☒ | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
☐ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Delaware | 81-0578975 | ||
(State or | (I.R.S. Employer Identification No.) | ||
Denver, | Colorado | 80202 | |
(Address of | (Zip Code) |
(720) | 889-8500 |
(Registrant’s telephone number, including area code) |
Title of each class | Trading Symbol | Name of each exchange on which registered |
Common Stock, $0.0001 Par Value | SREV | The Nasdaq Stock Market LLC |
Large accelerated filer | ☐ | Accelerated | ||||
Non-accelerated filer | ☐ | Smaller reporting company | ☒ | |||
Emerging growth company | ☐ |
Page | |
ServiceSource International, Inc. | |||||||
Consolidated Balance Sheets | |||||||
(in thousands, except per share amounts) | |||||||
(unaudited) | |||||||
March 31, 2020 | December 31, 2019 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 47,181 | $ | 27,089 | |||
Accounts receivable, net | 43,354 | 41,754 | |||||
Prepaid expenses and other | 5,939 | 7,296 | |||||
Total current assets | 96,474 | 76,139 | |||||
Property and equipment, net | 34,242 | 36,149 | |||||
ROU assets | 33,450 | 36,396 | |||||
Contract acquisition costs | 1,302 | 1,602 | |||||
Goodwill | 6,334 | 6,334 | |||||
Other assets | 4,764 | 4,844 | |||||
Total assets | $ | 176,566 | $ | 161,464 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 1,115 | $ | 4,392 | |||
Accrued expenses | 3,456 | 3,366 | |||||
Accrued compensation and benefits | 15,746 | 16,700 | |||||
Revolver | 27,000 | — | |||||
Operating lease liabilities | 10,132 | 9,652 | |||||
Other current liabilities | 1,662 | 2,218 | |||||
Total current liabilities | 59,111 | 36,328 | |||||
Operating lease liabilities, net of current portion | 30,800 | 33,716 | |||||
Other long-term liabilities | 2,520 | 2,983 | |||||
Total liabilities | 92,431 | 73,027 | |||||
Commitments and contingencies (Note 10) | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $0.001 par value; 20,000 shares authorized and none issued and outstanding | — | — | |||||
Common stock; $0.0001 par value; 1,000,000 shares authorized; 95,262 shares issued and 95,141 shares outstanding as of March 31, 2020; 94,972 shares issued and 94,851 shares outstanding as of December 31, 2019 | 10 | 9 | |||||
Treasury stock | (441 | ) | (441 | ) | |||
Additional paid-in capital | 375,666 | 374,525 | |||||
Accumulated deficit | (292,008 | ) | (286,066 | ) | |||
Accumulated other comprehensive income | 908 | 410 | |||||
Total stockholders’ equity | 84,135 | 88,437 | |||||
Total liabilities and stockholders’ equity | $ | 176,566 | $ | 161,464 |
September 30, 2017 | December 31, 2016 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 39,585 | $ | 47,692 | |||
Short-term investments | 140,188 | 137,881 | |||||
Accounts receivable, net | 53,061 | 63,289 | |||||
Prepaid expenses and other | 7,326 | 7,607 | |||||
Total current assets | 240,160 | 256,469 | |||||
Property and equipment, net | 35,703 | 38,180 | |||||
Deferred income taxes, net of current portion | 69 | 64 | |||||
Goodwill and intangibles, net | 6,797 | 7,932 | |||||
Other assets, net | 3,556 | 3,445 | |||||
Total assets | $ | 286,285 | $ | 306,090 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 1,129 | $ | 1,916 | |||
Accrued taxes | 387 | 1,388 | |||||
Accrued compensation and benefits | 17,470 | 21,579 | |||||
Convertible notes, net | 141,726 | — | |||||
Deferred revenue | 1,713 | 4,152 | |||||
Accrued expenses | 6,127 | 5,891 | |||||
Other current liabilities | 1,241 | 2,958 | |||||
Total current liabilities | 169,793 | 37,884 | |||||
Convertible notes, net | — | 134,775 | |||||
Other long-term liabilities | 7,127 | 6,495 | |||||
Total liabilities | 176,920 | 179,154 | |||||
Commitments and contingencies (Note 5) | |||||||
Stockholders’ equity: | |||||||
Common stock; $0.0001 par value; 1,000,000 shares authorized; 90,266 shares issued and 90,145 shares outstanding as of September 30, 2017; 88,304 shares issued and 88,183 shares outstanding as of December 31, 2016 | 8 | 8 | |||||
Treasury stock | (441 | ) | (441 | ) | |||
Additional paid-in capital | 355,969 | 344,521 | |||||
Accumulated deficit | (246,281 | ) | (216,361 | ) | |||
Accumulated other comprehensive income | 110 | (791 | ) | ||||
Total stockholders’ equity | 109,365 | 126,936 | |||||
Total liabilities and stockholders’ equity | $ | 286,285 | $ | 306,090 |
ServiceSource International, Inc. | |||||||
