☒
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Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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☐
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Delaware
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77-0534145
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification Number)
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Title of each class
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Trading Symbol(s)
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Name of exchange on which registered
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Common stock, $0.001 par value per share
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QLYS
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NASDAQ Stock Market
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Large accelerated filer
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x
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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||
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•
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our financial performance, including our revenues, costs, expenditures, growth rates, operating expenses and ability to generate positive cash flow to fund our operations and sustain profitability;
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•
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anticipated technology trends, such as the use of cloud solutions;
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•
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our ability to adapt to changing market conditions;
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•
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economic and financial conditions, including volatility in foreign exchange rates;
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•
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our ability to diversify our sources of revenues, including selling additional solutions to our existing customers and our ability to pursue new customers;
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•
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the effects of increased competition in our market;
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•
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our ability to innovate, enhance our cloud solutions and platform and introduce new solutions;
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•
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our ability to effectively manage our growth;
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•
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our anticipated investments in sales and marketing, our infrastructure, new solutions, research and development, and acquisitions;
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•
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maintaining and expanding our relationships with channel partners;
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•
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our ability to maintain, protect and enhance our brand and intellectual property;
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•
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costs associated with defending intellectual property infringement and other claims;
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•
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our ability to attract and retain qualified employees and key personnel, including sales and marketing personnel;
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•
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our ability to successfully enter new markets and manage our international expansion;
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•
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our expectations, assumptions and conclusions related to our provision for income taxes, our deferred tax assets and our effective tax rate; and
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•
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other factors discussed in this Annual Report on Form 10-K in the sections titled "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business."
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Item 1.
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Business
|
•
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No hardware to buy or manage. There is no infrastructure or software to buy and maintain thus reducing our customers’ operating costs; all services are accessible in the cloud via web interface. Qualys operates and maintains the platform.
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•
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Real-time visibility in one place, anytime and anywhere. Our customers can conveniently see their security and compliance posture across their global IT asset inventory in one browser window, without plugins or a virtual private network (VPN), whenever and wherever Internet access is available.
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•
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Easy global scanning. Our customers can easily perform scans on geographically distributed and segmented networks at the perimeter, behind the firewall, on dynamic cloud environments and on endpoints.
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•
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Seamless scaling. Our cloud platform is a scalable, comprehensive, and end-to-end solution for the IT, security and compliance needs of our customers. Our customers can seamlessly add new coverage, users and services after they have deployed our platform.
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•
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Up to date resources. Qualys has one of the largest knowledge bases of vulnerability signatures in the industry. All security updates are made in real-time.
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•
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Data stored securely. Data is securely stored and processed in a multi-tiered architecture of load-balanced servers. Our encrypted databases are physically and logically secured.
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•
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IT Security: Vulnerability Management (VM), Threat Protection (TP), Continuous Monitoring (CM), Patch Management (PM), Indication of Compromise (IOC);
|
•
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Compliance Monitoring: Policy Compliance (PC), PCI Compliance (PCI), File Integrity Monitoring (FIM), Security Configuration Assessment (SCA), Security Assessment Questionnaire (SAQ), Out of-Band Configuration Assessment (OCA);
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•
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Web Application Security: Web Application Scanning (WAS), Web Application Firewall (WAF);
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•
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Global IT Asset Management: Global IT Asset Inventory (AI), CMDB Sync (SYN), Certificate Inventory (CRI); and,
|
•
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Cloud/Container Security: Cloud Inventory (CI), Cloud Security Assessment (CSA), Container Security
|
•
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Asset Tagging and Management. Enables customers to easily identify, categorize and manage large numbers of assets in highly dynamic IT environments and automates the process of inventory management and hierarchical organization of IT assets. Built on top of this core service is the Qualys AI framework, which is a global asset inventory service enabling our customers to search for information on any IT asset, scaling to millions of assets for customers of all sizes, helping IT and security personnel to search IT assets and maintain an up-to-date inventory on a continuous basis.
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•
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Reporting and Dashboards. A highly configurable reporting engine that provides customers with reports and dashboards based on their roles and access privileges.
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•
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Questionnaires and Collaboration. A configurable workflow engine that enables customers to easily build questionnaires and capture existing business processes and workflows to evaluate controls and gather evidence to validate and document compliance.
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•
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Remediation and Workflow. An integrated workflow engine that allows customers to automatically generate helpdesk tickets for remediation and to manage compliance exceptions based on customer-defined policies, enabling subsequent review, commentary, tracking and escalation. This engine automatically distributes remediation tasks to IT administrators upon scan completion, tracks remediation progress and closes open tickets once patches are applied and remediation is verified in subsequent scans.
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•
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Big Data Correlation and Analytics Engine. Provides Elasticsearch capabilities for indexing, searching and correlating large amounts of security and compliance data with other security incidents and third-party security intelligence data. Embedded workflows enable customers to quickly assess risk and access information for remediation, incident analysis and forensic investigations.
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•
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Alerts and Notifications. Creates email notifications to alert customers of new vulnerabilities, malware infections, scan completion, open trouble tickets and system updates.
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•
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Qualys Global IT Asset Discovery and Inventory app automatically creates a continuous, real-time inventory of known and unknown assets throughout a user's global IT footprint across on-premises, endpoints, multi-cloud, mobile, containers, OT and IoT. The app also automatically normalizes and categorizes assets to ensure clean, reliable, and consistent data. In-depth asset details provide fine-grained visibility on the system, services, installed software, network, and users. It also detects any device that connects to a user's networks, via passive scanning technology. Upon an unknown device detection, users can install a light-weight Qualys self-updating agent (3MB) to turn the device into a managed device or launch a vulnerability scan.
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•
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Qualys Community Edition automatically gathers and analyzes security and compliance data from hybrid IT environments to provide a complete, continuously updated, and instant view of monitored IT assets on-premises or in the cloud, as well as web apps, from a single-pane-of-glass interface. The Community Edition is limited to one user with data retention for three months.
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•
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Qualys CloudView continuously discovers and tracks assets and resources across public cloud deployments to provide users both real-time and historical views of cloud inventory. It collects metadata about cloud assets and resources to help users understand the relationships between public cloud assets and resources across different dimensions and then discover their threat posture based on those attributes and relationships. CloudView is limited to three accounts per public cloud platform.
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•
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Qualys CertView inventories and assesses all Internet-facing certificates to generate SSL/TLS configuration grades, identifies the certificate issuer and tracks certificate expirations to help stop expired and expiring certificates from interrupting critical business functions.
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•
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Continue to innovate and enhance our cloud platform and suite of solutions. We intend to continue to make significant investments in research and development to extend our cloud platform’s functionality by developing new security solutions and capabilities and further enhancing our existing suite of solutions. From inception through December 31, 2018, we have added the following Cloud Apps: VM, PCI, PC, WAS, WAF, CM, SYN, SAQ, TP, FIM, IOC, AI, SCA, CS, CI, CSA, and CRI. In 2019, we introduced Patch Management (PM) and a free version of Global IT Asset Discovery and Inventory.
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•
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Expand the use of our suite of solutions by our large and diverse customer base. With more than 15,700 customers, including active subscribers of our free services, across many industries and geographies, we believe we have a significant opportunity to sell additional solutions to our customers and expand their use of our suite of solutions. Because our customers typically initially deploy one or two of our solutions in select parts of their IT infrastructures, our existing customers serve as a strong source of new sales as they expand their scope and increase their subscriptions or choose to adopt additional solutions from our integrated suite of IT, security and compliance offerings. In this regard, we continue to expand our sales execution and marketing functions to increase adoption of our newly developed solutions among our existing customers.
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•
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Drive new customer growth and broaden our global reach. We are pursuing new customers by targeting key accounts, releasing free IT, security and compliance services and expanding both our sales and marketing organization and network of channel partners. We will continue to seek to make significant investments to encourage organizations to replace their existing security products with our cloud solutions. We intend to expand our relationships with key security consulting organizations, managed security service providers and value-added resellers to accelerate the adoption of our cloud platform. We seek to strengthen existing relationships as well as establish new relationships to increase the distribution and market awareness of our cloud platform and target new geographic regions. We also plan to partner with such security providers that can host our private cloud offering within their data centers, helping us expand our reach in new markets and new geographies.
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•
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Selectively pursue technology acquisitions to bolster our capabilities and leadership position. We may explore acquisitions that are complementary to and can expand the functionality of our cloud platform. We may also seek to acquire development teams to supplement our own personnel and acquire technology to increase the breadth of our cloud-based IT, security and compliance solutions. In 2019, we acquired the software assets of Adya Inc. (Adya), enabling Qualys to provide companies of all sizes with the ability to consolidate administration of their Software as a Service (SaaS) applications into one console, manage license costs across SaaS applications, set and enforce security policies in one place and report and audit on all activity with a single tool. In 2018, we acquired the software assets of 1Mobility Private Limited (1Mobility), a Singapore based company, allowing Qualys to provide enterprises of all sizes with the ability to create and continuously update an inventory of mobile devices on all versions of Android, iOS and Windows Mobile in their environment; and to continuously assess their security and compliance posture, while quarantining devices that are compromised or out-of-compliance. In 2018, we also acquired Layered Insight (Layered Insight), a provider of container native application protection, delivering insight into container images, adaptive analysis of running containers, and automated enforcement of the container environments.
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Item 1A.
