commission on May 12, 2017, and incorporated herein by reference.
|
(8)
|
Previously filed as Exhibit 10.4 to Amendment No. 2 to the Company’s Registration Statement on Form S-1 (File No. 333-217510), filed with the Securities and Exchange Commission on May 10, 2017, and incorporated herein by reference.
|
(9)
|
Previously filed as Exhibit 10.5 to the Company’s Registration Statement on Form S-1 (File No. 333-217510), filed with the Securities and Exchange Commission on April 27, 2017, and incorporated herein by reference.
|
(10)
|
Previously filed as Exhibit 10.6 to the Company’s Registration Statement on Form S-1 (File No. 333-217510), filed with the Securities and Exchange Commission on April 27, 2017, and incorporated herein by reference.
|
(11)
|
Previously filed as Exhibit 10.7 to the Company’s Registration Statement on Form S-1 (File No. 333-217510), filed with the Securities and Exchange Commission on April 27, 2017, and incorporated herein by reference.
|
(12)
|
Previously filed as Exhibit 10.8 to Amendment No. 1 to the Company’s Registration Statement on Form S-1 (File No. 333-217510), filed with the Securities and Exchange Commission on May 8, 2017, and incorporated herein by reference.
|
(13)
|
Previously filed as Exhibit 10.11 to the Company’s Registration Statement on Form S-1 (File No. 333-217510), filed with the Securities and Exchange Commission on April 27, 2017, and incorporated herein by reference.
|
(14)
|
Previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 2, 2017, and incorporated herein by reference.
|
(15)
|
Previously filed as Exhibit 21.1 to the Company’s Registration Statement on Form S-1 (File No. 333-221517), filed with the Securities and Exchange Commission on November 13, 2017, and incorporated herein by reference.
|
+
|
Indicates management contract or compensatory plan.
|
†
|
Confidential treatment requested as to certain portions, which portions have been omitted and filed separately with the Securities and Exchange Commission.
|
#
|
Filed herewith.
|
*
|
This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
|
|
|
APPIAN CORPORATION
|
||
|
|
|
|
|
Date: February 23, 2018
|
|
By:
|
|
/s/ Matthew Calkins
|
|
|
|
|
Name:
Matthew Calkins
|
|
|
|
|
Title:
Chief Executive Officer and Chairman of the Board
(On behalf of the Registrant and as Principal Executive Officer)
|
Signature
|
|
Title
|
|
Date
|
/s/ Matthew Calkins
Matthew Calkins
|
|
Chief Executive Officer and
Chairman of the Board
(Principal Executive Officer)
|
|
February 23, 2018
|
/s/ Mark Lynch
Mark Lynch
|
|
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
|
|
February 23, 2018
|
/s/ Robert C. Kramer
Robert C. Kramer
|
|
General Manager and Director
|
|
February 23, 2018
|
/s/ A.G.W. "Jack" Biddle, III
A.G.W. "Jack" Biddle, III
|
|
Director
|
|
February 23, 2018
|
/s/ Prashanth “PV” Boccassam
Prashanth “PV” Boccassam
|
|
Director
|
|
February 23, 2018
|
/s/ Michael G. Devine
Michael G. Devine
|
|
Director
|
|
February 23, 2018
|
/s/ Barbara “Bobbie” Kilberg
Barbara “Bobbie” Kilberg
|
|
Director
|
|
February 23, 2018
|
/s/ Michael J. Mulligan
Michael J. Mulligan
|
|
Director
|
|
February 23, 2018
|
By:
|
|
Signature
|
Signature
|
By:
|
|
Signature
|
Signature
|
By:
|
|
Signature
|
Signature
|
(a)
|
ensure that RSUs may be granted to Eligible Employees who are French residents for tax purposes (
French Eligible Employees
) under the Plan; and
|
(b)
|
obtain the most favourable tax and social security treatment of the Plan available under French law from the perspective of the Company and its Affiliates, and any French Eligible Employee.
|
1.
|
GENERAL
|
(b) Eligible Awards Recipients
|
Can only be eligible to receive awards the Employees as defined in Section 13 below.
|
(c) Available awards
|
The French sub-plan provides for the grant of Restricted Stock Unit Awards.
|
4.
|
ELIGIBILITY
|
(b) Ten Percent Stockholders
|
Restricted Stock Unit awards can only be granted to Eligible Employees who do not own on the relevant Date of Grant more than ten per cent of the share capital of the Company or who will not own ten per cent of the share capital of the Company as a result of the vesting of their awards.