Consolidated Statements of Operations | |||||||
(in thousands, except per share amounts) | |||||||
(unaudited) | |||||||
For the Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Net revenue | $ | 50,114 | $ | 55,511 | |||
Cost of revenue | 35,560 | 39,476 | |||||
Gross profit | 14,554 | 16,035 | |||||
Operating expenses: | |||||||
Sales and marketing | 7,268 | 7,949 | |||||
Research and development | 1,181 | 1,263 | |||||
General and administrative | 10,688 | 10,982 | |||||
Restructuring and other related costs | 467 | 1,058 | |||||
Total operating expenses | 19,604 | 21,252 | |||||
Loss from operations | (5,050 | ) | (5,217 | ) | |||
Interest and other expense, net | (874 | ) | (490 | ) | |||
Loss before provision for income taxes | (5,924 | ) | (5,707 | ) | |||
Provision for income tax expense | (18 | ) | (12 | ) | |||
Net loss | $ | (5,942 | ) | $ | (5,719 | ) | |
Net loss per common share: | |||||||
Basic and diluted | $ | (0.06 | ) | $ | (0.06 | ) | |
Weighted-average common shares outstanding: | |||||||
Basic and diluted | 94,968 | 92,914 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net revenue | $ | 58,132 | $ | 62,514 | $ | 173,103 | $ | 184,233 | |||||||
Cost of revenue | 40,803 | 40,789 | 121,729 | 122,568 | |||||||||||
Gross profit | 17,329 | 21,725 | 51,374 | 61,665 | |||||||||||
Operating expenses: | |||||||||||||||
Sales and marketing | 7,829 | 8,847 | 24,790 | 30,626 | |||||||||||
Research and development | 1,048 | 1,952 | 4,534 | 6,132 | |||||||||||
General and administrative | 12,543 | 14,638 | 40,029 | 38,233 | |||||||||||
Restructuring and other | 545 | — | 6,259 | — | |||||||||||
Total operating expenses | 21,965 | 25,437 | 75,612 | 74,991 | |||||||||||
Loss from operations | (4,636 | ) | (3,712 | ) | (24,238 | ) | (13,326 | ) | |||||||
Interest expense and other, net | (2,839 | ) | (2,291 | ) | (7,555 | ) | (5,499 | ) | |||||||
Gain (loss) on cost basis equity investment | 2,100 | (2,300 | ) | 2,100 | (2,300 | ) | |||||||||
Loss before income taxes | (5,375 | ) | (8,303 | ) | (29,693 | ) | (21,125 | ) | |||||||
Income tax (benefit) provision | (180 | ) | 968 | 227 | 2,505 | ||||||||||
Net loss | $ | (5,195 | ) | $ | (9,271 | ) | $ | (29,920 | ) | $ | (23,630 | ) | |||
Net loss per share, basic and diluted | $ | (0.06 | ) | $ | (0.11 | ) | $ | (0.34 | ) | $ | (0.27 | ) | |||
Weighted average common shares outstanding, basic and diluted | 89,511 | 86,283 | 88,907 | 85,981 |
ServiceSource International, Inc. | |||||||
Consolidated Statements of Comprehensive Loss | |||||||
(in thousands) | |||||||
(unaudited) | |||||||
For the Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Net loss | $ | (5,942 | ) | $ | (5,719 | ) | |
Other comprehensive income | |||||||
Foreign currency translation adjustments | 498 | 76 | |||||
Other comprehensive income | 498 | 76 | |||||
Comprehensive loss | $ | (5,444 | ) | $ | (5,643 | ) |
ServiceSource International, Inc. | |||||||||||||||||||||||||||||
Consolidated Statements of Stockholders' Equity | |||||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||
Common Stock | Treasury Shares/Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||
Balance at January 1, 2020 | 94,972 | $ | 9 | (121 | ) | $ | (441 | ) | $ | 374,525 | $ | (286,066 | ) | $ | 410 | $ | 88,437 | ||||||||||||
Net loss | — | — | — | — | — | (5,942 | ) | — | (5,942 | ) | |||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | 498 | 498 | |||||||||||||||||||||
Stock-based compensation | — | — | — | — | 1,066 | — | — | 1,066 | |||||||||||||||||||||
Issuance of common stock, RSUs | 178 | 1 | — | — | (1 | ) | — | — | — | ||||||||||||||||||||
Proceeds from the exercise of stock options and ESPP | 112 | — | — | — | 76 | — | — | 76 | |||||||||||||||||||||
Balance at March 31, 2020 | 95,262 | $ | 10 | (121 | ) | $ | (441 | ) | $ | 375,666 | $ | (292,008 | ) | $ | 908 | $ | 84,135 |
Common Stock | Treasury Shares/Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||
Balance at January 1, 2019 | 92,895 | $ | 9 | (121 | ) | $ | (441 | ) | $ | 369,246 | $ | (267,383 | ) | $ | 402 | $ | 101,833 | ||||||||||||
Net loss | — | — | — | — | — | (5,719 | ) | — | (5,719 | ) | |||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | 76 | 76 | |||||||||||||||||||||
Stock-based compensation | — | — | — | — | 1,564 | — | — | 1,564 | |||||||||||||||||||||
Issuance of common stock, RSUs | 229 | — | — | — | — | — | — | — | |||||||||||||||||||||