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Risk Factors
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•
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the level of demand for our solutions;
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•
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publicity regarding security breaches generally and the level of perceived threats to IT security;
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•
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expenses associated with our existing and new products and services;
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•
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changes in customer renewals of our solutions;
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•
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the extent to which customers subscribe for additional solutions;
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•
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seasonal buying patterns of our customers;
|
•
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security breaches, technical difficulties or interruptions with our service;
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•
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changes in the growth rate of the IT, security and compliance market;
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•
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the timing and success of new product or service introductions by us or our competitors or any other changes in the competitive landscape of our industry, including consolidation among our competitors;
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•
|
the introduction or adoption of new technologies that compete with our solutions;
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•
|
decisions by potential customers to purchase IT, security and compliance products or services from other vendors;
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•
|
the amount and timing of operating costs and capital expenditures related to the operations and expansion of our business;
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•
|
the timing of sales commissions relative to the recognition of revenues;
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•
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the announcement or adoption of new regulations and policy mandates or changes to existing regulations and policy mandates;
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•
|
failure of our products and services to operate as designed;
|
•
|
price competition;
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•
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the length of our sales cycle for our products and services;
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•
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insolvency or credit difficulties confronting our customers, affecting their ability to purchase or pay for our solutions;
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•
|
timely invoicing or changes in billing terms of customers;
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•
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timing of deals signed within the quarter;
|
•
|
pace and cost of hiring employees;
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•
|
changes in foreign currency exchange rates;
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•
|
general economic conditions, both domestically and in the foreign markets in which we sell our solutions;
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•
|
future accounting pronouncements or changes in our accounting policies;
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•
|
our ability to integrate any products or services that we may acquire in the future into our product suite or migrate existing customers of any companies that we may acquire in the future to our products and services;
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•
|
our effective tax rate;
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•
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the amount and timing of income tax benefits that we recognize resulting from excess tax benefits related to stock-based compensation;
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•
|
the timing of expenses related to the development or acquisition of technologies, services or businesses; and
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•
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potential goodwill and intangible asset impairment charges associated with acquired businesses.
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•
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failure to timely meet market demand for product functionality;
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•
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inability to identify and provide intelligence regarding the attacks or techniques used by cyber-attackers;
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•
|
inability to inter-operate effectively with the database technologies, file systems or web applications of our prospective customers;
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•
|
defects, errors or failures;
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•
|
delays in releasing our enhancements or new solutions;
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•
|
negative publicity about their performance or effectiveness;
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•
|
introduction or anticipated introduction of products by our competitors;
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•
|
poor business conditions, causing customers to delay IT, security and compliance purchases;
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•
|
easing or changing of external regulations related to IT, security and compliance; and
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•
|
reluctance of customers to purchase cloud solutions for IT, security and compliance.
|
•
|
greater brand name recognition;
|
•
|
larger sales and marketing budgets and resources;
|
•
|
broader distribution networks and more established relationships with distributors and customers;
|
•
|
access to larger customer bases;
|
•
|
greater customer support resources;
|
•
|
greater resources to make acquisitions;
|
•
|
greater resources to develop and introduce products that compete with our solutions;
|
•
|
greater resources to meet relevant regulatory requirements; and
|
•
|
substantially greater financial, technical and other resources.
|
•
|
foreign currency exchange fluctuations;
|
•
|
trade and foreign exchange restrictions;
|
•
|
economic or political instability in foreign markets;
|
•
|
greater difficulty in enforcing contracts, accounts receivable collection and longer collection periods;
|
•
|
changes in regulatory requirements;
|
•
|
tax laws (including U.S. taxes on foreign subsidiaries);
|
•
|
difficulties and costs of staffing and managing foreign operations;
|
•
|
the uncertainty and limitation of protection for intellectual property rights in some countries;
|
•
|
costs of compliance with foreign laws and regulations and the risks and costs of non-compliance with such laws and regulations;
|
•
|
costs of complying with U.S. laws and regulations for foreign operations, including the Foreign Corrupt Practices Act, import and export control laws, tariffs, trade barriers, economic sanctions and other regulatory or contractual limitations on our ability to sell our solutions in certain foreign markets, and the risks and costs of non-compliance;
|
•
|
heightened risks of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, and irregularities in, financial statements;
|
•
|
the potential for political unrest, acts of terrorism, hostilities or war;
|
•
|
management communication and integration problems resulting from cultural differences and geographic dispersion; and
|
•
|
multiple and possibly overlapping tax structures.
|
•
|
pay substantial damages, including treble damages, if we are found to have willfully infringed a third party’s patents or copyrights;
|
•
|
cease making, licensing or using solutions that are alleged to infringe or misappropriate the intellectual property of others;
|
•
|
expend additional development resources to attempt to redesign our solutions or otherwise develop non-infringing technology, which may not be successful;
|
•
|
enter into potentially unfavorable royalty or license agreements in order to obtain the right to use necessary technologies or intellectual property rights; and
|
•
|
indemnify our partners and other third parties.
|
•
|
announcements of new solutions, services or technologies, commercial relationships, acquisitions or other events by us or our competitors;
|
•
|
fluctuations in stock market prices and trading volumes of securities of similar companies;
|
•
|
general market conditions and overall fluctuations in U.S. equity markets;
|
•
|
variations in our operating results, or the operating results of our competitors;
|
•
|
changes in our financial guidance or securities analysts’ estimates of our financial performance;
|
•
|
changes in accounting principles;
|
•
|
sales of large blocks of our common stock, including sales by our executive officers, directors and significant stockholders;
|
•
|
additions or departures of any of our key personnel;
|
•
|
announcements related to litigation;
|
•
|
changing legal or regulatory developments in the United States and other countries; and
|
•
|
discussion of us or our stock price by the financial press and in online investor communities.
|
•
|
authorizing “blank check” preferred stock, which could be issued by the board without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock, which would increase the number of outstanding shares and could thwart a takeover attempt;
|
•
|
a classified board of directors whose members can only be dismissed for cause;
|
•
|
the prohibition on actions by written consent of our stockholders;
|
•
|
the limitation on who may call a special meeting of stockholders;
|
•
|
the establishment of advance notice requirements for nominations for election to our Board of Directors or for proposing matters that can be acted upon at stockholder meetings; and
|
•
|
the requirement of at least two-thirds of the outstanding capital stock to amend any of the foregoing second through fifth provisions.
|
Item 1B.
|
Unresolved Staff Comments
|
Item 2.
|
Properties
|
Item 3.
|
Legal Proceedings
|
Item 4.
|
Mine Safety Disclosures
|
Plan Category
|
|
(a) Number of Securities to be
Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights
|
|
(b) Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
|
|
(c) Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column (a)(2)
|
||||
Equity compensation plans approved by security holders(1)
|
|
2,866,675
|
|
|
$
|
40.5
|
|
|
5,243,730
|
|
Equity compensation plans not approved by security holders
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
Dec 31, 2014
|
|
Dec 31, 2015
|
|
Dec 31, 2016
|
|
Dec 31, 2017
|
|
Dec 31, 2018
|
|
Dec 31, 2019
|
||||||||||||
Qualys, Inc.
|
$
|
100.00
|
|
|
$
|
143.18
|
|
|
$
|
136.95
|
|
|
$
|
256.82
|
|
|
$
|
323.41
|
|
|
$
|
360.75
|
|
NASDAQ Global Select Market
|
$
|
100.00
|
|
|
$
|
120.64
|
|
|
$
|
129.80
|
|
|
$
|
166.71
|
|
|
$
|
160.58
|
|
|
$
|
217.75
|
|
NASDAQ Computer
|
$
|
100.00
|
|
|
$
|
127.36
|
|
|
$
|
142.99
|
|
|
$
|
198.42
|
|
|
$
|
191.11
|
|
|
$
|
287.31
|
|
S&P 500
|
$
|
100.00
|
|
|
$
|
110.58
|
|
|
$
|
121.13
|
|
|
$
|
144.65
|
|
|
$
|
135.63
|
|
|
$
|
174.79
|
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plan or Program
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased under the Plan or Program
|
||||||
October 1, 2019 - October 31, 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
141,079,878
|
|
November 1, 2019 - November 30, 2019
|
|
145,000
|
|
|
$
|
86.53
|
|
|
145,000
|
|
|
$
|
128,531,156
|
|
December 1, 2019 - December 31, 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
128,531,156
|
|
Total
|
|
145,000
|
|
|
|
|
145,000
|
|
|
|
Item 6.