|
(b)
Restricted Stock Unit Awards
|
|
|
|
(i) Consideration
|
There shall not be any consideration paid by a Participant upon delivery of a share of Common Stock subject to the Restricted Stock Unit Award, except if the payment of a consideration is mandatorily required under local laws. In which case, it shall remain a symbolic consideration and shall not exceed 5% of the fair market value of the Shares at Grant.
|
(ii) Vesting
|
For French Eligible Employees, the Board may impose a Vesting Period that cannot be lesser than one (1) year.
|
(iii) Delivery
|
A Restricted Stock Unit Award may only be settled by the delivery of shares of Common Stock. It cannot be settled by the payment of a cash equivalent.
|
(iv) Additional Restrictions
|
At the time of the grant of a Restricted Stock Unit Award, the Board, as it deems appropriate, may impose such restrictions or conditions that delay the delivery of the shares of Common Stock subject to a Restricted Stock Unit Award to a time after the vesting of such Restricted Stock Unit Award.
|
(v) Dividend Equivalents
|
No dividend equivalent can be credited and/or converted into additional shares of Common Stock prior to the Delivery of the shares. As the case may be, any equivalent bonus would not qualify for the free shares French tax regime.
|
(vii) Holding period
|
At the time of the grant of a Restricted Stock Unit Award, the Board may impose such restrictions on or conditions to the holding of the shares of Common Stock covered by the Restricted Stock Unit Award Agreement as it, in its sole discretion, deems appropriate. If the Vesting period is less than two years, the Holding period shall be such that the accumulated Vesting period and Holding period is equal to minimum two years.
|
(c) Transaction
|
Sections 9 (c) (iii) or 9 (c) (vi) are deleted.
|
Affiliate
|
means, at the time of determination, any Subsidiary of the Company as such terms are defined below.
|
Delivery Date
|
means the date when the Eligible Employee receives the shares of Common Stock covered by the Restricted Stock Unit Awards Agreement.
|
Disability
|
means injury, disability, invalidity corresponding to the second or third category specified in Article L341-4 of the Code de la Sécurité Sociale
|
Eligible Awards Recipients
|
refers to the Employees as defined below.
|
Employee
|
Means the Employee of the Company or a Subsidiary, who:
(i) holds an employment contract with the Company or a Subsidiary, and
(ii) does not own on the relevant Date of Grant more than ten per cent of the share capital of the Company.
|
Holding Period
|
means the period as defined in Section 6 (b) (vii) above, starting after the Delivery Date, during which the Participant cannot sell the Shares (save in case of Disability or death).
|
Subsidiary
|
means a company in which the Company holds directly or indirectly, at least 10% of the share capital and/or voting rights.
|
Vesting Period
|
means the period as defined in Section 6 (b) (ii) above, starting at the date of grant until the Delivery Date.
|
By:
|
|
Signature
|
Signature
|
1
|
GENERAL
|
2
|
ESTABLISHMENT OF CSOP SUB-PLAN
|
3
|
PURPOSE OF CSOP SUB-PLAN
|
4
|
COMPLIANCE
|
5
|
RULES OF CSOP SUB-PLAN
|
6
|
RELATIONSHIP OF CSOP SUB-PLAN TO PLAN
|
7
|
INTERPRETATION
|
(a)
|
"
Acquiring Company
" is a company which obtains Control of the Company in the circumstances referred to in rule 26;
|
(b)
|
"
Adoption Date
" is the date on which the CSOP Sub-Plan is adopted by the Board;
|
(c)
|
"
Associate
" has the meaning given to that expression by paragraph 12 of Schedule 4;
|
(d)
|
"
Constituent Company
" means any of the following:
|
(i)
|
the Company; and
|
(ii)
|
any Eligible Company nominated by the Board to be a Constituent Company at the relevant time.