Proceeds from the exercise of stock options and ESPP | 139 | — | — | — | 141 | — | — | 141 | |||||||||||||||||||||
Balance at March 31, 2019 | 93,263 | $ | 9 | (121 | ) | $ | (441 | ) | $ | 370,951 | $ | (273,102 | ) | $ | 478 | $ | 97,895 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net loss | $ | (5,195 | ) | $ | (9,271 | ) | $ | (29,920 | ) | $ | (23,630 | ) | |||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Foreign currency translation adjustments | 285 | (110 | ) | 783 | (1,229 | ) | |||||||||
Unrealized gain (loss) on short-term investments | 13 | (81 | ) | 118 | 849 | ||||||||||
Other comprehensive income (loss), net of tax | 298 | (191 | ) | 901 | (380 | ) | |||||||||
Total comprehensive loss, net of tax | $ | (4,897 | ) | $ | (9,462 | ) | $ | (29,019 | ) | $ | (24,010 | ) |
ServiceSource International, Inc. | |||||||
Consolidated Statements of Cash Flows | |||||||
(in thousands) | |||||||
(unaudited) | |||||||
For the Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (5,942 | ) | $ | (5,719 | ) | |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||||||
Depreciation and amortization | 3,396 | 3,285 | |||||
Amortization of contract acquisition costs | 279 | 400 | |||||
Amortization of ROU assets | 2,313 | 2,239 | |||||
Stock-based compensation | 1,045 | 1,570 | |||||
Restructuring and other related costs | 431 | 1,041 | |||||
Other | 18 | 18 | |||||
Net changes in operating assets and liabilities: | |||||||
Accounts receivable, net | (1,722 | ) | 3,258 | ||||
Prepaid expenses and other assets | 1,323 | (1,277 | ) | ||||
Contract acquisition costs | 9 | (108 | ) | ||||
Accounts payable | (3,253 | ) | (18 | ) | |||
Accrued compensation and benefits | (1,210 | ) | 1,094 | ||||
Operating lease liabilities | (1,838 | ) | (2,338 | ) | |||
Accrued expenses | 223 | (1,023 | ) | ||||
Other liabilities | (741 | ) | (338 | ) | |||
Net cash (used in) provided by operating activities | (5,669 | ) | 2,084 | ||||
Cash flows from investing activities: | |||||||
Purchases of property and equipment | (1,557 | ) | (2,898 | ) | |||
Net cash used in investing activities | (1,557 | ) | (2,898 | ) | |||
Cash flows from financing activities: | |||||||
Repayment on finance lease obligations | (238 | ) | (190 | ) | |||
Proceeds from Revolver | 27,000 | — | |||||
Proceeds from issuance of common stock | 76 | 141 | |||||
Net cash provided by (used in) financing activities | 26,838 | (49 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents and restricted cash | 480 | 185 | |||||
Net change in cash and cash equivalents and restricted cash | 20,092 | (678 | ) | ||||
Cash and cash equivalents and restricted cash, beginning of period | 29,383 | 27,779 | |||||
Cash and cash equivalents and restricted cash, end of period | $ | 49,475 | $ | 27,101 | |||
Supplemental disclosures of cash flow information: | |||||||
Cash paid for interest | $ | 55 | $ | 66 | |||
Supplemental disclosures of non-cash activities: | |||||||
Purchase of property and equipment accrued in accounts payable and accrued expenses | $ | 10 | $ | 208 | |||
ROU assets obtained in exchange for new lease liabilities | $ | 204 | $ | 9,656 | |||
Increase in operating lease liabilities related to the adoption of ASC 842 | $ | — | $ | 32,104 | |||
Increase in ROU assets related to the adoption of ASC 842 | $ | — | $ | 29,526 | |||
Decrease in prepaids and other assets related to the adoption of ASC 842 | $ | — | $ | (749 | ) | ||
Decrease in other liabilities related to the adoption of ASC 842 | $ | — | $ | (3,327 | ) |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities | |||||||
Net loss | $ | (29,920 | ) | $ | (23,630 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation and amortization | 17,167 | 11,636 | |||||
Amortization of debt discount and issuance costs | 6,951 | 6,464 | |||||
Amortization of premium on short-term investments | (172 | ) | 888 | ||||
Deferred income taxes | 177 | 1,698 | |||||
Stock-based compensation | 10,396 | 7,441 | |||||
Restructuring and other | 2,522 | — | |||||
(Gain) loss on cost basis equity investment | (2,100 | ) | 2,300 | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable, net | 12,307 | 2,778 | |||||
Deferred revenue | (2,440 | ) | (805 | ) | |||
Prepaid expenses and other | 387 | 1,306 | |||||
Accounts payable | (813 | ) | 407 | ||||
Accrued taxes | (1,019 | ) | (627 | ) | |||
