MOBILEIRON, INC. (Form: 10-Q, Received: 08/02/2019 16:13:00)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2019


◻	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-36471

MobileIron, Inc.

(Exact name of Registrant as specified in its charter)

Delaware	26-0866846
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

490 East Middlefield Road Mountain View, California	94043
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:

(650) 919-8100

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.0001 per share	MOBL	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer ◻	Accelerated filer ☒
Nonaccelerated filer ◻	Smaller reporting company ◻
Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ◻ No ☒

The number of outstanding shares of the registrant’s common stock was 109,797,877 as of July 26, 2019.

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INDEX TO QUARTERLY REPORT ON FORM 10-Q

For the Quarter Ended June 30, 2019

		Page
PART I FINANCIAL INFORMATION		6
Item 1. Financial Statements :		6
Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018		6
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2019 and 2018		7
Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2019 and 2018		8
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018		9
Notes to Condensed Consolidated Financial Statements		10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		30
Item 3. Quantitative and Qualitative Disclosure About Market Risk		30
Item 4. Controls and Procedures		47
PART II OTHER INFORMATION		47
Item 1. Legal Proceedings		47
Item 1A. Risk Factors		48
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		73
Item 3. Defaults Upon Senior Securities		75
Item 4. Mine Safety Disclosures		75
Item 5. Other Information		76
Item 6. Exhibits		76
Signatures		77

“MobileIron,” the MobileIron logos and other trademark or service marks of MobileIron, Inc. appearing in this Quarterly Report on Form 10-Q are the property of MobileIron, Inc. Trade names, trademarks and service marks of other companies appearing in this report are the property of their respective holders.

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WHERE YOU CAN FIND MORE INFORMATION

Investors and others should note that we announce material financial information to our investors using our investor relations website address, press releases, reports and other information that we file from time to time with the Securities and Exchange Commission, or the SEC, and public conference calls and webcasts. We also use the following social media channels as a means of disclosing information about the company, our services and other matters and for complying with our disclosure obligations under Regulation FD:

MobileIron Company Blog ( https://www.mobileiron.com/en/smartwork-blog )

MobileIron Facebook Page ( https://www.facebook.com/mobileiron )

MobileIron Twitter Account ( https://twitter.com/mobileiron ); @mobileiron

MobileIron LinkedIn Page ( https://www.linkedin.com/company/mobileiron )

The information we post through these social media channels may be deemed material. Accordingly, investors should monitor these accounts and the blog, in addition to following our press releases, SEC filings and public conference calls and webcasts. This list may be updated from time to time. The information we post through these channels is not a part of this Quarterly Report on Form 10-Q. These channels may be updated from time to time on MobileIron’s investor relations website.

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SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases you can identify these statements by forward-looking words such as “believe,” “may,” “will,” “might,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “should,” “would,” “potentially,” “predict,” “plan,” “outlook,” “target,” “expect,” “future” or similar expressions, or the negative or plural of these words or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:


	—	beliefs and objectives for future operations, results and growth;

	—	our business plan and our ability to effectively manage our expenses;

	—	our ability to timely and effectively scale and adapt our existing technology;

	—	our ability to innovate new products and bring them to market in a timely manner;

	—	our ability to expand internationally;

	—	our ability to attract new customers and further penetrate our existing customer base;

	—	our expectations concerning renewal rates for subscriptions and services by existing customers;

	—	our expectations concerning the mix of our sales of subscriptions and perpetual licenses;

	—	cost of revenue, including changes in costs associated with hardware, royalties, customer support and data center operations;

	—	operating expenses, including changes in research and development, sales and marketing, and general and administrative expenses;

	—	our expectations concerning relationships with third parties, including channel partners;

	—	economic and industry trends or trend analysis; and

	—	the sufficiency of our existing cash and investments to meet our cash needs for at least the next 12 months.

In addition, statements such as "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those reflected in the forward-looking statements. These risks are not exhaustive. These statements are within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements appear throughout this Quarterly Report on Form 10-Q and are statements regarding our intent, belief, or current expectations, primarily with respect to our business and related industry developments. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us and described in Part

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II, Item 1A, entitled “Risk Factors,” and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 2 of this Quarterly Report on Form 10-Q. We undertake no obligation to update any forward-looking statements for any reason to conform these statements to actual results or to changes in our expectations.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

MOBILEIRON, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)


	June 30,		December 31,
	2019		2018
ASSETS
Current assets:
Cash and cash equivalents	$	98,877	$	104,613
Short-term investments		1,699		1,000
Accounts receivable, net of allowance for doubtful accounts of $425 at June 30, 2019 and December 31, 2018		39,312		60,994
Deferred commissions - current		9,480		8,265
Prepaid expenses and other current assets		12,333		8,367
TOTAL CURRENT ASSETS		161,701		183,239
Property and equipment—net		5,859		7,046
Operating lease right-of-use asset		14,127		—
Deferred commissions - noncurrent		8,247		9,066
Goodwill		5,475		5,475
Other assets		6,186		5,561
TOTAL ASSETS	$	201,595	$	210,387

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2,937	$	2,154
Accrued expenses		20,590		27,347
Lease liabilities - current		6,276		—
Unearned revenue - current		76,664		74,177
Customer arrangements with termination rights		16,978		19,367
TOTAL CURRENT LIABILITIES		123,445		123,045
Long-term liabilities:
Lease liabilities - noncurrent		10,833		—
Unearned revenue - noncurrent		29,736		31,660
Other long-term liabilities		155		1,565
TOTAL LIABILITIES		164,169		156,270

Commitments and contingencies (Note 11)
Stockholders’ equity:
Common stock, $0.0001 par value, 300,000,000 shares authorized, 111,873,095 shares issued and 109,770,021 shares outstanding and 107,028,433 shares issued and 106,206,545 shares outstanding at June 30, 2019 and December 31, 2018, respectively		11		11
Additional paid-in capital		484,593		462,004
Treasury stock		(10,422)		(3,831)
Accumulated deficit		(436,756)		(404,067)
TOTAL STOCKHOLDERS’ EQUITY		37,426		54,117
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	201,595	$	210,387

See accompanying notes.

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MOBILEIRON, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Revenue
Cloud services	$	16,311	$	11,832		31,572		22,982
License		12,227		13,880	$	23,598	$	26,321
Software support and services		22,327		20,417		43,777		40,515
Total revenue		50,865		46,129		98,947		89,818

Cost of revenue
Cloud services		5,146		2,722		9,856		5,293
License		433		515		987		946
Software support and services		4,844		4,672		9,867		9,647
Restructuring expense		224		—		300		—
Total cost of revenue		10,647		7,909		21,010		15,886
Gross profit		40,218		38,220		77,937		73,932

Operating expenses:
Research and development		19,988		18,272		41,817		39,607
Sales and marketing		26,035		24,321		50,522		48,002
General and administrative		7,626		7,052		15,545		14,274
Restructuring expense		2,219		—		2,758		—
Total operating expenses		55,868		49,645		110,642		101,883

Operating loss		(15,650)		(11,425)		(32,705)		(27,951)
Other income (expense) - net		540		(205)		952		298
Loss before income taxes		(15,110)		(11,630)		(31,753)		(27,653)
Income tax expense		479		377		936		724
Net loss	$	(15,589)	$	(12,007)	$	(32,689)	$	(28,377)
Net loss per share, basic and diluted	$	(0.14)	$	(0.12)	$	(0.30)	$	(0.28)
Weighted-average shares used to compute net loss per share, basic and diluted		109,245		101,313		108,292		100,003

See accompanying notes.

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MOBILEIRON, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data)

(Unaudited)



				Additional						Total
	Common Stock			Paid-in				Accumulated		Stockholders’
	Shares	Amount		Capital			Treasury Stock	Deficit		Equity
BALANCE—March 31, 2019	108,670,420	$	11	$	477,389	$	(7,432)	$	(421,167)	$	48,801
Issuance of common stock for stock option exercises	306,936		—		921						921
Shares withheld for net settlement of equity awards	(67,848)		—		(375)						(375)
Repurchase of common stock	(542,220)		—		—		(2,990)				(2,990)
Vesting of restricted stock units	1,402,733		—		—						—
Stock-based compensation	—		—		6,658						6,658
Net loss	—		—		—				(15,589)		(15,589)
BALANCE—June 30, 2019	109,770,021	$	11	$	484,593	$	(10,422)	$	(436,756)	$	37,426

BALANCE—December 31, 2018	106,206,545	$	11	$	462,004	$	(3,831)	$	(404,067)	$	54,117
Issuance of common stock for stock option exercises	557,404		—		1,720						1,720
Issuance of common stock pursuant to the Employee Stock Purchase Plan	518,112		—		2,047						2,047
Issuance of common stock pursuant to the Employee Stock-Settled Bonus Plans	2,170,855		—		10,485						10,485
Shares withheld for net settlement of equity awards	(962,042)		—		(4,784)						(4,784)
Repurchase of common stock	(1,281,186)		—				(6,591)				(6,591)
Vesting of restricted stock units	2,560,333		—								—
Stock-based compensation	—		—		13,121						13,121
Net loss	—		—						(32,689)		(32,689)
BALANCE—June 30, 2019	109,770,021	$	11	$	484,593	$	(10,422)	$	(436,756)	$	37,426


				Additional						Total
	Common Stock			Paid-in				Accumulated		Stockholders’
	Shares	Amount		Capital			Treasury Stock	Deficit		Equity
BALANCE—March 31, 2018	100,608,155	$	11	$	435,722	$	—	$	(377,353)	$	58,380
Issuance of common stock for stock option exercises	286,466		—		754						754
Vesting of restricted stock units	1,559,564		—		—						—
Stock-based compensation	—		—		6,318						6,318
Net loss	—		—		—				(12,007)		(12,007)
BALANCE—June 30, 2018	102,454,185	$	11	$	442,794	$	—	$	(389,360)	$	53,445

BALANCE—December 31, 2017	97,203,950	$	10	$	420,525	$	—	$	(360,983)	$	59,552
Issuance of common stock for stock option exercises	664,864		—		1,409						1,409
Issuance of common stock pursuant to the Employee Stock Purchase Plan	829,182		—		2,339						2,339
Issuance of common stock pursuant to the Employee Stock-Settled Bonus Plans	1,973,386		1		9,621						9,622
Shares withheld for net settlement of equity awards	(752,564)		—		(3,724)						(3,724)
Vesting of restricted stock units	2,535,367		—		—						—
Stock-based compensation	—		—		12,624						12,624
Net loss	—		—		—				(28,377)		(28,377)
BALANCE—June 30, 2018	102,454,185	$	11	$	442,794	$	—	$	(389,360)	$	53,445

See accompanying notes

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MOBILEIRON, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW S

(In thousands, except per share data)

(Unaudited)


	Six Months Ended
	June 30,
	2019		2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(32,689)	$	(28,377)
Adjustments to reconcile net loss to net cash provided by operating activities:
Stock-based compensation expense		19,147		19,113
Depreciation		1,757		1,794
Amortization of intangible assets		—		100
Accretion of premium on investment securities		(13)		(29)
Impairment of right-of-use assets		1,328		—
Loss on disposal of fixed assets		170		41
Changes in operating assets and liabilities:
Accounts receivable		21,683		7,751
Deferred commissions		(397)		1,481
Other current and noncurrent assets		(2,217)		(1,036)
Accounts payable		772		43
Unearned revenue		562		5,912
Customer arrangements with termination rights		(2,389)		(34)
Accrued expenses and other long-term liabilities		(4,384)		(524)
Net cash provided by operating activities		3,330		6,235

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(782)		(765)
Proceeds from maturities of investment securities		1,550		9,800
Purchase of investment securities		(2,236)		(5,970)
Net cash provided by (used in) investing activities		(1,468)		3,065

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Employee Stock Purchase Plan		2,057		2,249
Taxes paid for net settlement of equity awards		(4,784)		(3,724)
Proceeds from exercise of stock options		1,720		1,409
Repurchase of common stock		(6,591)		—
Net cash used in financing activities		(7,598)		(66)
NET CHANGE IN CASH AND CASH EQUIVALENTS		(5,736)		9,234
CASH AND CASH EQUIVALENTS—Beginning of period		104,613		85,833
CASH AND CASH EQUIVALENTS—End of period	$	98,877	$	95,067

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for income taxes	$	679	$	685
Lease payments included in cash provided by operating activities	$	3,688	$	3,613
SUPPLEMENTAL DISCLOSURES OF NONCASH FINANCING ACTIVITIES:
Value of shares issued under the Bonus Plans	$	6,374	$	5,898
Value of shares issued under the Employee Stock Purchase Plan	$	2,047	$	2,339
Unpaid property and equipment purchases	$	106	$	235

See accompanying notes.

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MOBILEIRON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Description of Business and Significant Accounting Policies

Description of Business

MobileIron, Inc. and its wholly owned subsidiaries, collectively, the “Company”, “we”, “us” or “our”, provides a purpose-built mobile IT platform that enables enterprises to manage and secure mobile applications, content and devices while providing their employees with device choice, privacy and a native user experience. We were incorporated in Delaware in July 2007 and are headquartered in Mountain View, California, with additional sales and support presence in North America, Europe, the Middle East, Asia and Australia and employees in India primarily focused on research and development.

Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements as of June 30, 2019 and for the three and six months ended June 30, 2019 and 2018 have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial statements and pursuant to the rules and regulations of the SEC, and include the accounts of our wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

Certain information and footnote disclosures in this Quarterly Report on Form 10-Q normally included in annual financial statements prepared in accordance with U.S. GAAP and pursuant to the rules and regulations of the SEC have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary for a fair presentation of our balance sheet as of June 30, 2019, our operating results for the three and six months ended June 30, 2019 and 2018, and our cash flows for the six months ended June 30, 2019 and 2018. Our operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2019. The condensed consolidated balance sheet as of December 31, 2018 has been derived from the audited consolidated financial statements as of that date, but does not include all the footnotes required by U.S. GAAP for complete financial statements.

The accompanying unaudited condensed consolidated financial statements and related financial information should be read in conjunction with our audited financial statements and related notes for the year ended December 31, 2018, included in our Annual Report on Form 10-K for the year ended December 31, 2018 previously filed with the SEC.

Foreign Currency Translation

Our reporting currency is the U.S. dollar. The functional currency of all our international operations is the U.S. dollar. All monetary asset and liability accounts are translated into U.S. dollars at the period-end rate, nonmonetary assets and liabilities are translated at historical exchange rates, and revenue and expenses are translated at the weighted-average exchange rates in effect during the period. Translation adjustments are recorded as foreign currency gains (losses) in the condensed consolidated statements of operations. We recognized a foreign currency gain of $18,000 and a loss of $535,000 in the three months ended June 30, 2019 and 2018, respectively, and we recognized a foreign currency loss of $193,000 and $355,000 in the six months ended June 30, 2019 and 2018, respectively, in other income (expense)—net in our condensed consolidated statements of operations.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of

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the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. These estimates include, but are not limited to, revenue recognition, deferred commissions and commissions expense, stock-based compensation, goodwill, and accounting for income taxes. Actual results could differ from those estimates.

Concentrations of Credit Risk

Financial instruments that potentially subject us to a concentration of credit risk consist of cash, money market funds and fixed income investments. Although we deposit our cash with multiple financial institutions, our deposits, at times, exceed federally insured limits. We invest in fixed income securities that are of high-credit quality. Substantially all of our money market funds, or $30.2 million, are held in five funds that are rated “AAA.”

We generally do not require collateral or other security in support of accounts receivable. Allowances are provided for individual accounts receivable when we become aware of a customer’s inability to meet its financial obligations, such as in the case of bankruptcy, deterioration of the customer’s operating results, or change in financial position. If circumstances related to customers change, estimates of the recoverability of receivables would be further adjusted. We also consider broader factors in evaluating the sufficiency of our allowances for doubtful accounts, including the length of time receivables are past due, significant one-time events and historical experience. At both June 30, 2019 and December 31, 2018, we had an allowance for doubtful accounts of $425,000.

One reseller accounted for 10% of total revenue for both the three and six months ended June 30, 2019, and for 11% of total revenue and 12% of total revenue for the three and six months ended June 30, 2018, respectively. No other resellers or end-user customers accounted for 10% or more of our total revenue for any period presented. Two resellers each accounted for 15% of our net accounts receivable at June 30, 2019. No other reseller or end-user customer accounted for 10% or more of net accounts receivable at December 31, 2018.

Segments

We have one reportable segment, software and services to manage and secure mobile devices, applications and content.

Summary of Significant Accounting Policies

Revenue Recognition

Revenue Presentation

License revenue includes sales of perpetual software licenses, software licenses sold as part of on-premises term subscriptions, and appliances.

Software support and services revenue includes sales of software support sold as part of on-premises term subscriptions, software support for perpetual licenses, and professional services.

Revenue Recognition

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities.

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Nature of Products and Services

Cloud services, which allow customers to use hosted software over a contract period without taking possession of our software, are provided on a subscription or usage basis. Revenue related to cloud services provided on a subscription basis is recognized ratably over the contract period and revenue related to cloud services based on usage is generally recognized as the usage occurs.

Licenses for on-premises software provide the customer with a right to use the software as it exists when made available to the customer. Customers may purchase on-premises software licenses as perpetual licenses or as part of subscriptions. On-premises licenses are considered distinct performance obligations and revenue from the licenses is recognized upfront when the software is made available to the customer. In the case of our on-premises subscriptions, the license portion of revenue is recognized up-front, and the software support and services portion is recognized ratably.

Software support and services convey rights to the upgrades released over the contract period and provide support and tools to help customers deploy and use our products more efficiently. Revenue allocated to software support and services is generally recognized ratably over the contract period as customers simultaneously consume and receive benefits, given that the software support and services comprises a distinct performance obligation that is satisfied over time.

On-premises subscriptions and software support and services occasionally contain termination rights. We recognize revenue from those arrangements, including the distinct licenses contained therein, as the termination rights for the performance obligation expire. See also Unearned Revenue and Customer Arrangements with Termination Rights below.

Professional services include consulting, deployment and training services. Our professional services represent distinct performance obligations as our customers benefit from the services separately or together with other readily available resources. Professional services revenue is recognized as services are delivered.

Appliance revenue was less than 5% of total revenue for all periods presented and is included as a component of license revenue within the consolidated statements of operations.

Refer to Note 14 – Segment and Disaggregation of Revenue Information for further information.

Significant Judgments

Our contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Judgment is required to determine whether a software license is considered distinct and accounted for separately, or not distinct and accounted for together with the software support and services and recognized over time.

Judgment is required to determine the standalone selling price (“SSP”) for each distinct performance obligation. We use a range of amounts to estimate the SSP for items that are not sold separately, including on-premises licenses sold with software support and services. In instances where SSP is not directly observable, such as when we do not sell the product or service separately, we determine the SSP using information that may include other observable inputs. We typically have more than one SSP for individual products and services due to the stratification of those products and services by customer classes and circumstances. In these instances, we may use information such as the size and type of customer in determining the SSP.

Contract Balances

Timing of revenue recognition may differ from the timing of invoicing customers. We record a receivable when revenue is recognized prior to invoicing, or unearned revenue when revenue will be recognized after invoicing. For multi-year agreements, we either invoice our customer in full at the inception of the contract or annually at the beginning of each annual period. We record an unbilled receivable related to revenue recognized for multi-year on-premises licenses invoiced annually when we have an unconditional right to invoice and receive payment in the future for those

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licenses or when we have the right to invoice future monthly periods under committed monthly recurring charge (“MRC”) agreements. The majority of our MRC agreements are for a month to month term (“non-committed”) or usage-based.

Payment terms and conditions vary by contract type, although terms generally include a requirement to pay within 30 to 60 days. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to receive financing from our customers or to provide customers with financing. This includes invoicing at the beginning of a subscription term with revenue recognized ratably over the contract period or multi-year on-premises licenses that are invoiced annually with a portion of the revenue recognized upfront.

As of June 30, 2019 and December 31, 2018, the balance of accounts receivable, net of the allowance for doubtful accounts, included $1.3 million and $1.4 million, respectively, of unbilled receivables from upfront recognition of revenue for certain multi-period on-premises software subscriptions that include both distinct software licenses and software support and services.

As of June 30, 2019 and December 31, 2018, unbilled receivables included in other long-term assets on our consolidated balance sheets were $494,000 and $592,000, respectively.

Unearned Revenue and Customer Arrangements with Termination Rights

We generally invoice our customers upfront for subscriptions and software support and services associated with perpetual licenses. Unearned revenue from those upfront billings is comprised of unearned revenue from cloud-based subscriptions, software support and services for on-premises subscriptions, software support and services associated with perpetual licenses and professional services to be performed in the future.

Because some of our arrangements with customers contain termination rights, the arrangements do not meet the definition of a contract under Accounting Standard Codification, or ASC, Topic 606, Revenue Recognition from Contracts with Customers, or ASC 606, and are not recorded as unearned revenue and instead are recorded as “customer arrangements with termination rights” on our consolidated balance sheets.

Refer to Note 13 – Unearned Revenue for further information on unearned revenue, changes in unearned revenue during the period, and customer arrangements with termination rights.

Deferred Commissions

We recognize an asset for the incremental costs of obtaining a contract with a customer. We have determined that certain sales incentive programs meet the requirements to be capitalized and we include those costs in current and non-current deferred commissions on our consolidated balance sheets.

Deferred commissions are amortized over the period commensurate with revenue recognition.

Changes in deferred commissions were as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Balance, beginning of the period	$	17,365	$	17,434	$	17,331	$	18,408
Deferral of commissions earned		4,535		3,696		8,591		6,794
Recognition of commission expense		(4,048)		(4,202)		(7,977)		(8,274)
Impairment of deferred commissions		(125)		-		(218)		-
Balance, end of the period	$	17,727	$	16,928	$	17,727	$	16,928

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Cash Equivalents

We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. As of June 30, 2019 and December 31, 2018, cash and cash equivalents consist of cash deposited with banks, money market funds and investments that mature within three months of their purchase.

Held-To-Maturity Investments

We determine the appropriate classification of our fixed income investments at the time of purchase and reevaluate their classifications each reporting period. Investments are classified as held-to-maturity since the Company has positive intent and the ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost.

Comprehensive Loss

Comprehensive loss includes all changes in equity (net assets) during a period from non-owner sources. For the three and six months ended June 30, 2019 and 2018, there were no differences between net loss and comprehensive loss. Therefore, the consolidated statements of comprehensive loss have been omitted.

Net Loss per Share of Common Stock

Basic net loss per common share is calculated by dividing the net loss by the weighted-average number of common shares outstanding during the period after repurchases but without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and potentially dilutive securities outstanding for the period determined using the treasury-stock and if-converted methods. For purposes of the diluted net loss per share calculation, unvested restricted stock and stock options are considered to be potentially dilutive securities. Because we have reported a net loss for the three and six months ended June 30, 2019 and 2018, the number of shares used to calculate diluted net loss per common share is the same as the number of shares used to calculate basic net loss per common share for those periods presented because the potentially dilutive shares would have been anti-dilutive if included in the calculation.

Software Development Costs Incurred in Connection with Software to be Sold or Marketed

The costs to develop new software products and enhancements to existing software products are expensed as incurred until technological feasibility has been established. We consider technological feasibility to have occurred when all planning, designing, coding and testing have been completed according to design specifications. Once technological feasibility is established, any additional costs would be capitalized. We believe our current process for developing software is essentially completed concurrent with the establishment of technological feasibility, and accordingly, no costs have been capitalized.

Internal Use Software

We capitalize costs incurred during the application development stage related to our internally used software. Such costs are primarily incurred by third-party vendors and consultants. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. Amounts capitalized in all periods presented were not significant.

All software development costs incurred in connection with our cloud offering, or SaaS, are also sold or marketed to partners or end customers, therefore we start capitalizing costs when technological feasibility is achieved. No costs were capitalized in any periods presented as we believe that our current process for developing software is essentially completed concurrent with the establishment of technological feasibility.

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Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful life of the property and equipment, determined to be three years for computers and equipment and software, five years for furniture and fixtures, and the lesser of the remaining lease term or estimated useful life for leasehold improvements. Expenditures for repairs and software support are charged to expense as incurred. Upon disposition, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is reflected as operating expenses in the consolidated statements of operations.

Leases

T he new leasing standard, Accounting Standards Codification 842, “Leases”, or ASC 842, requires us to record current and noncurrent lease liabilities and a right-of-use (“ROU”) asset on our condensed consolidated balance sheet for contractual arrangements that convey the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration . We adopted ASC 842 as of January 1, 2019 and, as permitted, we recorded lease liabilities and a ROU asset beginning March 31, 2019 and did not restate our prior periods.

We determine if an arrangement is a lease conveying the right to control identified property, plant, or equipment and whether the lease is operating or financing at the lease’s inception. We have determined that all of our leases are operating leases. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments under the lease arrangements. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at the lease commencement date to determine the present value of lease payments. The operating lease ROU asset also includes any advance lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense is recognized on a straight-line basis over the lease term. We have adopted the practical expedient as permitted by the new leasing standard to not recognize lease assets and lease liabilities for leases with a term of 12 months or less. Our leases generally separate lease components from nonlease components. However, where lease and nonlease components are combined in our lease arrangements, we have adopted the practical expedient to not separate the lease from the nonlease components. Refer to Note 12 - Leases for further information about our leases.

