Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☒Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2017March 31, 2021
ORor
☐Transition 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
For the transition period from to
Commission file number 001-35108
SERVICESOURCE INTERNATIONAL, INC.
(Exact name of registrant as specified in ourits charter)
Delaware81-0578975
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
DelawareNo. 81-0578975
(State or Other Jurisdiction of
Incorporation or Organization)
707 17th Street, 25th Floor
(I.R.S. Employer
Identification No.)
Denver,Colorado80202
717 17th St., 5th Floor(Address of principal executive offices)
(Zip Code)
Denver, CO
80202
(720)889-8500
(Address of Principal Executive Offices)(Zip Code)Registrant’s telephone number, including area code)
(720) 889-8500Securities registered pursuant to Section 12(b) of the Act:
(Registrant’s Telephone Number, Including Area Code)
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.0001 Par ValueSREVThe Nasdaq Stock Market LLC


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 Yes x☒   No  ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
 Yes x☒   No  ¨☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☐Accelerated Filer☒
Large accelerated filer¨Accelerated filerx
Non-accelerated filer
¨  (Do not check if a smaller reporting company)
☐Smaller reporting company¨☒
Emerging growth company
¨

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    
Yes  ¨☐    No  x☒
Indicate numberAs of April 23, 2021, 97,348,525 shares outstanding of each of the issuer’s classes of common stock as of the latest practical date:
ServiceSource International, Inc. were outstanding.

Table of Contents
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
ClassOutstanding as of October 31, 2017
Common Stock90,154,059

SERVICESOURCE INTERNATIONAL, INC.
Form 10-Q
INDEX
Page
No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
3
Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016
3
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016
4
Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2017 and 2016
5
Condensed Consolidated Statements of Stockholders’ Equity
6
Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016
67
Notes to Unaudited Condensed Consolidated Financial Statements
78
1516
2221
2221
PART II. OTHER INFORMATION
2422
2422
2422
2422
2422
Item 5. Other Information
24
Item 6. Exhibits
X
Signatures
25
Exhibit Index
24

PART I. FINANCIAL INFORMATION
Financial Statements
22
23
24
2
SERVICESOURCE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 September 30,
2017		 December 31,
2016
Assets   
Current assets:   
Cash and cash equivalents$39,585
 $47,692
Short-term investments140,188
 137,881
Accounts receivable, net53,061
 63,289
Prepaid expenses and other7,326
 7,607
Total current assets240,160
 256,469
Property and equipment, net35,703
 38,180
Deferred income taxes, net of current portion69
 64
Goodwill and intangibles, net6,797
 7,932
Other assets, net3,556
 3,445
Total assets$286,285
 $306,090
Liabilities and Stockholders’ Equity   
Current liabilities:   
Accounts payable$1,129
 $1,916
Accrued taxes387
 1,388
Accrued compensation and benefits17,470
 21,579
Convertible notes, net141,726
 —
Deferred revenue1,713
 4,152
Accrued expenses6,127
 5,891
Other current liabilities1,241
 2,958
Total current liabilities169,793
 37,884
Convertible notes, net—
 134,775
Other long-term liabilities7,127
 6,495
Total liabilities176,920
 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, 20168
 8
Treasury stock(441) (441)
Additional paid-in capital355,969
 344,521
Accumulated deficit(246,281) (216,361)
Accumulated other comprehensive income110
 (791)
Total stockholders’ equity109,365
 126,936
Total liabilities and stockholders’ equity$286,285
 $306,090
Table of Contents