Accrued compensation and benefits | (4,713 | ) | (1,509 | ) | |||
Accrued expenses | (839 | ) | 1,670 | ||||
Other liabilities | (1,375 | ) | (311 | ) | |||
Net cash provided by operating activities | 6,516 | 9,706 | |||||
Cash flows from investing activities | |||||||
Acquisition of property and equipment | (13,843 | ) | (21,203 | ) | |||
Proceeds from sale of cost basis equity investment | 2,100 | — | |||||
Purchases of short-term investments | (56,589 | ) | (86,365 | ) | |||
Sales of short-term investments | 51,119 | 83,331 | |||||
Maturities of short-term investments | 3,506 | 350 | |||||
Net cash used in investing activities | (13,707 | ) | (23,887 | ) | |||
Cash flows from financing activities | |||||||
Repayment on capital lease obligations | (52 | ) | (120 | ) | |||
Repurchase of common stock | — | (8,921 | ) | ||||
Proceeds from common stock issuances | 1,062 | 5,034 | |||||
Minimum tax withholding requirement | (735 | ) | (770 | ) | |||
Net cash provided by (used in) financing activities | 275 | (4,777 | ) | ||||
Net decrease in cash and cash equivalents | (6,916 | ) | (18,958 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (1,191 | ) | (1,681 | ) | |||
Cash and cash equivalents at beginning of period | 47,692 | 72,334 | |||||
Cash and cash equivalents at end of period | $ | 39,585 | $ | 51,695 |
Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | ||||||||||||
Cash | $ | 39,514 | $ | — | $ | — | $ | 39,514 | |||||||
Cash equivalents: | |||||||||||||||
Money market mutual funds | 71 | — | — | 71 | |||||||||||
Total cash and cash equivalents | 39,585 | — | — | 39,585 | |||||||||||
Short-term investments: | |||||||||||||||
Corporate bonds | 55,874 | 60 | (92 | ) | 55,842 | ||||||||||
U.S. agency securities | 34,644 | — | (255 | ) | 34,389 | ||||||||||
Asset-backed securities | 23,937 | 5 | (48 | ) | 23,894 | ||||||||||
U.S. Treasury securities | 26,297 | — | (234 | ) | 26,063 | ||||||||||
Total short-term investments | 140,752 | 65 | (629 | ) | 140,188 | ||||||||||
Cash, cash equivalents and short-term investments | $ | 180,337 | $ | 65 | $ | (629 | ) | $ | 179,773 |
Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | ||||||||||||
Cash | $ | 47,060 | $ | — | $ | — | $ | 47,060 | |||||||
Cash equivalents: | |||||||||||||||
Money market mutual funds | 632 | — | — | 632 | |||||||||||
Total cash and cash equivalents | 47,692 | — | — | 47,692 | |||||||||||
Short-term investments: | |||||||||||||||
Corporate bonds | 54,827 | 19 | (188 | ) | 54,658 | ||||||||||
U.S. agency securities | 34,658 | — | (281 | ) | 34,377 | ||||||||||
Asset-backed securities | 26,431 | 25 | (23 | ) | 26,433 | ||||||||||
U.S. Treasury securities | 22,701 | — | (288 | ) | 22,413 | ||||||||||
Total short-term investments | 138,617 | 44 | (780 | ) | 137,881 | ||||||||||
Cash, cash equivalents and short-term investments | $ | 186,309 | $ | 44 | $ | (780 | ) | $ | 185,573 |
Amortized Cost | Estimated Fair Value | ||||||
Less than 1 year | $ | 12,303 | $ | 12,302 | |||
Due in 1 to 3 years | 128,520 | 127,957 | |||||
Total | $ | 140,823 | $ | 140,259 |
March 31, 2020 | December 31, 2019 | ||||||
(in thousands) | |||||||
Level 1: | |||||||
Cash | $ | 11,202 | $ | 9,142 | |||
Money market mutual funds | 35,979 | 17,947 | |||||
Cash and cash equivalents | $ | 47,181 | $ | 27,089 | |||
Restricted cash | $ | 2,294 | $ | 2,294 |
Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | |||||||||
Cash equivalents: | |||||||||||
Money market mutual funds | $ | 71 | $ | 71 | $ | — | |||||
Total cash equivalents | 71 | 71 | — | ||||||||
Short-term investments: | |||||||||||
Corporate bonds | 55,842 | — | 55,842 | ||||||||
U.S. agency securities | 34,389 | — | 34,389 | ||||||||
Asset-backed securities | 23,894 | — | 23,894 | ||||||||
U.S. Treasury securities | 26,063 | — | 26,063 | ||||||||
Total short-term investments | 140,188 | — | 140,188 | ||||||||
Cash equivalents and short-term investments | $ | 140,259 | $ | 71 | $ | 140,188 |
Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | |||||||||
Cash equivalents: | |||||||||||
Money market mutual funds | $ | 632 | $ | 632 | $ | — | |||||
Total cash equivalents | 632 | 632 | — | ||||||||
Short-term investments: | |||||||||||
Corporate bonds | 54,658 | — | 54,658 | ||||||||
U.S. agency securities | 34,377 | — | 34,377 | ||||||||
Asset-backed securities | 26,433 | — | 26,433 | ||||||||
U.S. Treasury securities | 22,413 | — | 22,413 | ||||||||