|
Selected Consolidated Financial Data
|
|
|
As of December 31,
|
||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
|
(in thousands, except per share data)
|
||||||||||||||||||
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
321,607
|
|
|
$
|
278,889
|
|
|
$
|
230,828
|
|
|
$
|
197,925
|
|
|
$
|
164,284
|
|
Income from operations
|
|
$
|
72,253
|
|
|
$
|
50,361
|
|
|
$
|
37,243
|
|
|
$
|
30,107
|
|
|
$
|
24,806
|
|
Net income
|
|
$
|
69,336
|
|
|
$
|
57,304
|
|
|
$
|
40,440
|
|
|
$
|
19,224
|
|
|
$
|
15,865
|
|
Net income per share
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
1.77
|
|
|
$
|
1.47
|
|
|
$
|
1.08
|
|
|
$
|
0.55
|
|
|
$
|
0.47
|
|
Diluted
|
|
$
|
1.68
|
|
|
$
|
1.37
|
|
|
$
|
1.01
|
|
|
$
|
0.50
|
|
|
$
|
0.42
|
|
|
|
As of December 31,
|
||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
||||||||||||
Cash, cash equivalents and short-term marketable securities
|
|
$
|
298,890
|
|
|
$
|
289,166
|
|
|
$
|
288,414
|
|
|
$
|
243,856
|
|
|
$
|
178,966
|
|
Long-term marketable securities
|
|
$
|
119,508
|
|
|
$
|
76,710
|
|
|
$
|
67,224
|
|
|
$
|
45,725
|
|
|
$
|
43,277
|
|
Total assets
|
|
$
|
675,608
|
|
|
$
|
585,680
|
|
|
$
|
537,525
|
|
|
$
|
407,004
|
|
|
$
|
323,514
|
|
Deferred revenues, current
|
|
$
|
192,172
|
|
|
$
|
164,624
|
|
|
$
|
143,186
|
|
|
$
|
114,964
|
|
|
$
|
98,025
|
|
Deferred revenues, noncurrent
|
|
$
|
20,935
|
|
|
$
|
20,423
|
|
|
$
|
17,136
|
|
|
$
|
15,528
|
|
|
$
|
14,564
|
|
Total stockholders’ equity
|
|
$
|
386,803
|
|
|
$
|
357,989
|
|
|
$
|
343,544
|
|
|
$
|
258,413
|
|
|
$
|
195,566
|
|
Item 7.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
|
|
Year Ended December 31,
|
||||
|
|
2019
|
|
2018
|
||
Revenues
|
|
100
|
%
|
|
100
|
%
|
Cost of revenues
|
|
22
|
|
|
24
|
|
Gross profit
|
|
78
|
|
|
76
|
|
Operating expenses:
|
|
|
|
|
||
Research and development
|
|
21
|
|
|
19
|
|
Sales and marketing
|
|
22
|
|
|
25
|
|
General and administrative
|
|
13
|
|
|
14
|
|
Total operating expenses
|
|
56
|
|
|
58
|
|
Income from operations
|
|
22
|
|
|
18
|
|
Other income (expense), net
|
|
3
|
|
|
2
|
|
Income before income taxes
|
|
25
|
|
|
20
|
|
Provision for (benefit from) income taxes
|
|
3
|
|
|
(1
|
)
|
Net income
|
|
22
|
%
|
|
21
|
%
|
|
|
Year Ended
|
|
|
|
|
|||||||||
|
|
December 31,
|
|
Change
|
|||||||||||
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
|
|
(in thousands, except percentages)
|
|||||||||||||
Revenues
|
|
$
|
321,607
|
|
|
$
|
278,889
|
|
|
$
|
42,718
|
|
|
15
|
%
|
|
|
Year Ended
|
|
|
|
|
|||||||||
|
|
December 31,
|
|
Change
|
|||||||||||
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
|
|
(in thousands, except percentages)
|
|||||||||||||
Cost of revenues
|
|
$
|
69,517
|
|
|
$
|
66,185
|
|
|
$
|
3,332
|
|
|
5
|
%
|
Percentage of revenues
|
|
22
|
%
|
|
24
|
%
|
|
|
|
|
|||||
Gross profit percentage
|
|
78
|
%
|
|
76
|
%
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(in thousands)
|
||||||
Adjusted EBITDA
|
|
$
|
140,785
|
|
|
$
|
112,380
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(in thousands)
|
||||||
Net income
|
|
$
|
69,336
|
|
|
$
|
57,304
|
|
Depreciation and amortization of property and equipment
|
|
25,121
|
|
|
25,179
|
|
||
Amortization of intangible assets
|
|
6,080
|
|
|
3,725
|
|
||
Provision for (benefit from) income taxes
|
|
10,647
|
|
|
(1,836
|
)
|
||
Stock-based compensation
|
|
34,892
|
|
|
30,090
|
|
||
Other income (expense), net
|
|
(7,730
|
)
|
|
(5,107
|
)
|
||
Acquisition-related expense(1)
|
|
2,439
|
|
|
3,025
|
|
||
Adjusted EBITDA
|
|
$
|
140,785
|
|
|
$
|
112,380
|
|
Percentage of revenues
|
|
44
|
%
|
|
40
|
%
|
|
|
Year Ended December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(in thousands)
|
||||||
Cash provided by operating activities
|
|
$
|
160,607
|
|
|
$
|
125,464
|
|
Cash used in investing activities
|
|
(35,029
|
)
|
|
(93,546
|
)
|
||
Cash used in financing activities
|
|
(79,045
|
)
|
|
(77,483
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
|
$
|
46,533
|
|
|
$
|
(45,565
|
)
|
|
|
|
|
Payment Due by Period
|
||||||||||||||||
Contractual Obligations:
|
|
Total
|
|
Less Than
1 Year
|
|
1-3
Years
|
|
3-5
Years
|
|
More than 5 Years
|
||||||||||
|
|
(in thousands)
|
|
|
||||||||||||||||
Operating lease obligations
|
|
$
|
62,102
|
|
|
$
|
10,603
|
|
|
$
|
18,398
|
|
|
$
|
17,518
|
|
|
$
|
15,583
|
|
Purchase order obligations
|
|
25,338
|
|
23,060
|
|
2,278
|
|
|
—
|
|
—
|
|||||||||
Total
|
|
$
|
87,440
|
|
|
$
|
33,663
|
|
|
$
|
20,676
|
|
|
$
|
17,518
|
|
|
$
|
15,583
|
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
Page
|
Reports of Independent Registered Public Accounting Firm
|
|
Consolidated Balance Sheets
|
|
Consolidated Statements of Operations
|
|
Consolidated Statements of Comprehensive Income
|
|
Consolidated Statements of Cash Flows
|
|
Consolidated Statements of Stockholders' Equity
|
|
Notes to Consolidated Financial Statements
|
•
|
Involved an employee compensation specialist to assess the application of executive compensation rules.
|
•
|
Obtained management’s permanent and temporary provision calculation and tied out inputs to supporting equity documentation.
|
•
|
Tested the completeness and accuracy of the calculation of permanent and temporary differences.
|
•
|
Determined that the ending gross temporary difference agreed to the supporting equity documentation.
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
87,559
|
|
|
$
|
41,026
|
|
Short-term marketable securities
|
|
211,331
|
|
|
248,140
|
|
||
Accounts receivable, net of allowance of $585 and $683 at December 31, 2019 and 2018, respectively
|
|
78,034
|
|
|
75,825
|
|
||
Prepaid expenses and other current assets
|
|
18,692
|
|
|
13,974
|
|
||
Total current assets
|
|
395,616
|
|
|
378,965
|
|
||
Long-term marketable securities
|
|
119,508
|
|
|
76,710
|
|
||
Property and equipment, net
|
|
60,579
|
|
|
61,442
|
|
||
Operating leases - right of use asset
|
|
40,551
|
|
|
—
|
|
||
Deferred tax assets, net
|
|
18,830
|
|
|
26,387
|
|
||
Intangible assets, net
|
|
16,795
|
|
|
21,976
|
|
||
Goodwill
|
|
7,447
|
|
|
7,225
|
|
||
Restricted cash
|
|
1,200
|
|
|
1,200
|
|
||
Other noncurrent assets
|
|
15,082
|
|
|
11,775
|
|
||
Total assets
|
|
$
|
675,608
|
|
|
$
|
585,680
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
848
|
|
|
$
|
5,588
|
|
Accrued liabilities
|
|
22,784
|
|
|
26,695
|
|
||
Deferred revenues, current
|
|
192,172
|
|
|
164,624
|
|
||
Operating lease liabilities, current
|
|
7,663
|
|
|
—
|
|
||
Total current liabilities
|
|
223,467
|
|
|
196,907
|
|
||
Deferred revenues, noncurrent
|
|
20,935
|
|
|
20,423
|
|
||
Operating lease liabilities, noncurrent
|
|
44,015
|
|
|
—
|
|
||
Other noncurrent liabilities
|
|
388
|
|
|
10,361
|
|
||
Total liabilities
|
|
288,805
|
|
|
227,691
|
|
||
Commitments and contingencies (Note 7)
|
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
|
||||
Preferred stock: $0.001 par value; 20,000,000 shares authorized, no shares issued and outstanding at December 31, 2019 and 2018
|
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value; 1,000,000,000 shares authorized, 39,146,272 and 39,015,034 shares issued and outstanding at December 31, 2019 and 2018, respectively
|
|
39
|
|
|
39
|
|
||
Additional paid-in capital
|
|
362,408
|
|
|
330,572
|
|
||
Accumulated other comprehensive income (loss)
|
|
1,162
|
|
|
(586
|
)
|
||
Retained earnings
|
|
23,194
|
|
|
27,964
|
|
||
Total stockholders’ equity
|
|
386,803
|
|
|
357,989
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
675,608
|
|
|
$
|
585,680
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues
|
|
$
|
321,607
|
|
|
$
|
278,889
|
|
|
$
|
230,828
|
|
Cost of revenues
|
|
69,517
|
|
|
66,185
|
|
|
51,580
|
|
|||
Gross profit
|
|
252,090
|
|
|
212,704
|
|
|
179,248
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
||||||
Research and development
|
|
68,239
|
|
|
53,255
|
|
|
42,816
|
|
|||
Sales and marketing
|
|
70,833
|
|
|
70,039
|
|
|
63,855
|
|
|||
General and administrative
|
|
40,765
|
|
|
39,049
|
|
|
35,334
|
|
|||
Total operating expenses
|
|
179,837
|
|
|
162,343
|
|
|
142,005
|
|
|||
Income from operations
|
|
72,253
|
|
|
50,361
|
|
|
37,243
|
|
|||
Other income (expense), net:
|
|
|
|
|
|
|
||||||
Interest expense
|
|
(106
|
)
|
|
(172
|
)
|
|
(3
|
)
|
|||
Interest income
|
|
8,443
|
|
|
6,080
|
|
|
2,674
|
|
|||
Other income (expense), net
|
|