Item 1. Financial Statements (unaudited)
ServiceSource International, Inc.
Consolidated Balance Sheets
(in thousands, except per share and par value amounts)
(unaudited)
March 31, 2021December 31, 2020
Assets
Current assets:
Cash and cash equivalents$34,171 $34,006 
Accounts receivable, net34,578 38,890 
Prepaid expenses and other10,876 9,275 
Total current assets79,625 82,171 
Property and equipment, net26,998 29,948 
ROU assets27,515 29,798 
Contract acquisition costs757 872 
Goodwill6,334 6,334 
Other assets3,580 3,490 
Total assets$144,809 $152,613 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$5,151 $1,204 
Accrued expenses2,728 3,217 
Accrued compensation and benefits15,313 18,342 
Revolver15,000 15,000 
Operating lease liabilities10,365 10,797 
Other current liabilities827 1,209 
Total current liabilities49,384 49,769 
Operating lease liabilities, net of current portion23,739 25,975 
Other long-term liabilities2,302 1,593 
Total liabilities75,425 77,337 
Commitments and contingencies (Note 9)00
Stockholders’ equity:
Preferred stock, $0.0001 par value; 20,000 shares authorized and NaN issued and outstanding0 0 
Common stock; $0.0001 par value; 1,000,000 shares authorized; 97,470 shares issued and 97,349 shares outstanding as of March 31, 2021; 97,248 shares issued and 97,127 shares outstanding as of December 31, 202010 10 
Treasury stock(441)(441)
Additional paid-in capital382,314 379,696 
Accumulated deficit(313,442)(304,607)
Accumulated other comprehensive income943 618 
Total stockholders’ equity69,384 75,276 
Total liabilities and stockholders’ equity$144,809 $152,613 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

SERVICESOURCE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
3
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Net revenue$58,132
 $62,514
 $173,103
 $184,233
Cost of revenue40,803
 40,789
 121,729
 122,568
Gross profit17,329
 21,725
 51,374
 61,665
Operating expenses:       
Sales and marketing7,829
 8,847
 24,790
 30,626
Research and development1,048
 1,952
 4,534
 6,132
General and administrative12,543
 14,638
 40,029
 38,233
Restructuring and other545
 —
 6,259
 —
Total operating expenses21,965
 25,437
 75,612
 74,991
Loss from operations(4,636) (3,712) (24,238) (13,326)
Interest expense and other, net(2,839) (2,291) (7,555) (5,499)
Gain (loss) on cost basis equity investment2,100
 (2,300) 2,100
 (2,300)
Loss before income taxes(5,375) (8,303) (29,693) (21,125)
Income tax (benefit) provision(180) 968
 227
 2,505
Net loss$(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 diluted89,511
 86,283
 88,907
 85,981
Table of Contents
ServiceSource International, Inc.
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
 For the Three Months Ended March 31,
 20212020
Net revenue$45,023 $50,114 
Cost of revenue34,067 35,560 
Gross profit10,956 14,554 
Operating expenses:
Sales and marketing4,030 7,268 
Research and development1,160 1,181 
General and administrative12,190 10,688 
Restructuring and other related costs920 467 
Total operating expenses18,300 19,604 
Loss from operations(7,344)(5,050)
Interest and other expense, net(1,160)(874)
Loss before provision for income taxes(8,504)(5,924)
Provision for income tax expense(331)(18)
Net loss$(8,835)$(5,942)
Net loss per common share:
Basic and diluted$(0.09)$(0.06)
Weighted-average common shares outstanding:
Basic and diluted97,234 94,968 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

SERVICESOURCE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
4
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Net loss$(5,195) $(9,271) $(29,920) $(23,630)
Other comprehensive income (loss), net of tax:       
Foreign currency translation adjustments285
 (110) 783
 (1,229)
Unrealized gain (loss) on short-term investments13
 (81) 118
 849
Other comprehensive income (loss), net of tax298
 (191) 901
 (380)
Total comprehensive loss, net of tax$(4,897) $(9,462) $(29,019) $(24,010)
Table of Contents
ServiceSource International, Inc.
Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)
 For the Three Months Ended March 31,
 20212020
Net loss$(8,835)$(5,942)
Other comprehensive income
Foreign currency translation adjustments325 498 
Other comprehensive income325 498 
Comprehensive loss$(8,510)$(5,444)
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