Goodwill

Long-Lived Assets with Finite Lives

Long-lived assets are reviewed for possible impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable. We evaluate the recoverability of each of our long-lived assets, including property and equipment, by comparison of its carrying amount to the future discounted cash flows we expect the asset to generate. If we consider the asset to be impaired, we measure the amount of any impairment as the difference between the carrying amount and the fair value of the impaired asset.

Stock-Based Compensation

We use the estimated grant-date fair value method of accounting in accordance with ASC Topic 718 Compensation—Stock Compensation . Fair value is determined using the Black-Scholes Model using various inputs, including our estimates of expected volatility, term and future dividends. We estimated the forfeiture rate based on our historical experience for annual grant years where the majority of the vesting terms have been satisfied.

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We recognize compensation costs for awards with service and performance vesting conditions and for our Employee Stock Purchase Plan, or ESPP, on an accelerated method over the requisite service period of the award. For stock options or restricted stock unit grants with no performance condition, we recognize compensation costs on a straight-line basis over the requisite service period of the award, which is generally the vesting term of four years.

Research and Development

Because we estimate that our software is essentially completed concurrent with the establishment of technological feasibility, we have charged all research and development to expense as incurred.

Advertising

Advertising costs are expensed and included in sales and marketing expense when incurred. Advertising expense for the three and six months ended June 30, 2019 and 2018 was not significant.

Income Taxes

We account for income taxes in accordance with ASC Topic 740, Income Taxes , under which deferred tax liabilities and assets are recognized for the expected future tax consequences of temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities and net operating loss and tax credit carryforwards. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

We use a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. A tax position is recognized when it is more likely than not that the tax position will be sustained upon examination, including resolution of any related appeals or litigation processes. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority. The standard also provides guidance on derecognition of tax benefits, classification on the balance sheet, interest and penalties, accounting in interim periods, disclosure and transition.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting bodies and adopted by us as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption.

Financial Instruments – Credit Losses

In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses – Measurement of Credit Losses on Financial Instruments, which introduces a model based on expected losses to estimate credit losses for most financial assets and certain other instruments. In addition, for available-for-sale debt securities with unrealized losses, the losses will be recognized as allowances rather than reductions in the amortized cost of the securities. The standard is effective for annual reporting periods beginning after December 15, 2019, with early adoption permitted for annual reporting periods beginning after December 15, 2018. Entities will apply the standard’s provisions by recording a cumulative-effect adjustment to retained earnings. We are evaluating the impact of the adoption on our consolidated balance sheet, results of operations, cash flows and disclosures . We intend to adopt ASU No. 2016-13 effective January 1, 2020.

Simplifying the Test for Goodwill Impairment

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment.” This ASU simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its

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carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. This ASU should be applied on a prospective basis. The ASU is effective for annual and interim reporting periods beginning after December 15, 2021. Early adoption is permitted. We do not expect the adoption of this ASU to have a material impact on our consolidated financial position, results of operations, or cash flows.

2. Significant Balance Sheet Components

Accounts Receivable, Net —Accounts receivable, net at June 30, 2019 and December 31, 2018 consisted of the following (in thousands):


	June 30, 2019		December 31, 2018
Accounts receivable - billed	$	38,467	$	60,037
Accounts receivable - unbilled		1,270		1,382
Allowance for doubtful accounts		(425)		(425)
Accounts receivable, net	$	39,312	$	60,994

Property and Equipment —Property and equipment at June 30, 2019 and December 31, 2018 consisted of the following (in thousands):


	June 30, 2019		December 31, 2018
Computers and appliances	$	14,000	$	13,517
Purchased software		4,789		4,711
Furniture and fixtures		1,725		1,695
Leasehold improvements		3,290		3,503
Total property and equipment		23,804		23,426
Accumulated depreciation and amortization		(17,945)		(16,380)
Total property and equipment—net	$	5,859	$	7,046

Prepaid expenses and other current assets at June 30, 2019 and December 31, 2018 included $5.9 million and $3.8 million of prepaid royalties, respectively. Other assets at June 30, 2019 and December 31, 2018 included $4.0 million and $3.4 million of prepaid royalties, respectively. The prepaid royalties were primarily associated with MobileIron Threat Defense.

Accrued Expenses —Accrued expenses at June 30, 2019 and December 31, 2018 consisted of the following (in thousands):


	June 30, 2019		December 31, 2018
Accrued commissions	$	3,802	$	4,398
Accrued stock-settled bonus		4,895		9,355
Employee Stock Purchase Plan liability		1,932		1,923
Other accrued payroll-related expenses		3,337		3,630
Accrued royalties		1,729		3,596
Other accrued liabilities		4,895		4,445
Total accrued expenses	$	20,590	$	27,347

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3. Fair Value Measurement

With the exception of our held-to-maturity fixed income investments, we report financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis in accordance with ASC 820, Fair Value Measurements. ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions and credit risk.

ASC 820 also establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three levels. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is available and significant to the fair value measurement. ASC 820 establishes and prioritizes three levels of inputs that may be used to measure fair value:


	—		Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.


	—		Level 2—Inputs are quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices that are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments.


	—		Level 3—Inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. The inputs require significant management judgment or estimation.

Our financial assets that are carried at fair value include cash and money market funds. We had no financial liabilities, or nonfinancial assets and liabilities that were required to be measured at fair value on a recurring basis, or that were measured at fair value as of June 30, 2019 or December 31, 2018.

Our financial instruments measured at fair value as of June 30, 2019 and December 31, 2018 were as follows:


	As of June 30, 2019
(in thousands)	Level 1		Level 2		Level 3		Total
Money market funds	$	30,209	$	—	$	—	$	30,209
Corporate debt securities		—		250		—		250
U.S. government agencies		—		4,815		—		4,815
Commercial paper		—		50,891		—		50,891
Total	$	30,209	$	55,956	$	—	$	86,165


	As of December 31, 2018
(in thousands)	Level 1		Level 2		Level 3		Total
Money market funds	$	36,617	$	—	$	—	$	36,617
Corporate debt securities		—		6,555		—		6,555
Commercial paper		—		53,598		—		53,598
Total	$	36,617	$	60,153	$	—	$	96,770

4. Investments

Our portfolio of fixed income securities consists of commercial paper, corporate debt securities, and U.S. government agencies. All our investments in fixed income securities are classified as held-to-maturity. These investments are carried at amortized cost.

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Our investments in fixed income securities as of June 30, 2019 and December 31, 2018 were as follows:



	As of June 30, 2019
	Amortized						Fair
(in thousands)	Cost		Gains		Losses		Value
Corporate debt securities	$	250	$	—	$	—	$	250
U.S. government agencies		4,815		—		—		4,815
Commercial paper		50,899		—		(8)		50,891
Total	$	55,964	$	—	$	(8)	$	55,956



	As of December 31, 2018
	Amortized						Fair
(in thousands)	Cost		Gains		Losses		Value
Corporate debt securities	$	6,556	$	—	$	(1)	$	6,555
Commercial paper		53,600		1		(3)		53,598
Total	$	60,156	$	1	$	(4)	$	60,153

The following table summarizes the balance sheet classification of our investments:


	As of June 30,		As of December 31,
(in thousands)	2019		2018
Cash equivalents	$	54,265	$	59,156
Short-term investments		1,699		1,000
Total investments	$	55,964	$	60,156

The gross amortized cost and estimated fair value of our held-to-maturity investments by contractual maturity are shown below. Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.



	As of June 30, 2019				As of December 31, 2018
	Gross				Gross
	Amortized		Fair		Amortized		Fair
(in thousands)	Cost		Value		Cost		Value
Due in one year or less	$	55,964	$	55,956	$	60,156	$	60,153
Due after one year through five years		—		—		—		—
Total	$	55,964	$	55,956	$	60,156	$	60,153

We monitor our investment portfolio for impairment on a periodic basis. In order to determine whether a decline in fair value is other-than-temporary, we evaluate, among other factors: the duration and extent to which the fair value has been less than the carrying value; our financial condition and business outlook, including key operational and cash flow metrics, current market conditions and future trends in our industry; our relative competitive position within the industry; and our intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value. A decline in the fair value of the security below amortized cost that is deemed other-than-temporary is charged to earnings, resulting in the establishment of a new cost basis for the affected securities. In the three and six months ended June 30, 2019, we had an insignificant amount of unrealized gains or losses, and we did not recognize any other-than-temporary impairments .

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5. Restructuring Expense

We initiated a restructuring plan in the first quarter of 2019 under which we have terminated certain employees and exited an office facility. The restructuring plan was undertaken to better align resources with company initiatives and to reduce management and other costs.

The following table summarizes the activity in accrued restructuring expense, included in accrued expenses, for the three and six months ended June 30, 2019 (in thousands):



		Severance and Other Restructuring Costs
		Three Months Ended		Six Months Ended
	June 30, 2019
Accrued restructuring, beginning of the period	$	449	$	—
Provision for restructuring expense		946		1,561
Cash payments		(348)		(514)
Accrued restructuring, end of the period	$	1,047	$	1,047

We expect to pay the above $1.0 million accrued restructuring expense through June 30, 2020.

In connection with the exit of an office facility, we recorded a $1.3 million charge for the impairment of right-of-use assets and $170,000 of expense for the write-off of fixed assets in restructuring expense in the three months ended June 30, 2019.

6. Line of Credit

We have a $20.0 million revolving line of credit with a financial institution that can be used to (a) borrow for working capital and general business requirements, (b) issue letters of credit, and (c) enter into foreign exchange contracts. Amounts borrowed accrue interest at a floating per annum rate equal to the prime rate. A default interest rate shall apply during an event of default at a rate per annum equal to 5% above the otherwise applicable interest rate. The line of credit is collateralized by substantially all of our assets, except intellectual property, and requires us to comply with working capital, net worth and other covenants, including limitations on indebtedness and restrictions on dividend distributions, among others, but does allow for the repurchase of a limited amount of our common stock as contemplated by a share repurchase program approved by the Board of Directors (the “Board”) in October 2018, and the borrowing capacity is limited to eligible accounts receivable. We are required to maintain an adjusted quick ratio (defined as the ratio of current assets to current liabilities minus deferred revenue) of at least 1.25.

In May 2015, we issued a letter of credit for $1.5 million as a security deposit for a new lease for office space in a building in Mountain View, California, and in November 2017 we issued a bank guarantee to a customer of approximately $3.0 million that can be drawn if we become insolvent or bankrupt. The issuances of the letter of credit and bank guarantee reduced the borrowing capacity under our line of credit to approximately $15.5 million.

In June 2019, we amended our revolving line of credit and extended its maturity date to June 2020.

There were no other outstanding amounts under the line of credit at June 30, 2019 or December 31, 2018 and we were in compliance with all financial covenants.

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7. Preferred Stock

We were authorized to issue up to 10,000,000 shares of convertible preferred stock as of June 30, 2019 and December 31, 2018. No shares of convertible preferred stock were issued and outstanding as of June 30, 2019 or December 31, 2018.

8. Common Stock

We were authorized to issue 300,000,000 shares of common stock with a par value of $0.0001 per share as of June 30, 2019 and December 31, 2018. Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends out of funds legally available therefore, when and if declared by the board of directors, subject to the approval and priority rights of holders of all classes of preferred stock outstanding.

As of June 30, 2019 and December 31, 2018, our shares of common stock reserved for issuance were as follows:



	June 30,	December 31,
	2019	2018
Options outstanding	3,744,631	4,496,557
Unvested restricted stock units outstanding	14,904,876	12,303,913
Shares available for grant under the 2014 Equity Incentive Plan and 2015 Inducement Plan	1,472,285	2,337,545
Shares available for purchase under the Employee Stock Purchase Plan	908,715	364,762
Total	21,030,507	19,502,777

Repurchase Program

In October 2018, our Board of Directors approved a common stock repurchase program (“Repurchase Program”) whereby the Company is authorized to purchase up to a maximum of $25 million of its common stock, subject to compliance with applicable law and the limitations in the Company’s credit facilities on stock repurchases.

The authorization allows repurchases from time to time in the open market or in privately negotiated transactions. The amount and timing of repurchases made under the Repurchase Program will depend on a variety of factors, including available liquidity, cash flow and market conditions. Shares can be purchased through the Repurchase Program through October 2020, unless extended or shortened by our Board of Directors. The Repurchase Program does not obligate us to acquire any particular amount of common stock and the program may be modified or suspended at any time at our discretion. The repurchases would be funded from available working capital and are subject to compliance with the terms and limitations of the Company’s credit facilities.

In the three months ended June 30, 2019, we repurchased 542,220 shares of common stock at an average price of $5.51 per share for a total cost of $3.0 million under the Repurchase Program. In the six months ended June 30, 2019, we repurchased 1,281,186 shares of common stock at an average price of $5.14 per share for a total cost of $6.6 million under the Repurchase Program. The maximum remaining dollar value of shares yet to be purchased under the Repurchase Program was $14.6 million at June 30, 2019. This excludes shares repurchased to settle employee tax withholding related to the vesting of our stock-settled bonus and RSUs .

9. Share Based Awards

2008 Stock Plan

Our 2008 Stock Plan, or 2008 Plan, which expired on June 12, 2014, provided for the grant of incentive and nonstatutory stock options to employees, nonemployee directors and consultants of the Company. Options granted under

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the 2008 Plan generally become exercisable within three to four years following the date of grant and expire 10 years from the date of grant.

Our 2008 Plan was terminated following the date our 2014 Equity Incentive Plan, or our 2014 Plan, became effective. Any outstanding stock awards under our 2008 Plan will continue to be governed by the terms of our 2008 Plan and applicable award agreements.

2014 Equity Incentive Plan

Our 2014 Plan provides for the grant of incentive stock options, or ISOs, within the meaning of Section 422 of the Internal Revenue Code, or the Code, to our employees and our parent and subsidiary corporations’ employees, and for the grant of nonstatutory stock options, or NSOs, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance-based stock awards, and other forms of equity compensation to our employees, directors and consultants. Additionally, our 2014 Plan provides for the grant of performance cash awards to our employees, directors and consultants.

The initial number of shares of our common stock available to be issued under our 2014 Plan was 8,142,857, which number of shares will be increased by any shares subject to stock options or other stock awards granted under the 2008 Stock Plan that would have otherwise returned to our 2008 Stock Plan (such as upon the expiration or termination of a stock award prior to vesting), not to exceed 16,312,202.

The number of shares of our common stock reserved for issuance under our 2014 Plan automatically increase on January 1 of each year, beginning on January 1, 2015 and continuing through and including January 1, 2024, by 5% of the total number of shares of our capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by our board of directors. On January 1, 2019, we increased the number of shares of common stock reserved for issuance under our 2014 Plan by 5,310,327 shares, which was 5% of the total number of shares of common stock outstanding at December 31, 2018.

Amended and Restated 2015 Inducement Plan

On December 20, 2015, our board of directors adopted our 2015 Inducement Plan, or the Inducement Plan, to reserve 1,600,000 shares of our common stock to be used exclusively for grants of awards to individuals that were not previously employees or directors of the Company. The terms and conditions of the Inducement Plan are substantially similar to our stockholder-approved 2014 Plan. On January 5, 2016, our board of directors approved the amendment and restatement of the Inducement Plan to increase the share reserve under the Inducement Plan to 1,970,000 shares of our common stock. As of June 30, 2019, there were 882,813 stock options and restricted stock units outstanding under the Inducement Plan.

2014 Employee Stock Purchase Plan

The purpose of our 2014 Employee Stock Purchase Plan, or ESPP, is to secure the services of new employees, to retain the services of existing employees and to provide incentives for such individuals to exert maximum efforts toward our success and that of our customers, other partners, and shareholders. Our ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Code. Our ESPP permits eligible employees to purchase our common stock through payroll deductions, which may not exceed 15% of the employee’s base compensation. Stock may be purchased under the plan at a price equal to 85% of the fair market value of our common stock on either the first day of the offering or the last day of the applicable purchase period, whichever is lower.

As of June 30, 2019 and December 31, 2018, approximately 908,715 and 364,762 shares of common stock were available for future issuance under our ESPP, respectively. The number of shares of our common stock reserved for issuance under our ESPP increase automatically each year, beginning on January 1, 2015 and continuing through and including January 1, 2024, by the lesser of (i) 1% of the total number of shares of our common stock outstanding on December 31 of the preceding calendar year; (ii) 2,142,857 shares of common stock; or (iii) such lesser number as determined by our board of directors. Shares subject to purchase rights granted under our ESPP that terminate without having been exercised in full will not reduce the number of shares available for issuance under our ESPP. On January 1,

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2019, we increased the number of shares available for issuance under the ESPP by 1,062,065 shares, which was 1% of the total number of shares of our common stock outstanding as of December 31, 2018.

Restricted Stock Units

In 2014 we began granting restricted stock units under our 2014 Plan. For stock-based compensation expense, we measure the value of the restricted stock units based on the fair value of our common stock on the date of grant. Our restricted stock unit grants are subject to service conditions and we expense the fair value of those shares on a straight-line basis over their vesting periods.

Our restricted stock unit activity for the six months ended June 30, 2019 was as follows:


	Restricted Stock Units
		Weighted-
		Average
	Number of	Grant Date
	Shares	Fair Value
Unvested, December 31, 2018	12,303,913	$	4.63
Granted	8,753,793		5.29
Vested	(4,731,188)		4.77
Forfeitures	(1,421,642)		4.61
Unvested, June 30, 2019	14,904,876	$	4.98

Bonus Plans

In April 2017, the Compensation Committee of our board of directors approved the 2017 Executive Bonus Plan and 2017 Non-Executive Bonus Plan, or collectively, the 2017 Bonus Plans. The 2017 Bonus Plans provided for the issuance of shares of unrestricted common stock to employees based on the achievement of certain 2017 Company metrics. We issued 1,220,822 shares of unrestricted common stock in the first quarter of 2018, after withholding 752,564 shares to cover employee payroll taxes which we paid in cash totaling $3.7 million.

In March 2018, the Compensation Committee of our board of directors approved the 2018 Non-Executive Bonus Plan and in April 2018, the Compensation Committee of our board of directors approved the 2018 Executive Bonus Plan, or collectively, the 2018 Bonus Plans. The 2018 Bonus Plans provided for the issuance of shares of unrestricted common stock to employees based on the achievement of certain 2018 Company metrics. We issued 1,338,220 shares of unrestricted common stock in the first quarter of 2019, after withholding 832,635 shares to cover employee payroll taxes which we paid in cash totaling $4.1 million.

In March 2019, the Compensation Committee of our board of directors approved the 2019 Non-Executive Bonus Plan and the 2019 Executive Bonus Plan, or collectively, the 2019 Bonus Plans. The 2019 Bonus Plans provide for the issuance of shares of unrestricted common stock to employees based on the achievement of certain 2019 Company metrics.

Shares issued under the aforementioned Bonus Plans are issued from our 2014 Plan and reduce the 2014 Plan shares available for issuance.

We record stock-based compensation expense related to the Bonus Plans over the service period of eligible employees based on forecasted performance relative to the Company target metrics. To the extent that updated estimates of bonus expense differ from original estimates, the cumulative effect on current and prior periods of those changes is recorded in the period those estimates are revised.

In the three months ended June 30, 2019, we recorded $2.2 million of stock-based compensation expense under the 2019 Bonus Plans, which included a $211,000 cumulative catchup credit based on adjustments to expected performance relative to Company target metrics. In the three months ended June 30, 2018, we recorded $2.2 million of stock-based compensation expense under the 2018 Bonus Plans. In the six months ended June 30, 2019, we recorded $1.1 million of stock-based compensation expense under the 2018 Bonus Plans and $4.9 million of stock-based

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compensation expense under the 2019 Bonus Plans. In the six months ended June 30, 2018, we recorded $1.9 million of stock-based compensation expense under the 2017 Bonus Plans and $4.6 million of stock-based compensation expense under the 2018 Bonus Plans.

Stock Options

Stock option activity under the 2008 Plan, 2014 Plan and 2015 Inducement Plan for the six months ended June 30, 2019 was as follows:


		Options Outstanding
						Weighted-
	Number of					Average	Aggregate
	Shares		Weighted-			Remaining	Intrinsic
	Available	Number of	Average		Contractual		Value
	for Issuance	Shares	Exercise Price			Term (Years)	(In thousands)
Balance—December 31, 2018	2,337,545	4,496,557	$	5.02		4.98	$	2,446
Authorized	5,310,327	—
Stock options granted	(125,000)	125,000		4.52
Issuance of shares under Bonus Plans	(2,170,855)	—
Shares withheld from net settlement of restricted stock units	962,042
Restricted stock units granted	(6,582,938)	—
Exercised	—	(557,404)		3.09
Stock options canceled	319,522	(319,522)		6.79
Restricted stock units canceled	1,421,642	—
Balance—June 30, 2019	1,472,285	3,744,631	$	5.14		4.84	$	5,160
Vested and exercisable—June 30, 2019		3,112,330	$	5.29		4.03	$	4,036
Vested and expected to vest(1)—June 30, 2019		3,634,400	$	5.16		4.72	$	4,971

(1)

Options expected to vest reflect an estimated forfeiture rate.

Our stock-based compensation expense was recorded in the following cost and expense categories (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Cost of revenue	$	1,266	$	1,067	$	2,807	$	2,449
Research and development		3,625		3,343		7,736		8,110
Sales and marketing		2,064		2,159		4,338		4,688
General and administrative		1,902		1,851		4,266		3,866
Total	$	8,857	$	8,420	$	19,147	$	19,113

We used the Black-Scholes Model to estimate the fair value of our stock options granted to employees with the following assumptions:


	Six Months Ended
	June 30,
	2019	2018
Expected dividend yield	—	—
Risk-free interest rate	2.5%	2.7%
Expected volatility	50%	50%
Expected life (in years)	6.1	6.1

No stock options were granted in the three months ended June 30, 2019 or 2018.

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We used the Black-Scholes Model to estimate the fair value of our Employee Stock Purchase Plan awards with the following assumptions:


	Six Months Ended
	June 30,
	2019	2018
Expected dividend yield	—	—
Risk-free interest rate	2.5%	2.0%
Expected volatility	42%	52%
Expected life (in years)	1.3	1.3

No ESPP purchase periods began in the three months ended June 30, 2019 or 2018.

As required by Topic 718 Compensation—Stock Compensation , we estimate expected forfeitures and recognize compensation costs only for those equity awards expected to vest.

As of June 30, 2019, unrecognized stock-based compensation expense and its remaining weighted-average recognition period was as follows:


	Unrecognized		Remaining
	Stock-based		Weighted-Average
	Compensation		Recognition
	Expense		Period
	(in millions)		(in years)
Stock options	$	1.0	2.9
Restricted stock units		54.8	3.0
ESPP		1.4	1.6
Total	$	57.2

10. Employee Benefit Plan

We maintain a defined contribution 401(k) plan. The plan covers all full-time U.S. employees over the age of 21. Each employee can contribute up to $19,000 annually (with a $6,000 catch up contribution limit for employees aged 50 or older). We have the option to provide matching contributions, but have not done so to date.

11. Commitments and Contingencies

Litigation

We continually evaluate uncertainties associated with litigation and record a charge equal to at least the minimum estimated liability for a loss contingency when both of the following conditions are met: (i) information available prior to issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and (ii) the loss or range of loss can be reasonably estimated. If we determine that a loss is possible and a range of the loss can be reasonably estimated, we disclose the range of the possible loss in the Notes to the Consolidated Financial Statements. We evaluate, on a quarterly basis, developments in our legal matters that could affect the amount of liability that has been previously accrued, if any, and the matters and related ranges of possible losses disclosed, and make adjustments and changes to our disclosures as appropriate. Significant judgment is required to determine both likelihood of there being and the estimated amount of a loss related to such matters. Until the final resolution of such matters, there may be an exposure to loss, and such amounts could be material. For legal proceedings for which there is a reasonable possibility of loss (meaning those losses for which the likelihood is more than remote but less than probable), we have determined we do not have material exposure on an aggregate basis.

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Indemnification

Under the indemnification provisions of our standard sales related contracts, we agree to defend and/or settle claims brought by third parties against our customers and channel partners alleging that our software or the customer’s use thereof infringes the third-party’s intellectual property right, such as a patent right. These indemnification obligations are typically not subject to limitation; however if we believe such a claim is reasonably likely to occur and if it is commercially impractical for us to either procure the right for the customer to continue to use our software or modify our software so that it’s not infringing, we can terminate the customer agreement and refund the customer a portion of the license fees paid (prorated over the three year period from initial delivery for software licensed on a perpetual basis). We also on occasion indemnify our customers for other types of third-party claims. In addition, we indemnify our officers, directors, and certain key employees while they are serving in such capacities in good faith. Through June 30, 2019, we have not received any material written claim for indemnification.