Total short-term investments | 137,881 | — | 137,881 | ||||||||
Cash equivalents and short-term investments | $ | 138,513 | $ | 632 | $ | 137,881 |
September 30, 2017 | December 31, 2016 | ||||||
Principal amount | $ | 150,000 | $ | 150,000 | |||
Unamortized debt discount | (7,569 | ) | (13,928 | ) | |||
Unamortized debt issuance costs | (705 | ) | (1,297 | ) | |||
Net carrying amount | $ | 141,726 | $ | 134,775 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Contractual interest expense at 1.5% per annum | $ | 563 | $ | 563 | $ | 1,688 | $ | 1,688 | |||||||
Amortization of debt issuance costs | 204 | 189 | 592 | 551 | |||||||||||
Accretion of debt discount | 2,190 | 2,028 | 6,359 | 5,913 | |||||||||||
Total | $ | 2,957 | $ | 2,780 | $ | 8,639 | $ | 8,152 |
For the Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
(in thousands) | |||||||
Operating lease cost | $ | 3,107 | $ | 2,881 | |||
Finance lease cost: | |||||||
Amortization of leased assets | 188 | 151 | |||||
Interest on lease liabilities | 31 | 41 | |||||
Total finance lease cost | 219 | 192 | |||||
Sublease income | (892 | ) | (468 | ) | |||
Net lease cost | $ | 2,434 | $ | 2,605 |
March 31, 2020 | December 31, 2019 | ||||||
(in thousands) | |||||||
Operating leases: | |||||||
ROU assets | $ | 33,450 | $ | 36,396 | |||
Operating lease liabilities | $ | 10,132 | $ | 9,652 | |||
Operating lease liabilities, net of current portion | 30,800 | 33,716 | |||||
Total operating lease liabilities | $ | 40,932 | $ | 43,368 | |||
Finance leases: | |||||||
Property and equipment | $ | 2,836 | $ | 3,480 | |||
Accumulated depreciation | (1,395 | ) | (1,823 | ) | |||
Property and equipment, net | $ | 1,441 | $ | 1,657 | |||
Other current liabilities | $ | 875 | $ | 952 | |||
Other long-term liabilities | 510 | 671 | |||||
Total finance lease liabilities | $ | 1,385 | $ | 1,623 |
For the Three Months Ended March 31, | |||||
2020 | 2019 | ||||
Weighted-average remaining lease term (in years): | |||||
Operating lease | 5.9 | 5.3 | |||
Finance lease | 1.6 | 2.5 | |||
Weighted-average discount rate: | |||||
Operating lease | 6.4 | % | 6.5 | % | |
Finance lease | 7.8 | % | 8.3 | % |
Operating Leases | Operating Sublease | Finance Leases | Total | ||||||||||||
(in thousands) | |||||||||||||||
Remainder of 2020 | $ | 9,361 | $ | (2,717 | ) | $ | 771 | $ | 7,415 | ||||||
2021 | 11,922 | (2,631 | ) | 633 | 9,924 | ||||||||||
2022 | 8,478 | (2,538 | ) | 64 | 6,004 | ||||||||||
2023 | 3,555 | (623 | ) | — | 2,932 | ||||||||||
2024 | 2,619 | — | — | 2,619 | |||||||||||
Thereafter | 13,634 | — | — | 13,634 | |||||||||||
Total lease payments | 49,569 | (8,509 | ) | 1,468 | 42,528 | ||||||||||
Less: interest | (8,601 | ) | — | (83 | ) | (8,684 | ) | ||||||||
Less: tenant improvement reimbursements(1) | (36 | ) | — | — | (36 | ) | |||||||||
Total | $ | 40,932 | $ | (8,509 | ) | $ | 1,385 | $ | 33,808 |
For the Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
(in thousands) | |||||||
Selling services | $ | 49,173 | $ | 55,128 | |||
Professional services | 941 | 383 | |||||
Total revenue | $ | 50,114 | $ | 55,511 |
For the Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
(in thousands) | |||||||
NALA | $ | 28,473 | $ | 33,201 | |||
EMEA | 14,007 | 13,636 | |||||
APJ | 7,634 | 8,674 | |||||
Total revenue | $ | 50,114 | $ | 55,511 |
For the Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
(in thousands) | |||||||
Variable consideration | $ | 36,366 | $ | 35,782 | |||
Fixed consideration | 13,748 | 19,729 | |||||
Total revenue | $ | 50,114 | $ | 55,511 |
For the Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
(in thousands) | |||||||
Balance at beginning of period | $ | 761 | $ | 842 | |||
Capitalized costs | (21 | ) | 112 | ||||
Amortization expense | (61 | ) | (143 | ) | |||
Balance at end of period(1) | $ | 679 | $ | 811 |
For the Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
(in thousands) | |||||||
Cost of revenue | $ | 45 | $ | 159 | |||
Sales and marketing | 377 | 443 | |||||
Research and development | 18 | (6 | ) | ||||
General and administrative | 605 | 974 | |||||
Total stock-based compensation | $ | 1,045 | $ | 1,570 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Cost of revenue | $ | 385 | $ | 299 | $ | 969 | $ | 1,146 | |||||||
Sales and marketing | 982 | 565 | 2,834 | 2,152 | |||||||||||
Research and development | 42 | 106 | 107 | 448 | |||||||||||