5
SERVICESOURCE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 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 amortization17,167
 11,636
Amortization of debt discount and issuance costs6,951
 6,464
Amortization of premium on short-term investments(172) 888
Deferred income taxes177
 1,698
Stock-based compensation10,396
 7,441
Restructuring and other2,522
 —
(Gain) loss on cost basis equity investment(2,100) 2,300
Changes in operating assets and liabilities:   
Accounts receivable, net12,307
 2,778
Deferred revenue(2,440) (805)
Prepaid expenses and other387
 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 activities6,516
 9,706
Cash flows from investing activities   
Acquisition of property and equipment(13,843) (21,203)
Proceeds from sale of cost basis equity investment2,100
 —
Purchases of short-term investments(56,589) (86,365)
Sales of short-term investments51,119
 83,331
Maturities of short-term investments3,506
 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 issuances1,062
 5,034
Minimum tax withholding requirement(735) (770)
Net cash provided by (used in) financing activities275
 (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 period47,692
 72,334
Cash and cash equivalents at end of period$39,585
 $51,695
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ServiceSource International, Inc.
Consolidated Statements of Stockholders' Equity
(in thousands)
(unaudited)
Common StockTreasury Shares/StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive IncomeTotal
SharesAmountSharesAmount    
Balance at January 1, 202197,248 $10 (121)$(441)$379,696 $(304,607)$618 $75,276 
Net loss— — — — — (8,835)— (8,835)
Other comprehensive income— — — — — — 325 325 
Stock-based compensation— — — — 2,486 — — 2,486 
Issuance of common stock, RSUs73 — — — — — — — 
Proceeds from the exercise of stock options and ESPP149 — — — 132 — — 132 
Balance at March 31, 202197,470 $10 (121)$(441)$382,314 $(313,442)$943 $69,384 
Common StockTreasury Shares/StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive IncomeTotal
SharesAmountSharesAmount
Balance at January 1, 202094,972 $9 (121)$(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, RSUs178 1 — — (1)— — 0 
Proceeds from the exercise of stock options and ESPP112 — — — 76 — — 76 
Balance at March 31, 202095,262 $10 (121)$(441)$375,666 $(292,008)$908 $84,135 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