12. Leases

We have operating leases for office facilities and data centers. Our leases have remaining lease terms of less than one year to approximately five years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the leases within one year.

The operating lease cost for both the three months ended June 30, 2019 and 2018 was $1.7 million. The operating lease cost for both the six months ended June 30, 2019 and 2018 was $3.4 million. The future maturities of lease liabilities as of June 30, 2019 are as follows (in thousands):


Year
2019 (remaining)	$	3,618
2020		5,953
2021		4,398
2022		3,236
2023		1,320
Thereafter		126
Total lease payments		18,651
Less: imputed interest		(1,542)
Total lease liability	$	17,109

All of our leases are classified as operating leases. In the three months ended June 30, 2019, the weighted average discount rate used to determine the lease liabilities was 5.3% and the weighted average remaining lease term was 39 months.

As previously disclosed in our 2018 Annual Report on Form 10-K and under the previous lease accounting standard, future minimum lease payments for operating leases having initial or remaining noncancellable lease terms in excess of one year were as follows as of December 31, 2018 (in thousands):


Year
2019	$	7,144
2020		5,553
2021		4,083
2022		3,074
2023		1,163
Total	$	21,017

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13. Unearned Revenue

Changes in unearned revenue were as follows for the three and six months ended June 30, 2019 and 2018:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands)	2019		2018		2019		2018
Balance, beginning of period	$	102,879	$	80,925	$	105,837	$	77,022
Billings, excluding billings for customer arrangements with termination rights		49,477		44,075		89,800		88,288
Additions to unearned revenue upon expiration of termination rights		5,062		4,204		10,062		8,356
Recognition of revenue, net of change in unbilled accounts receivable*		(51,019)		(46,270)		(99,300)		(90,732)
Balance, end of period	$	106,399	$	82,934	$	106,399	$	82,934

* Reconciliation to Revenue Reported per Condensed Consolidated Statement of Operations:	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands)	2019		2018		2019		2018
Revenue billed as of the end of period	$	51,019	$	46,270	$	99,300	$	90,732
Increase (decrease) in total unbilled accounts receivable		(154)		(141)		(353)		(914)
Revenue Reported in Condensed Consolidated Statement of Operations	$	50,865	$	46,129	$	98,947	$	89,818

Revenue allocated to remaining performance obligations includes unearned revenue plus contractually committed amounts that will be invoiced and recognized as revenue in future periods, but excludes amounts invoiced and not recognized as revenue under customer arrangements that contain termination rights. Remaining performance obligations were $114.8 million as of June 30, 2019, of which we expect to recognize approximately 72% as revenue over the next 12 months and the remainder thereafter.

As of June 30, 2019 and December 31, 2018, the balance of customer arrangements that contain termination rights was $17.0 million and $19.4 million, respectively.

14. Segment and Disaggregated Revenue Information

We conduct business globally. Our chief operating decision maker (Chief Executive Officer) reviews financial information presented on a consolidated basis accompanied by information about revenue by geographic region for purposes of allocating resources and evaluating financial performance. We have one business activity, software and services to manage and secure mobile devices, applications and content, and there are no segment managers who are held accountable for operations, operating results and plans for levels, components or types of products or services below the consolidated unit level. Accordingly, we are considered to be in a single reportable segment and operating unit structure.

Approximately $2.2 million and $2.5 million as of June 30, 2019 and December 31, 2018, or 38% and 35%, respectively, of our net Property and Equipment was attributable to our operations located in India. Substantially all other long-lived assets were attributable to operations in the United States.

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Revenue by geographic region based on the billing address was as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands)	2019		2018		2019		2018
Revenue
United States	$	21,861	$	20,640	$	41,473	$	39,407
International		29,004		25,489		57,474		50,411
Total	$	50,865	$	46,129	$	98,947	$	89,818

We recognized revenue of $8.4 million, or 17% of total revenue, and $7.3 million, or 16% of total revenue, from customers with a billing address in Germany for the three months ended June 30, 2019 and 2018, respectively. We recognized revenue of $16.1 million, or 16% of total revenue, and $14.3 million, or 16% of total revenue, from customers with a billing address in Germany for the six months ended June 30, 2019 and 2018, respectively. No other country, except for the United States and Germany, exceeded 10% of total revenue in the three or six months ended June 30, 2019 or 2018.

Revenue from recurring and non-recurring contractual arrangements was as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands)	2019		2018		2019		2018
Cloud subscriptions - ratable	$	16,311	$	11,832	$	31,572	$	22,982
On-premise subscriptions - point-in-time		7,478		5,458		11,430		8,995
On-premise subscriptions - ratable		4,512		3,949		8,970		7,835
Software support on perpetual licenses - ratable		16,196		15,652		32,306		30,899
Recurring revenue		44,497		36,891		84,278		70,711
Perpetual license - point-in-time		4,749		8,422		12,168		17,326
Professional services - point-in-time		1,619		816		2,501		1,781
Non-recurring revenue		6,368		9,238		14,669		19,107
Total revenue	$	50,865	$	46,129	$	98,947	$	89,818

Recurring revenue in the table above is defined as revenue that requires a contract renewal for the service or license to continue beyond the initial or current contract term and additional revenue will be recognized if that renewal occurs. Non-recurring revenue is defined as sales of perpetual license or professional services that are one-time in nature and does not need to be renewed.

15. Net Loss per Share

The following table sets forth the computation of basic and diluted net loss per share for the three and six months ended June 30, 2019 and 2018 (in thousands, except per share data):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Numerator:
Net loss	$	(15,589)	$	(12,007)	$	(32,689)	$	(28,377)
Denominator:
Weighted–average shares used to compute basic and diluted net loss per share		109,245		101,313		108,292		100,003
Basic and diluted net loss per share	$	(0.14)	$	(0.12)	$	(0.30)	$	(0.28)

Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding for the period. Because we have reported a net loss for the three and six months ended June 30, 2019 and

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2018, the number of shares used to calculate diluted net loss per common share is the same as the number of shares used to calculate basic net loss per common share for those periods presented because the potentially dilutive shares would have been anti-dilutive if included in the calculation.

The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares outstanding because such securities have an antidilutive impact due to losses reported (in common stock equivalent shares):


	June 30,	June 30,
	2019	2018
Stock options outstanding, net of unvested exercised stock options	3,744,631	6,398,991
Unvested restricted stock units	14,904,876	13,654,421
ESPP shares	491,151	679,559
Stock-settled bonus shares	473,727	616,375
Total potentially dilutive securities	19,614,385	21,349,346

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those contained in or implied by any forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in “Special Note Regarding Forward-Looking Statements” and “Risk Factors.” The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date hereof.

Overview

Mobile and cloud computing are the catalysts for modern work. Mobile lets employees make better decisions and take faster actions because the information and tools they need to do their jobs are always available. Cloud lets developers build innovative services quickly and lets employees start using them easily.

However, this comes with new risks. The traditional, locked-down, perimeter-based approach to security no longer applies to mobile endpoints and cloud services that operate outside the network. Data no longer resides behind the firewall on locked-down PCs and servers, and so it cannot be secured by firewall-based solutions. Instead, data is spread across an information fabric that spans a wide variety of modern endpoints including Android, iOS, macOS, and Windows 10, as well as cloud services such as Box, Concur, Microsoft Office 365, NetSuite, Salesforce, Workday and custom cloud applications.

This shift to mobile and cloud technologies introduces three main challenges that CIOs and CISOs need to address:

Drive business innovation by allowing employees to securely use mobile, cloud, and other endpoints for work;

Enforce corporate security without impacting the user experience;

Redefine enterprise security strategies to address a perimeter-less environment.

To solve these challenges, many organizations are in the early stages of investigating a zero trust enterprise security framework. Zero trust assumes that bad actors are already in the network and secure access is determined by an “always verify, never trust” approach.

We are a leader in defining a zero trust, mobile-centric framework, one that goes beyond traditional approaches to security by utilizing a more comprehensive set of attributes to grant secure access. At MobileIron, we validate the device, establish user context, check app authorization, verify the network, and detect and mitigate threats before granting secure access to a device or user. We believe traditional identity-based and gateway approaches to zero trust fall short because they provide only limited visibility into devices, apps, and threats.

We are redefining how customers build a secure foundation in a perimeter-less world. Our security platform is built on the foundation of unified endpoint management (UEM) with additional zero trust capabilities including single sign-on (SSO), multifactor authentication (MFA), and mobile threat defense (MTD). Together they create a more seamless mobile experience by automating access control decisions across users, endpoints, operating systems, clouds, networks, threats, and vulnerabilities so that only trusted resources can access corporate data.

Our customers can deploy MobileIron as either a cloud service or on-premises software. They can choose subscription-based or perpetual licensing. We primarily target midsize and large enterprises around the world across a broad range of industries including financial services, government, healthcare, legal, manufacturing, professional services, retail, technology, and telecommunications.

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Our total revenue in the three and six months ended June 30, 2019 was $50.9 million and $98.9 million, respectively, compared to $46.1 million and $89.8 million in the three and six months ended June 30, 2018, respectively, representing an increase of 10%.

Revenue from cloud services, licenses and software support and services represented 32%, 24% and 44% of total revenue, respectively, in the three months ended June 30, 2019, and 26%, 30% and 44% of total revenue, respectively, in the three months ended June 30, 2018. Revenue from cloud services, licenses and software support and services represented 32%, 24% and 44% of total revenue, respectively, in the six months ended June 30, 2019, and 26%, 29% and 45% of total revenue, respectively, in the six months ended June 30, 2018. This represents a continuing mix shift in our business. Revenue from recurring sources, which includes revenue from the license component of on-premise term subscriptions, cloud services, and software support on perpetual and on-premise term licenses, was 87% and 85% of total revenue in the three and six months ended June 30, 2019, respectively, compared to 80% and 79% of total revenue in the three and six months ended June 30, 2018, respectively.

Our cloud services revenue in the three months ended June 30, 2019 and 2018 was $16.3 million and $11.8 million, respectively, representing an increase of 38%. Our cloud services revenue in the six months ended June 30, 2019 and 2018 was $31.6 million and $23.0 million, respectively, representing an increase of 37%. This growth reflects our customers’ preference to purchase cloud services and contributions from MobileIron Threat Detection and Access. When we sell our cloud solutions on a subscription basis, we typically offer 12 months or longer terms and bill in advance.

Our license revenue in the three months ended June 30, 2019 and 2018 was $12.2 million and $13.9 million, respectively, representing a decrease of 12%. Our license revenue in the six months ended June 30, 2019 and 2018 was $23.6 million and $26.3 million, respectively, representing a decrease of 10%. The decline in license revenue was primarily due to a decrease in revenue from perpetual licenses, partially offset by an increase in license fees recognized from on-premises subscriptions. We have seen a decrease in demand for our perpetual licenses and a mix shift in favor of subscriptions rather than perpetual licenses.

Our software support and services revenue in the three months ended June 30, 2019 and 2018 was $22.3 million and $20.4 million, respectively, representing an increase of 9%. Our software support and services revenue in the six months ended June 30, 2019 and 2018 was $43.8 million and $40.5 million, respectively, representing an increase of 8%. Software support and services revenue includes support of perpetual license customers, the support component of on-premise subscriptions, and professional services. The growth rate of software support and services revenue is primarily dependent on growth in our installed base of customers that purchase perpetual licenses or on-premises subscriptions, renewals of on-premises subscriptions and software support on perpetual licenses, and purchases of professional services as part of our solutions.

Our Annual Recurring Revenue (or “Total ARR”) at June 30, 2019 was $172.0 million compared to $145.1 million at June 30, 2018, representing a growth rate of 19%. See “Key Metrics and Non-GAAP Financial Information” for more information about ARR.

We sell a significant portion of our products through our channel partners, including resellers, service providers and system integrators . Our sales force develops sales opportunities and works closely with our channel partners to sell our solutions. We have a high touch sales force focused on large organizations, inside sales teams focused on mid-sized enterprises and sales teams that work with service providers that focus on smaller businesses. We prioritize our internal sales and marketing efforts on large organizations because we believe that they represent the largest potential opportunity.

We believe that our market opportunity is large, and sales to customers outside of the United States will remain a significant opportunity for future growth. In the six months ended June 30, 2019 and the full years of 2018 and 2017, 58 %, 58% and 53%, respectively, of our total revenue was generated from customers located outside of the United States, primarily those located in Europe. International market trends that may affect sales of our products and services include heightened concerns and legal requirements relating to data security and privacy, the importance of execution on our international channel partner strategy, the importance of recruiting and retaining sufficient international personnel, the effect of exchange rates, and political and financial market instability.

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Since 2016, we have focused on driving more efficiency in our business. However, we have continued to incur net losses. We incurred net losses of $32.7 million, $43.1 million and $53.4 million in the six months ended June 30, 2019, and the full years 2018 and 2017, respectively. As a result of this, we do not expect to be profitable for the foreseeable future under our current operating plan. Future profitability is primarily dependent on revenue growth, which may be challenging for a number of reasons including likely continued mix shift towards cloud subscription licensing, increasing and entrenched competition, product features, changes in our pricing model, the amount of revenue we generate from sales of partner solutions that bear royalties, our ability to continue to develop and evolve our products, any failure to capitalize on market opportunities, and the ability of our sales organization to retain its key employees and leadership team. Future profitability is also dependent on our ability to drive efficiencies into the business and to manage our expenses, which continue to be impacted by stock-based compensation charges from RSU grants and stock-settled bonuses. We will also need to increase operating efficiency, which may be challenging given our operational complexity. Further, the new revenue accounting standard may make our financial results more difficult to predict.

Critical Accounting Policies

The preparation of financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions in the preparation of our consolidated financial statements and accompanying notes. Actual results could differ from those estimates. A significant change to our critical accounting policies from those accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC was the adoption of ASC 842, which impacted our accounting for leases.

Recent Accounting Pronouncements

For discussion on recent accounting pronouncements, see “Summary of Significant Accounting Policies” under Note 1 “Description of Business and Significant Accounting Policies” included in Item 1, “Financial Statements” of Part I of this Quarterly Report on Form 10-Q.

Application of Critical Accounting Policies

Our consolidated financial statements and accompanying notes are prepared in accordance with U.S. GAAP. Preparing consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies.

Revenue Recognition

We derive revenue from software-related arrangements consisting of perpetual software licenses, post-contract customer support for such licenses, or PCS or software support, including when and if available updates, and professional services such as consulting and training services. We also offer our software as term-based licenses and cloud-based arrangements.

Judgment is also required to determine the stand-alone selling price (“SSP") for each distinct performance obligation. We use a single amount to estimate SSP for items that are not sold separately, including on-premises licenses sold with software support. We use a range of amounts to estimate SSP when we sell our products and services separately and need to determine whether there is a discount that needs to be allocated based on the relative SSP of the various products and services.

We typically have more than one SSP for individual products and services due to the stratification of those products and services by customers and circumstances. In these instances, we may use information such as the size of the customer in determining the SSP.

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Our products are sometimes sold with a right of refund which we have to consider when estimating the amount of revenue to recognize.

Commissions

Current accounting principles require us to defer commission costs and amortize them in a manner consistent with how we recognize revenue. Key judgments that impact our commission expense include estimating our customer life and the determination of the impairment of commission assets we deem to be unrecoverable.

Goodwill

We record the excess of the acquisition purchase price over the fair value of the tangible and identifiable intangible assets acquired as goodwill. We perform an impairment test of our goodwill in the third quarter of our fiscal year, or more frequently if indicators of potential impairment arise. We have a single reporting unit and consequently evaluate goodwill for impairment based on an evaluation of the fair value of the Company as a whole. We evaluated our goodwill for impairment in 2018 and 2017 and observed no impairment indicators. As part of this, we observed that the fair value of the Company as a whole is substantially in excess of its carrying value, including goodwill.

Stock-Based Compensation

Stock-based compensation costs related to restricted stock and stock options granted to employees are measured at the date of grant based on the estimated fair value of the award, net of estimated forfeitures. We estimate the grant date fair value, and the resulting stock-based compensation expense, using the Black-Scholes option-pricing model. For stock awards, we recognize compensation costs on a straight-line basis over the requisite service period of the award, which is generally the vesting term of four years.

We estimate the fair value of the rights to acquire stock under our ESPP using the Black-Scholes option pricing formula. Our ESPP typically provides for consecutive 24 month offering periods, consisting of four tranches. We recognize compensation expense on an accelerated-graded basis over the employee’s requisite service period. We account for the fair value of restricted stock units, or RSUs, using the closing market price of our common stock on the date of grant. RSUs typically vest ratably on a quarterly basis over one to four years.

Stock-based compensation expense associated with our stock-settled bonus program is recognized on a straight-line basis over the required service period and the expense is evaluated each quarter based on our forecast of the Company’s performance relative to the metrics that determine the bonus pool.

Income Taxes

We account for income taxes in accordance with ASC Topic 740, Income Taxes, under which deferred tax liabilities and assets are recognized for the expected future tax consequences of temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities and net operating loss and tax credit carryforwards. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

We currently have a full valuation allowance against our U.S. net deferred tax assets, which was $104.2 million as of December 31, 2018. We continue to monitor the relative weight of positive and negative evidence of future profitability in relevant jurisdictions. The allowance will be released if evidence indicates that it becomes more likely than not that the tax asset may be utilized.

Key Metrics and Non-GAAP Financial Information

To supplement our financial results presented on a U.S. GAAP basis, we provide investors with certain non-GAAP financial measures, including non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per share and free cash flow. These non-GAAP financial measures exclude stock-based compensation, amortization of intangible assets, and restructuring expense.

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Stock-based compensation expenses

In our non-GAAP financial measures, we have excluded the effect of stock-based compensation expenses. We exclude stock-based compensation expense because it is non-cash in nature and excluding this expense provides meaningful supplemental information regarding our operational performance. In particular, because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under FASB ASC Topic 718, we believe that providing non-GAAP financial measures that exclude this expense allows investors the ability to make more meaningful comparisons between MobileIron operating results and those of other companies. Stock-based compensation expenses will recur in future periods.

Amortization of intangible assets

In our non-GAAP financial measures, we have excluded the effect of the amortization of intangible assets. Amortization of intangible assets can be significantly affected by the timing and size of acquisitions of companies or technology. Beginning with the second quarter of 2018, we no longer had amortizing intangible assets.

Restructuring expense

In our non-GAAP financial measures, we have excluded the effect of expenses associated with the exit of one of our office facilities and severance and other expenses related to reductions in our workforce. Restructuring expense may recur in the future; however, the timing and amounts are difficult to predict.

Non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating loss, non-GAAP operating margin, non-GAAP net loss, and non-GAAP net loss per share

We believe that the exclusion of stock-based compensation expense, the amortization of intangible assets, and restructuring expense from various gross profit, gross margin, operating income (loss), operating margin, net income (loss), and net income (loss) per share provides useful measures for management and investors. Because stock-based compensation, the amortization of intangible assets and restructuring expense have been and can continue to be inconsistent in amount from period to period. We believe the inclusion of these items makes it difficult to compare periods and understand the growth and performance of our business. In addition, we evaluate our business performance and compensate management based in part on these non-GAAP measures. There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by our competitors and exclude expenses that may have a material impact on our reported financial results. Further, stock-based compensation expense has been and will continue to be for the foreseeable future a significant recurring expense in our business and an important part of the compensation provided to our employees.

Free Cash Flow

Our non-GAAP financial measures also include free cash flow, which we define as cash provided by (used in) operating activities less the amount of property and equipment purchased. Management believes that information regarding free cash flow provides investors with an important perspective on the cash available to invest in our business and fund ongoing operations. However, our calculation of free cash flow may not be comparable to similar measures used by other companies.

We believe these non-GAAP financial measures are helpful in understanding our past financial performance and our future results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business, and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business relative to certain of these non-GAAP measures.

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Non-GAAP financial measures for the three and six months ended June 30, 2019 and 2018 were as follows (unaudited):


	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in thousands, except percentages and per share data)	2019			2018			2019			2018
Non-GAAP gross profit	$	41,708		$	39,287		$	81,044		$	76,481
Non-GAAP gross margin		82.0	%		85.2	%		81.9	%		85.2	%
Non-GAAP operating loss	$	(4,350)		$	(3,005)		$	(10,500)		$	(8,738)
Non-GAAP operating margin		(8.6)	%		(6.5)	%		(10.6)	%		(9.7)	%
Non-GAAP net loss	$	(4,289)		$	(3,587)		$	(10,484)		$	(9,164)
Non-GAAP loss per share	$	(0.04)		$	(0.04)		$	(0.10)		$	(0.09)
Free cash flow	$	(5,091)		$	(3,194)		$	2,548		$	5,470

Reconciliation of Non-GAAP Financial Measures

The following table reconciles the most directly comparable GAAP financial measure to each of the non-GAAP financial measures discussed above.


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
(in thousands, except percentages and per share data)
Non-GAAP gross profit reconciliation:
Gross profit	$	40,218		$	38,220		$	77,937		$	73,932
Add: Stock-based compensation expense		1,266			1,067			2,807			2,449
Add: Amortization of intangible assets		—			—			—			100
Add: Restructuring expense		224			—			300			—
Non-GAAP gross profit	$	41,708		$	39,287		$	81,044		$	76,481
Non-GAAP gross margin reconciliation:
GAAP gross margin: GAAP gross profit over GAAP total revenue		79.1	%		82.9	%		78.8	%		82.3	%
GAAP to non-GAAP gross margin adjustments		2.9	%		2.3	%		3.1	%		2.9	%
Non-GAAP gross margin		82.0	%		85.2	%		81.9	%		85.2	%
Non-GAAP operating loss reconciliation:
GAAP operating loss	$	(15,650)		$	(11,425)		$	(32,705)		$	(27,951)
Add: Stock-based compensation expense		8,857			8,420			19,147			19,113
Add: Amortization of intangible assets		—			—			—			100
Add: Restructuring expense		2,443			—			3,058			—
Non-GAAP operating loss reconciliation:	$	(4,350)		$	(3,005)		$	(10,500)		$	(8,738)
Non-GAAP operating margin reconciliation:
GAAP operating margin: GAAP operating profit over GAAP total revenue		(30.8)	%		(24.8)	%		(33.1)	%		(31.1)	%
GAAP to non-GAAP operating margin adjustments		22.2	%		18.3	%		22.5	%		21.4	%
Non-GAAP operating margin		(8.6)	%		(6.5)	%		(10.6)	%		(9.7)	%
Non-GAAP net loss reconciliation:
GAAP net loss	$	(15,589)		$	(12,007)		$	(32,689)		$	(28,377)
Add: Stock-based compensation expense		8,857			8,420			19,147			19,113
Add: Amortization of intangible assets		—			—			—			100
Add: Restructuring expense		2,443			—			3,058			—
Non-GAAP net loss reconciliation:	$	(4,289)		$	(3,587)		$	(10,484)		$	(9,164)
Non-GAAP net loss per share reconciliation:
GAAP net loss	$	(0.14)		$	(0.12)		$	(0.30)		$	(0.28)
Add: Stock-based compensation expense		0.08			0.08			0.17			0.19
Add: Amortization of intangible assets		—			—			—			—
Add: Restructuring expense		0.02			—			0.03			—
Non-GAAP net loss per share	$	(0.04)		$	(0.04)		$	(0.10)		$	(0.09)
Free cash flow:
Net cash provided by operating activities	$	(4,486)		$	(2,945)		$	3,330		$	6,235
Purchase of property and equipment		(605)			(249)			(782)			(765)
Free cash flow	$	(5,091)		$	(3,194)		$	2,548		$	5,470

Annual Recurring Revenue

Beginning with the fourth quarter of 2018, we began monitoring a new operating metric, total annual recurring revenue (“Total ARR”), which is defined as the annualized value of all recurring revenue contracts active at the end of a reporting period. Total ARR includes the annualized value of subscriptions (“Subscription ARR”) and the annualized value of software support contracts related to perpetual licenses (“Perpetual license support ARR”) active at the end of a

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reporting period and does not include revenue reported as perpetual license or professional services in our consolidated statement of operations. We are monitoring these metrics because they align with how our customers are increasingly purchasing our solutions and how we are managing our business. These ARR measures should be viewed independently of revenue, unearned revenue, and customer arrangements with termination rights as ARR is an operating metric and is not intended to be combined with or replace those items. ARR is not an indicator of future revenue and can be impacted by contract start and end dates and renewal rates.

ARR metrics as of June 30, 2019 and 2018 were as follows (unaudited):


	June 30,
(in thousands, except percentages)	2019			2018
Total ARR	$	171,965		$	145,081
Year-over-year percentage increase		19	%		—
Subscription ARR	$	106,115		$	80,844
Year-over-year percentage increase		31	%		—
Perpetual license support ARR	$	65,850		$	64,237
Year-over-year percentage increase		3	%		—

Results of Operations

Revenue

Cloud Services

Cloud services include sales of cloud-based solutions that allow customers to use hosted software over a contract period without taking possession of our software and are typically provided on a subscription or usage basis. We recognize revenue from cloud-based subscriptions ratably over the term of the subscriptions or, if usage based, as the usage is billed.