General and administrative | 2,074 | 1,276 | 6,486 | 3,695 | |||||||||||
Restructuring and other | 352 | — | 352 | — | |||||||||||
Total stock-based compensation | $ | 3,835 | $ | 2,246 | $ | 10,748 | $ | 7,441 |
Shares | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Life (Years) | Intrinsic Value | |||||||||
(in thousands) | (in thousands) | |||||||||||
Outstanding as of December 31, 2019 | 4,146 | $ | 2.16 | $ | 1,580 | |||||||
Granted | 20 | $ | 1.32 | |||||||||
Expired and/or forfeited | (77 | ) | $ | 3.51 | ||||||||
Outstanding as of March 31, 2020 | 4,089 | $ | 2.13 | 7.80 | $ | — | ||||||
Exercisable as of March 31, 2020 | 2,072 | $ | 3.01 | 6.80 | $ | — |
Options Outstanding | Restricted Stock Outstanding | |||||||||||
Shares and Units Available for Grant | Number of Shares | Weighted- Average Exercise Price | Number of Shares | |||||||||
December 31, 2016 | 10,406 | 7,495 | $ | 4.63 | 4,237 | |||||||
Additional shares reserved under the 2011 Equity Incentive Plan | 3,527 | — | — | — | ||||||||
Granted | (2,973 | ) | 145 | 3.65 | 2,828 | |||||||
PSU Additional Goal Shares Achieved | (242 | ) | — | — | 242 | |||||||
Options exercised/Restricted stock released | — | (14 | ) | 4.86 | (1,834 | ) | ||||||
RSU shares withheld for taxes | 193 | — | — | — | ||||||||
Canceled/Forfeited | 1,499 | (922 | ) | 5.47 | (577 | ) | ||||||
September 30, 2017 | 12,410 | 6,704 | $ | 4.49 | 4,896 |
Units | Weighted-Average Grant Date Fair Value | |||||
(in thousands) | ||||||
Non-vested as of December 31, 2019 | 5,305 | $ | 1.88 | |||
Granted | 185 | $ | 1.31 | |||
Vested | (178 | ) | $ | 3.27 | ||
Forfeited | (322 | ) | $ | 1.95 | ||
Non-vested as of March 31, 2020 | 4,990 | $ | 1.80 |
Severance and Other Employee Costs | Lease Termination Costs | Total | |||||||||
(in thousands) | |||||||||||
Balance as of January 1, 2019 | $ | — | $ | — | $ | — | |||||
Restructuring and other related costs | 1,806 | 123 | 1,929 | ||||||||
Cash paid | (1,624 | ) | (123 | ) | (1,747 | ) | |||||
Balance as of December 31, 2019 | 182 | — | 182 | ||||||||
Restructuring and other related costs | 467 | — | 467 | ||||||||
Cash paid | (503 | ) | — | (503 | ) | ||||||
Change in estimates and non-cash charges | (19 | ) | — | (19 | ) | ||||||
Balance as of March 31, 2020 | $ | 127 | $ | — | $ | 127 |
Severance and Other Employee Costs | Lease and Other Contract Termination Costs | Asset Impairments | Total | ||||||||||||
(in thousands) | |||||||||||||||
Balance as of January 1, 2017 | $ | — | $ | — | $ | — | $ | — | |||||||
Restructuring and other related costs | 3,483 | 2,939 | 886 | 7,308 | |||||||||||
Cash paid | (3,060 | ) | (1,185 | ) | — | (4,245 | ) | ||||||||
Change in estimates and non-cash charges | — | — | (886 | ) | (886 | ) | |||||||||
Acceleration of stock-based compensation expense in additional paid-in capital | (352 | ) | — | — | (352 | ) | |||||||||
Balance as of December 31, 2017 | 71 | 1,754 | — | 1,825 | |||||||||||
Restructuring and other related costs | 120 | 89 | — | 209 | |||||||||||
Cash paid | (188 | ) | (1,133 | ) | — | (1,321 | ) | ||||||||
Change in estimates and non-cash charges | (3 | ) | 252 | — | 249 | ||||||||||
Balance as of December 31, 2018 | — | 962 | — | 962 | |||||||||||
Cash paid | — | (183 | ) | — | (183 | ) | |||||||||
Change in estimates and non-cash charges | — | (63 | ) | — | (63 | ) | |||||||||
Balance as of December 31, 2019 | — | 716 | — | 716 | |||||||||||
Cash paid | — | (44 | ) | — | (44 | ) | |||||||||
Change in estimates and non-cash charges | — | (17 | ) | — | (17 | ) | |||||||||
Balance as of March 31, 2020 | $ | — | $ | 655 | $ | — | $ | 655 |
Severance and Other Employee Costs | Lease and Other Contract Termination Costs | Asset Impairments | Total | ||||||||||||
Restructuring and other liability at January 1, 2017 | $ | — | $ | — | $ | — | $ | — | |||||||
Restructuring and other charges | 3,399 | 1,974 | 886 | 6,259 | |||||||||||
Cash paid | (2,908 | ) | (830 | ) | — | (3,738 | ) | ||||||||
Non-cash impairment charges | — | — | (886 | ) | (886 | ) | |||||||||
Acceleration of stock-based compensation expense in additional paid-in capital | (352 | ) | — | — | (352 | ) | |||||||||
Restructuring and other liability at September 30, 2017 | $ | 139 | $ | 1,144 | $ | — | $ | 1,283 |
March 31, 2020 | |||
(in thousands) | |||
Remainder of 2020 | $ | 6,539 | |
2021 | 10,057 | ||
2022 | 9,017 | ||
2023 | 7,446 | ||
2024 | 821 | ||