6
SERVICESOURCE INTERNATIONAL, INC.
Table of Contents
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ServiceSource International, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
For the Three Months Ended March 31,
20212020
Cash flows from operating activities:
Net loss$(8,835)$(5,942)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization3,657 3,396 
Amortization of contract acquisition costs167 279 
Amortization of ROU assets2,391 2,313 
Stock-based compensation2,475 1,045 
Restructuring and other related costs902 431 
Other265 18 
Net changes in operating assets and liabilities:
Accounts receivable, net4,131 (1,722)
Prepaid expenses and other assets(2,099)1,323 
Contract acquisition costs(51)9 
Accounts payable3,952 (3,253)
Accrued compensation and benefits(3,673)(1,210)
Operating lease liabilities(2,738)(1,838)
Accrued expenses(511)223 
Other liabilities504 (741)
Net cash provided by (used in) operating activities537 (5,669)
Cash flows from investing activities:
Purchases of property and equipment(1,019)(1,557)
Net cash used in investing activities(1,019)(1,557)
Cash flows from financing activities:
Repayment on finance lease obligations(161)(238)
Proceeds from Revolver0 27,000 
Proceeds from issuance of common stock132 76 
Net cash (used in) provided by financing activities(29)26,838 
Effect of exchange rate changes on cash and cash equivalents and restricted cash650 480 
Net change in cash and cash equivalents and restricted cash139 20,092 
Cash and cash equivalents and restricted cash, beginning of period36,326 29,383 
Cash and cash equivalents and restricted cash, end of period$36,465 $49,475 
Supplemental disclosures of cash flow information:
Cash paid for interest$105 $55 
Supplemental disclosures of non-cash activities:
Purchases of property and equipment accrued in accounts payable and accrued expenses$9 $10 
ROU assets obtained in exchange for new lease liabilities$618 $204 
The accompanying notes are an integral part of these Consolidated Financial Statements.
7
Table of Contents
ServiceSource International, Inc.
Notes to Consolidated Financial Statements
(unaudited)
Note 1 — DescriptionThe Company
ServiceSource is a leading provider of BusinessBPaaS solutions that enable the transformation of go-to-market organizations and Basisfunctions for global technology clients. We design, deploy, and operate a suite of Presentationinnovative solutions and complex processes that support and augment our clients’ B2B customer acquisition, engagement, expansion and retention activities. Our clients - ranging from Fortune 500 technology titans to high-growth disruptors and innovators - rely on our holistic customer engagement methodology and process excellence, global scale and delivery footprint, and data analytics and business insights to deliver trusted business outcomes that have a meaningful and material positive impact to their long-term revenue and profitability objectives. Through our unique integration of people, process and technology - leveraged against our more than 20 years of experience and domain expertise in the cloud, software, hardware, medical device and diagnostic equipment, and industrial IoT sectors - we effect and transact billions of dollars of B2B commerce in more than 175 countries on our clients’ behalf annually.
“ServiceSource,” “the Company,” “we,” “us,” or “our,” as used herein, refer to ServiceSource International, Inc. (together withand its wholly owned subsidiaries, unless the “Company”) iscontext indicates otherwise.
For a global leader in outsourced, performance-based customer successsummary of commonly used industry terms and revenue growth solutions. Through the Company’s people, processes and technology, the Company finds, converts, grows and retains revenue on behalf of its clients—some of the world’s leading business-to-business companies—in more than 35 languages. The Company’s solutions help its clients strengthen their customer relationships, drive improved customer adoption, expansion and retention and minimize churn. The Company’s technology platform and best-practice business processes combined with its highly-trained, client-focused revenue delivery professionals and data from over 15 years of operating experience enable the Company to provide its clients greater value for its customer success services than attained by its clients’ in-house customer success teams.
The Company’s pay-for-performance model allows its clients to pay for the services through either flat-rate or variable commissions based on the revenue generated by the Company on their behalf. Fixed-fee arrangements are typicallyabbreviations used in quick deployments to address discrete target areasthis quarterly report on Form 10-Q, see the Glossary of our clients’ needs. The Company also earns revenue through its professional services teams, who assist clients with data optimization, as well as through supporting select existing clients with the Company’s Renew OnDemand application. The Company’s corporate headquarters is located in Denver, Colorado. The Company has additional U.S. offices in California and Tennessee, and international offices in Bulgaria, Ireland, Japan, Malaysia, Philippines, Singapore and the United Kingdom.Terms.
Note 2 — Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statements (“condensed consolidated financial statements”)Consolidated Financial Statements include the accounts of ServiceSource International, Inc. and its subsidiaries. Intercompany accountswholly owned subsidiaries and have been prepared in accordance with GAAP and with the instructions to Form 10-Q and Article 8 of Regulation S-X for interim financial information. All intercompany balances and transactions have been eliminated in consolidation.
These condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X, without audit. Accordingly, they do not include all of the information required by U.S. GAAP for annual financial statements. The unaudited condensed consolidated balance sheetConsolidated Balance Sheet as of December 31, 20162020 has been derived from the Company’s audited annual consolidated financial statementsConsolidated Financial Statements included in our Annual Reportannual report on Form 10-K for the year ended December 31, 20162020 filed with the Securities and Exchange Commission (“SEC”)SEC on March 6, 2017. These condensed consolidated financial statements and accompanying notes should be read in conjunction with our annual consolidated financial statements and the notes thereto for the year ended December 31, 2016, included in our Annual Report on Form 10-K.
February 24, 2021. In the opinion of management, these condensed consolidated financial statementsConsolidated Financial Statements reflect all adjustments, including normal recurring adjustments, management considers necessary for a fair statementpresentation of the Company’s financial position, operating results, and cash flows for the interim periods presented. PreparationThese Consolidated Financial Statements and accompanying notes should be read in conjunction with our audited Consolidated Financial Statements and the notes thereto for the year ended December 31, 2020, included in our annual report on Form 10-K. Interim results are not necessarily indicative of financial statementsresults for the entire year.
Use of Estimates
The preparation of the Consolidated Financial Statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts reported inof assets and liabilities, the Company’s condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. Also, the results for the interim periods are not necessarily indicative of results for the entire year.
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”) which amended the existing FASB Accounting Standards Codification. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. The standard also specifies that the incremental costs of obtaining a contract with a customer and the costs of fulfilling a contract with a customer (if those costs are not within the scope of another Topic or Sub-Topic) would be deferred and recognized over the appropriate period of contract performance if they are expected to be recovered. In addition, the standard requires disclosure of the nature, amount, timingcontingent assets and uncertainty of revenue and cash flows arising from contracts with customers.
The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognizedliabilities at the date of initial application (modified retrospective method, also known as the cumulative catch-up transition method).  ASU 2014-09 is effective forConsolidated Financial Statements and the Company for interimreported amount of net revenue and annual periods beginning after December 15, 2017.