License

License revenue consists primarily of revenue from on-premises perpetual licenses and the license portion of on-premises subscriptions. From time to time, we enter into multiple element arrangements with customers in which a customer purchases our software with an appliance. Appliance revenues are also included in license revenue and constituted less than 5% of total revenue for the three and six months ended June 30, 2019 and 2018.

Software support and services

Software support and services revenue consists of revenue from agreements to provide software upgrades and updates, as well as technical support, to customers with perpetual software licenses, on-premises subscriptions, and professional services. Revenue from software support for both perpetual and on-premises subscriptions is recognized ratably over the support or subscription term. Revenue from professional services is recognized as work is performed.

Cost of Revenue

Cloud Services

Our cloud services cost of revenue consists of cloud service data center operations expense, the portion of our global Customer Success organization (See Software support and services below) associated with our cloud services business, and third-party royalties. Cloud service data center operations expenses primarily consist of personnel costs, stock-based compensation, third-party hosting facilities, telecommunication and information technology costs. We

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expect cloud services cost of revenue to increase if we continue to increase sales of MobileIron Threat Defense and as we scale our data center operations team and infrastructure to support our growing cloud business.

License

Our cost of license revenue consists of the cost of third-party software royalties, appliances and, until March 31, 2018, amortization of intangible assets.

Software support and services

Our software support and services cost of revenue consists of the portion of our global Customer Success organization expenses associated with our software support business and third-party royalties. Costs associated with our global Customer Success organization include our customer support, professional services, customer advocacy and training teams. These costs consist of personnel costs, stock-based compensation, depreciation, facilities and information technology costs.

Gross Margin

Gross margin, or gross profit as a percentage of total revenue, has been and will continue to be affected by various factors, including mix between large and small customers, mix of products sold, including our MobileIron Threat Defense product which bears a royalty, mix between perpetual, on-premises and cloud subscription licenses, timing of revenue recognition and the extent to which we expand our global Customer Success organization and cloud service data center operations, including costs associated with third-party hosting facilities and stock-based compensation expense associated with grants of equity awards. We expect our gross margins to decline somewhat over the short-term based on the factors described above.

Operating Expenses

Personnel costs are the most significant component of operating expenses and consist of salaries, benefits, bonuses, stock-based compensation and, in sales and marketing expense, sales commissions. While operating expenses, exclusive of stock-based compensation expense, may fluctuate as a percentage of total revenue from period to period, we expect these expenses to decrease over the long term as a percentage of total revenue. Stock-based compensation expense may fluctuate depending on the size and timing of RSU grants and stock-settled bonus plans, if any. In the six months ended June 30, 2019, stock-based compensation expense in operating expenses was $16.3 million compared to $16.7 million in the six months ended June 30, 2018.

Research and Development Expenses

Research and development costs are expensed as incurred. Research and development expense consists primarily of personnel costs. Research and development expense also includes costs associated with contractors and consultants, equipment and software to support our development and quality assurance teams, facilities and information technology. While our research and development expense, exclusive of stock-based compensation expense, may fluctuate as a percentage of total revenue from period to period, we expect it to decrease as a percentage of total revenue over the long term.

Sales and Marketing Expenses

Sales and marketing expense consists primarily of personnel costs, including sales commissions. Sales and marketing expense also includes costs associated with third-party events, lead generation campaigns, promotional and other marketing activities, as well as travel, equipment and software depreciation, consulting, information technology and facilities. While our sales and marketing expense, exclusive of stock-based compensation expense, may fluctuate as a percentage of total revenue from period to period, we expect it to decrease as a percentage of total revenue over the long term.

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General and Administrative Expenses

General and administrative expense consists of personnel costs, travel, information technology, facilities and professional services fees. General and administrative personnel include our executive, finance, human resources and legal organizations. Professional services fees consist primarily of litigation, other legal, accounting and consulting costs. While our general and administrative expense, exclusive of stock-based compensation expense, may fluctuate as a percentage of total revenue from period to period, we expect it to decrease as a percentage of total revenue over the long term.

Restructuring Expense

In our non-GAAP financial measures, we have excluded expense associated with the exit of an office facility, severance and other expenses related to reductions in our workforce. Restructuring expense may recur in the future; however, the timing and amounts are difficult to predict.

Other Income (Expense) — Net

Other income (expense), net consists primarily of the effect of exchange rates on our foreign currency-denominated asset and liability balances and interest income earned on our cash and cash equivalents and fixed income securities. All translation adjustments are recorded as foreign currency gains (losses) in the consolidated statements of operations.

Income Tax Expense

Income tax expense consists primarily of income taxes in foreign jurisdictions in which we conduct business. Due to our history of losses, we maintain a full valuation allowance for deferred tax assets including net operating loss carry-forwards, research and development tax credits, capitalized research and development and other book versus tax differences.

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Consolidated Results of Operations

The following tables summarize our results of operations for the periods presented and as a percentage of our total revenue for those periods. The period-to-period comparison of results is not necessarily indicative of results for future periods.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Revenue
Cloud services	$	16,311	$	11,832	$	31,572	$	22,982
License		12,227		13,880		23,598		26,321
Software support and services		22,327		20,417		43,777		40,515
Total revenue		50,865		46,129		98,947		89,818
Cost of revenue (1)
Cloud services		5,146		2,722		9,856		5,293
License		433		515		987		946
Software support and services		4,844		4,672		9,867		9,647
Restructuring expense		224		—		300		—
Total cost of revenue		10,647		7,909		21,010		15,886
Gross profit		40,218		38,220		77,937		73,932

Operating expenses:
Research and development (1)		19,988		18,272		41,817		39,607
Sales and marketing (1)		26,035		24,321		50,522		48,002
General and administrative (1)		7,626		7,052		15,545		14,274
Restructuring expense		2,219		—		2,758		—
Total operating expenses		55,868		49,645		110,642		101,883
Operating loss		(15,650)		(11,425)		(32,705)		(27,951)
Other income (expense) - net		540		(205)		952		298
Loss before income taxes		(15,110)		(11,630)		(31,753)		(27,653)
Income tax expense		479		377		936		724
Net loss	$	(15,589)	$	(12,007)	$	(32,689)	$	(28,377)

(1)

Includes stock-based compensation expense as follows:


	Three Months Ended,				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Cost of revenue	$	1,266	$	1,067	$	2,807	$	2,449
Research and development		3,625		3,343		7,736		8,110
Sales and marketing		2,064		2,159		4,338		4,688
General and administrative		1,902		1,851		4,266		3,866
Total	$	8,857	$	8,420	$	19,147	$	19,113

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Statement of operations presented as a percentage of revenue:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Revenue
Cloud services	32	%	26	%	32	%	26	%
License	24		30		24		29
Software support and services	44		44		44		45
Total revenue	100		100		100		100
Cost of revenue
Cloud services	10		6		10		6
License	1		1		1		1
Software support and services	10		10		10		11
Restructuring expense	—		—		0		—
Total cost of revenue	21		17		21		18
Gross profit	79		83		79		82
Operating expenses:
Research and development	39		40		42		44
Sales and marketing	51		53		51		53
General and administrative	15		15		16		16
Restructuring expense	5		—		3		—
Total operating expense	110		108		112		113
Operating loss	(31)		(25)		(33)		(31)
Other income (expense) - net	1		—		1		—
Loss before income taxes	(30)		(25)		(32)		(31)
Income tax expense	1		1		1		1
Net loss	(31)	%	(26)	%	(33)	%	(32)	%

Comparison of the Three and Six Months Ended June 30, 2019 and 2018


	Three Months Ended
	June 30,				Change
(in thousands, except percentages)	2019		2018		Amount		%
Cloud services	$	16,311	$	11,832	$	4,479	38	%
License		12,227		13,880		(1,653)	(12)
Software support and services		22,327		20,417		1,910	9
Total revenue	$	50,865	$	46,129	$	4,736	10	%


	Six Months Ended
	June 30,				Change
(in thousands, except percentages)	2019		2018		Amount		%
Cloud services	$	31,572	$	22,982	$	8,590	37	%
License		23,598		26,321		(2,723)	(10)
Software support and services		43,777		40,515		3,262	8
Total revenue	$	98,947	$	89,818	$	9,129	10	%

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	Three Months Ended
	June 30,
	2019				2018				Change
			% of				% of
			Total				Total
(in thousands, except percentages)	Amount		Revenue		Amount		Revenue		Amount		%
Revenue
United States	$	21,861	43	%	$	20,640	45	%	$	1,221	6	%
International		29,004	57			25,489	55			3,515	14
Total revenue	$	50,865	100	%	$	46,129	100	%	$	4,736	10	%


	Six Months Ended
	June 30,
	2019				2018				Change
			% of				% of
			Total				Total
(in thousands, except percentages)	Amount		Revenue		Amount		Revenue		Amount		%
Revenue
United States	$	41,473	42	%	$	39,407	44	%	$	2,066	5	%
International		57,474	58			50,411	56			7,063	14
Total revenue	$	98,947	100	%	$	89,818	100	%	$	9,129	10	%

Revenue

Cloud services revenue increased $4.5 million and $8.6 million, or 38% and 37%, in the three and six months ended June 30, 2019, respectively, compared to the corresponding periods of 2018, which we believe was attributable to customer preference for solutions sold under a cloud-based delivery model and contributions from sales of Access and MobileIron Threat Defense.

License revenue decreased $1.7 million and $2.7 million, or 12% and 10%, in the three and six months ended June 30, 2019, respectively, compared to the corresponding periods of 2018 primarily due to a continued slowdown in perpetual license orders and a shift in favor of cloud or on-premise subscription services. Revenue from perpetual licenses decreased $3.7 million, or 44%, while revenue from the license component of on-premise subscriptions increased $2.0 million, or 37%, in the three months ended June 30, 2019 compared to the corresponding period of 2018. Revenue from perpetual licenses decreased $5.2 million, or 30%, while revenue from the license component of on-premise subscriptions increased $2.4 million, or 27%, in the six months ended June 30, 2019 compared to the corresponding period of 2018.

Software support and services revenue increased $1.9 million and $3.3 million, or 9% and 8%, in the three and six months ended June 30, 2019, respectively, compared to the corresponding periods of 2018, primarily as a result of growth in our installed base of customers that purchase perpetual licenses and new and renewed on-premise subscriptions and software support on perpetual licenses. Professional services revenue was $1.6 million and $2.5 million in the three and six months ended June 30, 2019, respectively, compared to $816,000 and $1.8 million in the three and six months ended June 30, 2018, respectively. Professional services revenue for the three and six months ended June 30, 2019 included revenue of $683,000 from one professional services engagement whereas in the corresponding periods of 2018 there was no comparable single professional services engagement revenue contribution. Support for perpetual licenses increased $544,000 and $1.4 million, or 3% and 5%, and support for on-premise subscriptions increased $563,000 and $1.1 million, or 14%, in the three and six months ended June 30, 2019, respectively, compared to the three and six months ended June 30, 2018.

Revenue from international sales increased 14% in both the three and six months ended June 30, 2019 compared to the corresponding periods of 2018 due to an increase in the adoption of our products and an increased cumulative installed base of customers outside of the United States. Revenue from U.S. sales increased 6% and 5% in the three and

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six months ended June 30, 2019, respectively, compared to the corresponding periods of 2018. U.S. revenue grew at a slower rate than international revenue growth due to a lesser contribution from new customers.

Revenue from our largest reseller, AT&T, was 10% for both the three and six months ended June 30, 2019 compared to 11% and 12% of total revenue in the three and six months ended June 30, 2018. No other customer accounted for 10% or more of total revenue in the three or six months ended June 30, 2019 and 2018 .

Cost of Revenue and Gross Margin


	Three Months Ended
	June 30,
	2019				2018				Change
			% of				% of
			Total				Total
(in thousands, except percentages)	Amount		Revenue		Amount		Revenue		Amount		%
Cost of revenue:
Cloud services	$	5,146	10	%	$	2,722	6	%	$	2,424	89	%
License		433	1			515	1			(82)	(16)
Software support and services		4,844	10			4,672	10			172	4
Restructuring expense		224	—			—	—			224	—
Total cost of revenue	$	10,647	21	%	$	7,909	17	%	$	2,738	35	%
Gross profit	$	40,218			$	38,220			$	1,998
Gross margin			79	%			83	%


	Six Months Ended
	June 30,
	2019				2018				Change
			% of				% of
			Total				Total
(in thousands, except percentages)	Amount		Revenue		Amount		Revenue		Amount		%
Cost of revenue:
Cloud services	$	9,856	10	%	$	5,293	6	%	$	4,563	86	%
License		987	1			946	1			41	4
Software support and services		9,867	10			9,647	11			220	2
Restructuring expense		300	0			—	—			300	—
Total cost of revenue	$	21,010	21	%	$	15,886	18	%	$	5,124	32	%
Gross profit	$	77,937			$	73,932			$	4,005
Gross margin			79	%			82	%

Total cost of revenue increased $2.7 million, or 35%, and $5.1 million, or 32%, in the three and six months ended June 30, 2019, respectively, compared to the corresponding periods of 2018 due primarily to increases in cloud services cost of revenue.

Cloud services cost of revenue increased $2.4 million and $4.6 million in the three and six months ended June 30, 2019, respectively, compared to the corresponding periods of the prior year. Within cloud services cost of revenue, data center operations expense increased $894,000 and $2.1 million, third-party royalties increased $1.2 million and $2.0 million, and customer success expense increased $327,000 and $560,000 in the three and six months ended June 30, 2019, respectively, compared to the corresponding periods of the prior year. Payroll-related expense in data center operations increased $513,000 and $1.3 million in the three and six months ended June 30, 2019, respectively, compared to the corresponding periods of 2018 due to increased headcount, which increased salaries, stock-based compensation and other payroll-related expense. Infrastructure costs such as third-party hosting, facilities, and IT costs in data center operations increased by $387,000 and $738,000, in the three and six months ended June 30, 2019, respectively, compared to the corresponding periods of 2018 to support and improve the growing cloud services business. Royalty expense in cloud services cost of revenue increased due to greater sales of partner solutions that bear royalties, in particular MobileIron Threat Defense. Customer success expense, which includes expenses from our customer support,

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customer advocacy and training teams, in cost of cloud services increased as we hired additional support personnel to support the growing cloud services business.

License cost of revenue was slightly lower in the three months ended June 30, 2019 and roughly flat in the six months ended June 30, 2019 compared to the three and six months ended June 30, 2018, respectively. Expense in the three months ended June 30, 2019 were lower due to a decrease in appliance sales.

In cost of software support and services, customer success expense increased $172,000 and $220,000 in the three and six months ended June 30, 2019, respectively, compared to the corresponding periods of 2018 due to additional hiring and merit increases.

In the three and six months ended June 30, 2019, respectively, we incurred $224,000 and $300,000, of restructuring expense due to a reduction in our workforce. Additional restructuring expense was recorded in operating expenses.

Operating Expenses


	Three Months Ended
	June 30,
	2019				2018				Change
			% of				% of
			Total				Total
(in thousands, except percentages)	Amount		Revenue		Amount		Revenue		Amount		%
Operating expenses:
Research and development	$	19,988	39	%	$	18,272	40	%	$	1,716	9	%
Sales and marketing		26,035	51			24,321	53			1,714	7
General and administrative		7,626	15			7,052	15			574	8
Restructuring expense		2,219	5			—	—			2,219	—
Total operating expenses	$	55,868	110	%	$	49,645	108	%	$	6,223	13	%


	Six Months Ended
	June 30,
	2019				2018				Change
			% of				% of
			Total				Total
(in thousands, except percentages)	Amount		Revenue		Amount		Revenue		Amount		%
Operating expenses:
Research and development	$	41,817	42	%	$	39,607	44	%	$	2,210	6	%
Sales and marketing		50,522	51			48,002	53			2,520	5
General and administrative		15,545	16			14,274	16			1,271	9
Restructuring expense		2,758	3			—	—			2,758	—
Total operating expenses	$	110,642	112	%	$	101,883	113	%	$	8,759	9	%

Research and development expense increased $1.7 million, or 9%, in the three months ended June 30, 2019 compared to the corresponding period of 2018. Facilities and infrastructure expense increased $851,000 primarily due to higher telecommunications costs incurred to enhance our cloud platform. Other outside services expense increased $469,000 as we used more third-party resources to supplement our development efforts. Payroll-related expense increased by $480,000 primarily because of merit increase, changes in employee geographic mix and higher stock-based compensation expense associated with our ESPP and restricted stock unit grants.

Research and development expense increased $2.2 million, or 6%, in the six months ended June 30, 2019 compared to the corresponding period of 2018. Facilities and infrastructure expense increased $1.7 million primarily due to higher telecommunications costs incurred to enhance our cloud platform. Other outside services expense increased $876,000 as we used more third-party resources to supplement our development efforts. Partially offsetting the increases, stock-based compensation expense decreased by $373,000 primarily because of lower expense associated with our stock-settled bonus plans in the first quarter of 2019 compared to the first quarter of 2018.

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Sales and marketing expense increased $1.7 million, or 7%, in the three months ended June 30, 2019 compared to the corresponding period of 2018. Marketing program expense increased $1.0 million as we spent more on events. Payroll-related expense increased $575,000 due primarily to an increase in headcount. Travel-related expense increased $309,000 due to the timing and size of sales events and an increase in sales and marketing headcount.

Sales and marketing expense increased $2.5 million, or 5%, in the six months ended June 30, 2019 compared to the corresponding period of 2018. Marketing program expense increased $1.3 million as we spent more on events and lead generation activities. Payroll-related expense increased $774,000 due primarily to an increase in headcount. Travel-related expense increased $587,000 due to the timing and size of sales events and an increase in sales headcount. The increases were partially offset by $297,000 lower expense associated with recruiting and outside consulting.

General and administrative expense increased $574,000, or 8%, in the three months ended June 30, 2019 compared to the corresponding period of 2018. Payroll-related expense increased $320,000 primarily because of an increase in headcount. Outside services expense increased $280,000 due to increased accounting fees largely associated with Sarbanes-Oxley compliance and legal fees.

General and administrative expense increased $1.3 million, or 9%, in the six months ended June 30, 2019 compared to the corresponding period of 2018. Payroll-related expense increased $875,000 primarily because of an increase in headcount and somewhat higher expense associated with our stock-settled bonus plans. Outside services expense increased $332,000 due to increased accounting fees largely associated with Sarbanes-Oxley compliance and legal fees.

We incurred $2.2 million and $2.8 million of restructuring expense in operating expenses in the three and six months ended June 30, 2019, respectively, due to expenses associated with a reduction in our workforce and the exit of an office building.

Other Income (Expense)—Net


	Three Months Ended
	June 30,				Change
(in thousands, except percentages)	2019		2018		Amount		%
Other income (expense)—net	$	540	$	(205)	$	745	(363)	%


	Six Months Ended
	June 30,				Change
(in thousands, except percentages)	2019		2018		Amount		%
Other income (expense)—net	$	952	$	298	$	654	219	%

Other income (expense)—net was primarily comprised of interest income and gains or losses from foreign currency transactions and the translation of foreign-denominated balances to the U.S. dollar. We recorded $521,000 and $319,000 of interest income for the three months ended June 30, 2019 and 2018, respectively, and an $18,000 foreign currency gain and $535,000 foreign currency loss for the three months ended June 30, 2019 and 2018, respectively. We recorded $1.1 million and $579,000 of interest income for the six months ended June 30, 2019 and 2018, respectively, and a $193,000 and $355,000 foreign currency loss for the six months ended June 30, 2019 and 2018, respectively. A higher interest rate environment has driven up our interest income while strengthening of the U.S. dollar versus foreign currencies has generally resulted in losses on our foreign-denominated assets, most notably cash and accounts receivable balances.

Income Tax Expense


	Three Months Ended
	June 30,				Change
(in thousands, except percentages)	2019		2018		Amount		%
Income tax expense	$	479	$	377	$	102	27	%

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	Six Months Ended
	June 30,				Change
(in thousands, except percentages)	2019		2018		Amount		%
Income tax expense	$	936	$	724	$	212	29	%

Income tax expense was $479,000 and $377,000 in the three months ended June 30, 2019 and 2018, respectively, and $936,000 and $724,000 in the six months ended June 30, 2019 and 2018, respectively. The increase in income tax expense was due to an increase in foreign income taxes on profits realized by our foreign subsidiaries as we expanded internationally. We have a full valuation allowance on our deferred tax assets.

Liquidity and Capital Resources


	As of		As of
	June 30,		December 31,
(in thousands)	2019		2018
Cash and cash equivalents	$	98,877	$	104,613
Short term-investments		1,699		1,000
Total cash, cash equivalents and investments	$	100,576	$	105,613


	Six Months Ended
	June 30,				Change
(in thousands, except percentages)	2019		2018		Amount		%
Net cash provided by operating activities	$	3,330	$	6,235	$	(2,905)	(47)	%
Net cash provided by (used in) investing activities		(1,468)		3,065		(4,533)	(148)
Net cash used in financing activities	$	(7,598)	$	(66)	$	(7,532)	(11,412)	%

At June 30, 2019, we had cash and cash equivalents of $98.9 million. Approximately 89% of our cash and cash equivalents are held in the United States. At June 30, 2019, we had short-term investments of $1.7 million.

In addition, we have a $20.0 million revolving line of credit with a financial institution that expires in June 2020 which, after issuing a $1.5 million letter of credit and a $3.0 million bank guarantee, has borrowing capacity of approximately $15.5 million as of June 30, 2019. We are required to maintain an adjusted quick ratio (defined as the ratio of current assets to current liabilities minus deferred revenue) of at least 1.25. At June 30, 2019, we had no borrowings outstanding under this revolving loan facility and we were in compliance with our loan covenants.

We believe that our existing cash and cash equivalents will be sufficient to meet our anticipated cash needs for at least the next 12 months. Our future capital requirements will depend on many factors including our growth rate, the timing and extent of spending to support development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced products and services offerings, the continuing market acceptance of our products, any future acquisitions and similar transactions and the proportion of our perpetual versus subscription sales. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, operating results and financial condition would be adversely affected. In October 2018, our Board of Directors approved the repurchase of up to an aggregate of $25.0 million of our common stock, subject to compliance with applicable laws, over a two-year period (the “Repurchase Program”). The amount and timing of any repurchases made under the Repurchase Program will depend on a variety of factors, including available liquidity, cash flow and market conditions.

Cash Provided by Operating Activities

Our primary source of cash from operating activities has been from cash collections from our customers. We expect cash inflows from operating activities to be affected by increases in sales and timing of collections. Our primary use of cash from operating activities has been for personnel costs.

In the six months ended June 30, 2019, we generated $3.3 million of cash from operating activities compared to $6.2 million in the corresponding period of the prior year. We incurred a net loss of $32.7 million in the six months

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ended June 30, 2019 compared to a net loss of $28.4 million in the corresponding period of 2018. The net loss included non-cash charges of $22.4 million, primarily due to stock-based compensation expense, compared to $21.0 million in the six months ended June 30, 2018. Changes in operating assets and liabilities, as sources of cash, consisted primarily of a $21.7 million decrease in accounts receivable as our fourth fiscal quarter is a seasonally high billing quarter compared to our first and second fiscal quarters and the majority of the cash from those receivables is collected in the quarter following the billing quarter and our days sales outstanding improved compared to December 31, 2018. Changes in operating assets and liabilities that used cash consisted primarily of a decrease in accrued expenses and other long-term liabilities of $4.4 million, an increase in other current and noncurrent assets of $2.2 million, and a decrease in the liability for customer arrangements with termination rights of $2.4 million.

In the six months ended June 30, 2018, we generated $6.2 million of cash from operating activities. We incurred a net loss of $28.4 million in the six months ended June 30, 2018. The net loss included non-cash charges of $21.0 million, primarily due to stock-based compensation and depreciation expense. Changes in operating assets and liabilities, as sources of cash, consisted of a $7.8 million decrease in accounts receivable as our fourth fiscal quarter is a seasonally high billing quarter compared to our first and second fiscal quarters and the majority of the cash from those receivables is collected in the quarter following the billing quarter, a $5.9 million increase in unearned revenue, and a $1.5 million increase in deferred commissions, partially offset by a $0.5 million decrease in accrued expenses and other long-term liabilities and a $1.0 million increase in other current and noncurrent assets.

Cash Provided by Investing Activities

Our investing activities have consisted of purchases of property and equipment and purchases of investment securities, offset by maturities of the investment securities.

Cash used in investing activities was $1.5 million for the six months ended June 30, 2019 as compared to $3.1 million generated in the corresponding period of 2018. In the six months ended June 30, 2019, we received $1.6 million from maturities of investment securities and invested $2.2 million in new investment securities, compared to the six months ended June 30, 2018 where we received $9.8 million from maturities of investment securities and invested $6.0 million in new investment securities . Cash paid for the purchase of property and equipment was $782,000 and $765,000 for the six months ended June 30, 2019 and 2018, respectively.

Cash Used by Financing Activities

Our financing activities have historically consisted of proceeds from the issuance of common stock, the exercise of stock options, and our ESPP. Our financing activities also include cash used to pay employee payroll taxes as part of the net settlement of our equity awards. Beginning in the fourth quarter of 2018, our financing activities include cash outflows associated with the repurchase of shares of our common stock under our Repurchase Program.