(607
|
)
|
|
(801
|
)
|
|
(536
|
)
|
|||
Total other income (expense), net
|
|
7,730
|
|
|
5,107
|
|
|
2,135
|
|
|||
Income before income taxes
|
|
79,983
|
|
|
55,468
|
|
|
39,378
|
|
|||
Provision for (benefit from) income taxes
|
|
10,647
|
|
|
(1,836
|
)
|
|
(1,062
|
)
|
|||
Net income
|
|
$
|
69,336
|
|
|
$
|
57,304
|
|
|
$
|
40,440
|
|
Net income per share:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
1.77
|
|
|
$
|
1.47
|
|
|
$
|
1.08
|
|
Diluted
|
|
$
|
1.68
|
|
|
$
|
1.37
|
|
|
$
|
1.01
|
|
Weighted average shares used in computing net income per share:
|
|
|
|
|
|
|
||||||
Basic
|
|
39,075
|
|
|
38,876
|
|
|
37,443
|
|
|||
Diluted
|
|
41,345
|
|
|
41,897
|
|
|
40,071
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
|
$
|
69,336
|
|
|
$
|
57,304
|
|
|
$
|
40,440
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
||||||
Available-for-sale marketable securities:
|
|
|
|
|
|
|
||||||
Change in net unrealized gain (loss), net of tax effect of ($243), $0 and $0 in fiscal years 2019, 2018 and 2017, respectively
|
|
1,367
|
|
|
(261
|
)
|
|
(462
|
)
|
|||
Reclassification adjustment for net loss realized and included in net income, net of tax effect of $0 in fiscal years 2019, 2018 and 2017
|
|
—
|
|
|
289
|
|
|
44
|
|
|||
Total change in unrealized gain (loss) on marketable securities, net of tax
|
|
1,367
|
|
|
28
|
|
|
(418
|
)
|
|||
Cash flow hedges:
|
|
|
|
|
|
|
||||||
Change in net unrealized gain (loss), net of tax effect of ($136), $0 and $0 in fiscal years 2019, 2018 and 2017, respectively
|
|
515
|
|
|
(40
|
)
|
|
—
|
|
|||
Reclassification adjustment for net gain realized and included in net income, net of tax effect of $35, $0 and $0 in fiscal years 2019, 2018 and 2017, respectively
|
|
(134
|
)
|
|
—
|
|
|
—
|
|
|||
Total change in unrealized gain (loss) on cash flow hedges, net of tax
|
|
381
|
|
|
(40
|
)
|
|
—
|
|
|||
Other comprehensive income (loss), net of tax
|
|
1,748
|
|
|
(12
|
)
|
|
(418
|
)
|
|||
Comprehensive income
|
|
$
|
71,084
|
|
|
$
|
57,292
|
|
|
$
|
40,022
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
69,336
|
|
|
$
|
57,304
|
|
|
$
|
40,440
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization expense
|
|
31,201
|
|
|
28,904
|
|
|
20,636
|
|
|||
Bad debt expense
|
|
247
|
|
|
86
|
|
|
657
|
|
|||
Loss on disposal of property and equipment
|
|
202
|
|
|
9
|
|
|
161
|
|
|||
Stock-based compensation
|
|
34,892
|
|
|
30,090
|
|
|
26,961
|
|
|||
Amortization of premiums and (accretion) of discounts on marketable securities
|
|
(1,597
|
)
|
|
(1,136
|
)
|
|
1,324
|
|
|||
Deferred income taxes
|
|
7,095
|
|
|
(2,521
|
)
|
|
(2,718
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
(2,456
|
)
|
|
(11,467
|
)
|
|
(17,966
|
)
|
|||
Prepaid expenses and other assets
|
|
(6,012
|
)
|
|
(4,970
|
)
|
|
(53
|
)
|
|||
Accounts payable
|
|
(1,076
|
)
|
|
3,515
|
|
|
(454
|
)
|
|||
Accrued liabilities
|
|
715
|
|
|
1,426
|
|
|
1,485
|
|
|||
Deferred revenues
|
|
28,060
|
|
|
24,725
|
|
|
29,830
|
|
|||
Other noncurrent liabilities
|
|
—
|
|
|
(501
|
)
|
|
7,343
|
|
|||
Net cash provided by operating activities
|
|
160,607
|
|
|
125,464
|
|
|
107,646
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
||||||
Purchases of marketable securities
|
|
(331,131
|
)
|
|
(339,862
|
)
|
|
(299,891
|
)
|
|||
Sales and maturities of marketable securities
|
|
328,350
|
|
|
285,224
|
|
|
231,996
|
|
|||
Purchases of property and equipment
|
|
(27,573
|
)
|
|
(22,775
|
)
|
|
(37,818
|
)
|
|||
Business combinations
|
|
(4,050
|
)
|
|
(13,633
|
)
|
|
(12,482
|
)
|
|||
Purchase of privately-held investment
|
|
(625
|
)
|
|
(2,500
|
)
|
|
—
|
|
|||
Net cash used in investing activities
|
|
(35,029
|
)
|
|
(93,546
|
)
|
|
(118,195
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
||||||
Repurchase of common stock
|
|
(86,424
|
)
|
|
(85,040
|
)
|
|
—
|
|
|||
Proceeds from exercise of stock options
|
|
24,831
|
|
|
24,053
|
|
|
31,327
|
|
|||
Payments for taxes related to net share settlement of equity awards
|
|
(15,743
|
)
|
|
(14,879
|
)
|
|
(20,924
|
)
|
|||
Principal payments under finance lease obligations
|
|
(1,709
|
)
|
|
(1,617
|
)
|
|
—
|
|
|||
Net cash (used in) provided by financing activities
|
|
(79,045
|
)
|
|
(77,483
|
)
|
|
10,403
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
|
46,533
|
|
|
(45,565
|
)
|
|
(146
|
)
|
|||
Cash, cash equivalents and restricted cash at beginning of period
|
|
42,226
|
|
|
87,791
|
|
|
$
|
87,937
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
|
$
|
88,759
|
|
|
$
|
42,226
|
|
|
$
|
87,791
|
|
Supplemental disclosures of cash flow information
|
|
|
|
|
|
|
||||||
Cash paid for interest expense
|
|
$
|
107
|
|
|
$
|
168
|
|
|
$
|
3
|
|
Cash paid for income taxes, net of refunds
|
|
3,031
|
|
|
2,693
|
|
|
1,584
|
|
|||
Non-cash investing and financing activities
|
|
|
|
|
|
|
||||||
Business acquisitions recorded in accrued liabilities and deferred tax liability
|
|
1,650
|
|
|
4,676
|
|
|
1,000
|
|
|||
Purchases of property and equipment recorded in accounts payable and accrued liabilities
|
|
235
|
|
|
4,190
|
|
|
2,765
|
|
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Retained Earnings (deficit)
|
|
Total
Stockholders’
Equity
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||
Balances at December 31, 2016
|
|
35,841,001
|
|
|
$
|
36
|
|
|
$
|
266,794
|
|
|
$
|
(156
|
)
|
|
$
|
(8,261
|
)
|
|
$
|
258,413
|
|
Cumulative effect of a change in accounting principle related to stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,745
|
|
|
7,745
|
|
|||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40,440
|
|
|
40,440
|
|
|||||
Other comprehensive loss, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(418
|
)
|
|
—
|
|
|
(418
|
)
|
|||||
Issuance of common stock upon exercise of stock options
|
|
2,997,095
|
|
|
3
|
|
|
31,324
|
|
|
—
|
|
|
—
|
|
|
31,327
|
|
|||||
Issuance of common stock upon vesting of restricted stock units
|
|
368,367
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Taxes related to net share settlement of equity awards and options
|
|
(608,346
|
)
|
|
—
|
|
|
(20,924
|
)
|
|
—
|
|
|
—
|
|
|
(20,924
|
)
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
26,961
|
|
|
—
|
|
|
—
|
|
|
26,961
|
|
|||||
Balances at December 31, 2017
|
|
38,598,117
|
|
|
39
|
|
|
304,155
|
|
|
(574
|
)
|
|
39,924
|
|
|
343,544
|
|
|||||
Adjustment to opening retained earnings on adoption of ASC 606
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,711
|
|
|
2,711
|
|
|||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
57,304
|
|
|
57,304
|
|
|||||
Other comprehensive loss, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
(12
|
)
|
|||||
Issuance of common stock upon exercise of stock options
|
|
1,183,235
|
|
|
1
|
|
|
24,052
|
|
|
—
|
|
|
—
|
|
|
24,053
|
|
|||||
Repurchase of common stock
|
|
(1,088,899
|
)
|
|
(1
|
)
|
|
(13,064
|
)
|
|
—
|
|
|
(71,975
|
)
|
|
(85,040
|
)
|
|||||
Issuance of common stock upon vesting of restricted stock units
|
|
525,375
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Taxes related to net share settlement of equity awards
|
|
(202,794
|
)
|
|
—
|
|
|
(14,879
|
)
|
|
—
|
|
|
—
|
|
|
(14,879
|
)
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
30,308
|
|
|
—
|
|
|
—
|
|
|
30,308
|
|
|||||
Balances at December 31, 2018
|
|
39,015,034
|
|
|
39
|
|
|
330,572
|
|
|
(586
|
)
|
|
27,964
|
|
|
357,989
|
|
|||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
69,336
|
|
|
69,336
|
|
|||||
Other comprehensive income, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,748
|
|
|
—
|
|
|
1,748
|
|
|||||
Issuance of common stock upon exercise of stock options
|
|
901,290
|
|
|
1
|
|
|
24,830
|
|
|
—
|
|
|
—
|
|
|
24,831
|
|
|||||
Repurchase of common stock
|
|
(1,026,455
|
)
|
|
(1
|
)
|
|
(12,317
|
)
|
|
—
|
|
|
(74,106
|
)
|
|
(86,424
|
)
|
|||||
Issuance of common stock upon vesting of restricted stock units
|
|
438,892
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Taxes related to net share settlement of equity awards
|
|
(182,489
|
)
|
|
—
|
|
|
(15,743
|
)
|
|
—
|
|
|
—
|
|
|
(15,743
|
)
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
35,066
|
|
|
—
|
|
|
—
|
|
|
35,066
|
|
|||||
Balances at December 31, 2019
|
|
39,146,272
|
|
|
$
|
39
|
|
|
$
|
362,408
|
|
|
$
|
1,162
|
|
|
$
|
23,194
|
|
|
$
|
386,803
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 1.