expenses during the reporting period.
The Company continuesbases its estimates and judgments on historical experience and on various assumptions that it believes are reasonable under the circumstances. The Company has considered the effects of the COVID-19 pandemic in determining its estimates. However, future events are difficult to assesspredict and subject to change, especially with the risks and uncertainties related to the impact of the standard,COVID-19 pandemic, which could cause estimates and has not yet determined whether the standard will have a material impact onjudgments to require adjustment. Actual results and outcomes may differ from our consolidated financial statements. However, we currently believe the most significant impact is from the timing of recognition of certain sales commission expenses, which upon adoption will be recognized as costs over a period of time instead of immediately. We are also in the process of assessing the impact of the new standard on certain of our contracts that include performance-based fees. We currently recognize such fees in the period when the performance criteria have been met; however, under the new standard we would estimate the variable fees and recognize amounts as control of the promised deliverable is transferred to the client for which it is probable that a significant reversal would not occur. For certain contracts, this could result in accelerated recognition of the performance-based fees. We do not currently expect our recurring revenue management fees, based on a fixed percentage of overall sales value associated with the service contracts, to be significantly impacted by the new standard.estimates.
We will adopt the standard in the first quarter of 2018 using the modified prospective method. We expect to complete our assessment process, including impacts on our processes, systems and financial statement disclosures, by the end of the fourth quarter of 2017.
In February 2016, the FASB issued ASU No. 2016-02 Leases (Topic 842). This standard requires entities that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The standard is effective for fiscal years and the interim periods within those fiscal years beginning after December 15, 2018. The guidance is required to be applied by the modified retrospective transition approach. Early adoption is permitted. The Company continues to assess the impact of the adoption of this authoritative guidance on its consolidated financial statements.    
Cost Basis Equity Investment
In 2013, the Company made an equity investment in a private company for $4.5 million, which represented less than 5% of the outstanding equity of that company. Based on unfavorable growth trends and declining financial performance of this private company, the Company determined that its investment was fully impaired and recorded a $2.3 million and $2.2 million impairment charge in the third and fourth quarters of 2016, respectively. During the quarter ended September 30, 2017, the Company sold this investment for $2.1 million in cash and recorded the proceeds as a gain in Gain (loss) on cost basis equity investment.
Note 2 — Cash, Cash Equivalents and Short-Term InvestmentsRestricted Cash
The Company follows a three-tier fair value hierarchy, which is described in detail in the Company's Annual Report on Form 10-K for the year ended December 31, 2020.
Cash equivalents consist of highly liquid fixed-income investments with original maturities of three months or less at the time of purchase includingand are classified as a Level 1 investment.
Restricted cash consists of cash in money market funds. Short-term investments consistaccounts that are used to secure letters of readily marketable securitiescredit in connection with 2 of our leased facilities. Restricted cash is recorded within "Other assets" in the Consolidated Balance Sheets and is classified as a remaining maturity of more than three months from time of purchase.Level 1 investment. The Company classifies allhad restricted cash of its cash equivalents and short-term investments as “available for sale,” as these investments are free of trading restrictions and are available for use in the Company’s daily operations. These marketable securities are carried at fair value, with the unrealized gains and losses, net of tax, reported as accumulated other comprehensive income and included as a separate component of stockholders’ equity. Gains and losses are recognized when realized. When the Company determines that other-than-temporary declines in fair value have occurred, the amount of the decline that is related to a credit loss is recognized in earnings. Gains and losses are determined using the specific identification method. The Company’s realized gains and losses in the three and nine months ended September 30, 2017 and 2016 were insignificant.