In the six months ended June 30, 2019, our financing activities used $7.6 million of cash. We received $1.7 million from the exercise of stock options and $2.1 million from ESPP contributions. We used $4.8 million to pay employee payroll taxes as part of the net settlement of our stock-settled bonuses and RSUs and $6.6 million for the repurchase of common stock.

In the six months ended June 30, 2018, our financing activities used $66,000 of cash. We received $1.4 million from the exercise of stock options and $2.2 million from ESPP contributions. We used $3.7 million to pay employee payroll taxes as part of the net settlement of our stock-settled bonuses.

Off-Balance-Sheet Arrangements

As of June 30, 2019, we did not have off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

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Segment Information

We have one primary business activity and operate in one reportable segment, software and services to manage and secure mobile devices, applications and content.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Management believes that there have been no material changes to our quantitative and qualitative disclosures about market risks compared to those disclosed in Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" in our Annual Report on Form 10-K for the year ended December 31, 2018 previously filed with the SEC .

Item 4. Controls and Procedures

Limitations on Effectiveness of Controls

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2019. The term “disclosure controls and procedures,” as defined in Rule 13a-15 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to provide a reasonable assurance that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2019, our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended June 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we are a party to litigation and subject to claims in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business, financial conditions or results of

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operations. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Item 1A. Risk Factors

You should carefully consider the following risk factors, in addition to the other information contained in this Quarterly Report on Form 10-Q, including the section of this report titled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes. If any of the events described in the following risk factors and the risk described elsewhere in this report occur, our business, operating results and financial condition could be seriously harmed and the trading price of our common stock could decline. This Quarterly Report on Form 10-Q also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of factors that are described below and elsewhere in this report.

Risks Related to Our Business and Industry

We have a limited operating history, which makes it difficult to evaluate our prospects and future financial results and may increase the risk that we will not be successful.

As a result of our limited operating history, our ability to forecast our future operating results is limited and subject to a number of uncertainties, including our ability to plan for and model future growth. We have encountered and expect to continue to encounter risks and uncertainties frequently experienced by growing companies in rapidly changing markets. If our assumptions regarding these uncertainties are incorrect or change in reaction to changes in our markets, or if we do not manage or address these risks successfully, our results of operations could differ materially from our expectations, and our business could suffer. Any success that we may experience in the future will depend, in large part, on our ability to, among other things:


	—	retain and expand our customer base on a cost-effective basis;
	—	increase revenues from existing customers as they add users or devices;
	—	increase revenues from existing customers as they purchase additional solutions;
	—	successfully compete in our markets;
	—	continue to add features and functionality to our solutions to meet customer demand;
	—	gain market traction with our MobileIron Cloud platform and our more recently introduced products and services such as MobileIron Access and MobileIron Threat Defense;
	—	continue to invest in research and development and bring new products to market;
	—	scale our engineering and internal business operations in an efficient and cost-effective manner;
	—	scale our global Customer Success organization to make our customers successful in their mobile IT deployments;
	—	continue to expand our solutions across mobile and modern operating systems and device platforms;
	—	hire, integrate and retain professional and technical talent;
	—	make our service provider partners successful in their deployments of our solutions and technology;
	—	successfully expand our business domestically and internationally; and

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—

successfully protect our intellectual property and defend against intellectual property infringement claims.

We have had net losses each year since our inception and may not achieve or maintain profitability in the future.

We have incurred net losses each year since our inception, including net losses of $43.1 million and $53.4 million in 2018 and 2017, respectively, and $32.7 million for the six months ended June 30, 2019. As of June 30, 2019, our accumulated deficit was $436.8 million. Our revenue growth rate has slowed and we may not be able to sustain or increase our growth rate or achieve or sustain profitability in the future. The revenue growth rate has slowed, and may additionally slow or revenue may decline, for a number of reasons, including, but not limited to our customers’ and/or prospective customers’ failure to widely deploy mobile apps within their businesses, increasing and entrenched competition, changes in pricing model, customers’ failure to renew or expand their deployments of our software, product and billing model mix shift, a decrease in size or growth of the mobile IT market, or any failure to capitalize on market opportunities. We plan to continue to invest for future growth, in part by making additional investments in research and development, and as a result, we do not expect to be profitable for the foreseeable future. In addition, we will need to increase operating efficiency, which may be challenging given our operational complexity, the expenses outlined above, expenses associated with being a public company, and increasing sales of subscriptions that bear royalties. As a result of these increased expenditures, we will have to generate and sustain increased revenues to achieve future profitability. We may incur significant losses in the future for a number of reasons, including without limitation the other risks and uncertainties described in this Quarterly Report on Form 10-Q a nd in the Annual Report on Form 10-K for the year ended December 31, 2018 that was previously filed with the SEC . Additionally, we may encounter unforeseen operating expenses, difficulties, complications, delays and other unknown factors that may result in losses in future periods. If these losses exceed our expectations or our revenue growth expectations are not met in future periods, our financial performance will be harmed.

Our operating results may fluctuate significantly, which makes our future results difficult to predict and could cause our operating results to fall below expectations or our guidance.

Our quarterly operating results have fluctuated in the past and may fluctuate significantly in the future. The timing and size of sales of our solutions makes our revenue highly variable and difficult to predict and can result in significant fluctuations in our revenue from period to period. Historically, a substantial portion of our revenue has been generated from sales of software solutions sold as perpetual licenses to large enterprise companies, which tend to close near the end of a given quarter. Further, our customers’ and prospective customers’ buying patterns and sales cycles can vary significantly from quarter to quarter and are not subject to an established pattern over the course of a quarter. Accordingly, at the beginning of a quarter, we have limited visibility into the level of sales that will be made in that quarter. If expected revenue at the end of any quarter is reduced or delayed for any reason, we may not be able to reduce our costs sufficiently to compensate for an unexpected shortfall in revenue, and even a small shortfall in revenue could disproportionately and adversely affect our operating margin, operating results or other key metrics for a given quarter.

Our operating results may fluctuate due to a variety of factors, many of which are outside of our control, and any of which may cause our stock price to fluctuate. In addition to other risks listed in this “Risk Factors” section, factors that may affect our operating results include, but are not limited to:


	—	the inherent complexity, length and associated unpredictability of our sales cycles for our solutions;

	—	the extent to which our customers and prospective customers delay or defer purchase decisions in a quarter, particularly in the last few weeks of the quarter, which is when we typically complete a large portion of our sales for a quarter;

	—	our ability to develop and release in a timely manner new solutions, features and functionality that meet customer requirements;

	—	changes in pricing due to competitive pricing pressure or other factors;

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	—	reductions and reprioritizations in customers’ IT budgets and delays in the purchasing cycles of our customers and prospective customers;

	—	variation in sales channels or in mix of solutions sold, including the mix of solutions sold on a perpetual license basis versus a subscription or monthly recurring contract, or MRC, basis 1 ;

	—	the timing of recognizing revenue in any given quarter as a result of revenue recognition accounting rules, including the extent to which revenue from sales transactions in a given period may not be recognized until a future period or, conversely, the satisfaction of revenue recognition rules in a given period resulting in the recognition of revenue from transactions initiated in prior periods;

	—	changes in our mix of revenue as a result of our different deployment options and licensing models and the ensuing revenue recognition effects;

	—	the effect of litigation;

	—	changes in foreign currency exchange rates; and

	—	general economic conditions in our domestic and international markets.

1 In the MRC model, revenue is based on active devices or users of the service provider’s customer based on billings reported to us by the service provider on a monthly basis one month in arrears. Under the usage-based MRC model, we receive no revenue for MRC at the time the deal is booked, but instead the MRC is billed and revenue is recognized each month based on active usage. Unlike one-year and other term subscriptions, MRC is not reflected in unearned revenue unless the customer commits for a longer period of time.

The cumulative effects of these factors could result in large fluctuations and unpredictability in our quarterly operating results. As a result, comparing our operating results on a period-to-period basis may not be meaningful. You should not rely on our past results as an indication of our future performance.

If our customers do not place significant follow-on orders to deploy our solutions widely throughout their companies, or if they do not renew with us or if they do not purchase additional solutions, our future revenue and operating results will be harmed.

In order to increase our revenues we must continually grow our customer base and increase the depth and breadth of the deployments of our solutions with our existing customers. While customers may initially purchase a relatively modest number of licenses, it is important to our revenue growth that they later expand the use of our software on substantially more devices or for more users throughout their business. We also need to upsell—to sell additional solutions—to the same customers. Our strategy also depends on our existing customers renewing their software support or subscription agreements with us. Because of the number of participants, consolidation in the mobile IT market and competing priorities within customers’ IT budgets, customers may delay making initial purchase orders or expanding orders as they take into account the evolving mobile IT landscape. Also, if we do not successfully develop and market new solutions, features and functionality that meet our customers’ needs, they may not place upsell orders or expand orders. The rate at which our customers purchase additional solutions depends on a number of factors, including the relative prioritization of the IT budget allocated to mobile projects versus other IT projects, perceived need for additional solutions, features or functionality, the reliability of our solutions and other competitive factors, such as pricing and competitors’ offerings. If our efforts to sell additional licenses to our customers and to upsell additional solutions to our customers are not successful, our business may suffer. In addition, we have entered into enterprise license arrangements with certain large customers under which they pay an amount up front and in turn can deploy an unlimited number of devices in a certain period, thereby lowering potential future additional orders from those customers.

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Further, existing customers that purchase our solutions have no contractual obligation to purchase additional solutions after the initial subscription or contract period, and given our limited operating history, we are unable to accurately predict our customer expansion or renewal rates. Our customers’ expansion and renewal rates may decline or fluctuate as a result of a number of factors, including the level of their satisfaction with our solutions or our customer support, customer budgets, the pricing and breadth of our solutions compared with the solutions offered by our competitors, and the impact of our competitors’ selling UEM or mobile security as a component of a broader suite, any of which may cause our revenue to grow more slowly than expected, if at all. Competition from larger companies has in the past and may in the future lengthen the renewal process and require us to recompete for renewal business.

For smaller or simpler deployments, the switching costs and time are relatively minor compared to traditional enterprise software deployments and a customer may decide not to renew with us and switch to a competitor’s offerings. Accordingly, we must invest significant time and resources in providing ongoing value to our customers. If these efforts fail, or if our customers do not renew for other reasons, or if they renew on terms less favorable to us, our revenue may decline and our business will suffer.

We are in a highly competitive market, and competitive pressures from existing and new companies may harm our business, revenues, growth rates and market share. In addition, there has been consolidation in our market, and a number of our current or potential competitors have longer operating histories, greater brand recognition, larger customer bases and significantly greater resources than we do.

Our market is intensely competitive, and we expect competition to increase in the future from established competitors, consolidations and new market entrants. Our major competitors include Blackberry, Citrix, IBM, Lookout, Microsoft, Symantec and VMware. A number of our historical competitors have been purchased by large corporations. For example, AirWatch was acquired by VMware, Good Technology was acquired by Blackberry, and Skycure was acquired by Symantec. These large corporations have longer operating histories, greater name recognition, larger and better established customer bases, more channel partners, and significantly greater financial, technical, sales, marketing and other resources than we have. Because these competitors possess greater resources, they may be able to adapt more quickly to new technologies and changes in customer requirements, devote greater resources to the promotion and sale of their solutions, purchase companies or new technologies, initiate or withstand substantial price competition, and/or develop and expand their products and features more quickly than we can. In addition, certain of our competitors may be able to leverage their relationships with customers based on an installed base of solutions or to incorporate functionality into existing solutions to gain business in a manner that discourages customers from including us in competitive bidding processes, evaluating and/or purchasing our solutions. They have done this in the past, and may in the future do this, by selling at zero or negative margins, through solution bundling or through enterprise license deals. Some potential customers, especially Forbes Global 2000 Leading Companies, have already made investments in, or may make investments in, substantial personnel and financial resources and established deep relationships with these much larger enterprise IT vendors, which may make them reluctant to evaluate our solutions or work with us regardless of solution performance or features. Potential customers may prefer to purchase a broad suite of solutions from a single provider, or may prefer to purchase mobile IT solutions from an existing supplier rather than a new supplier, regardless of performance or features.

We expect competition to intensify in the future as new and existing competitors introduce new solutions into our market. In addition, some of our competitors have entered into partnerships or other strategic relationships or purchased companies to offer a more comprehensive solution than they individually had offered. We expect this trend to continue as companies attempt to strengthen or maintain their market positions in an evolving industry. This competition has resulted in the past and could in the future result in increased pressure on pricing and renewals, increased sales and marketing expenses, or harm to our market share, any of which could harm our business. Competitors’ offerings may in the future have better performance or features, lower prices and/or broader acceptance than our solutions. Competitors’ products could also include new technologies, which could render our existing solutions obsolete or less attractive to customers, or be bundled with legacy enterprise security and management products as a “one-stop-shop” offering, which certain customers with large installed bases of those legacy products may prefer. If we fail to keep up with technological changes or to convince our customers and potential customers of the value of our solutions, our business, operating results and financial condition could be materially and adversely affected.

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We compete in rapidly evolving markets and must develop new solutions and enhancements to our existing solutions. If we fail to predict and respond rapidly to emerging technological trends and our customers’ changing needs, we may not be able to remain competitive. In addition, we may not generate positive returns on our research and development investments, which may harm our operating results.

Our markets are characterized by rapidly changing technology, changing customer needs, evolving operating system standards and frequent introductions of new offerings. To succeed, we must effectively anticipate, and adapt in a timely manner to, customer and multiple operating system requirements and continue to develop or acquire new solutions and features that meet market demands and technology trends. Likewise, if our competitors introduce new offerings that compete with ours or incorporate features that are not available in our solutions, we may be required to reposition our solutions or introduce new solutions in response to such competitive pressure. We may not have access to or have adequate notice of new operating system developments, and we may experience unanticipated delays in developing new solutions and cloud services or fail to meet customer expectations for such solutions. If we fail to timely develop and introduce new solutions or enhancements that respond adequately to new challenges in the mobile IT market, our business could be adversely affected, especially if our competitors are able to more timely introduce solutions with such increased functionality.

We have invested significant time and financial resources in the development of our platforms and infrastructure and believe that we must continue to dedicate substantial resources to our research and development efforts to maintain our competitive position. Developing our products is expensive, and the investment in product development may not generate additional revenue in the near-term or at all. The research and development of new technologically advanced products is also a complex and uncertain process requiring high levels of innovation and investment, as well as the accurate forecasts of technology, market trends and consumer needs. Our failure to successfully develop new and improved products, services and technologies may reduce our future growth and profitability and may adversely affect our business, results and financial condition.

We have invested in MobileIron Access and MobileIron Threat Defense but have not yet gained significant market traction in these product lines. Should our MobileIron Access or MobileIron Threat Defense fail to achieve significant market traction, we would lose the value of our investment and our business and operating results may be harmed.

Further, we may be required to commit significant resources to developing new solutions before knowing whether our investments will result in solutions that the market will accept. We are in the process of phasing out our older cloud-based product in favor of MobileIron Cloud, our newer and more scalable cloud-only platform. The failure to successfully market MobileIron Cloud as a replacement and improvement to our older cloud-based product or the failure of our customers and prospective customers to adopt MobileIron Cloud for any reason could result in a decline in our revenue.

These risks are greater in the mobile IT market because our software is deployed on endpoints (E.g., phones, tablets or laptops) that run on different operating systems, and these multiple operating systems change frequently in response to consumer demand. As a result, we may need to release new software updates at a much greater pace than a traditional enterprise software company that supports only traditional PCs. We may experience technical design, engineering, marketing and other difficulties that could delay or prevent the development, introduction or marketing of new solutions and enhancements on both of our technology platforms. As a result, we may not be successful in modifying our current solutions or introducing new ones in a timely or appropriately responsive manner, or at all. If we fail to address these changes successfully, our business and operating results could be materially harmed.

Finally, all of our additional solutions require customers to use our MobileIron platform, whether deployed on-premise or through our cloud service. As such, virtually all of our revenue depends on the continued adoption and use of our MobileIron platform. If customers and prospective customers decided to stop using or purchasing the MobileIron platform, our product strategy and business would be harmed.

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An increasing portion of our sales has been generated from subscription licenses, which involves certain risks.

An increasing portion of our sales has been generated from subscription licenses. This mix shift towards subscription licensing, and differing revenue recognition patterns between the different types of subscriptions that we offer under the new revenue accounting guidelines, present a number of risks to us. We recognize a substantial portion of our subscription revenues over the term of the subscription agreement as compared to sales of perpetual licenses, which are recognized up-front at the time of delivery. Under the new revenue accounting guidelines, a portion of subscriptions to on-premises software is recognized up-front, while the remainder of the subscription is recognized over the subscription term. That revenue recognition pattern is different from subscriptions to cloud offerings, for which all revenue is recognized ratably over the term of the subscription. Customers in a subscription arrangement may elect not to renew their contractual arrangement with us upon expiration, or they may attempt to renegotiate pricing or other contract provisions on terms that are less favorable to us. MRC revenue, which is currently included in subscription revenue in our statements of operations, is recognized monthly on the basis of active users or devices and thus will fluctuate from month to month. Service providers that operate on an MRC billing model typically report to us in arrears on a monthly basis the number of actual users or devices deployed, and then we generate invoices based on those reports. Therefore, invoicing and collection logistics often result in a longer collection cycle. In addition, service providers may bundle our solution with their offerings and price aggressively, which could result in a decrease in MRC billings. These factors could negatively affect our cash flow to the extent subscription revenue includes MRC revenue.

Changes in features and functionality by operating system providers and mobile device manufacturers could cause us to make short-term changes in engineering focus or product development or otherwise impair our product development efforts or strategy, increase our costs, and harm our business.

Our platform depends on interoperability with operating systems, such as those provided by Apple, Google and Microsoft, as well as device manufacturers. Because mobile and other modern operating systems are released more frequently than legacy PC operating systems, and we typically have limited advance notice of changes in features and functionality of operating systems and mobile devices, we may be forced to divert resources from our preexisting product roadmap in order to accommodate these changes. As a result of this limited advance notice, we also have a short time to implement and test changes to our product to accommodate these new features, which increases the risk of product defects. In addition, if we fail to enable IT departments to support operating system upgrades upon release, our business and reputation could suffer. This could disrupt our product roadmap and cause us to delay introduction of planned solutions, features and functionality, which could harm our business.

Operating system providers have included, and may continue to include, features and functionality in their operating systems that are comparable to certain of our solutions, features and/or functionality, thereby making our platform less valuable. The inclusion of, or the announcement of an intent to include, functionality perceived to be similar to that offered by our mobile IT solutions in mobile or other modern operating systems may have an adverse effect on our ability to market and sell our solutions. Even if the functionality offered by mobile operating system providers is more limited than our solutions, a significant number of potential customers may elect to accept such limited functionality in lieu of purchasing our solutions. Furthermore, some of the features and functionality in our solutions require interoperability with operating system APIs, and if operating system providers decide to restrict our access to their APIs, that functionality would be lost and our business could be impaired. Finally, we have entered into contractual arrangements with operating systems providers and/or mobile device manufactures, under which we are obligated to certain development priorities, which can further limit our engineering flexibility.

We have experienced substantial turnover, and the loss of key personnel or an inability to attract, retain and motivate qualified personnel may impair our ability to expand our business.

Our success is substantially dependent upon the continued service and performance of our senior management team and key technical, marketing, sales and operations personnel. Over the last four years, we have experienced substantial turnover in our sales, engineering and executive teams, and this could continue in the future. The replacement of any members of our senior management team or other key personnel likely would involve significant time and costs and may harm our business, operating results and financial condition. Our future success also depends, in part, on our ability to continue to attract, integrate and retain highly skilled personnel, in particular engineers and sales personnel. Competition for highly skilled personnel is frequently intense, especially in the San Francisco Bay Area, where we have

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a substantial presence and need for highly skilled personnel, including, in particular, engineers. We must offer competitive compensation and opportunities for professional growth in order to attract and retain these highly skilled employees. Failure to successfully attract, integrate or retain qualified personnel to fulfill our current or future needs may negatively impact our growth.

A failure of our product strategy could harm our business.

Our product and business strategy is highly dependent on current and future customers continuing to adopt our solutions, features, and functionality, including expanding to newer products, such as MobileIron Access and MobileIron Threat Defense, and with existing on-premise customers migrating to MobileIron Cloud. Slow adoption by enterprises of mobile business applications may slow the adoption of our platform, because customers who are not deploying business apps other than email may not see value in our more advanced application security and management capabilities. If customers shift from client-side apps to web apps as the preferred interface for end-users, it would reduce the value of our security solution because less confidential data would reside on the endpoint. Operating system providers and larger software companies could harm our strategy by creating competitive solutions and/or bundling those solutions in a broader portfolio of products. For example, Microsoft bundled certain UEM capabilities into Microsoft 365 in an attempt to dissuade customers from using solutions like MobileIron. If our product strategy is not successful for these or other reasons, the value of our investment would be lost and our results of operations would be harmed.

If we are not able to scale our business and manage our expenses, our operating results may suffer.

We have expanded, decreased and/or relocated specific functions over time in order to scale efficiently, including restructurings in 2016, 2017 and 2019 to improve our cost structure and help scale our business. Our need to scale our business has placed, and will continue to place, a significant strain on our administrative and operational business processes, infrastructure, facilities and other resources. Our ability to manage our operations will require significant expenditures and allocation of valuable management resources to improve internal business processes and systems, including investments in automation. Further international expansion may also be required for our continued business growth, and managing any international expansion will require additional resources and controls. If our operations infrastructure and business processes fail to keep pace with our business and customer requirements, customers may experience disruptions in service or support or we may not scale the business efficiently, which could adversely affect our reputation and adversely affect our revenues. There is no guarantee that we will be able to continue to develop and expand our infrastructure and business processes at the pace necessary to scale the business, and our failure to do so may have an adverse effect on our business. If we fail to efficiently expand our engineering, operations, customer support, professional services, cloud infrastructure, IT and financial organizations and systems, or if we fail to implement or maintain effective internal business processes, controls and procedures, our costs and expenses may increase more than we planned or we may fail to execute on our product roadmap or our business plan, any of which would likely seriously harm our business, operating results and financial condition.

A security breach of our cloud service infrastructure or a disruption of our cloud service availability for any reason could result in liabilities, lost business and reputational harm.

In connection with providing our cloud service to customers, we obtain access to certain data, such as employees’ names, registration credentials, mobile device ID, geolocation of last device check-in, business email addresses, mobile phone numbers, business contact information and the list of applications installed on the mobile devices. Any security breach of the systems used to provide the cloud service, whether through third-party action or employee error or malfeasance, could result in damage, loss, misuse or theft of such data. A breach could also give rise to litigation or require us to incur financial and operational expenses in connection with fulfillment of certain indemnity obligations to our cloud service customers, settling or defending claims made against us, or complying with specific laws or regulations such as breach notification requirements. Techniques used to sabotage or obtain unauthorized access to information processing systems change frequently and are generally not recognized until launched against a target. As a result, we may be unable to anticipate these techniques or to implement adequate preventative or mitigation measures in a timely manner. Because our software is designed to enable IT administrators to secure and manage customers’ data transmitted to or stored on employees’ mobile devices, the publicity associated with an actual or perceived breach of our cloud service infrastructure would likely result in reputational damage, as well as loss of potential sales and existing customers. In addition, unexpected increases in demand at one customer may affect the overall service in unanticipated

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ways and may cause a disruption in service for other customers of this platform. We have experienced, and may in the future experience, disruptions, outages and other performance problems with our cloud service. These problems may be caused by a variety of factors, including, but not limited to, infrastructure changes, human or software errors, viruses, malicious code, denial of service or other security attacks, fraud, spikes in customer usage and interruption or loss of critical third-party hosting, power or Internet connectivity services. If we sustain disruptions of our cloud services for any reason, our reputation, business and results of operations would be seriously harmed.

Defects in our solutions could harm our business, including as a result of customer dissatisfaction, data breaches or other disruption, and subject us to substantial liability.

Because the mobile IT market involves multiple operating platforms, we provide frequent incremental releases of solution updates and functional enhancements. Such new versions frequently contain undetected errors when first introduced or released. We have found defects in new releases of our solutions, and new errors in our existing solutions may be detected in the future. Defects in our solutions may also result in vulnerability to security attacks, which could result in claims by customers and users for losses that they sustain.

Because our customers use our solutions for important aspects of their business, any errors, defects, disruptions in service or other performance problems with our solutions could hurt our reputation and may damage our customers’ businesses. In certain instances, our customers have stopped using or failed to expand use of, our solutions as a result of defects, and this may happen in the future. In addition, customers may delay or withhold payment to us, elect not to renew and make warranty claims or other claims against us. In addition, we rely on positive customer experiences in order to sell additional products to other customers or sell to new customers. Defects or disruptions in our solutions could result in reputational harm and loss of future sales. In addition, regardless of the party at fault, errors of these kinds divert the attention of our engineering personnel from our development efforts, damage our reputation and the reputation of our solutions, cause significant customer relations problems, can result in product liability claims and negatively impact our stock price.