|
The Company and Summary of Significant Accounting Policies
|
NOTE 2.
|
Fair Value of Financial Instruments
|
|
|
December 31, 2019
|
||||||||||||||
|
|
Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
||||||||
Cash
|
|
$
|
84,102
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
84,102
|
|
Money market funds
|
|
58
|
|
|
—
|
|
|
—
|
|
|
58
|
|
||||
Commercial paper
|
|
3,399
|
|
|
—
|
|
|
—
|
|
|
3,399
|
|
||||
Total
|
|
87,559
|
|
|
—
|
|
|
—
|
|
|
87,559
|
|
||||
Short-term marketable securities:
|
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
|
2,239
|
|
|
—
|
|
|
—
|
|
|
2,239
|
|
||||
Corporate bonds
|
|
33,048
|
|
|
51
|
|
|
(1
|
)
|
|
33,098
|
|
||||
Asset-backed securities
|
|
2,438
|
|
|
11
|
|
|
—
|
|
|
2,449
|
|
||||
U.S. government agencies
|
|
173,364
|
|
|
184
|
|
|
(3
|
)
|
|
173,545
|
|
||||
Total
|
|
211,089
|
|
|
246
|
|
|
(4
|
)
|
|
211,331
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Long-term marketable securities:
|
|
|
|
|
|
|
|
|
||||||||
Asset-backed securities
|
|
40,001
|
|
|
193
|
|
|
(1
|
)
|
|
40,193
|
|
||||
U.S. government agencies
|
|
46,447
|
|
|
370
|
|
|
—
|
|
|
46,817
|
|
||||
Corporate bonds
|
|
32,236
|
|
|
262
|
|
|
—
|
|
|
32,498
|
|
||||
Total
|
|
118,684
|
|
|
825
|
|
|
(1
|
)
|
|
119,508
|
|
||||
Total
|
|
$
|
417,332
|
|
|
$
|
1,071
|
|
|
$
|
(5
|
)
|
|
$
|
418,398
|
|
|
|
December 31, 2018
|
||||||||||||||
|
|
Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
||||||||
Cash
|
|
$
|
40,913
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
40,913
|
|
Money market funds
|
|
113
|
|
|
—
|
|
|
—
|
|
|
113
|
|
||||
Total
|
|
41,026
|
|
|
—
|
|
|
—
|
|
|
41,026
|
|
||||
Short-term marketable securities:
|
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
|
3,237
|
|
|
—
|
|
|
—
|
|
|
3,237
|
|
||||
Corporate bonds
|
|
30,906
|
|
|
—
|
|
|
(84
|
)
|
|
30,822
|
|
||||
Asset-backed securities
|
|
10,447
|
|
|
—
|
|
|
(15
|
)
|
|
10,432
|
|
||||
U.S. government agencies
|
|
203,734
|
|
|
9
|
|
|
(94
|
)
|
|
203,649
|
|
||||
Total
|
|
248,324
|
|
|
9
|
|
|
(193
|
)
|
|
248,140
|
|
||||
Long-term marketable securities:
|
|
|
|
|
|
|
|
|
||||||||
Asset-backed securities
|
|
22,945
|
|
|
10
|
|
|
(28
|
)
|
|
22,927
|
|
||||
U.S. government agencies
|
|
18,804
|
|
|
—
|
|
|
(53
|
)
|
|
18,751
|
|
||||
Corporate bonds
|
|
35,322
|
|
|
3
|
|
|
(293
|
)
|
|
35,032
|
|
||||
Total
|
|
77,071
|
|
|
13
|
|
|
(374
|
)
|
|
76,710
|
|
||||
Total
|
|
$
|
366,421
|
|
|
$
|
22
|
|
|
$
|
(567
|
)
|
|
$
|
365,876
|
|
|
|
December 31, 2019
|
||||||||||
|
|
Level 1
|
|
Level 2
|
|
Fair Value
|
||||||
|
|
(in thousands)
|
||||||||||
Money market funds
|
|
$
|
58
|
|
|
$
|
—
|
|
|
$
|
58
|
|
Commercial paper
|
|
—
|
|
|
5,638
|
|
|
5,638
|
|
|||
U.S. government agencies
|
|
—
|
|
|
220,362
|
|
|
220,362
|
|
|||
Corporate bonds
|
|
—
|
|
|
65,596
|
|
|
65,596
|
|
|||
Asset-backed securities
|
|
—
|
|
|
42,642
|
|
|
42,642
|
|
|||
Total
|
|
$
|
58
|
|
|
$
|
334,238
|
|
|
$
|
334,296
|
|
|
|
December 31, 2018
|
||||||||||
|
|
Level 1
|
|
Level 2
|
|
Fair Value
|
||||||
|
|
(in thousands)
|
||||||||||
Money market funds
|
|
$
|
113
|
|
|
$
|
—
|
|
|
$
|
113
|
|
Commercial paper
|
|
—
|
|
|
3,237
|
|
|
3,237
|
|
|||
U.S. government agencies
|
|
—
|
|
|
222,400
|
|
|
222,400
|
|
|||
Corporate bonds
|
|
—
|
|
|
65,854
|
|
|
65,854
|
|
|||
Asset-backed securities
|
|
—
|
|
|
33,359
|
|
|
33,359
|
|
|||
Total
|
|
$
|
113
|
|
|
$
|
324,850
|
|
|
$
|
324,963
|
|
|
|
December 31, 2019
|
||||||||||||||
|
|
Mature within One Year
|
|
After One Year through Two Years
|
|
Over Two Years
|
|
Fair Value
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Commercial paper
|
|
$
|
5,638
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,638
|
|
U.S. government agencies
|
|
173,546
|
|
|
46,816
|
|
|
|
|
|
220,362
|
|
||||
Corporate bonds
|
|
33,098
|
|
|
23,251
|
|
|
9,247
|
|
|
65,596
|
|
||||
Asset-backed securities
|
|
2,449
|
|
|
15,550
|
|
|
24,643
|
|
|
42,642
|
|
||||
Total
|
|
$
|
214,731
|
|
|
$
|
85,617
|
|
|
$
|
33,890
|
|
|
$
|
334,238
|
|
|
|
December 31,
|
|
||||||
|
|
2019
|
|
2018
|
|
||||
Assets:
|
|
(in thousands)
|
|||||||
Foreign currency forward contracts designated as cash flow hedge
|
|
$
|
427
|
|
|
$
|
32
|
|
|
Foreign currency forward contracts not designated as hedging instruments
|
|
515
|
|
|
—
|
|
|
||
Total
|
|
$
|
942
|
|
|
$
|
32
|
|
|
Liabilities:
|
|
|
|
|
|
||||
Foreign currency forward contracts designated as cash flow hedge
|
|
$
|
(524
|
)
|
|
$
|
(72
|
)
|
|
Foreign currency forward contracts not designated as hedging instruments
|
|
(550
|
)
|
|
(44
|
)
|
|
||
Total
|
|
$
|
(1,074
|
)
|
|
$
|
(116
|
)
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net gains (losses) from forward contracts
|
|
$
|
438
|
|
|
$
|
543
|
|
|
$
|
(1,665
|
)
|
Other foreign currency transaction (losses) gains
|
|
(792
|
)
|
|
(1,120
|
)
|
|
1,310
|
|
|||
Total foreign exchange loss, net
|
|
(354
|
)
|
|
(577
|
)
|
|
(355
|
)
|
|||
Other expenses
|
|
(253
|
)
|
|
(224
|
)
|
|
(181
|
)
|
|||
Other income (expense), net
|
|
$
|
(607
|
)
|
|
$
|
(801
|
)
|
|
$
|
(536
|
)
|
NOTE 3.
|
Property and Equipment, Net
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(in thousands)
|
||||||
Computer equipment
|
|
$
|
112,599
|
|
|
$
|
93,530
|
|
Computer software
|
|
26,137
|
|
|
26,030
|
|
||
Scanner appliances
|
|
15,864
|
|
|
15,356
|
|
||
Furniture, fixtures and equipment
|
|
6,973
|
|
|
5,814
|
|
||
Equipment under capital lease
|
|
3,503
|
|
|
3,503
|
|
||
Leasehold improvements
|
|
18,817
|
|
|
16,439
|
|
||
Total property and equipment
|
|
183,893
|
|
|
160,672
|
|
||
Less: accumulated depreciation and amortization
|
|
(123,314
|
)
|
|
(99,230
|
)
|
||
Property and equipment, net
|
|
$
|
60,579
|
|
|
$
|
61,442
|
|
NOTE 4.