Cash and cash equivalents and short-term investments consisted of the following$2.3 million as of September 30, 2017March 31, 2021 and December 31, 2016 (in thousands):
September 30, 2017
2020.
8
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Estimated
Fair Value
Cash$39,514
 $—
 $—
 $39,514
Cash equivalents:       
Money market mutual funds71
 —
 —
 71
Total cash and cash equivalents39,585
 —
 —
 39,585
Short-term investments:       
Corporate bonds55,874
 60
 (92) 55,842
U.S. agency securities34,644
 —
 (255) 34,389
Asset-backed securities23,937
 5
 (48) 23,894
U.S. Treasury securities26,297
 —
 (234) 26,063
Total short-term investments140,752
 65
 (629) 140,188
Cash, cash equivalents and short-term investments$180,337
 $65
 $(629) $179,773
December 31, 2016
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Estimated
Fair Value
Cash$47,060
 $—
 $—
 $47,060
Cash equivalents:       
Money market mutual funds632
 —
 —
 632
Total cash and cash equivalents47,692
 —
 —
 47,692
Short-term investments:       
Corporate bonds54,827
 19
 (188) 54,658
U.S. agency securities34,658
 —
 (281) 34,377
Asset-backed securities26,431
 25
 (23) 26,433
U.S. Treasury securities22,701
 —
 (288) 22,413
Total short-term investments138,617
 44
 (780) 137,881
Cash, cash equivalents and short-term investments$186,309
 $44
 $(780) $185,573
The following table summarizes the amortized cost and estimated fair valueTable of money market mutual funds and short-term fixed income securities classified as short-term investments based on stated maturities as of September 30, 2017 (in thousands):Contents
 
Amortized
Cost
 
Estimated
Fair Value
Less than 1 year$12,303
 $12,302
Due in 1 to 3 years128,520
 127,957
Total$140,823
 $140,259
As of September 30, 2017, the Company did not consider any of its investments to be other-than-temporarily impaired.
Note 3 — Fair Value of Financial Instruments
The Company measures certain financial instruments at fair value on a recurring basis. The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
Level 1 valuations are based on quoted prices in active markets for identical assets or liabilities.

Level 2 valuations are based on inputs that are observable, either directly or indirectly, other than quoted prices included within Level 1. Such inputs used in determining fair value for Level 2 valuations include quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 valuations are based on information that is unobservable and significant to the overall fair value measurement.
All of the Company’s cash equivalents and short-term investments are classified within Level 1 or Level 2.
The following table presents information about the Company’s financial instruments that are measured at fair value as of September 30, 2017 and indicates the fair value hierarchy of the valuation (in thousands):
 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 equivalents71
 71
 —
Short-term investments:     
Corporate bonds55,842
 —
 55,842
U.S. agency securities34,389
 —
 34,389
Asset-backed securities23,894
 —
 23,894
U.S. Treasury securities26,063
 —
 26,063
Total short-term investments140,188
 —
 140,188
Cash equivalents and short-term investments$140,259
 $71
 $140,188
The Company has restricted cash of $1.2 million within Other assets, net as of September 30, 2017 and December 31, 2016. The restricted cash is classified within Level 1.
The following table presents information about the Company’s financial instruments that are measured at fair value as of December 31, 2016 and indicates the fair value hierarchy of the valuation (in thousands):
 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 equivalents632
 632
 —
Short-term investments:     
Corporate bonds54,658
 —
 54,658
U.S. agency securities34,377
 —
 34,377
Asset-backed securities26,433
 —
 26,433
U.S. Treasury securities22,413
 —
 22,413
Total short-term investments137,881
 —
 137,881
Cash equivalents and short-term investments$138,513
 $632
 $137,881