Security breaches and other disruptions of our information systems could significantly impair our operations, compromise our ability to conduct our business and deliver our products and services, result in significant data losses, theft of our intellectual property, significant liability, damage to our reputation and loss of current and future business, and negatively impact our stock price.

We rely on our IT systems for almost all of our business operations, including internal operations, product development, sales and marketing, and communications with customers and other business partners. The secure processing, maintenance and transmission of both our own sensitive information and our customers’ data is critical to our operations and business strategy. Despite our security measures, our information technology systems and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, compromised networks of our third-party service providers, malfeasance or other disruptions. Any cyber security attack could result in the damage, loss, theft or misappropriation of our proprietary information or our customers’ data and/or cause interruptions of our internal business operations or the delivery of our solutions to customers. Because the techniques used by unauthorized persons to access or sabotage networks change frequently and may not be recognized until launched against a target, we may be unable to anticipate these techniques or readily detect or take remedial action against an attack. Further, if unauthorized access or sabotage remains undetected for an extended period of time, the effects of such breach could be exacerbated. We also depend on our employees to handle confidential data appropriately and deploy our information resources in a secure fashion that does not expose our network systems to security breaches and the loss of data. Any breach as a result of cyber criminals or employee malfeasance or error could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Our insurance may not be sufficient to cover all of our losses from any future breaches of our systems. We have also outsourced a number of our business functions to third parties, and we rely on distributors, resellers, system vendors, and system integrators to sell our products and services. Thus our business operations also depend, in part, on their cybersecurity measures. Any unauthorized access, disclosure or other loss of information could result in legal claims or proceedings, investigations by law enforcement or regulatory bodies, liability under laws that protect the confidentiality of personal information, regulatory penalties, could disrupt our operations and the solutions we provide to customers, could compromise our ability to protect our intellectual property rights, could damage our reputation, which could adversely affect our business, financial condition, and operating results, and could negatively impact our stock price.

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We depend and rely upon technologies from third parties to operate our products, and interruptions or performance problems with these technologies may adversely affect our business and results of operations.

We rely on applications from third parties in order to operate critical functions of our products. If these services become unavailable due to extended outages, interruptions, errors or defects or because they are no longer available on commercially reasonable terms, our expenses could increase, our ability to manage finances could be interrupted and supporting our customers could be impaired until equivalent services, if available, are identified, obtained and implemented, all of which could adversely affect our business.

Real or perceived errors, failures or bugs in our software could adversely affect our business, results of operations, financial condition, and growth prospects.

Our software is complex, and therefore, undetected errors, failures or bugs may occur in the future. Our software is used in IT environments with different operating systems, system management software, applications, devices, databases, servers, storage, middleware, custom and third-party applications and equipment and networking configurations, which may cause errors or failures in the IT environment into which our software is deployed. This diversity increases the likelihood of errors or failures in those IT environments. Despite testing by us, real or perceived errors, failures or bugs may not be found until our customers use our software. Real or perceived errors, failures or bugs in our products could result in negative publicity, loss of or delay in market acceptance of our software and harm our brand, weakening of our competitive position, claims by customers for losses sustained by them or failure to meet the stated service level commitments in our customer agreements. In such an event, we may be required, or may choose, for customer relations or other reasons, to expend significant additional resources in order to help correct the problem. Any errors, failures or bugs in our software could impair our ability to attract new customers, retain existing customers or expand their use of our software, which would adversely affect our business, results of operations and financial condition.

Disruptions of the third-party data centers that host our cloud service could result in delays or outages of our cloud service and harm our business.

We currently host our cloud service from third-party data center facilities operated by several different providers located around the world, such as Equinix and Amazon Web Services. Any damage to, or failure of, our cloud service that is hosted by these third parties, whether as a result of our actions, actions by the third-party data centers, actions by other third parties, or acts of God, could result in interruptions in our cloud service and/or the loss of data. While the third-party data centers host the server infrastructure, we manage the cloud services through our site reliability engineering team and need to support version control, changes in cloud software parameters and the evolution of our solutions, all in a multi-OS environment. As we continue to add data centers and capacity in our existing data centers, we may move or transfer our data and our customers’ data. Despite precautions taken during this process, any unsuccessful data transfers may impair the delivery of our service. In some cases, we have entered into contractual service level commitments to maintain uptime of at least 99.9% for our cloud services platform and if we or our third-party data center facilities fail to meet these service level commitments, we may have to issue credits to these customers. Impairment of, or interruptions in, our cloud services may reduce our subscription revenues, subject us to claims and litigation, cause our customers to terminate their subscriptions and adversely affect our subscription renewal rates and our ability to attract new customers. Our business will also be harmed if our customers and potential customers believe our services are unreliable.

We do not control, or in some cases have limited control over, the operation of the data center facilities we use, and they are vulnerable to damage or interruption from earthquakes, floods, fires, power loss, telecommunications failures and similar events. They may also be subject to break-ins, sabotage, intentional acts of vandalism and similar misconduct, and to adverse events caused by operator error. We cannot rapidly switch to new data centers or move customers from one data center to another in the event of any adverse event. Despite precautions taken at these facilities, the occurrence of a natural disaster, an act of terrorism or other act of malfeasance, a decision to close the facilities without adequate notice, or other unanticipated problems at these facilities could result in lengthy interruptions in our service and the loss of customer data and business.

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The prices of our solutions may decrease or we may change our licensing and subscription programs, renewal programs or bundling arrangements, which may reduce our revenue and adversely impact our financial results.

The prices for our solutions may decline for a variety of reasons, including competitive pricing pressures, discounts, a change in our mix of solutions toward subscription, enterprise-wide licensing arrangements, bundling of solutions, features and functionality by us or our competitors, potential changes in our pricing, anticipation of the introduction of new solutions, or promotional programs for customers or channel partners. Competition and consolidation continue to increase in the markets in which we participate, and we expect competition to further increase in the future, leading to increased pricing pressures. Larger competitors with more diverse product lines may reduce the price of solutions or services that compete with ours or may bundle their solutions with other solutions and services. Furthermore, we anticipate that the sales prices and gross profits for our solutions will decrease over product life cycles. If we are unable to increase sales to offset any decline in our prices, our business and results of operations would be harmed.

We continually re-evaluate our licensing and subscription programs and renewal programs, including specific license and subscription models and terms and conditions. We have in the past implemented, and could in the future implement, new licensing and subscription programs, renewal programs or bundling arrangements, including promotional programs or specified enhancements to our current and future solutions, enterprise licensing arrangements, discounted pricing and/or conversion of service providers or customers from one billing model to another. Such billing model, renewal programs or licensing and subscription arrangement changes may result in delayed revenue recognition.

Our ability to sell our solutions is highly dependent on the quality of our support, which is made complex by the requirements of mobile IT. Our failure to deliver high quality support would have a material adverse effect on our sales and results of operations.

Once our solutions are deployed, our customers depend on our support organization or that of our channel partners to resolve any issues relating to our solutions. Our failure to provide effective support has in the past, and could in the future, adversely affect our ability to sell our solutions or increase the number of licenses sold to existing customers. Our customer support is especially critical because the mobile IT market requires relatively frequent software releases. Mobile IT requires a complex set of features, functionality and controls, which makes support critical and difficult. In addition, we target companies on the Forbes Global 2000 Leading Companies list, many of whom have complex networks and require higher levels of support than smaller customers. As customers deploy more licenses and purchase a broader array of our solutions, the complexity and difficulty of our support obligations increase. If we fail to meet the requirements of the larger customers, it may be more difficult to increase our deployments either within our existing Forbes Global 2000 Leading Companies list or other customers or with new Forbes Global 2000 Leading Companies list customers. We face additional challenges in supporting our non-U.S. customers, including the employment and retention of qualified support personnel and the need to rely on channel partners to provide support.

We rely substantially on channel partners for the sale and distribution of our solutions and, in some instances, for the support of our solutions. A loss of certain channel partners, a decrease in revenues from certain of these channel partners or any failure in our channel strategy could adversely affect our business.

A substantial portion of our sales are through channel partners – either telecommunications carriers, which we call service providers, or other resellers – and thus we depend on our channel partners and on our channel partner strategy for the vast majority of our revenue. Our international resellers often enter into agreements directly with our mutual customers to host our software and provide other value-added services, such as IT administration.

Our service provider partners often provide support to our customers and enter into similar agreements directly with our mutual customers to host our software and/or provide other value-added services. Our agreements and operating relationships with our service provider partners are complex and require a significant commitment of internal time and resources. In addition, our service provider partners are large corporations with multiple strategic businesses and relationships, and thus our business may not be significant to them in the overall context of their much larger enterprise. These partnerships may require us to adhere to outside policies, which may be administratively challenging and could result in a decrease in our ability to complete sales. Even if the service provider partner considers us to be an important strategic relationship, internal processes at these large partners are sometimes difficult and time-consuming to navigate.

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Thus, any loss of a major channel partner or failure of our channel strategy could adversely affect our business. AT&T, as a reseller, is our largest service provider partner and was responsible for 10% of our total revenue in 2018.

Our agreements with AT&T and our other channel partners are non-exclusive and most of our channel partners have entered, and may continue to enter, into strategic relationships with our competitors. Our channel partners may terminate their respective relationships with us with limited or no notice and with limited or no penalty, pursue other partnerships or relationships, or attempt to develop or acquire solutions or services that compete with our solutions. If our channel partners do not effectively market and sell our solutions, if they choose to place greater emphasis on solutions of their own or those offered by our competitors, or if they fail to provide adequate support or otherwise meet the needs of our customers, our ability to grow our business and sell our solutions may be adversely affected. The loss of our channel partners, in particular AT&T, the failure to recruit additional channel partners, or any reduction or delay in sales of our solutions by our channel partners could materially and adversely affect our results of operations.

In addition, we have sold and will sell directly to end-user customers, which may adversely affect our relationship with our channel partners.

Our sales cycles for large enterprises are often long, unpredictable and expensive. As a result, our sales and revenue are difficult to predict and may vary substantially from period to period, which may cause our operating results to fluctuate significantly.

Our sales efforts involve educating our customers about the use and benefits of our solutions, including the technical capabilities of our solutions and the business value of our solutions. Many of our large customers have very complex IT systems, mobile environments and data privacy and security requirements. Accordingly, many of these customers undertake a significant evaluation process, which frequently involves not only our solutions, but also those of our competitors, and has resulted in lengthy sales cycles. We spend substantial time, money and effort on our sales activities without any assurance that our efforts will produce any sales. In addition, purchases of our solutions are frequently subject to budget constraints, multiple purchase approvals, lengthy contract negotiations and unplanned administrative, processing and other delays. Moreover, the evolving nature of the mobile IT market may lead prospective customers to postpone their purchasing decisions pending adoption of technology by others or pending potential consolidation in the market, and may require evaluation of our product my multiple functions within their company. As a result of our lengthy sales cycle, it is difficult to predict whether and when a sale will be completed, and our operating results may vary significantly from quarter to quarter. Even if sales are completed, the revenues we receive from these customers may not be sufficient to offset our upfront investments.

We seek to sell our solutions to large enterprises. Sales to and support of these types of enterprises involve risks that could harm our business, financial position and results of operations.

Our growth strategy is dependent, in part, upon increasing sales of our solutions to large enterprises. Sales to large customers involve risks that may not be present (or that are present to a lesser extent) with sales to smaller entities. These risks include:


	—	more complicated network requirements, which result in more difficult and time-consuming implementation processes;

	—	more intense and time-consuming customer support practices;

	—	increased purchasing power and leverage held by large customers in negotiating contractual arrangements with us;

	—	more customer-favorable contractual terms, including penalties;

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	—	longer sales cycles and the associated risk that substantial time and resources may be spent on a potential customer that ultimately elects not to purchase our solution or purchases fewer licenses than we had anticipated;

	—	closer relationships with, and dependence upon, large technology companies that offer competitive solutions;

	—	an RFP process that may favor incumbent or larger technology companies;

	—	increased reputational risk as a result of data breaches or other problems involving high profile customers; and

	—	more pressure for discounts.

If we are unable to increase sales of our solutions to large enterprises while mitigating the risks associated with serving such customers, our business, financial position and results of operations may suffer.

Our failure to comply with privacy and data protection laws could have a material adverse effect on our business.

Personal privacy and data protection have become significant issues in the United States, Europe and elsewhere where we offer our solutions. We collect contact and other personal or identifying information from our customers, and our customers increasingly use our cloud services to store and process personal information and other regulated data. We also maintain personal data of our employees in connection with our HR and benefits administration and share that information with third-party payroll and benefits providers.

Many federal, state and foreign government bodies and agencies have adopted or are considering adopting laws and regulations regarding the collection, use, disclosure and retention of personal information, with which we must comply. The variety, complexity and changing nature of the privacy law landscape worldwide is challenging. If our solutions fail to adequately separate personal information and to maintain the security of enterprise applications and data, the market perception of the effectiveness of our solutions could be harmed, employee adoption of mobile initiatives could be slowed, we could lose potential sales and existing customers, and we could incur significant liabilities.

If any of our customers or prospective customers decide not to purchase our software as a result of this regulatory uncertainty, our revenues could decline and our business could suffer. Any inability to adequately address privacy concerns, whether valid or not, or to comply with applicable privacy or data protection laws, regulations and privacy standards, could result in additional cost and liability to us, damage our reputation, inhibit sales of our solutions and harm our business. Furthermore, the attention garnered by the National Security Agency’s bulk intelligence collection programs may result in further concerns surrounding privacy and technology products, which could harm our business.

The European Union data protection law, the General Data Protection Regulation (“GDPR”), which became enforceable in May 2018, is wide-ranging in scope. To adapt to these new requirements, we have invested and will continue to invest resources necessary to enhance our policies and controls across our business units, products and services relating to how we collect and use personal data relating to customers, distributors, resellers, personnel and suppliers. Additionally, we expect that the international transfer of personal data will present ongoing compliance challenges and complicate our business transactions as we negotiate and implement suitable arrangements with international customers and international and domestic suppliers. Failure to comply may lead to fines of up to €20 million or up to 4% of the annual global revenues of the infringer, whichever is greater. EU data protection laws and their interpretations continue to develop, and may be inconsistent from jurisdiction to jurisdiction, which may further impact our information processing activities. Further, laws such as the EU’s proposed e-Privacy Regulation are increasingly aimed at the use of personal information for marketing purposes, and the tracking of individuals’ online activities. In addition, countries outside the EU are considering or have passed legislation that requires local storage and processing of data, which could increase the cost and complexity of delivering our products and services. Our current arrangements for the transfer of personal data will need to continue to adapt to future judicial decisions and regulatory

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activity as laws on privacy and the protection of personal data continue to evolve in the countries in which we and our customers do business. If we do not adapt to such changes in the laws or regulations, our business and reputation could be harmed.

The implementation of GDPR has led other jurisdictions to either amend, or propose legislation to amend their existing data privacy and cybersecurity laws to resemble the requirements of GDPR. For example, on June 27, 2018, California adopted the California Consumer Privacy Act of 2018 (“CaCPA”). The CaCPA has been characterized as the first “GDPR-like” privacy statute to be enacted in the United States because it mirrors a number of the key provisions in the GDPR. Because of this, we may need to engage in additional compliance efforts, including data mapping to identify the personal information we are collecting and the purposes for which such information is collected and enhanced consumer controls with respect to their data. All of this will need to be done before the effective date of the CaCPA on January 2, 2020. If we are unable to meet these new standards, our business could be harmed.

The failure of third parties to comply with privacy and data security laws could harm our business.

The regulatory framework for privacy and data security issues worldwide is currently evolving and is likely to remain uncertain for the foreseeable future, in particular as it relates to cloud computing vendors. Our existing contractual provisions may not protect us from claims for data loss or regulatory noncompliance made against cloud computing providers with whom we contract. Any failure by us or our channel partners or cloud computing vendors to comply with posted privacy policies, other privacy-related or data protection laws and regulations, or the privacy and security commitments contained in contracts could result in legal or regulatory proceedings and/or fines, our business and reputation could be harmed. Our implementation of, and ongoing compliance with, the GDPR, the CaCPA and other legislation that may be enacted in the future, may be costly and distracting to management.

Employee adoption of mobile initiatives depends on the credible and clear separation of enterprise applications and data and personal information on the device, as well as the employee’s data privacy. For our customers, it is also essential to maintain the security of enterprise data properly while retaining the native experience users expect. While we contractually obligate our customers to make the required disclosures, gain the required consents from their employees and otherwise comply with applicable law regarding the processing of personally identifiable information that the employer may access, we do not control whether they in fact do so. Any claim by an employee that his or her employer had not complied with applicable privacy and data security laws in connection with the deployment and use of our software on the employee’s mobile device could harm our reputation and business and subject us to liability, whether or not warranted.

We may acquire other businesses which could require significant management attention, disrupt our business, dilute stockholder value and adversely affect our operating results.

As part of our business strategy, we may make investments in complementary companies, solutions or technologies. We may not be able to find suitable acquisition candidates, and we may not be able to complete such acquisitions on favorable terms, if at all. If we do complete acquisitions, we may not ultimately strengthen our competitive position or achieve our goals. In addition, if we are unsuccessful at integrating such acquisitions, fail to properly identify issues or liabilities in the business and assets we may acquire or are unsuccessful in developing the acquired technologies, the revenue and operating results of the combined company could be adversely affected. We have in the past and could in the future record impairment losses in connection with acquisitions. Further, the integration of an acquired company typically requires significant time and resources, and we may not be able to manage the process successfully and such activities could be distracting to management. We may not successfully evaluate or utilize the acquired technology or personnel or accurately forecast the financial impact of an acquisition transaction, including accounting charges. We may have to pay cash, incur debt or issue equity securities to pay for any such acquisition, each of which could adversely affect our financial condition or the value of our common stock. The sale of equity to finance any such acquisition could result in dilution to our stockholders. The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations.

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We have indemnity obligations under our contracts with our customers and channel partners, which could have a material adverse effect on our business.

The mobile industry has been characterized by substantial patent infringement lawsuits. In our agreements with customers and channel partners, we typically agree to indemnify them for losses related to, among other things, claims by third parties of intellectual property infringement and sometimes data breaches resulting in the compromise of personal data. If any such indemnification obligations are triggered, we could face substantial liabilities or be forced to make changes to our solutions or terminate our customer agreements and refund monies. In addition, provisions regarding limitation of liability in our agreements with customers or channel partners may not be enforceable in some circumstances or jurisdictions or may not protect us from claims and related liabilities and costs. We maintain insurance to protect against certain types of claims associated with the use of our solutions, but our insurance may not adequately cover any such claims. In addition, even claims that ultimately are unsuccessful could result in expenditures of and divert management’s time and other resources. Furthermore, any legal claims from customers and channel partners could result in reputational harm and the delay or loss of market acceptance of our solutions.

A portion of our revenues are generated by sales to heavily regulated organizations and governmental entities, which are subject to a number of challenges and risks.

Some of our customers are either in highly regulated industries or are governmental entities and may be required to comply with more stringent regulations in connection with the implementation and use of our solutions. Selling to these entities can be highly competitive, expensive and time consuming, often requiring significant upfront time and expense without any assurance that we will successfully complete a sale or that the organization will deploy our solution at scale. Highly regulated and governmental entities often require contract terms that differ from our standard arrangements and impose compliance requirements that are complicated, require preferential pricing or “most favored nation” terms and conditions, or are otherwise time-consuming and expensive to satisfy. If we are unable to gain any required federal clearance or certificate in a timely manner, or at all, we would likely be prohibited from selling to particular federal customers. In addition, government demand and payment for our solutions and services may be impacted by public sector budgetary cycles and funding authorizations, particularly in light of U.S. budgetary challenges, with funding reductions or delays adversely affecting public sector demand for our solutions. The additional costs associated with providing our solutions to governmental entities and highly regulated customers could harm our margins. Moreover, changes in the underlying regulatory conditions that affect these types of customers could harm our ability to efficiently provide our solutions to them and to grow or maintain our customer base.

If our solutions do not interoperate with our customers’ IT infrastructures, sales of our solutions could be negatively affected.

Our solutions need to interoperate with our customers’ existing IT infrastructures, which have varied and complex specifications. As a result, we must attempt to ensure that our solutions interoperate effectively with these different, complex and varied back-end environments. To meet these requirements, we have and must continue to undertake development and testing efforts that require significant capital and employee resources. We may not accomplish these development efforts quickly or cost-effectively, or at all. If our solutions do not interoperate effectively, orders for our solutions could be delayed or cancelled, which would harm our revenues, gross margins and reputation, potentially resulting in the loss of existing and potential customers. The failure of our solutions to interoperate effectively within the enterprise environment may divert the attention of our engineering personnel from our development efforts and cause significant customer relations problems. In addition, if our customers are unable to implement our solutions successfully, they may not renew or expand their deployments of our solutions, customer perceptions of our solutions may be impaired and our reputation and brand may suffer.

Although technical problems experienced by users may not be caused by our solutions, our business and reputation may be harmed if users perceive our solutions as the cause of a device failure.

The ability of our solutions to operate effectively can be negatively impacted by many different elements unrelated to our solutions. For example, a user’s experience may suffer from an incorrect setting in his or her mobile device, an issue relating to his or her employer’s corporate network or an issue relating to the underlying mobile operating system, none of which we control. Even though technical problems experienced by users may not be caused by

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our solutions, users often perceive the underlying cause to be a result of poor performance of our solution. This perception, even if incorrect, could harm our business and reputation.

Our customers may exceed their licensed device or user count, and it is sometimes difficult to collect payments as a result of channel logistics, which could harm our business, financial position and results of operations.

Our customers license our solutions on either a per-device or per-user basis. Because the vast majority of the sales of our solutions are through channel partners, and in some cases multiple tiers of channel partners, the logistics of collecting payments for excess usage can sometimes be time-consuming. We may also encounter difficulty collecting accounts receivable and could be exposed to risks associated with uncollectible accounts receivable. Economic conditions may impact some of our customers’ ability to pay their accounts payable. If we are unable to collect from our customers for their excess usage or otherwise or if we have to write down our accounts receivable, our revenues and operating results would suffer.

If the market for our solutions shrinks or does not continue to develop as we expect, our growth prospects may be harmed.

The success of our business depends on the continued growth and proliferation of mobile and other modern IT infrastructure as an increasingly important computing platform for businesses. Our business plan assumes that the demand for mobile and other modern IT solutions and the deployment of business apps on mobile devices will increase. However, the mobile IT market has slowed and may not develop as quickly as we expect, or at all, and businesses may not continue to elect to utilize mobile IT solutions as an advanced business platform. This market for our solutions may not develop for a variety of reasons, including that larger, more established companies will enter the market or that mobile operating system companies will offer substantially similar functionality or that companies may not deploy business apps at scale and thus may be satisfied with less advanced technologies. Accordingly, demand for our solutions may not continue to develop as we anticipate, or at all, and the growth of our business and results of operations may be adversely affected. In addition, because we derive substantially all of our revenue from the adoption and use of our platform, a decline or slowing growth in the mobile IT market would harm the results of our business operations more seriously than if we derived significant revenue from a variety of other products and services.

Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, we cannot assure you our business will grow at similar rates, if at all.

Growth forecasts are subject to significant uncertainty and are based on assumptions and estimates, which may not prove to be accurate. Forecasts relating to our market opportunity and the expected growth in the mobile IT market and other markets may prove to be inaccurate. Even if these markets experience the forecasted growth, we may not grow our business at similar rates, or at all. Our growth will be affected by many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties.

Seasonality may cause fluctuations in our revenue.

We believe there are significant seasonal factors that may cause us to record higher revenue in some quarters compared with others. We believe this variability is largely due to our customers’ budgetary and spending patterns, as many customers spend the unused portions of their discretionary budgets prior to the end of their fiscal years. For example, we have historically recorded our highest level of total revenue in our fourth quarter, which we believe corresponds to the fourth quarter of a majority of our customers. In addition, the type of budget (operating versus capital) available to a customer may affect its decision to purchase a perpetual license or a subscription license. As our rate of growth has slowed, seasonal or cyclical variations in our operations may become more pronounced, and our business, results of operations and financial position may be adversely affected.

Economic or political uncertainties or downturns could materially adversely affect our business.

Economic downturns or uncertainty could adversely affect our business operations or financial results. Negative conditions in the general economy and political sphere both in the United States and abroad, including conditions resulting from changing tariff and trade policies, financial and credit market fluctuations and terrorist attacks on the

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United States, Europe, Asia Pacific or elsewhere, could cause a decrease in corporate spending on enterprise software in general and negatively affect the rate of growth of our business. Economic downturns or economic and/or political uncertainty make it difficult for our customers and us to forecast and plan future business activities accurately, and they could cause our customers to reevaluate their decision to purchase our products, which could delay and lengthen our sales cycles, or to deprioritize the portion of their IT budget focused on mobility. We cannot predict the timing, strength or duration of any economic slowdown, economic or political instability or recovery, generally or within any particular industry or geography. If the economic conditions of the general economy or industries in which we operate worsen from present levels, our business operations and financial results could be adversely affected.