|
Revenue from Contracts with Customers
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Commission asset, current
|
$
|
2,568
|
|
|
$
|
1,480
|
|
Commission asset, noncurrent
|
$
|
6,454
|
|
|
$
|
4,692
|
|
|
Total Expected Revenue
|
|
||
2020
|
$
|
67,055
|
|
|
2021
|
35,437
|
|
|
|
2022
|
13,027
|
|
|
|
2023
|
1,454
|
|
|
|
2024
|
343
|
|
|
|
2025 and thereafter
|
138
|
|
|
|
Total
|
$
|
117,454
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017(1)
|
||||||
Direct
|
|
$
|
186,130
|
|
|
$
|
164,084
|
|
|
$
|
139,908
|
|
Partner
|
|
135,477
|
|
|
114,805
|
|
|
90,920
|
|
|||
Total
|
|
$
|
321,607
|
|
|
$
|
278,889
|
|
|
$
|
230,828
|
|
NOTE 5.
|
Business Combinations
|
Acquiree
|
|
Acquisition Date
|
|
Purchase Consideration
|
|
Net Tangible
Assets Acquired/
(liabilities assumed)
|
|
Purchased Intangible Assets
|
|
Goodwill
|
|
Deferred Tax Liability
|
||||||||||
Adya
|
|
January 10,2019
|
|
$
|
1,000
|
|
|
$
|
—
|
|
|
$
|
900
|
|
|
$
|
100
|
|
|
$
|
—
|
|
Layered Insight
|
|
October 16, 2018
|
|
$
|
13,434
|
|
|
$
|
80
|
|
|
$
|
9,600
|
|
|
$
|
5,498
|
|
|
$
|
1,500
|
|
1Mobility
|
|
April 1, 2018
|
|
$
|
4,000
|
|
|
$
|
—
|
|
|
$
|
3,700
|
|
|
$
|
300
|
|
|
$
|
—
|
|
NetWatcher
|
|
November 28, 2017
|
|
$
|
7,729
|
|
|
$
|
80
|
|
|
$
|
7,000
|
|
|
$
|
649
|
|
|
$
|
—
|
|
Nevis
|
|
August 29, 2017
|
|
$
|
5,753
|
|
|
$
|
14
|
|
|
$
|
5,156
|
|
|
$
|
583
|
|
|
$
|
—
|
|
NOTE 6.
|
Goodwill and Intangible Assets, Net
|
|
|
|
|
|
|
|
December 31,
|
||||||||
|
|
|
|
|
|
|
2019
|
||||||||
|
Weighted Average Lives (Years)
|
|
Weighted Remaining Average Lives (Years)
|
|
Cost
|
|
Accumulated Amortization
|
|
Net Book Value
|
||||||
Developed technology
|
4.6
|
|
2.7
|
|
$
|
26,356
|
|
|
$
|
(10,066
|
)
|
|
$
|
16,290
|
|
Patent licenses
|
14.0
|
|
4.7
|
|
1,387
|
|
|
(922
|
)
|
|
465
|
|
|||
Total intangibles subject to amortization
|
|
|
|
|
$
|
27,743
|
|
|
$
|
(10,988
|
)
|
|
16,755
|
|
|
Intangible assets not subject to amortization
|
|
|
|
|
|
|
|
|
40
|
|
|||||
Total intangible assets, net
|
|
|
|
|
|
|
|
|
$
|
16,795
|
|
|
|
|
|
|
|
|
December 31,
|
||||||||
|
|
|
|
|
|
|
2018
|
||||||||
|
Weighted Average Lives (Years)
|
|
Weighted Remaining Average Lives (Years)
|
|
Cost
|
|
Accumulated Amortization
|
|
Net Book Value
|
||||||
Developed technology
|
5.0
|
|
3.8
|
|
$
|
25,456
|
|
|
$
|
(4,085
|
)
|
|
$
|
21,371
|
|
Patent licenses
|
14.0
|
|
5.9
|
|
1,388
|
|
|
(822
|
)
|
|
565
|
|
|||
Total intangibles subject to amortization
|
|
|
|
|
$
|
26,844
|
|
|
$
|
(4,907
|
)
|
|
21,936
|
|
|
Intangible assets not subject to amortization
|
|
|
|
|
|
|
|
|
40
|
|
|||||
Total intangible assets, net
|
|
|
|
|
|
|
|
|
$
|
21,976
|
|
2020
|
$
|
6,081
|
|
2021
|
6,081
|
|
|
2022
|
4,427
|
|
|
2023
|
100
|
|
|
2024
|
66
|
|
|
2025 and thereafter
|
—
|
|
|
Total expected future amortization expense
|
$
|
16,755
|
|
|
Amount
|
||
Balance as of December 31, 2017
|
$
|
1,549
|
|
Goodwill acquired
|
5,676
|
|
|
Balance as of December 31, 2018
|
7,225
|
|
|
Goodwill acquired
|
100
|
|
|
Adjustment
|
122
|
|
|
Balance as of December 31, 2019
|
$
|
7,447
|
|
NOTE 7.
|
Commitments and Contingencies
|
|
|
December 31
|
||
(in thousands)
|
Classification on the Balance Sheet
|
2019
|
||
Assets
|
|
|
||
Operating lease assets
|
Operating lease - right of use asset
|
$
|
40,551
|
|
Finance lease assets
|
Property and equipment, net
|
1,299
|
|
|
Total lease assets
|
|
$
|
41,850
|
|
|
|
|
||
Liabilities
|
|
|
||
Current
|
|
|
||
Operating
|
Operating lease liabilities, current
|
$
|
7,663
|
|
Finance
|
Accrued liabilities
|
124
|
|
|
Noncurrent
|
|
|
||
Operating
|
Operating lease liabilities, noncurrent
|
44,015
|
|
|
Finance
|
Other noncurrent liabilities
|
54
|
|
|
Total lease liabilities
|
|
$
|
51,856
|
|
|
|
Operating
Leases
|
|
Finance
Leases
|
||||
|
|
(in thousands)
|
||||||
2020
|
|
$
|
10,603
|
|
|
$
|
130
|
|
2021
|
|
9,859
|
|
|
54
|
|
||
2022
|
|
8,539
|
|
|
—
|
|
||
2023
|
|
8,652
|
|
|
—
|
|
||
2024
|
|
8,866
|
|
|
—
|
|
||
2025 and thereafter
|
|
15,583
|
|
|
—
|
|
||
Total minimum lease payments
|
|
62,102
|
|
|
184
|
|
||
Less: amount representing interest
|
|
(10,424
|
)
|
|
(6
|
)
|
||
Present value of minimum payments
|
|
51,678
|
|
|
178
|
|
||
Less: lease obligations, current
|
|
(7,663
|
)
|
|
(124
|
)
|
||
Lease obligations, noncurrent
|
|
$
|
44,015
|
|
|
$
|
54
|
|
|
December 31, 2019
|
|
Weighted average remaining lease term (years)
|
|
|
Operating leases
|
6.5
|
|
Finance leases
|
1.25
|
|
Weighted average discount rates
|
|
|
Operating leases
|
5.0
|
%
|
Finance leases
|
5.0
|
%
|
NOTE 8.