|
(e)
|
"
Control
" the meaning given to that word by Section 719 of ITEPA 2003 and “Controlled” shall be construed accordingly;
|
(f)
|
"
Date of Grant
" is the date on which an Option is granted under the CSOP Sub-Plan;
|
(g)
|
"
Eligible Company
" means any company of which the Company has Control, including any jointly owned company (as defined in paragraph 34 of Schedule 4):
|
(i)
|
which is treated as being under the Company’s Control under paragraph 34 of Schedule 4; and
|
(ii)
|
which is not excluded from being a Constituent Company under paragraph 34(4) of Schedule 4;
|
(h)
|
"
Eligible Employee
" means any Employee who:
|
(i)
|
does not have a Material Interest (either on his own or together with one or more of his Associates), and has not had such an interest in the last 12 months; and
|
(ii)
|
has no Associate or Associates which has or (taken together) have a Material Interest, or had such an interest in the last 12 months; and
|
(iii)
|
is either:
|
(A)
|
not a director of any Constituent Company; or
|
(B)
|
a director of a Constituent Company who is required to devote at least 25 hours per week (excluding meal breaks) to his duties;
|
(i)
|
"
Employee
" means an employee of a Constituent Company;
|
(j)
|
"
Employer NICs
" means secondary class 1 (employer) NICs that are included in any Tax Liability (or that would be included in any Tax Liability if an election of the type referred to in rule 22.2 had not been made) and that may be lawfully recovered from the Participant;
|
(k)
|
"
Exercise Price
" means the price at which each Share subject to an Option may be acquired on the exercise of that Option, which (subject to rule 29):
|
(i)
|
if the Share are to be newly issued to satisfy the exercise of the Option, many not be less than the nominal value of a Share; and
|
(ii)
|
may not be less than the Market Value of a Share on the Date of Grant.
|
(l)
|
"
Existing EMI Options
" means all qualifying options (as defined in section 527 of ITEPA 2003) that have been granted as a result of employment with the Company (or any other member of a group of companies to which the Company belongs) that can still be exercised;
|
(m)
|
Group Company
means any of the following:
|
(i)
|
the Company;
|
(ii)
|
a company of which the Company has Control; and
|
(iii)
|
a jointly owned company (as defined in paragraph 34 of Schedule 4) that is:
|
(A)
|
treated as being under the Company's Control under paragraph 34 of Schedule 4; and
|
(B)
|
that is not excluded from being a Constituent Company under paragraph 34(4) of Schedule 4.
|
(n)
|
"
HMRC
" means HM Revenue and Customs;
|
(o)
|
"
ITEPA 2003
" means The Income Tax (Earnings and Pensions) Act 2003;
|
(p)
|
"
Key Feature
" means any provision of the CSOP Sub-Plan which is necessary to meet the requirements of Schedule 4;
|
(q)
|
"
Market Value
" means the market value of a Share as determined in accordance with the applicable provisions of Part VIII of the Taxation of Chargeable Gains Act 1992, and any relevant published HMRC guidance, on the relevant date. If Shares are subject to a Relevant Restriction, Market Value shall be determined as if they were not subject to a Relevant Restriction;
|
(r)
|
"
Material Interest
" has the meaning given to that expression by paragraph 9 of Schedule 4;
|
(s)
|
"
Option
" is a right to acquire Shares granted under the CSOP Sub-Plan;
|
(t)
|
"
Option Agreement
" means a written agreement between the Company and Participant evidencing the terms of an individual Option grant, subject to the terms and conditions of the CSOP Sub-Plan;
|
(u)
|
"
Participant
" means an individual who holds an Option or, where the context permits, his personal representatives;
|
(v)
|
“
Redundancy
” has the meaning given by the Employment Rights Act 1996;
|
(w)
|
"
Relevant CSOP Options
" means all Options granted under the Plan (and any other Schedule 4 CSOP as a result of employment with the Company (or any other member of a group of companies to which the Company belongs) that can still be exercised;
|
(x)
|
“
Relevant Restriction
” means any provision included in any contract, agreement, arrangement or condition to which sections 423(2), 423(3) and 423(4) of ITEPA 2003 would apply if references in those sections to employment-related securities were references to Shares;
|
(y)
|
"
Schedule 4
" means Schedule 4 to ITEPA 2003;
|
(z)
|
"
Schedule 4 CSOP
" means a share plan that meets the requirements of Schedule 4 to ITEPA 2003;
|
(aa)
|
"
Shares
" means common stock of the Company;
|
(bb)
|
"
Sufficient Shares
" means the smallest number of Shares that, when sold, will produce an amount at least equal to the relevant Tax Liability (after deduction of brokerage and any other charges or taxes on the sale);
|
(cc)
|
"
Tax Liability
" means the pounds sterling total of:
|
(i)
|
any PAYE income tax and primary class 1 (employee) national insurance contributions that the Company or any employer (or former employer) of a Participant is liable to account for as a result of the exercise of an Option; and
|
(ii)
|
if the relevant Option includes the requirement specified in rule 22.2, any Employer NICs that the Company or any employer (or former employer) of a Participant is liable to pay as a result of the exercise of an Option.