The UK’s pending withdrawal from the EU may have a negative effect on global economic conditions, financial markets and our business.

The United Kingdom’s (UK) pending withdrawal from the European Union (EU), commonly referred to as “Brexit,” has created significant uncertainty concerning the future relationship between the UK and the EU and the impact on global markets. It is unclear what financial, trade, regulatory and legal implications the withdrawal of the UK from the EU will have and how such withdrawal will affect us. Economic and political uncertainty stemming from Brexit may cause our enterprise customers to freeze or decrease their spending on our products. Brexit may also adversely affect and delay our ability to market and sell our products in the UK or may increase our costs of doing business in the UK due to risks such as regulatory uncertainty, including whether new privacy laws are enacted in the UK to replace GDPR. Furthermore, the announcement of Brexit caused significant volatility in global stock markets and currency exchange rate fluctuations, and the pending withdrawal of the UK from the EU may also adversely affect European and global economic and market conditions, which may cause our customers outside of the UK to closely monitor their costs and reduce their spending budgets. Any of these effects of Brexit, among others, could have a material adverse impact on our business, financial condition and results of operations.

Our business is subject to the risks of earthquakes, fire, floods and other natural catastrophic events, and to interruption by manmade problems such as network security breaches, computer viruses or terrorism.

Our corporate headquarters are located in the San Francisco Bay Area, a region known for seismic activity. A significant natural disaster, such as an earthquake, fire or flood, occurring near our headquarters could have a material adverse impact on our business, operating results and financial condition. Despite the implementation of network security measures, our networks also may be vulnerable to computer viruses, break-ins and similar disruptions from unauthorized tampering. In addition, natural disasters, acts of terrorism or war could cause disruptions in our or our customers’ businesses or the economy as a whole. We also rely on information technology systems to communicate among our workforce and with third parties. Any disruption to our communications or systems, whether caused by a natural disaster or by manmade problems, such as power disruptions, could adversely affect our business.

If we are unable to implement and maintain effective internal controls over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock may be negatively affected.

As a public company, we are required to maintain internal controls over financial reporting and to report any material weaknesses in such internal controls. Section 404 of the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act) requires that we furnish a report by management on, among other things, the effectiveness of our internal controls over financial reporting. Management’s assessment needs to include disclosure of any material weaknesses identified in our internal controls over financial reporting. Because we continued to qualify as an “emerging growth company,” as defined in the JOBS Act, our independent registered public accounting firm was not required to attest to the effectiveness of our internal controls over financial reporting for the year ended December 31, 2018. However, we lose our emerging growth company status on December 31, 2019 and our independent registered public accounting firm will be required to attest to the effectiveness of our internal controls as of December 31, 2019 and for each year thereafter. Implementation of internal controls over financial reporting can be time-consuming, costly and complicated. If we have a material weakness in our internal controls over financial reporting, we may not detect errors on a timely basis and our financial statements may be materially misstated. If we identify material weaknesses in our internal controls over financial reporting, if we are unable to comply with the requirements of Section 404 in a timely manner, if we are unable to assert that our internal controls over financial reporting are effective, or if our independent registered public accounting firm is unable to

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express an opinion as to the effectiveness of our internal controls over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, and the market price of our common stock could be negatively affected. In addition, we could become subject to investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial and management resources.

If our estimates relating to our critical accounting policies are based on assumptions or judgments that change or prove to be incorrect, our operating results could fall below expectations of financial analysts and investors, resulting in a decline in our stock price.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, assumptions and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue and expenses that are not readily apparent from other sources. Our operating results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of financial analysts and investors, resulting in a decline in our stock price. Significant assumptions and estimates used in preparing our consolidated financial statements include those related to revenue recognition, stock-based compensation and income taxes. Moreover, the new revenue recognition guidance, Topic 606 – Revenue from Contracts with Customers, requires more judgment than did the prior guidance.

Impairment of goodwill and other intangible assets would result in a decrease in earnings.

We have in the past and may in the future acquire intangible assets. Current accounting rules require that goodwill and other intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually. These rules also require that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events and circumstances considered in determining whether the carrying value of amortizable intangible assets and goodwill may not be recoverable include, but are not limited to, significant changes in performance relative to expected operating results, significant changes in the use of the assets, significant negative industry or economic trends, or a significant decline in our stock price and/or market capitalization for a sustained period of time. To the extent such evaluation indicates that the useful lives of intangible assets are different than originally estimated, the amortization period is reduced or extended and the quarterly amortization expense is increased or decreased. Any impairment charges or changes to estimated amortization periods could have a material adverse effect on our financial results.

Risks Related to Our Intellectual Property

We have been sued by third parties for alleged infringement of their proprietary rights and may be sued in the future.

There is considerable patent and other intellectual property development activity in our industry. Our success depends in part on not infringing the intellectual property rights of others. From time to time, our competitors or other third parties have claimed, and we expect they will continue in the future to claim, that we are infringing their intellectual property rights, and we may be found to be infringing such rights.

We may be unaware of the intellectual property rights of others that may cover some or all of our solutions. Any claims or litigation could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial damages or ongoing royalty payments, prevent us from offering our solutions, or require that we comply with other unfavorable terms. If any of our customers are sued, we would in general be required to defend and/or settle the litigation on their behalf. In addition, if we are unable to obtain licenses or modify our solutions to make them non-infringing, we might have to refund a portion of perpetual license fees paid to us and terminate those agreements, which could further exhaust our resources. In addition, we may pay substantial settlement amounts or royalties on future solution sales to resolve claims or litigation, whether or not legitimately or successfully asserted against us. Even if we were to prevail in the actual or potential claims or litigation against us, any claim or litigation regarding our intellectual property could be costly and time-consuming and divert the attention of our management and key personnel from our

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business operations. Such disputes, with or without merit, could also cause potential customers to refrain from purchasing our solutions or otherwise cause us reputational harm.

We have been sued by non-practicing entities, or NPEs, for patent infringement in the past and may be sued by NPEs in the future. While we have settled such litigation in the past, these lawsuits, with or without merit, require management attention and can be expensive.

If we are unable to protect our intellectual property rights, our competitive position could be harmed or we could be required to incur significant expenses to enforce our rights.

Our ability to compete effectively is dependent in part upon our ability to protect our proprietary technology. We protect our proprietary information and technology through licensing agreements, third-party nondisclosure agreements and other contractual provisions, as well as through patent, trademark, copyright and trade secret laws in the United States and similar laws in other countries. There can be no assurance that these protections will be available in all cases or will be adequate to prevent our competitors from copying, reverse engineering or otherwise obtaining and using our technology, proprietary rights or solutions. The laws of some foreign countries, including countries in which our solutions are sold, may not be as protective of intellectual property rights as those in the United States, and mechanisms for enforcement of intellectual property rights may be inadequate. In addition, third parties may seek to challenge, invalidate or circumvent our patents, trademarks, copyrights and trade secrets, or applications for any of the foregoing. There can be no assurance that our competitors will not independently develop technologies that are substantially equivalent or superior to our technology or design around our proprietary rights. In each case, our ability to compete could be significantly impaired.

To prevent substantial unauthorized use of our intellectual property rights, it may be necessary to prosecute actions for infringement and/or misappropriation of our proprietary rights against third parties. Any such action could result in significant costs and diversion of our resources and management’s attention, and there can be no assurance that we will be successful in such action.

Furthermore, many of our current and potential competitors have the ability to dedicate substantially greater resources to enforce their intellectual property rights than we do. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property.

Our reliance on third-party software and intellectual property licenses

Our solutions are designed to include software and other intellectual property licensed from third parties. While it may be necessary in the future to seek or renew licenses relating to various aspects of our solutions, we have the expectation, based on experience and standard industry practice, that such licenses generally can be obtained on commercially reasonable terms. However, there can be no assurance that the necessary licenses would be available on commercially reasonable terms, if at all. Our inability to obtain certain licenses or other rights or to obtain such licenses or rights on favorable terms could have a material adverse effect on our business, operating results, and financial conditions. Moreover, inclusion in our products or software or other intellectual property licenses from third parties on a nonexclusive basis could limit our ability to protect our proprietary rights in our products.

Our use of open source software could impose limitations on our ability to commercialize our solutions.

Our solutions contain software modules licensed for use from third-party authors under open source licenses, including the GNU Public License, the GNU Lesser Public License, the Apache License and others. Use and distribution of open source software may entail greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code. Some open source licenses contain requirements that we make available source code for modifications or derivative works we create based upon the type of open source software we use. If we combine our proprietary solutions with open source software in a certain manner, we could, under certain of the open source licenses, be required to release the source code of our proprietary solutions to the public or offer our solutions to users at no cost. This could allow our competitors to create similar solutions with lower development effort and time and ultimately could result in a loss of sales for us.

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The terms of many open source licenses have not been interpreted by U.S. courts, and there is a risk that such licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our solutions. In such event, we could be required to seek licenses from third parties in order to continue offering our solutions, to re-engineer our solutions or to discontinue the sale of our solutions in the event re-engineering cannot be accomplished on a timely basis, any of which could materially and adversely affect our business and operating results.

Risks Related to Our International Operations

Our international operations expose us to additional business risks, and failure to manage these risks may adversely affect our international revenue.

We derive a significant portion of our revenues from customers outside the United States. For the six months ended June 30, 2019 and for the years ended 2018 and 2017, 58%, 58%, and 53% of our revenue, respectively, was attributable to our international customers, primarily those located in Europe. As of December 31, 2018, approximately 45% of our employees were located abroad.

We expect that our international activities will be dynamic over the foreseeable future as we continue to pursue opportunities in international markets, which will require significant management attention and financial resources. Therefore, we are subject to risks associated with having worldwide operations.

We have a limited history of marketing, selling and supporting our solutions internationally. As a result, we must hire and train experienced personnel to staff and manage our foreign operations. To the extent that we experience difficulties in recruiting, training, managing and retaining an international staff, and specifically staff related to sales and engineering, we may experience difficulties in foreign markets. In addition, business practices in the international markets that we serve may differ from those in the United States and may require us to include non-standard terms in customer contracts, such as extended warranty terms. To the extent that we may enter into customer contracts in the future that include non-standard terms related to payment, warranties or performance obligations, our operating results may be adversely affected. International operations are subject to other inherent risks, and our future results could be adversely affected by a number of factors, including:


	—	difficulties in executing an international channel partners strategy;

	—	burdens of complying with a wide variety of foreign laws, including heightened concerns and legal requirements relating to data security and privacy;

	—	economic or political instability and security concerns in countries outside the United States in which we operate or have customers ;

	—	unfavorable contractual terms or difficulties in negotiating contracts with foreign customers or channel partners as a result of varying and complex laws and contractual norms;

	—	difficulties in providing support and training to channel partners and customers in foreign countries and languages;

	—	heightened risks of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results or result in fines and penalties;

	—	difficulties and costs of attracting and retaining employees and managing foreign operations

	—	import restrictions and the need to comply with export laws;

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	—	difficulties in protecting intellectual property;

	—	difficulties in enforcing contracts and longer accounts receivable payment cycles;

	—	the effect of foreign exchange fluctuations on the competitiveness of our prices;

	—	potentially adverse tax consequences;

	—	the increased cost of terminating employees in some countries; and

	—	variability of foreign economic, political and labor conditions.

As we continue to expand our business globally, our success will depend, in large part, on our ability to anticipate and manage effectively these and other risks associated with our international operations. Our failure to manage any of these risks successfully could harm our international operations and reduce our international sales, adversely affecting our business, operating results and financial condition.

We rely on channel partners to sell our solutions in international markets, the loss of which could materially reduce our revenue.

We sell our solutions in international markets almost entirely through channel partners. We believe that establishing and maintaining successful relationships with these channel partners is, and will continue to be, critical to our financial success. Recruiting and retaining qualified channel partners and training them to be knowledgeable about our solutions requires significant time and resources. In some countries, we rely on a sole or very few channel partners and thus the loss of the channel partner could have a significant impact on our sales and support in those countries. To develop and expand our distribution channel, we must continue to scale and improve our processes and procedures that support our channel, including investment in systems and training. In particular, foreign-based service provider partners are large and complex businesses, and we may have difficulty negotiating and building successful business relationships with them.

In addition, existing and future channel partners will only partner with us if we are able to provide them with competitive offerings on terms that are commercially reasonable to them. If we fail to maintain the quality of our solutions or to update and enhance them or to offer them at competitive discounts, existing and future channel partners may elect to partner with one or more of our competitors. In addition, the terms of our arrangements with our channel partners must be commercially reasonable for both parties. If we are unable to reach agreements that are beneficial to both parties, then our channel partner relationships will not succeed. In addition, international channel partners often rely on business models that favor our on premises product over our cloud product because in the former, the channel partner may host and manage the software for, and provide additional administrative, support, training and other services to, the mutual customer for additional fees. This situation could impede sales of our cloud product in certain international markets.

If we fail to maintain relationships with our channel partners, fail to develop new relationships with other channel partners in new markets, fail to manage, train or incentivize existing channel partners effectively, or fail to provide channel partners with competitive solutions on terms acceptable to them, or if these partners are not successful in their sales efforts, our revenue may decrease and our operating results could suffer.

We have no long-term contracts or minimum purchase commitments with any of our channel partners, and our contracts with channel partners do not prohibit them from offering solutions that compete with ours, including solutions they currently offer or may develop in the future and incorporate into their own systems. Some of our competitors may have stronger relationships with our channel partners than we do, and we have limited control, if any, as to whether those partners sell our solutions, rather than our competitors’ solutions, or whether they devote resources to market and support

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our competitors’ solutions, rather than our solutions. Our failure to establish and maintain successful relationships with channel partners could materially adversely affect our business, operating results and financial condition.

Failure to comply with the U.S. Foreign Corrupt Practices Act and similar laws associated with our activities outside the United States could subject us to penalties and other adverse consequences.

A significant portion of our revenues is and will continue to be from jurisdictions outside of the United States. As a result, we are subject to the U.S. Foreign Corrupt Practices Act, or FCPA, which generally prohibits U.S. companies and their intermediaries from making payments to foreign officials for the purpose of obtaining or keeping business or otherwise obtaining favorable treatment, and requires companies to maintain adequate record-keeping and internal accounting practices to accurately reflect the transactions of the company. The FCPA applies to companies, individual directors, officers, employees and agents. Under the FCPA, we may be held liable for actions taken by strategic or local partners or representatives. In addition, the government may seek to hold us liable for successor liability FCPA violations committed by companies that we acquire.

In many foreign countries, particularly in countries with developing economies, including many countries in which we operate, it may be a local custom that businesses operating in such countries engage in business practices that are prohibited by the FCPA or other similar laws and regulations. Although we have contractual provisions in our agreements with channel partners that require them to comply with the FCPA and similar laws, we have not engaged in formal FCPA training of our channel partners. Our channel partners could take actions in violation of our policies, for which we may be ultimately held responsible. Our development of infrastructure designed to identify FCPA matters and monitor compliance is at an early stage. If we or our intermediaries fail to comply with the requirements of the FCPA or other anti-corruption laws, governmental authorities in the U.S. or elsewhere could seek to impose civil and/or criminal penalties, which could have a material adverse effect on our business, results of operations, financial conditions and cash flows.

We are subject to export controls, and our customers and channel partners are subject to import controls.

Certain of our solutions are subject to U.S. export controls and may be exported to certain countries outside the U.S. only by first obtaining an export license from the U.S. government, or by utilizing an existing export license exception, or after clearing U.S. government agency review. Obtaining the necessary export license or accomplishing a U.S. government review for a particular export may be time-consuming and may result in the delay or loss of sales opportunities. Furthermore, U.S. export control laws and economic sanctions prohibit the shipment of certain solutions to U.S. embargoed or sanctioned countries, governments and persons. If we were to fail to comply with U.S. export law requirements, U.S. customs regulations, U.S. economic sanctions or other applicable U.S. laws, we could be subject to substantial civil and criminal penalties, including fines, incarceration for responsible employees and managers and the possible loss of export or import privileges. U.S. export controls, sanctions and regulations apply to our channel partners as well as to us. Any failure by our channel partners to comply with such laws, regulations or sanctions could have negative consequences, including reputational harm, government investigations and penalties.

In addition, various countries regulate the import of certain encryption and other technology by requiring an import permit, authorization, pre-classification, import certification and/or an import license. Some countries have enacted laws that could limit our customers’ ability to implement our solutions in those countries.

Changes in our solutions or changes in export and import regulations may create delays in the introduction of our solutions into international markets, prevent our customers with international operations from deploying our solutions globally or, in some cases, prevent the export or import of our solutions to certain countries, governments or persons altogether. In addition, any change in export or import regulations, economic sanctions or related legislation, shift in the enforcement or scope of existing regulations, or change in the countries, governments, persons or technologies targeted by such regulations, could result in decreased use of our solutions by, or in our decreased ability to export or sell our solutions to, existing or potential customers with international operations. Any decreased use of our solutions or limitation on our ability to export or sell our solutions would likely adversely affect our business, financial condition and operating results.

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Risks Related to Ownership of Our Common Stock

Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations.

In general, under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change net operating losses, or NOLs, to offset future taxable income. Our existing NOLs may be subject to limitations arising from previous ownership changes. Future changes in our stock ownership, some of which are outside of our control, could result in an ownership change. Furthermore, our ability to utilize NOLs of companies that we may acquire in the future may be subject to limitations. There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs, or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities. For these reasons, we may not be able to utilize a material portion of the NOLs reflected on our balance sheet, even if we attain profitability.

The price of our common stock has been and may continue to be weak, and you could lose all or part of your investment.

The trading price of our common stock has declined since our Initial Public Offering, and the shares are thinly traded. The trading price of our common stock depends on a number of factors, including those described in this “Risk Factors” section, many of which are beyond our control and may not be related to our operating performance.

Since shares of our common stock were sold at our initial public offering, our stock price has ranged from as low as $2.56 to as high as $12.96 through June 30, 2019. These fluctuations could cause you to lose all or part of your investment in our common stock, because you might be unable to sell your shares at or above the price you paid. Factors that could cause fluctuations in the trading price of our common stock include the following:


	—	failure to meet quarterly guidance with regard to revenue, ARR, cash flow breakeven or other key metrics;

	—	price and volume fluctuations in the overall stock market from time to time;

	—	volatility in the market prices and trading volumes of high technology stocks;

	—	changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;

	—	sales of shares of our common stock by us or our stockholders;

	—	failure of financial analysts to maintain coverage of us, changes in financial estimates by any analysts who follow our company, or our failure to meet these estimates or the expectations of investors;

	—	announcements by us or our competitors of new products or new or terminated significant contracts, commercial relationships or capital commitments;

	—	the public’s reaction to our press releases, other public announcements and filings with the SEC;

	—	rumors and market speculation involving us or other companies in our industry;

	—	actual or anticipated changes in our results of operations or fluctuations in our operating results;

	—	actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally;

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	—	litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors;

	—	developments or disputes concerning our intellectual property or other proprietary rights;

	—	announced or completed acquisitions of businesses or technologies by us or our competitors;

	—	new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

	—	changes in accounting standards, policies, guidelines, interpretations or principles;

	—	any major change in our management;

	—	general economic conditions and slow or negative growth of our markets; and

	—	other events or factors, including those resulting from war, incidents of terrorism or responses to these events.

In addition, broad market and industry factors may seriously affect the market price of our common stock, regardless of our actual operating performance. In addition, in the past, following periods of volatility in the overall market and the market prices of particular companies’ securities, securities class action litigation has often been instituted against these companies. Litigation of this type has been instituted against us, and could result in substantial costs and a diversion of our management’s attention and resources.

If financial or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our stock, our stock price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that industry or financial analysts publish about us or our business. We do not control these analysts or the content and opinions included in their reports. If any of the analysts who cover us issue an adverse or misleading opinion regarding our stock price, our stock price would likely decline. Financial analysts have in the past ceased coverage of our stock or published adverse reports, and this may recur in the future. Any cessation of coverage or adverse reports would likely cause our stock price or trading volume to decline.

Insiders continue to have substantial control over our company, which could limit your ability to influence the outcome of key transactions, including a change of control.

Our directors, executive officers and each of our stockholders who own greater than 5% of our outstanding common stock and their affiliates, in the aggregate, own approximately 27% of the outstanding shares of our common stock as of June 30, 2019. As a result, these stockholders, if acting together, will be able to influence or control matters requiring approval by our stockholders, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions. They may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. This concentration of ownership may have the effect of delaying, preventing or deterring a change of control of our company, could deter certain public investors from purchasing our common stock and might ultimately affect the market price of our common stock.

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We have in the past failed, and may in the future fail, to meet our publicly announced guidance or other expectations about our business and future operating results, which has in the past caused, and would in the future cause, our stock price to decline.

We have provided and may continue to provide guidance about our business and future operating results as part of our press releases, conference calls or otherwise. In developing this guidance, our management must make certain assumptions and judgments about our future performance. Our business results may vary significantly from such guidance due to a number of factors, many of which are outside of our control, and which could adversely affect our operations and operating results. Furthermore, if our publicly announced guidance of future operating results fails to meet expectations of securities analysts, investors or other interested parties, the price of our common stock would decline.

We have been an “Emerging Growth Company,” and any decision on our part to comply only with certain reduced disclosure requirements applicable to Emerging Growth Companies could make our common stock less attractive to investors.

Until December 31, 2019, we will continue to be an “emerging growth company,” as defined in the JOBS Act enacted in April 2012, and, for as long as we continue to be an “emerging growth company,” we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies, but not to “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive if we choose to rely on these exemptions. If some investors find our common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our common stock and our stock price may be more volatile.

Our future capital needs are uncertain, and we may need to raise additional funds in the future. If we require additional funds in the future, those funds may not be available on acceptable terms, or at all.

We may need to raise substantial additional capital in the future to:


	—	fund our operations;

	—	continue our research and development;

	—	develop and commercialize new solutions; or

	—	acquire companies, in-licensed solutions or intellectual property.

Our future funding requirements will depend on many factors, including:


	—	market acceptance of our solutions;

	—	the cost of our research and development activities;

	—	the cost of defending and resolving litigation or other legal disputes;

	—	the cost and timing of establishing additional sales, marketing and distribution capabilities;

	—	the cost and timing of establishing additional technical support capabilities;

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	—	the effect of competing technological and market developments; and

	—	the market for different types of funding and overall economic conditions.

We may require additional funds in the future, and we may not be able to obtain those funds on acceptable terms, or at all. If we raise additional funds by issuing equity securities, our stockholders may experience dilution. Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. Any debt or additional equity financing that we raise may contain terms that are not favorable to us or our stockholders.

If we do not have, or are not able to obtain, sufficient funds, we may have to delay development or commercialization of our solutions. If we are unable to raise adequate funds, we may have to liquidate some or all of our assets, or delay, reduce the scope of or eliminate some or all of our development programs. We also may have to reduce marketing, customer support or other resources devoted to our solutions or cease operations. Any of these actions could harm our operating results.

Sales of substantial amounts of our common stock in the public markets, or the perception that these sales might occur, could reduce the price that our common stock might otherwise attain and may dilute your voting power and your ownership interest in us.

Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales could occur, could adversely affect the market price of our common stock and may make it more difficult for you to sell your common stock at a time and price that you deem appropriate. At June 30, 2019, we have 109,770,021 shares of common stock outstanding, excluding any potential exercises of our outstanding stock options and vesting of restricted stock units (“RSUs”).

In the future, we may issue additional shares of common stock, or securities with convertible features into our common stock, from time to time in connection with our employee equity plans, financings, acquisitions and investments or otherwise.

On June 14, 2017, our shareholders approved in a proxy vote the amendment of our 2014 Employee Stock Purchase Plan, or ESPP, to provide for a one-time increase of 1,200,000 shares of common stock available for issuance under the ESPP. In February of 2018, we issued 1,220,822 shares of common stock under our 2017 Executive and Non-Executive Bonus Plans. In February of 2019, we issued 1,338,220 shares of common stock under our 2018 Executive and Non-Executive Bonus Plans. In March 2019, we approved 2019 Non-Executive and Executive Bonus Plans which will be paid in full or in large part by issuing shares of common stock should we meet the operating metrics required for payout under the plans. The issuance of shares of common stock under RSUs, future bonus programs, or our ESPP could result in substantial dilution to our existing stockholders and cause the trading price of our common stock to decline.

Certain provisions in our charter documents and Delaware law could limit attempts by our stockholders to replace or remove our board of directors or current management and limit the market price of our common stock.

Provisions in our certificate of incorporation and bylaws may have the effect of delaying or preventing a change of control or changes in our management. These provisions include the following:


	—	our board of directors has the right to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;

	—	our stockholders may not act by written consent or call special stockholders’ meetings; as a result, a holder, or holders, controlling a majority of our capital stock would not be able to take certain actions other than at annual stockholders’ meetings or special stockholders’ meetings called by the board of directors, the chairman of the board, the chief executive officer or the president;

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—

our certificate of incorporation prohibits cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;


	—	stockholders must provide advance notice and additional disclosures in order to nominate individuals for election to the board of directors or to propose matters that can be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company; and

	—	our board of directors may issue, without stockholder approval, shares of undesignated preferred stock; the ability to issue undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us.