|
Stockholders' Equity and Stock-based Compensation
|
Options and RSUs outstanding under equity incentive plans
|
|
|
|
2000 Equity Incentive Plan
|
|
157,385
|
|
2012 Equity Incentive Plan
|
|
3,924,108
|
|
Shares available for future grants under an equity incentive plan
|
|
|
|
2012 Equity Incentive Plan
|
|
5,243,730
|
|
Total shares reserved for future issuance
|
|
9,325,223
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in thousands)
|
||||||||||
Cost of revenues
|
|
$
|
2,262
|
|
|
$
|
2,489
|
|
|
$
|
2,159
|
|
Research and development
|
|
11,151
|
|
|
7,961
|
|
|
5,944
|
|
|||
Sales and marketing
|
|
4,984
|
|
|
4,650
|
|
|
4,755
|
|
|||
General and administrative
|
|
16,495
|
|
|
14,990
|
|
|
14,103
|
|
|||
Total stock-based employee compensation
|
|
$
|
34,892
|
|
|
$
|
30,090
|
|
|
$
|
26,961
|
|
|
|
Year Ended December 31,
|
||||
|
|
2019
|
|
2018
|
|
2017
|
Expected term (in years)
|
|
4.4 to 6.6
|
|
4.5 to 5.0
|
|
5.1 to 5.5
|
Volatility
|
|
40% to 46%
|
|
45% to 47%
|
|
47% to 49%
|
Risk-free interest rate
|
|
1.5% to 2.4%
|
|
2.5% to 3.0%
|
|
1.8% to 2.0%
|
Dividend yield
|
|
—
|
|
—
|
|
—
|
|
|
Outstanding
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Life (Years)
|
|
Aggregate
Intrinsic
Value
|
|||||
|
|
|
|
|
|
|
|
(in thousands)
|
|||||
Balance as of December 31, 2016
|
|
7,527,680
|
|
|
$
|
19.25
|
|
|
6.0
|
|
$
|
101,717
|
|
Granted
|
|
408,225
|
|
|
$
|
40.82
|
|
|
|
|
|
||
Exercised
|
|
(2,997,095
|
)
|
|
$
|
11.05
|
|
|
|
|
|
||
Canceled
|
|
(442,919
|
)
|
|
$
|
33.29
|
|
|
|
|
|
||
Balance as of December 31, 2017
|
|
4,495,891
|
|
|
$
|
25.29
|
|
|
6.6
|
|
$
|
153,129
|
|
Granted
|
|
366,786
|
|
|
$
|
79.79
|
|
|
|
|
|
||
Exercised
|
|
(1,183,235
|
)
|
|
$
|
20.33
|
|
|
|
|
|
||
Canceled
|
|
(250,133
|
)
|
|
$
|
39.61
|
|
|
|
|
|
||
Balance as of December 31, 2018
|
|
3,429,309
|
|
|
$
|
31.79
|
|
|
6.4
|
|
$
|
149,935
|
|
Granted
|
|
496,145
|
|
|
$
|
87.10
|
|
|
|
|
|
||
Exercised
|
|
(901,290
|
)
|
|
$
|
27.55
|
|
|
|
|
|
||
Canceled
|
|
(157,489
|
)
|
|
$
|
71.04
|
|
|
|
|
|
||
Balance as of December 31, 2019
|
|
2,866,675
|
|
|
$
|
40.54
|
|
|
6.0
|
|
$
|
125,647
|
|
Vested and expected to vest—December 31, 2019
|
|
2,655,987
|
|
|
$
|
37.27
|
|
|
5.9
|
|
$
|
124,592
|
|
Exercisable—December 31, 2019
|
|
2,099,200
|
|
|
$
|
28.39
|
|
|
5.4
|
|
$
|
115,916
|
|
|
|
Outstanding
|
|
Exercisable
|
||||||||||||
Exercise Price
|
|
Number of
Shares |
|
|
Weighted
Average Exercise Price Per Share |
|
Weighted
Average Remaining Contractual Life (Years) |
|
Number of
Shares |
|
Weighted
Average Exercise Price Per Share |
|||||
$4.10 - $13.50
|
|
297,913
|
|
|
$
|
9.75
|
|
|
2.5
|
|
297,913
|
|
|
$
|
9.75
|
|
$13.60 - $25.17
|
|
351,255
|
|
|
$
|
22.22
|
|
|
4.6
|
|
347,391
|
|
|
$
|
22.19
|
|
$25.56 - $25.56
|
|
836,635
|
|
|
$
|
25.56
|
|
|
6.3
|
|
764,382
|
|
|
$
|
25.56
|
|
$26.86 - $34.97
|
|
297,207
|
|
|
$
|
30.98
|
|
|
5.0
|
|
287,277
|
|
|
$
|
30.96
|
|
$36.25 - $40.68
|
|
301,532
|
|
|
$
|
38.19
|
|
|
6.3
|
|
244,236
|
|
|
$
|
38.17
|
|
$40.89 - $79.51
|
|
363,278
|
|
|
$
|
70.50
|
|
|
8.5
|
|
113,388
|
|
|
$
|
61.81
|
|
$86.35 - $87.26
|
|
196,706
|
|
|
$
|
86.69
|
|
|
5.5
|
|
2,770
|
|
|
$
|
87.26
|
|
$89.55 - $89.55
|
|
63,300
|
|
|
$
|
89.55
|
|
|
9.6
|
|
499
|
|
|
$
|
89.55
|
|
$94.45 - $94.45
|
|
77,425
|
|
|
$
|
94.45
|
|
|
9.0
|
|
10,458
|
|
|
$
|
94.45
|
|
$95.10 - $95.10
|
|
81,424
|
|
|
$
|
95.10
|
|
|
8.5
|
|
30,886
|
|
|
$
|
95.10
|
|
|
|
2,866,675
|
|
|
$
|
40.54
|
|
|
6.0
|
|
2,099,200
|
|
|
$
|
28.39
|
|
|
|
Number of Shares
|
|
Weighted-Average Grant Date Fair Value Per Share
|
|||
Balance as of December 31, 2016
|
|
587,333
|
|
|
$
|
28.85
|
|
Granted
|
|
1,326,849
|
|
|
$
|
42.69
|
|
Vested
|
|
(368,367
|
)
|
|
$
|
33.52
|
|
Cancelled
|
|
(135,227
|
)
|
|
$
|
32.04
|
|
Balance as of December 31, 2017
|
|
1,410,588
|
|
|
$
|
40.34
|
|
Granted
|
|
548,245
|
|
|
$
|
75.44
|
|
Vested
|
|
(525,375
|
)
|
|
$
|
39.87
|
|
Cancelled
|
|
(206,575
|
)
|
|
$
|
43.43
|
|
Balance as of December 31, 2018
|
|
1,226,883
|
|
|
$
|
55.71
|
|
Granted
|
|
595,985
|
|
|
$
|
81.59
|
|
Vested
|
|
(438,892
|
)
|
|
$
|
53.17
|
|
Cancelled
|
|
(169,158
|
)
|
|
$
|
65.51
|
|
Balance as of December 31, 2019
|
|
1,214,818
|
|
|
$
|
67.99
|
|
Expected to vest as of December 31, 2019
|
|
902,794
|
|
|
$
|
66.37
|
|
NOTE 9.
|
Employee Benefits Plan
|
NOTE 10.
|
Income Taxes
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in thousands)
|
||||||||||
Domestic
|
|
$
|
72,124
|
|
|
$
|
50,010
|
|
|
$
|
34,914
|
|
Foreign
|
|
7,859
|
|
|
5,458
|
|
|
4,464
|
|
|||
Income before income taxes
|
|
$
|
79,983
|
|
|
$
|
55,468
|
|
|
$
|
39,378
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in thousands)
|
||||||||||
Current
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
(90
|
)
|
|
$
|
(90
|
)
|
|
$
|
22
|
|
State
|
|
646
|
|
|
62
|
|
|
23
|
|
|||
Foreign
|
|
3,000
|
|
|
1,988
|
|
|
1,471
|
|
|||
Total current provision
|
|
3,556
|
|
|
1,960
|
|
|
1,516
|
|
|||
Deferred
|
|
|
|
|
|
|
||||||
Federal
|
|
7,085
|
|
|
(3,449
|
)
|
|
(1,650
|
)
|
|||
State
|
|
447
|
|
|
21
|
|
|
(996
|
)
|
|||
Foreign
|
|
(441
|
)
|
|
(368
|
)
|
|
68
|
|
|||
Total deferred (benefit) provision
|
|
7,091
|
|
|
(3,796
|
)
|
|
(2,578
|
)
|
|||
Total provision for (benefit from) provision for income taxes
|
|
$
|
10,647
|
|
|
$
|
(1,836
|
)
|
|
$
|
(1,062
|
)
|
|
|
Year Ended December 31,
|
|||||||
|
|
2019
|
|
2018
|
|
2017
|
|||
Federal statutory rate
|
|
21.0
|
%
|
|
21.0
|
%
|
|
35.0
|
%
|
State taxes
|
|
1.5
|
|
|
(1.9
|
)
|
|
(2.1
|
)
|
Stock-based compensation
|
|
(7.2
|
)
|
|
(20.4
|
)
|
|
(58.1
|
)
|
Foreign source income
|
|
0.1
|
|
|
(0.2
|
)
|
|
(0.2
|
)
|
Change in valuation allowance
|
|
1.1
|
|
|
4.4
|
|
|
2.8
|
|
Federal rate adjustment (due to 2017 Tax Act)
|
|
—
|
|
|
—
|
|
|
26.4
|
|
Federal and state research and development credit
|
|
(3.7
|
)
|
|
(6.7
|
)
|
|
(5.3
|
)
|
Other
|
|
0.4
|
|
|
0.5
|
|
|
(1.2
|
)
|
Provision for (benefit from) income taxes
|
|
13.2
|
%
|
|
(3.3
|
)%
|
|
(2.7
|
)%
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(in thousands)
|
||||||
Deferred tax assets
|
|
|
|
|
||||
Net operating loss carryforwards
|
|
$
|
1,325
|
|
|
$
|
11,250
|
|
Research and development credit carryforwards
|
|
20,182
|
|
|
16,901
|
|
||
Foreign tax credit carryforwards
|
|
2,586
|
|
|
2,209
|
|
||
Accrued liabilities
|
|
1,109
|
|
|
4,180
|
|
||
Deferred revenues
|
|
4,843
|
|
|
4,200
|
|
||
Lease Liability
|
|
13,187
|
|
|
—
|
|
||
Intangible assets
|
|
327
|
|
|
—
|
|
||
Stock-based compensation
|
|
5,942
|
|
|
6,975
|
|
||
Other
|
|
158
|
|
|
174
|
|
||
Gross deferred tax assets
|
|
49,659
|
|
|
45,889
|
|
||
Valuation allowance
|
|
(10,094
|
)
|
|
(9,100
|
)
|
||
Net deferred tax assets
|
|
39,565
|
|
|
36,789
|
|
||
Deferred tax liabilities
|
|
|
|
|
||||
Fixed assets
|
|
(8,097
|
)
|
|
(8,160
|
)
|
||
ROU Asset
|
|
(10,496
|
)
|
|
—
|
|
||
Deferred commissions
|
|
(2,142
|
)
|
|
(1,458
|
)
|
||
Intangible assets
|
|
—
|
|
|
(784
|
)
|
||
Total deferred tax liabilities
|
|
(20,735
|
)
|
|
(10,402
|
)
|
||
Net deferred tax assets
|
|
$
|
18,830
|
|
|
$
|
26,387
|
|
|
Year Ended December 31,
|
|||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|||||||||||
Unrecognized tax benefits beginning balance
|
|
$
|
6,406
|
|
|
$
|
5,112
|
|
|
$
|
4,071
|
|
Gross increase for tax positions of prior years
|
|
—
|
|
|
279
|
|
|
66
|
|
|||
Gross decrease for tax positions of prior years
|
|
(12
|
)
|
|
(227
|
)
|
|
—
|
|
|||
Gross increase for tax positions of current year
|
|
1,384
|
|
|
1,399
|
|
|
1,101
|
|
|||
Lapse of statute of limitations
|
|
—
|
|
|
(157
|
)
|
|
(126
|
)
|
|||
Total unrecognized tax benefits
|
|
$
|
7,778
|
|
|
$
|
6,406
|
|
|
$
|
5,112
|
|
NOTE 11.