|
(a)
|
words and expressions not defined above have the same meanings as are given to them in the Plan;
|
(b)
|
the rule headings are inserted for ease of reference only and do not affect their interpretation;
|
(c)
|
a reference to a rule is a reference to a rule in this supplement;
|
(d)
|
the singular includes the plural and vice-versa and the masculine includes the feminine; and
|
(e)
|
a reference to a statutory provision is a reference to a United Kingdom statutory provision and includes any statutory modification, amendment or re-enactment thereof.
|
8
|
COMPANIES PARTICIPATING IN CSOP SUB-PLAN
|
9
|
SHARES USED IN CSOP SUB-PLAN
|
10
|
GRANT OF OPTIONS
|
11
|
IDENTIFICATION OF OPTIONS
|
12
|
CONTENTS OF OPTION AGREEMENT
|
(a)
|
the Date of Grant of the Option;
|
(b)
|
the number of Shares subject to the Option;
|
(c)
|
the Exercise Price;
|
(d)
|
any performance criteria imposed on the exercise of the Option;
|
(e)
|
the date(s) on which the Option will ordinarily become exercisable;
|
(f)
|
the date(s) on which the Option will lapse; and
|
(g)
|
a statement that:
|
(i)
|
the Option is subject to these rules, Schedule 4 and any other legislation applying to Schedule 4 CSOPs; and
|
(ii)
|
the provisions listed in rule 12(g)(i) shall prevail over any conflicting statement relating to the Option’s terms.
|
13
|
EARLIEST DATE FOR GRANT OF OPTIONS
|
14
|
PERSONS TO WHOM OPTIONS MAY BE GRANTED
|
15
|
OPTIONS NON TRANSFERABLE
|
16
|
LIMIT ON NUMBER OF SHARES PLACED UNDER OPTION UNDER CSOP SUB-PLAN
|
17
|
HMRC LIMIT (£30,000)
|
17.1.
|
An Option may not be granted to an Eligible Employee if the result of granting the Option would be that the aggregate Market Value of the Shares subject to all outstanding options granted to him under the CSOP Sub-Plan or any other Schedule 4 CSOP would exceed sterling £30,000 or such other limit as may from time to time be specified in paragraph 6 of Schedule 4. For this purpose, the United Kingdom sterling equivalent of the Market Value of a share on any day shall be determined by taking the spot sterling/dollar exchange rate for that day as shown in the Financial Times.
|
17.2.
|
If the grant of an Option would otherwise cause the limit in rule 17.1 to be exceeded, it shall take effect as the grant of an Option under the CSOP Sub-Plan over the highest number of Shares which does not cause the limit to be exceeded.
|
17.3.
|
If the grant of any share option intended to be an Option (referred to in this rule 17.3 as the Excess Option) would cause the total Market Value of Shares subject to:
|
(a)
|
the Excess Option; and
|
(b)
|
all Relevant CSOP Options held by the relevant Eligible Employee; and
|
(c)
|
all Existing EMI Options held by the relevant Eligible Employee,
|
18
|
EXERCISE PRICE UNDER OPTIONS
|
19
|
PERFORMANCE CRITERIA IMPOSED ON EXERCISE OF OPTION
|
19.1.
|
Any performance criteria imposed on the exercise of an Option shall be:
|
(a)
|
objective;
|
(b)
|
such that, once satisfied, the exercise of the Option is not subject to the discretion of any person; and
|
(c)
|
stated on the Date of Grant.
|
19.2.
|
If an event occurs as a result of which the Board considers that any performance criteria imposed on the exercise of an Option is no longer appropriate and amends or modifies the performance criteria, such amendment or modification shall:
|
(a)
|
be fair and reasonable in the circumstances; and
|
(b)
|
produce a measure of performance that is no more difficult to satisfy than the original.
|
20
|
EXERCISE OF OPTIONS BY LEAVERS
|
20.1.
|
The period during which an Option shall remain exercisable following termination of employment, shall be stated at grant in the Option Agreement, which period may not thereafter be altered.
|
20.2.