Thereafter | — | ||
Total | $ | 33,880 |
For the Three Months Ended March 31, | ||||||||||||||||||||
2020 | 2019 | |||||||||||||||||||
Amount | % of Net Revenue | Amount | % of Net Revenue | $ Change | % Change | |||||||||||||||
(in thousands) | (in thousands) | (in thousands) | ||||||||||||||||||
Net revenue | $ | 50,114 | 100 | % | $ | 55,511 | 100 | % | $ | (5,397 | ) | (10 | )% | |||||||
Cost of revenue | 35,560 | 71 | % | 39,476 | 71 | % | (3,916 | ) | (10 | )% | ||||||||||
Gross profit | $ | 14,554 | 29 | % | $ | 16,035 | 29 | % | $ | (1,481 | ) | (9 | )% |
For the Three Months Ended March 31, | ||||||||||||||||||||
2020 | 2019 | |||||||||||||||||||
Amount | % of Net Revenue | Amount | % of Net Revenue | $ Change | % Change | |||||||||||||||
(in thousands) | (in thousands) | (in thousands) | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Sales and marketing | $ | 7,268 | 15 | % | $ | 7,949 | 14 | % | $ | (681 | ) | (9 | )% | |||||||
Research and development | 1,181 | 2 | % | 1,263 | 2 | % | (82 | ) | (6 | )% | ||||||||||
General and administrative | 10,688 | 21 | % | 10,982 | 20 | % | (294 | ) | (3 | )% | ||||||||||
Restructuring and other related costs | 467 | 1 | % | 1,058 | 2 | % | (591 | ) | (56 | )% | ||||||||||
Total operating expenses | $ | 19,604 | 39 | % | $ | 21,252 | 38 | % | $ | (1,648 | ) | (8 | )% |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
(as % of net revenue) | |||||||||||
Net revenue | 100 | % | 100 | % | 100 | % | 100 | % | |||
Cost of revenue | 70 | % | 65 | % | 70 | % | 67 | % | |||
Gross profit | 30 | % | 35 | % | 30 | % | 33 | % | |||
Operating expenses: | |||||||||||
Sales and marketing | 13 | % | 14 | % | 14 | % | 17 | % | |||
Research and development | 2 | % | 3 | % | 3 | % | 3 | % | |||
General and administrative | 22 | % | 23 | % | 23 | % | 21 | % | |||
Restructuring and other | 1 | % | — | % | 4 | % | — | % | |||
Total operating expenses | 38 | % | 40 | % | 44 | % | 41 | % | |||
Loss from operations | (8 | )% | (5 | )% | (14 | )% | (8 | )% |
For the Three Months Ended March 31, | ||||||||||||||||||||
2020 | 2019 | |||||||||||||||||||
Amount | % of Net Revenue | Amount | % of Net Revenue | $ Change | % Change | |||||||||||||||
(in thousands) | (in thousands) | (in thousands) | ||||||||||||||||||
Interest expense | $ | (81 | ) | — | % | $ | (92 | ) | — | % | $ | 11 | (12 | )% | ||||||
Other expense, net | $ | (793 | ) | (2 | )% | $ | (398 | ) | (1 | )% | $ | (395 | ) | 99 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
2017 | 2016 | Change | % Change | 2017 | 2016 | Change | % Change | ||||||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||||||||
Net Revenue | $ | 58,132 | $ | 62,514 | $ | (4,382 | ) | (7 | )% | $ | 173,103 | $ | 184,233 | $ | (11,130 | ) | (6 | )% | |||||||||||
Cost of Revenue | 40,803 | 40,789 | 14 | — | % | 121,729 | 122,568 | (839 | ) | (1 | )% | ||||||||||||||||||
Gross Profit | $ | 17,329 | $ | 21,725 | $ | (4,396 | ) | (20 | )% | $ | 51,374 | $ | 61,665 | $ | (10,291 | ) | (17 | )% | |||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
2017 | 2016 | Change | % Change | 2017 | 2016 | Change | % Change | ||||||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||
Sales and marketing | $ | 7,829 | $ | 8,847 | $ | (1,018 | ) | (12 | )% | $ | 24,790 | $ | 30,626 | $ | (5,836 | ) | (19 | )% | |||||||||||
Research and development | 1,048 | 1,952 | (904 | ) | (46 | )% | 4,534 | 6,132 | (1,598 | ) | (26 | )% | |||||||||||||||||
General and administrative | 12,543 | 14,638 | (2,095 | ) | (14 | )% | 40,029 | 38,233 | 1,796 | 5 | % | ||||||||||||||||||
Restructuring and other | 545 | — | 545 | 100 | % | 6,259 | — | 6,259 | 100 | % | |||||||||||||||||||
Total operating expenses | $ | 21,965 | $ | 25,437 | $ | (3,472 | ) | (14 | )% | $ | 75,612 | $ | 74,991 | $ | 621 | 1 | % | ||||||||||||
Includes stock-based compensation of: | |||||||||||||||||||||||||||||
Sales and marketing | $ | 982 | $ | 565 | $ | 417 | $ | 2,834 | $ | 2,152 | $ | 682 | |||||||||||||||||
Research and development | 42 | 106 | (64 | ) | 107 | 448 | (341 | ) | |||||||||||||||||||||
General and administrative | 2,074 | 1,276 | 798 | 6,486 | 3,695 | 2,791 | |||||||||||||||||||||||
Restructuring and other | 352 | — | 352 | 352 | — | 352 | |||||||||||||||||||||||
Total stock-based compensation | $ | 3,450 | $ | 1,947 | $ | 1,503 | $ | 9,779 | $ | 6,295 | $ | 3,484 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