|
Segment Information and Information about Geographic Area
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in thousands)
|
||||||||||
United States
|
|
$
|
206,555
|
|
|
$
|
185,887
|
|
|
$
|
162,681
|
|
Foreign
|
|
115,052
|
|
|
93,002
|
|
|
68,147
|
|
|||
Total revenues
|
|
$
|
321,607
|
|
|
$
|
278,889
|
|
|
$
|
230,828
|
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(in thousands)
|
||||||
United States
|
|
$
|
46,100
|
|
|
$
|
51,587
|
|
India
|
|
9,221
|
|
|
5,774
|
|
||
Rest of world
|
|
5,258
|
|
|
4,081
|
|
||
Total property and equipment, net
|
|
$
|
60,579
|
|
|
$
|
61,442
|
|
NOTE 12.
|
Net Income Per Share
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in thousands, except per share data)
|
||||||||||
Numerator:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
69,336
|
|
|
$
|
57,304
|
|
|
$
|
40,440
|
|
|
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
|
||||||
Weighted-average shares used in computing net income per share - basic
|
|
39,075
|
|
|
38,876
|
|
|
37,443
|
|
|||
Effect of potentially dilutive securities:
|
|
|
|
|
|
|
||||||
Common stock options
|
|
1,807
|
|
|
2,401
|
|
|
2,262
|
|
|||
Restricted stock units
|
|
463
|
|
|
620
|
|
|
366
|
|
|||
Weighted-average shares used in computing net income per share - diluted
|
|
$
|
41,345
|
|
|
$
|
41,897
|
|
|
$
|
40,071
|
|
Net income per share:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
1.77
|
|
|
$
|
1.47
|
|
|
$
|
1.08
|
|
Diluted
|
|
$
|
1.68
|
|
|
$
|
1.37
|
|
|
$
|
1.01
|
|
|
|
Year Ended December 31,
|
|||||||
|
|
2019
|
|
2018
|
|
2017
|
|||
|
|
(in thousands)
|
|||||||
Common stock options
|
|
461
|
|
|
177
|
|
|
742
|
|
Restricted stock units
|
|
26
|
|
|
22
|
|
|
71
|
|
Total anti-dilutive shares
|
|
487
|
|
|
199
|
|
|
813
|
|
NOTE 13.
|
Selected Quarterly Financial Information (Unaudited)
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
Dec. 31,
2019
|
|
Sep. 30,
2019
|
|
Jun. 30,
2019
|
|
Mar. 31,
2019
|
|
Dec. 31,
2018
|
|
Sep. 30,
2018
|
|
Jun. 30,
2018
|
|
Mar. 31,
2018
|
||||||||||||||||
|
(unaudited)
|
||||||||||||||||||||||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||||||||||||||
Revenues
|
$
|
84,664
|
|
|
$
|
82,671
|
|
|
$
|
78,929
|
|
|
$
|
75,343
|
|
|
$
|
74,200
|
|
|
$
|
71,658
|
|
|
$
|
68,153
|
|
|
$
|
64,878
|
|
Income from operations
|
19,545
|
|
|
22,549
|
|
|
16,108
|
|
|
14,051
|
|
|
12,943
|
|
|
18,117
|
|
|
10,895
|
|
|
8,406
|
|
||||||||
Other income (expense), net
|
1,757
|
|
|
1,786
|
|
|
2,401
|
|
|
1,786
|
|
|
1,862
|
|
|
1,116
|
|
|
884
|
|
|
1,245
|
|
||||||||
Income before income taxes
|
21,302
|
|
|
24,335
|
|
|
18,509
|
|
|
15,837
|
|
|
14,805
|
|
|
19,233
|
|
|
11,779
|
|
|
9,651
|
|
||||||||
Net income
|
$
|
20,664
|
|
|
$
|
19,174
|
|
|
$
|
16,232
|
|
|
$
|
13,266
|
|
|
$
|
14,400
|
|
|
$
|
23,469
|
|
|
$
|
10,293
|
|
|
$
|
9,142
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
$
|
0.53
|
|
|
$
|
0.49
|
|
|
$
|
0.41
|
|
|
$
|
0.34
|
|
|
$
|
0.37
|
|
|
$
|
0.60
|
|
|
$
|
0.26
|
|
|
$
|
0.24
|
|
Diluted
|
$
|
0.50
|
|
|
$
|
0.47
|
|
|
$
|
0.39
|
|
|
$
|
0.32
|
|
|
$
|
0.35
|
|
|
$
|
0.56
|
|
|
$
|
0.24
|
|
|
$
|
0.22
|
|
Item 9.
|
Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accounting Fees and Services
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
|
|
|
|
Additions
|
|
|
|
|
||||||||
|
|
Balance at Beginning of Year
|
|
Charged to Costs and Expenses
|
|
Deductions and Other (1)
|
|
Balance at End of Year
|
||||||||
Allowance for Doubtful Accounts
|
|
|
|
|
|
|
|
|
||||||||
Year Ended December 31, 2019
|
|
$
|
683
|
|
|
$
|
247
|
|
|
$
|
(345
|
)
|
|
$
|
585
|
|
Year Ended December 31, 2018
|
|
$
|
816
|
|
|
$
|
86
|
|
|
$
|
(219
|
)
|
|
$
|
683
|
|
Year Ended December 31, 2017
|
|
$
|
702
|
|
|
$
|
657
|
|
|
$
|
(543
|
)
|
|
$
|
816
|
|
QUALYS, INC.
|
|
|
|
By:
|
/s/ PHILIPPE F. COURTOT
|
|
Philippe F. Courtot
|
|
Chairman and Chief Executive Officer
|
|
(principal executive officer)
|
Signature
|
|
Title
|
Date
|
|
|
|
|
/s/ PHILIPPE F. COURTOT
|
|
Chairman and Chief Executive Officer (principal executive officer)
|
February 21, 2020
|
Philippe F. Courtot
|
|
|
|
|
|
|
|
/s/ MELISSA B. FISHER
|
|
Chief Financial Officer (principal financial officer)
|
February 21, 2020
|
Melissa B. Fisher
|
|
|
|
|
|
|
|
/s/ SANDRA E. BERGERON
|
|
Director
|
February 21, 2020
|
Sandra Bergeron
|
|
|
|
|
|
|
|
/s/ JEFFREY P. HANK
|
|
Director
|
February 21, 2020
|
Jeffrey P. Hank
|
|
|
|
|
|
|
|
/s/ GENERAL PETER PACE
|
|
Director
|
February 21, 2020
|
General Peter Pace
|
|
|
|
|
|
|
|
/s/ KRISTI M. ROGERS
|
|
Director
|
February 21, 2020
|
Kristi M. Rogers
|
|
|
|
|
|
|
|
/s/ WENDY M. PFEIFFER
|
|
Director
|
February 21, 2020
|
Wendy M. Pfeiffer
|
|
|
|
Name of Subsidiary
|
|
Jurisdiction of Incorporation
|
Qualys International, Inc.
|
|
United States
|
Blue Jay Acquisition Sub, Inc.
|
|
United States
|
Qualys Brazil Desenvolvimento de Produtos e Consultoria de Tecnologias de Seguranca LTDA.
|
|
Brazil
|
Qualys Canada, Ltd.
|
|
Canada
|
Qualys Technologies, S.A.
|
|
France
|
Qualys GmbH
|
|
Germany
|
Qualys Hong Kong Limited
|
|
Hong Kong
|
Qualys Security TechServices Private Ltd.
|
|
India
|
Qualys Japan K.K.
|
|
Japan
|
Qualys Singapore Pte. Ltd.
|
|
Singapore
|
Qualys Middle East FZE
|
|
United Arab Emirates
|
Qualys Ltd.
|
|
United Kingdom
|
Qualys Australia Pty Ltd.
|
|
Australia
|
Qualys Switzerland Sarl
|
|
Switzerland
|
Qualys Colombia S.A.S.
|
|
Colombia
|
Qualys South Africa Proprietary Limited
|
|
South Africa
|
Qualys Netherlands B.V.
|
|
The Netherlands
|
1.
|
I have reviewed this annual report on Form 10-K of Qualys, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
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):
|
Date:
|
February 21, 2020
|
|
By:
|
/s/ PHILIPPE F. COURTOT
|
|
|
Philippe F. Courtot
|
|
Chairman and Chief Executive Officer
|
||
(Principal Executive Officer)
|
||
Qualys, Inc.
|
1.
|
I have reviewed this annual report on Form 10-K of Qualys, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
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):
|
Date:
|
February 21, 2020
|
|
By:
|
/s/ MELISSA B. FISHER
|
|
|
Melissa B. Fisher
|
|
Chief Financial Officer
|
||
(Principal Financial Officer)
|
||
Qualys, Inc.
|
Date:
|
February 21, 2020
|
|
By:
|
/s/ PHILIPPE F. COURTOT
|
|
|
Philippe F. Courtot
|
|
Chairman and Chief Executive Officer
|
||
(Principal Executive Officer)
|
||
Qualys, Inc.
|
Date:
|
February 21, 2020
|
|
By:
|
/s/ MELISSA B. FISHER
|
|
|
Melissa B. Fisher
|
|
Chief Financial Officer
|
||
(Principal Financial Officer)
|
||
Qualys, Inc.
|