|
A Participant who ceases to be an Employee due to:
|
(a)
|
injury;
|
(b)
|
ill health;
|
(c)
|
disability;
|
(d)
|
retirement;
|
(e)
|
Redundancy;
|
(f)
|
the Option Holder's employer ceasing to be a Group Company;
|
(g)
|
the transfer of the business that employs the Option Holder to a person that is not a Group Company,
|
21
|
LATEST DATE FOR EXERCISE OF OPTIONS
|
22
|
TAX LIABILITIES
|
22.1.
|
Each Option shall include a requirement that the Participant irrevocably agrees to:
|
(a)
|
pay to the Company, his employer or former employer (as appropriate) the amount of Tax Liability; or
|
(b)
|
enter into arrangements to the satisfaction of the Company, his employer or former employer (as appropriate) for payment of any Tax Liability.
|
22.2.
|
Unless the Constituent Company which employs the relevant Eligible Employee directs that it shall not, each Option shall include a requirement that the Participant agrees that the Company, his employer or former employer (as appropriate) may recover the whole or any part of any Employer NICs from the Participant:
|
22.3.
|
If a Participant does not fulfil his obligations under rule 22.1(a) or rule 22.1(b) in respect of any Tax Liability arising from the exercise of an Option within seven days after the date of exercise and Shares are readily saleable at that time, the Company shall withhold Sufficient Shares from the Shares which would otherwise be delivered to the Participant. From the net proceeds of sale of those withheld Shares, the Company shall pay to the employer or former employer an amount equal to the Tax Liability and shall pay any balance to the Participant.
|
22.4.
|
Participants shall have no rights to compensation or damages on account of any loss in respect of Options or the CSOP Sub-Plan where such loss arises (or is claimed to arise), in whole or in part, from the CSOP Sub-Plan ceasing to be a Schedule 4 CSOP.
|
23
|
MANNER OF PAYMENT FOR SHARES ON EXERCISE OF OPTIONS
|
24
|
ISSUE OR TRANSFER OF SHARES ON EXERCISE OF OPTIONS
|
(a)
|
the listing of the Shares on any stock exchange on which Shares are then listed;
|
(b)
|
such registration or other qualification of the Shares under any applicable law, rule or regulation as the Company determines is necessary or desirable;
|
25
|
DEATH OF PARTICIPANT
|
26
|
CHANGE IN CONTROL
|
26.1.
|
Exchange of Options
|
(a)
|
making a general offer to acquire the whole of the issued share capital of the Company which is made on a condition such that if it is satisfied the person making the offer will have Control of the Company;
|
(b)
|
making a general offer to acquire all the shares in the Company that are the same class as the Shares;
|
(c)
|
the court sanctioning a compromise or arrangement under section 899 of the Companies Act 2006 that is applicable to or affects:
|
(i)
|
all the ordinary share capital of the Company or all the Shares of the same class as the Shares to which the Option relates; or
|
(ii)
|
all the Shares, or all the Shares of that same class, which are held by a class of shareholders identified otherwise than by reference to their employment or directorships or their participation in a Schedule 4 CSOP; or
|
(d)
|
shareholders becoming bound by a non-UK reorganisation (as defined by paragraph 35ZA of Schedule 4) that is applicable to or affects (i) all the ordinary share capital of the Company or all the shares of the same class as the Shares to which the Option relates; or (ii) all the shares, or all the shares of that same class, which are held by a class of shareholders identified otherwise than by reference to their employment or directorships or their participation in a Schedule 4 CSOP,
|
26.2.
|
Period allowed for exchange of Options
|
26.3.
|
Meaning of “equivalent”
|
(a)
|
the New Shares satisfy the conditions specified in paragraphs 16 to 20 inclusive of Schedule 4; and
|
(b)
|
save for any performance criteria imposed on the exercise of the Option, the New Option will be exercisable in the same manner as the Option and subject to the provisions of the CSOP Sub-Plan as it had effect immediately before the release of the Option; and
|
(c)
|
the total Market Value, immediately before the release of the Option, of the Shares which were subject to the Option is equal to the total Market Value, immediately after the grant of the New Option, of the New Shares determined using a methodology agreed by HMRC; and
|
(d)
|
the total amount payable by the Participant for the acquisition of the New Shares under the New Option is equal to the total amount that would have been payable by the Participant for the acquisition of the Shares under the Option.
|
26.4.
|
Date of grant of New Option
|
26.5.
|
Application of CSOP Sub-Plan to New Option
|
26.6.