2017 | 2016 | Change | % Change | 2017 | 2016 | Change | % Change | ||||||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||||||||
Interest expense | $ | 2,965 | $ | 2,792 | $ | 173 | 6 | % | $ | 8,672 | $ | 8,191 | $ | 481 | 6 | % | |||||||||||||
Other, net | (126 | ) | (501 | ) | (375 | ) | (75 | )% | (1,117 | ) | (2,692 | ) | (1,575 | ) | (59 | )% | |||||||||||||
(Gain) loss on cost basis equity investment | (2,100 | ) | 2,300 | (4,400 | ) | 191 | % | (2,100 | ) | 2,300 | (4,400 | ) | 191 | % |
For the Three Months Ended March 31, | ||||||||||||||||||||
2020 | 2019 | |||||||||||||||||||
Amount | % of Net Revenue | Amount | % of Net Revenue | $ Change | % Change | |||||||||||||||
(in thousands) | (in thousands) | (in thousands) | ||||||||||||||||||
Provision for income tax expense | $ | (18 | ) | — | % | $ | (12 | ) | — | % | $ | (6 | ) | 50 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||
2017 | 2016 | Change | % Change | 2017 | 2016 | Change | % Change | ||||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||||||
Income tax (benefit) provision | $ | (180 | ) | $ | 968 | $ | (1,148 | ) | * | $ | 227 | $ | 2,505 | $ | (2,278 | ) | * |
Nine Months Ended September 30, | For the Three Months Ended March 31, | |||||||||||||
2017 | 2016 | 2020 | 2019 | |||||||||||
Net cash provided by operating activities | $ | 6,516 | $ | 9,706 | ||||||||||
(in thousands) | ||||||||||||||
Net cash (used in) provided by operating activities | $ | (5,669 | ) | $ | 2,084 | |||||||||
Net cash used in investing activities | (13,707 | ) | (23,887 | ) | (1,557 | ) | (2,898 | ) | ||||||
Net cash provided by (used in) financing activities | 275 | (4,777 | ) | 26,838 | (49 | ) | ||||||||
Net decrease in cash and cash equivalents, net of impact of exchange rate changes on cash | (8,107 | ) | (20,639 | ) | ||||||||||
Effect of exchange rate changes on cash and cash equivalents and restricted cash | 480 | 185 | ||||||||||||
Net change in cash and cash equivalents and restricted cash | $ | 20,092 | $ | (678 | ) |
For the Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
(in thousands) | |||||||
Internally developed software amortization | $ | 1,765 | $ | 1,259 | |||
Property and equipment depreciation | 1,631 | 2,026 | |||||
Total depreciation and amortization | $ | 3,396 | $ | 3,285 |
For the Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
(in thousands) | |||||||
Net loss | $ | (5,942 | ) | $ | (5,719 | ) | |
Provision for income tax expense | 18 | 12 | |||||
Interest and other expense, net | 874 | 490 | |||||
Depreciation and amortization | 3,396 | 3,285 | |||||
EBITDA | (1,654 | ) | (1,932 | ) | |||
Stock-based compensation | 1,045 | 1,570 | |||||
Restructuring and other related costs | 467 | 1,058 | |||||
Amortization of contract acquisition asset costs - ASC 606 initial adoption | 218 | 257 | |||||
COVID-19 related costs | 62 | — | |||||
Adjusted EBITDA | $ | 138 | $ | 953 |
Exhibit Number | Description of Document | |
10.1* | ||
31.1* | ||
31.2* | ||
32.1* | ||
32.2* | ||
Inline XBRL Taxonomy Extension Schema Document. | ||
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
104 | Cover Page Interactive |
Abbreviations or acronyms | Definition |
2011 Plan | 2011 Equity Incentive Plan |
APJ | Asia Pacific-Japan |
ASC 606 | Accounting Standards Codification Topic 606, Revenue from Contracts with Customers |
ASC 740 | Accounting Standards Codification Topic 740, Income Taxes |
ASC 842 | Accounting Standards Codification Topic 842, Leases |
ASU | Accounting Standards Update |
B2B | Business-to-business |
BPaaS | Business Process-as-a-Service |
CEO | Chief Executive Officer |
CFO | Chief Financial Officer |
COVID-19 | Coronavirus disease 2019 |
EMEA | Europe, Middle East and Africa |
ESPP | 2011 Employee Stock Purchase Plan |
FASB | Financial Accounting Standards Board |
GAAP | United States Generally Accepted Accounting Principles |
IoT | Internet of things |
MD&A | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
NALA | North America and Latin America |
PSU | Performance-based restricted stock unit |
Revolver | Senior secured revolving line of credit |
ROU | Right-of-use |
RSU | Restricted stock unit |
SEC | Securities and Exchange Commission |
U.S. | United States |
SERVICESOURCE INTERNATIONAL, INC. (Registrant) | |||
Date: | By: | /s/ | |
Chief Financial Officer and Director (Principal Financial and Accounting Officer) |