As a Delaware corporation, we are also subject to certain Delaware anti-takeover provisions. Under Delaware law, a corporation may not engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other things, the board of directors has approved the transaction. Our board of directors could rely on Delaware law to prevent or delay an acquisition of our company.

Our executive officers are entitled to accelerated vesting of their stock options pursuant to the terms of their employment arrangements under certain conditions following a change of control of the Company. In addition to the arrangements currently in place with some of our executive officers, we may enter into similar arrangements in the future with other officers. Such arrangements could delay or discourage a potential acquisition of the Company.

Our financial results may be adversely affected by changes in accounting principles applicable to us.

U.S. GAAP are subject to interpretation by the Financial Accounting Standards Board (“FASB”), the SEC, and other various bodies formed to promulgate and interpret appropriate accounting principles. For example, in May 2014, the FASB issued accounting standards update No. 2014-09 (Topic 606), Revenue from Contracts with Customers, which superseded nearly all existing revenue recognition guidance under U.S. GAAP. We implemented this guidance in the first quarter of our fiscal year 2018. The most significant impact related to our accounting for subscriptions to our on-premise licenses, specifically, as under the new standard we recognize revenue from those subscriptions predominantly at the time of billing rather than ratably over the license term, potentially making revenue more volatile and difficult to predict. In addition, accounting for commissions was impacted significantly as we capitalize and amortize most commissions under the new standard instead of expensing commissions as incurred. Due to the complexity of certain of our contracts, the revenue recognition treatment required under the new standard is dependent on contract-specific terms. Any difficulties in adequately accounting under the new standard could cause us to fail to meet our financial reporting obligations, which could result in regulatory discipline and h arm investors’ confidence in us.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Repurchase Program

In October 2018, the Company’s Board of Directors approved a common stock repurchase program (“Repurchase Program”) whereby the Company is authorized to purchase up to a maximum of $25 million of its common stock, subject to compliance with applicable laws and the limitations in the Company’s credit facilities on stock repurchases.

The authorization allows repurchases from time to time in the open market or in privately negotiated transactions. The amount and timing of repurchases made under the Repurchase Program will depend on a variety of factors, including available liquidity, cash flow and market conditions. Shares can be purchased through the Repurchase Program through October 2020, unless extended or shortened by the Company’s Board of Directors. The Repurchase Program does not obligate the Company to acquire any particular amount of common stock and the program may be

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modified or suspended at any time at the Company’s discretion. The repurchases would be funded from available working capital and are subject to compliance with the terms and limitations of the Company’s credit facilities.

All shares repurchased in the current period under the Repurchase Program were made in the open market.

Net Settlement of Equity Awards

The majority of restricted stock units are subject to vesting. The underlying shares of common stock are issued when the restricted stock units vest. The majority of participants choose to participate in a broker-assisted automatic sales program to satisfy their applicable tax withholding requirements. We do not treat the shares sold pursuant to this automatic sales program as common stock repurchases.

In the second quarter of 2019, we withheld shares through net settlements (where the award holder receives the net of the shares vested, after surrendering a portion of the shares back to the Company for tax withholding) for some of our restricted stock units that vested.

The following table provides a summary of the Company’s repurchase of common stock under the Repurchase Program and shares surrendered back to the Company for tax withholding on restricted stock units that vested under our equity incentive programs in the three months ended June 30, 2019:

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Period	Total Number of Shares Repurchased	Average Price Paid per Share		Total Number of Shares Purchased As Part of a Publicly Announced Program	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Repurchase Program
April 1, 2019 through April 30, 2019	—		n/a	—	$	17,567,980
May 1, 2019 through May 31, 2019	329,391	$	5.58	261,543	$	16,103,515
June 1, 2019 through June 30, 2019	280,677	$	5.44	280,677	$	14,577,990
Total shares repurchased	610,068	$	5.52	542,220	$	14,577,990

Through of June 30, 2019, we have used proceeds from our IPO to fund our operations, including hiring employees in all major functional areas. We maintain the remaining cash received from our IPO in cash and cash equivalents and short-term investments. As of June 30, 2019, no portion of the proceeds from our IPO have been paid by us directly or indirectly to any of our directors or officers (or their associates) or persons owning ten percent or more of any class of our equity securities or to any other affiliates, other than payments in the ordinary course of business to officers for salaries and bonuses, and payments to our directors for service on our Board of Directors or on committees of our Board of Directors.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

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Item 5. Other Information

Not applicable.

Item 6. Exhibits

The exhibits listed on the accompanying Exhibit Index are filed or incorporated by reference (as stated therein) as part of this Quarterly Report on Form 10-Q.

EXHIBIT INDEX

Incorporated by Reference

Exhibit

Number

Description

Exhibit
Number

Filing

Filing
Date

File No.

Filed
Herewith

3.1

Amended and Restated Certificate of Incorporation of MobileIron, Inc.

3.1

8-K

June 17, 2014

001-36471

3.2

Amended and Restated Bylaws of MobileIron, Inc.

3.4

S-1/A

May 29, 2014

333-195089

4.1

Reference is made to Exhibits 3.1 and 3.2 above

4.2

Amended and Restated Investors’ Rights Agreement, dated August 29, 2013

4.2

S-1

April 7, 2014

333-195089

10.1

Amendment to Resale Agreement between MobileIron, Inc. and AT&T Services, Inc., dated April 3, 2019

10.2

Amendment to Resale Agreement between MobileIron, Inc. and AT&T Services, Inc. dated April 3, 2019

31.1

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 ( 1 )

Certification of Chief 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


EX—101.INS		XBRL Instance Document

EX—101.SCH		XBRL Taxonomy Extension Schema

EX—101.CAL		XBRL Taxonomy Extension Calculation Linkbase

EX—101.DEF		XBRL Taxonomy Extension Definition Linkbase

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EX—101.LAB		XBRL Taxonomy Extension Label Linkbase

EX—101.PRE		XBRL Taxonomy Extension Presentation Linkbase

(1)

The certifications attached as Exhibit 32.1 accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		MOBILEIRON, INC.

		By:	/s/ Simon Biddiscombe
			Simon Biddiscombe
			President and Chief Executive Officer
			(Principal Executive Officer)


		By:	/s/ Scott D. Hill
			Scott D. Hill
			Chief Financial Officer
			(Principal Financial Officer and Accounting Officer)

Dated: August 2, 2019

Exhibit 10.1

Amendment No.

5983.A.016

Between

AT&T Services, Inc.

And

MobileIron, Inc.

AMENDMENT NO. 16 TO

AGREEMENT NO. 5 983.C

After all Parti es hav e sig n e d , thi s A mendment is mad e effec tiv e as of the l ast date sig ned by a Party ( "E ffe c ti ve Dat e " ) a nd is b e t wee n Mobil eIro n , Inc ., a Dela wa r e corporat i on ( " S uppli er " ) , and AT&T Serv i ces , In c ., a D e la wa r e corporation ( " AT&T " ) , e a c h o f w hi c h ma y be r efe rr ed t o in th e s in g ular as a " Party " o r in the plural as the " P art i es " .

WITNESS ETH

WHE REAS , S uppli er and AT&T e nt ered into Agreeme nt No. 20100106.054.C (subsequently renumbered as 5 98 3 . C) on A pril 22 , 2010 (as s ub seq uentl y amended , the " Agree m e nt " ) ;

WHE REAS , S uppli e r and AT&T de s ire to amend th e Ag r ee m e nt as he r e in a ft e r se t forth

NOW, THEREFORE , in co ns id e ra ti o n of t h e premises a nd th e covenant s hereinafter co nt ained , the Parti es h ereto ag r ee as follows:

1. Section 3.11, titled " Duration of Agreement ," is hereb y deleted in it s entirety and replaced with a new Section bearing the same title, as follows:

3.11

Duration of Agree ment

This Agreement co mmen ces as of the Effec ti ve Dat e and will co ntinu e in effect for a t e rm expiring May 01, 2022 unl ess it is Ca n ce ll e d or Terminated b efo r e that dat e.

Any Ord er in effec t on the d a t e w h e n this Ag re e m ent ex pir es o r i s Te rminat e d or Ca n ce ll ed w ill co ntinue in e ffect until s u c h Order e ither (i) exp i res b y it s own t er m s o r ( ii ) i s se p ara tel y Terminated or Cance ll e d , prior to i t s own ex pi ratio n , as pro v id e d in thi s Agreement. The term s and co nditi o n s of thi s Agreement s hall co ntinu e to app l y to s u c h Ord er as if this Agree ment we r e st ill in effec t.

The terms and co nditi o n s of the Agreement in a ll other respects remain unmodified and i n full force and effect.

Original sig natur es transmitted and received via facsimile or other e lectronic transmission of a sc anned document , (e . g ., . pdf or sim ilar format) are true and valid s i gna tur es for all purposes hereunder and shall bind the Parti es to th e sa m e extent as that of an original signa tur e. Thi s Amendment ma y be executed in multiple co unterparts , ea ch of which shall b e d ee med to constitute an original but all of w hich together s hall constitute onl y one document.

IN WITNESS WHEREOF , the Partie s ha ve cau se d this Amendment to th e Agreement to be exec ut e d , as of the Effec tiv e Date .


MobileIron , Inc.	AT&T Services , Inc.
/s/Drew Hallin	/s/ Bhaskar Chundru
Printed Name: Drew Hallin:	Print e d Name: Bhaskar Chundru
Title: Vice President, Legal	Title: Senior Sourcing Manager
Date: April 3, 2019	Date: April 3, 2019

EXHIBIT 10.2

CERTAIN CONFIDENTIAL INFORMATION IN THIS DOCUMENT, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED.

Amendment

No. 5983.A.017

between

AT&T Services, Inc.

and

MobileIron, Inc.

AMENDMENT NO. 17

AGREEMENT NO. 5983.C

After all Parties have signed, this Amendment is made effective as of the last date signed by a Party (“Effective Date”) and is between MobileIron, Inc., a Delaware corporation (“Supplier”), and AT&T Services, Inc., a Delaware corporation (“AT&T”), each of which may be referred to in the singular as a “Party” or in the plural as the “Parties”.

WITNESSETH

WHEREAS , Supplier and AT&T entered into Agreement No. 20100106.054.C (subsequently renumbered as 5983.C) on April 22, 2010 (as subsequently amended, the “Agreement”) ;

WHEREAS , Supplier and AT&T desire to amend the Agreement as hereinafter set forth

NOW, THEREFORE , in consideration of the premises and the covenants hereinafter contained, the Parties hereto agree as follows:

Section 3.30, titled “Price Revisions,” in the Agreement is hereby deleted and replaced in its entirety with a new Section 3.30 bearing the same title, as follows:

3.30 Price Revisions

Upon [***] written notice to AT&T, such notice to provide sufficient particularity for AT&T to understand the change that the Supplier may make, Supplier may change [***], such changes to be memorialized through a new [***] emailed to AT&T. That new [***] shall [***] supersede and replace the [***] in Appendix B as the then-current [***] following [***]. Orders received by Supplier prior to [***] will be [***]. Upon request, Supplier will [***]. In the event that [***], [***]. Regarding Orders placed after the effective date of Amendment 17 to the Agreement, Supplier will [***]. For [***], Supplier will [***]. For [***], AT&T may [***]. MobileIron shall provide the [***] to AT&T, at jackie.klock@att.com with a copy to tony.mazraai@att.com or such other person(s) as AT&T may designate from time to time.

2. Section 3.29, titled “Ownership of Work Product,” is hereby deleted and replaced in its entirety with a new Section 3.29, titled “Incidental Development and Reservation of Rights,” as follows:

3.29 Incidental Development and Reservation of Rights.

Incidental Development. The parties do not currently anticipate that there will be any Paid-For Development under this Agreement (including under any subordinate agreement, SOW or Order hereunder). Any Paid-For Development should be negotiated and performed under a standalone, separate written agreement mutually executed by the Parties. In the event, however, AT&T is charged monies for any development, enhancement or modification performed by or on behalf of Supplier under this Agreement (“Paid-For Development”), Supplier shall assign and hereby assigns to AT&T all right, title and interest in such Paid-For Development. (In no event shall Paid-For Development include Items i) owned by Supplier to the extent and in the form they existed prior to the date Supplier began any work under this Agreement, ii) to the extent developed by Supplier independently of any work performed under this Agreement, or iii) to the extent that they constitute Mere Reconfigurations. AT&T’s payment of Supplier’s standard license fees, standard installation fees, or standard maintenance-and-support fees shall not be deemed a payment triggering Paid-For Development.) Thereafter, Supplier may request that AT&T assign back to Supplier such right, title and interest, and AT&T shall not unreasonably withhold its agreement to make such assignment, provided however that, in the event AT&T does agree to make such assignment, Supplier agrees to (1) grant AT&T and its affiliates a perpetual, irrevocable, royalty-free, world-wide, non-exclusive license to (a) make, copy, use, import, create derivative works of, sell, offer to sell, disclose, distribute and otherwise exploit the Paid-For Development in AT&T’s and its affiliates’ present and future business operations, and (b) sublicense others to do these same activities on AT&T’s behalf (such sublicense including, without limitation, the right of AT&T customers to use AT&T products and services), and (2) pay AT&T, in compensation for the assignment, an amount equal to the monies AT&T previously paid to Supplier for such Paid-For Development. Any such assignment to Supplier, along with the attendant license and reimbursement to AT&T and its affiliates, shall be made in a separate written, mutually executed, agreement.

Reservation of Rights.
Other than as to Paid-For Development, or as provided elsewhere in this Agreement, Supplier is not transferring or granting to AT&T any right, title or interest, or granting AT&T or its customers any license or permissions (other than those related to distributing or making use of Items provided by or on behalf of Supplier) in or to any or all Items provided by or on behalf of Supplier. Notwithstanding any other provision in this Agreement, AT&T is not transferring or granting to Supplier any right, title, or interest in or to (or granting to Supplier any license or other permissions in or to) any or all: a) Items created by or on behalf of AT&T or directly or indirectly provided to Supplier (in any form, including, without limitation, verbally) by or on behalf of AT&T or its third party providers (“AT&T Provided Items”); b) Paid-For Development; or c)

Intellectual Property Rights, including, without limitation, any Intellectual Property Rights in or to any AT&T Provided Items or Paid-For Development. AT&T Provided Items and Paid-For Development shall constitute AT&T Information under this Agreement.

Definitions.

1. “Items” shall mean any or all inventions, discoveries, ideas (whether patentable or not), and all works and materials, including but not limited to products, devices, computer programs, source codes, designs, files, specifications, texts, drawings, processes, feedback, data or other information or documentation in preliminary or final form, and all Intellectual Property Rights in or to any of the foregoing.

2. “Intellectual Property Rights” means all patents (including all reissues, divisions, continuations, and extensions thereof) and patent applications, trade names, trademarks, service marks, logos, trade dress, copyrights, trade secrets, mask works, rights in technology, database rights, know-how, rights in content (including but not limited to performance and synchronization rights), or other intellectual property rights, protected under the laws of any domestic or foreign governmental authority having jurisdiction.

3. “Mere Reconfigurations” means those specific reconfigurations of Supplier’s pre-existing software performed by Supplier under this Agreement, but only to the extent that such reconfiguration does not add any features, functionality, or capabilities.

3.A new Section 3.47, titled “ Offshore Work Permitted Under Specified Conditions,” is hereby added to the Agreement, as follows:

3.47 Offshore Work Permitted Under Specified Conditions

Supplier shall not perform any Services under this Agreement or allow such performance by any Supplier affiliate or Subcontractor (hereinafter Supplier, its affiliates and Subcontractors are individually referred to as a “Supplier Entity” or collectively as the “Supplier Entities”) [***] unless AT&T consents to [***]. In the event of such consent, [***]. Prior to Supplier’s [***], AT&T must consent to [***]. [***]. The requirements of this Section shall be in addition to the Sections entitled “Assignment and Delegation,” “Material and Services Provided by Others” and “Use of Subcontractors”.

[***].

Supplier’s compliance with this Section, and all Services performed [***], shall be subject to [***].

Supplier acknowledges that AT&T is constantly reviewing the security requirements for AT&T’s networks, systems and applications, and access to AT&T Information or Supplier Entity storage of AT&T Information. As a condition to AT&T approving this Agreement and granting Supplier Entity access to AT&T’s non-public, firewall-protected networks, systems, and applications, or granting Supplier Entity access to AT&T Information or allowing Supplier Entity to store AT&T Information, Supplier agrees that [***]. In the event that [***].

Prior to interconnecting with, or otherwise accessing the AT&T internal company network, or doing any other work at an Offshore Location, Supplier must be in compliance with all AT&T requirements for such interconnection, access or other Services as agreed in writing by the parties.

Any Services under this Agreement performed by a Supplier Entity [***] in accordance with Subsection “a” of this Section shall be [***].

When AT&T has [***], Supplier shall [***]. Nothing contained within this Agreement is intended to extend, nor does it extend, any rights or benefits to any Subcontractor, and no third party beneficiary right is intended or granted to any third party hereby.

Supplier shall advise AT&T as early as possible prior to [***]. AT&T may, but shall not be obligated to, [***]. [***].

Supplier’s work involving providing support activities (specifically, sustaining support) for AT&T and/or AT&T customers related to Supplier products (including software) [***] including the following:

[***];

[***]; and

[***].

In the event that AT&T identifies [***], then AT&T may [***]. If Supplier [***], then AT&T [***]. Upon [***], AT&T [***].

4. A new Appendix K, titled “Offshore Locations,” is hereby added to the Agreement in the form attached to this Amendment

5. Section 4.28, titled “AT&T Supplier Information Security Requirements (SISR),” in the Agreement is hereby deleted and replaced in its entirety with a new Section 4.28 bearing the same title, as follows:

4.28. AT&T Supplier Information Security Requirements (SISR)

Supplier agrees to comply with the AT&T Supplier Information Security Requirements (SISR) set forth in Appendix O attached hereto and incorporated by reference herein. Supplier agrees to cooperate with AT&T to complete checklists or similar documentation as AT&T may reasonably request to demonstrate that Software and/or computer systems Supplier develops, designs, supports and/or uses under this Agreement that are subject to SISR comply with the standards and requirements set forth in SISR. [***].

6. Appendix O in the Agreement, titled “Supplier Information Security Requirements (SISR)”, is replaced in its entirety with Appendix O bearing the same title, in the form attached to this Amendment

7. A new Section 4.29, titled “ General Data Protection Regulation (GDPR),” is hereby added to the Agreement as follows:

4.29 General Data Protection Regulation (GDPR)

Supplier shall comply with the requirements set forth in Appendix – EU Data Privacy and GDPR Data Processing Obligations attached hereto as Appendix Y:

8. A new Appendix Y, titled “ EU Data privacy and GDPR Data Processing obligations, ” is hereby added to the Agreement in the form attached to this Amendment

9. Section 4.5, titled “Customer Information,” in the Agreement is hereby deleted and replaced in its entirety with a new Section 4.5 bearing the same title as follows:

4.5 Customer Information

As between Supplier and AT&T, title to all Customer Information and customer proprietary network information (“CPNI”) (as that term is defined in Section 222 of the Communications Act of 1934, 47 U.S.C. §222 (as amended, “Section 222”)) shall be in AT&T. Except as otherwise provided herein, no license or rights to any Customer Information are granted to Supplier hereunder.

b. Supplier acknowledges that Customer Information received may be subject to certain privacy laws and regulations and requirements, including requirements of AT&T. Supplier shall consider Customer Information to be private, sensitive and confidential. Accordingly, with respect to Customer Information, Supplier shall comply with all applicable privacy laws and regulations and requirements, including the CPNI restrictions contained in Section 222. Accordingly, Supplier shall:

i. not use any CPNI to market or otherwise sell products to AT&T’s customers, except to the extent necessary for the performance of Services for AT&T or as otherwise approved or authorized by AT&T in this Agreement or in writing;

ii. make no disclosure of Customer Information to any party other than AT&T or the applicable Customer , except to the extent necessary for the performance of Services for AT&T or except such disclosure required under force of law; provided that Supplier shall provide AT&T with notice immediately upon receipt of any legal request or demand by a judicial, regulatory or other authority or third party to disclose or produce Customer Information; Supplier shall furnish only that portion of the Customer Information that is legally required to furnish and shall provide reasonable cooperation to AT&T should AT&T exercise efforts to obtain a protective order or other confidential treatment with respect to such Customer Information;

iii. logically separate AT&T Customer Information into any database from other Supplier customer information in Supplier’s databases

iv. not incorporate any data from any of Supplier’s other customers, including Affiliates of AT&T, into AT&T’s customer database;

v. make no use whatsoever of any Customer Information for any purpose except to comply with the terms of this Agreement,

vi. make no sale, license or lease of Customer Information to any other party;

vii. restrict access to Customer Information to only those employees of Supplier that require access or to perform Services under this Agreement;

viii. prohibit and restrict access or use of Customer Information by any of Supplier’s other customers, Supplier’s Affiliates, or third parties except as may be agreed otherwise by AT&T or the applicable Customer. ;

ix. promptly return all Customer Information to AT&T upon expiration or termination of this Agreement or applicable schedule or Order, unless expressly agreed or instructed otherwise by AT&T; and

x. immediately notify AT&T upon Supplier’s awareness of (1) any breach of the above-referenced provisions, (2) any disclosure (inadvertent or otherwise) of Customer Information to any third party not expressly permitted herein to receive or have access to such Customer Information, except that such Customer Information may be provided to third party service providers that provide services that allow the Supplier to provide the Services to or (3) a security breach of Supplier’s systems or network that causes or permits access to Customer Information inconsistent with the above-referenced provisions, and such notice shall include the details of the breach, disclosure. To the extent permitted by law, Supplier shall fully cooperate with AT&T in determining, as may be necessary or appropriate, actions that need to be taken including, but not limited to, the full scope of the breach, disclosure or security incident, corrective steps to be taken by Supplier, the nature and content of any customer notifications, law enforcement involvement, or news/press/media contact etc., and Supplier shall not communicate directly with any AT&T customer without AT&T’s consent, which such consent shall not be unreasonably withheld.

10.

A new Section 4.30, titled “Derived Information,” is hereby added to the Agreement as follows:

4.30 AT&T Derived Information

Definitions . For purposes of this Section, [***]

Rights and Obligations .

[***]

11. A new Section 4.31, titled “FOSS,” is hereby added to the Agreement as follows:

4.31 FOSS

a. For purposes of this Section, “FOSS” means [***].

b. [***]

c. Supplier represents and warrants to AT&T: [***].

d. In the event that AT&T notifies Supplier or Supplier becomes aware of [***], then in either case, Supplier shall [***]. Supplier shall promptly notify AT&T of all actions taken by Supplier to [***]. Should AT&T receive notice from any third party alleging acts or omissions which, notwithstanding AT&T’s use of the FOSS for the intent and purposes furnished hereunder, constitute [***], then [***].

The terms and conditions of the Agreement in all other respects remain unmodified and in full force and effect.

Original signatures transmitted and received via facsimile or other electronic transmission of a scanned document, (e.g., .pdf or similar format) are true and valid signatures for all purposes hereunder and shall bind the Parties to the same extent as that of an original signature. This Amendment may be executed in multiple counterparts, each of which shall be deemed to constitute an original but all of which together shall constitute only one document.

IN WITNESS WHEREOF , the Parties have caused this Amendment to the Agreement to be executed, as of the Effective Date.

MobileIron, Inc.

AT&T Services, Inc.

By: /s/ Drew Hallin

By: /s/ Bhaskar Chundru

Printed Name: _Drew Hallin______________

Printed Name: Bhaskar Chundru

Title: _Vice President, Legal____________

Title: Senior Sourcing Manager

Date: April 3, 2019

Exhibit 31.1

I, Simon Biddiscombe, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of MobileIron, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: August 2, 2019				/s/ Simon Biddiscombe
				Simon Biddiscombe
				President and Chief Executive Officer
				(Principal Executive Officer)

Exhibit 31.2

I, Scott D. Hill, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of MobileIron, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date August 2, 2019				/s/ Scott D. Hill
				Scott D. Hill
				Chief Financial Officer
				(Principal Financial and Accounting Officer)

Exhibit 32.1

CERTIFICATION

Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), Simon Biddiscombe, President and Chief Executive Officer (Principal Executive Officer) of MobileIron, Inc. (the “Company”), and Scott D. Hill, Chief Financial Officer (Principal Financial and Accounting Officer) of the Company, each hereby certifies that, to the best of his or her knowledge:

1. The Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2019, to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act, and

2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 2, 2019

I N W ITNESS W HEREOF , the undersigned have set their hands hereto as of the 2nd day of August, 2019.

Imon

/s/ Simon Biddiscombe				/s/ Scott D. Hill
Simon Biddiscombe				Scott D. Hill
President and Chief Executive Officer				Chief Financial Officer
(Principal Executive Officer)				(Principal Financial and Accounting Officer)

“This certification accompanies the Form 10-Q 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 MobileIron, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.”