|
Interaction with Section 9(c) of the Plan
|
(a)
|
Reference in Section 9(c)(i) of the Plan to the assumption or substitution of Options, shall be disapplied for the purposes of the CSOP Sub-Plan.
|
(b)
|
In the event that a “Transaction” does not fall within rule 26.1 above, or where it does, but an Acquiring Company does not agree to grant a New Option, or if a New Option would not be regarded as ‘equivalent’ in accordance with rule 26.3 above, the Board shall give written notice to the Participants and all Options shall be exercisable in full up to 20 days before a Transaction save that any Option exercised in anticipation of a Transaction that does not take place will be treated as not having been exercised.
|
(c)
|
Reference in Section 9(c)(v) and (vi) of the Plan to the receipt of a cash payment, shall be disapplied for the purposes of the CSOP Sub-Plan.
|
27
|
RIGHTS ATTACHING TO SHARES ISSUED ON EXERCISE OF OPTIONS
|
28
|
AMENDMENT OF CSOP SUB-PLAN
|
29
|
ADJUSTMENT OF OPTIONS
|
29.1.
|
Notwithstanding Rule 9(a) of the Plan, no adjustment may be made to an Option (i) other than in accordance with paragraph 22 of Schedule 4 and (ii) in the event of a demerger or payment of a capital dividend or similar event.
|
29.2.
|
Where an adjustment to an Option is made, the total Market Value of the Shares subject to the Option and the total amount payable on the exercise of the Option before and after the adjustment must be the same.
|
30
|
EXERCISE OF DISCRETION BY THE BOARD
|
31
|
DISAPPLICATION OF CERTAIN PROVISIONS OF PLAN
|
(a)
|
Incentive Stock Options (defined in the Plan);
|
(b)
|
Stock Appreciation Rights (defined in the Plan);
|
(c)
|
Amending or modifying an Option (Section 2(b)(viii));
|
(d)
|
The power to accelerate (Section 2(b)(iv) and Section 9(c)(iii));
|
(e)
|
The ability to reprice options (Section 2(b)(xi));
|
(f)
|
Transferring an Option (Section 5(e));
|
(g)
|
Non-Exempt Employees (Section 5(l));
|
(h)
|
Restricted Stock Awards (Section 6(a));
|
(i)
|
Restricted Stock Unit Awards (Section 6(b));
|
(j)
|
Performance Awards (Section 6(c));
|
(k)
|
Other Stock Awards (Section 6(d));
|
(l)
|
Change in Time Commitment (Section 8(e));
|
(m)
|
Deferrals (Section 8(j));
|
(n)
|
Compliance with Section 409A of the Code (Section 8(k));
|
(o)
|
Clawback/Recovery (Section 8(l));
|
(p)
|
The ability to change the class of securities set out in Section 9(a);
|
(q)
|
Action by the Board in connection with a Corporate Transaction or Change in Control in relation to the substitution or cash cancellation of options;
|
Type of Grant:
|
This Option is subject to the provisions of the CSOP Sub-Plan, a copy of which is furnished to the Optionholder with this Option and to Schedule 4 to the Income Tax (Earnings and Pensions) Act 2003. This statement shall take precedent over any conflicting statement about the terms of the option.
|
Vesting Schedule
:
|
Five Years, with 20% vesting on each anniversary of the Vesting Commencement Date,
subject to Optionholder’s Continuous Service as of each such date.
|
By:
|
|
Signature
|
Signature
|
1.
|
VESTING.
Subject to the provisions contained herein, your option will vest as provided
|
(a)
|
immediately upon the termination of your Continuous Service for Cause;
|
Type of option (check one):
|
CSOP
¨
|
Stock option dated:
|
_______________
|
Number of Shares as to which option is
exercised:
|
_______________
|
Certificates to be issued in name of:
|
_______________
|
Total exercise price:
|
$______________
|
Cash payment delivered herewith:
|
$______________
|
[Regulation T Program (cashless exercise
1
):
|
$______________
|
|
/s/ Matthew Calkins
|
|
Matthew Calkins
|
|
Chief Executive Officer
|
|
(principal executive officer)
|
|
/s/ Mark Lynch
|
|
Mark Lynch
|
|
Chief Financial Officer
|
|
(principal financial officer)
|
/s/ Matthew Calkins
|
|
/s/ Mark Lynch
|
Matthew Calkins
|
|
Mark Lynch
|
Chief Executive Officer
(principal executive officer)
|
|
Chief Financial Officer
(principal financial officer)
|
*
|
This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing.
|