The convertible notes issued by the Company in August 2013 are shown on the accompanying consolidated balance sheets at their original issuance value, net of unamortized discount and issuance costs, and are not marked to market each period. The approximate fair value of the convertible notes as of September 30, 2017 and December 31, 2016 was $146.1 million and $143.8 million, respectively. The fair value of the convertible notes was determined using quoted market prices for similar securities, which, due to limited trading activity, are considered Level 2 in the fair value hierarchy.
The Company did not have any other financial instruments or long-term debt measured at fair value as of September 30, 2017March 31, 2021 and December 31, 2016.2020. There were no transfers between levels during the three months ended March 31, 2021 and 2020.
Government Assistance
During 2020, ServiceSource received various grants from the Singapore government, including the Job Support Scheme, which assists enterprises in retaining their local employees during the COVID-19 pandemic. ServiceSource received $1.3 million related to these grants during the year ended December 31, 2020 and is expected to receive an additional $0.2 million through August 2021. There are no conditions to repay the grants. Government grants are recognized in the Company's Consolidated Statements of Operations during the same period that the expenses related to the grant are incurred if there is reasonable assurance the grant will be received, and the Company has complied with any conditions attached to the grant.  
New Accounting Standards Adopted
Income Taxes
In December 2019, the FASB issued an ASU that simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This ASU is effective for annual periods and interim periods for those annual periods beginning after December 15, 2020, with early adoption permitted. The Company adopted this standard effective January 1, 2021 and the effects of this standard were applied prospectively to eligible costs incurred on or after January 1, 2021. The adoption of this standard did not have a material impact on the Consolidated Financial Statements.
New Accounting Standards Issued but Not yet Adopted
Financial Instruments - Credit Losses
In June 2016, the FASB issued an ASU that amends the measurement of credit losses on financial instruments and requires measurement and recognition of expected versus incurred credit losses for financial assets held. This ASU is effective for annual periods and interim periods for those annual periods beginning after December 15, 2022, with early adoption permitted. This standard will apply to the Company's accounts receivable and contract assets. Based on our current analysis, the Company does not expect the adoption to have a material impact on the Consolidated Financial Statements as credit losses from trade receivables have historically been insignificant. The Company will adopt this standard effective January 1, 2023.
Note 3 — Debt
Revolving Line of Credit
In July 2018, the Company entered into a $40.0 million Revolver that allows it and the other Borrower named therein to borrow against their domestic receivables as defined in the Credit Agreement. The Revolver matures July 2021 and bears interest at a variable rate per annum based on the greater of the prime rate, the Federal Funds rate plus 0.50% or the one-month LIBOR rate plus 1.00%, plus, in each case, a margin of 1.00% for base rate borrowings or 2.00% for Eurodollar borrowings.
As of March 31, 2021, the Company had $15.0 million of borrowings under the Revolver through a one-month Eurodollar borrowing at an effective interest rate of 2.11% maturing April 2021. An additional $14.7 million was available for borrowing under the Revolver as of March 31, 2021. The Eurodollar borrowings may be extended upon maturity, converted into a base rate borrowing upon maturity or require an incremental payment if the borrowing base decreases below the current amount outstanding during the term of the Eurodollar borrowing.
Subsequent to March 31, 2021, the one-month $15.0 million Eurodollar borrowing was extended at an effective interest rate of approximately 2.11% maturing May 2021.
The obligations under the Credit Agreement are secured by substantially all the assets of the Borrowers and certain of their subsidiaries, including pledges of equity in certain of the Company’s subsidiaries. The Revolver has financial covenants which the Company was in compliance with as of March 31, 2021 and December 31, 2020.
Interest Expense
Interest expense related to the amortization of debt issuance costs and interest expense associated with the Company's debt obligation was $0.1 million and $0.1 million for the three months ended March 31, 2021 and 2020, respectively.
Note 4 — DebtLeases
Senior Convertible NotesThe Company has operating leases for office space and finance leases for certain equipment under non-cancelable agreements with various expiration dates through May 2030. Certain office leases include the option to extend the term between one to
In August 2013,
9
seven years and certain office leases include the option to terminate the lease upon written notice within one year after lease commencement. Leases with an initial term of 12 months or less are not recorded on the balance sheet.
During 2021, the Company issued senior convertible notes due 2018 (the “Notes”) in exchangeentered into a sublease agreement through the end of the original lease term with a third party for gross proceedstwo floors of $150.0 million. The Notes will mature on August 1, 2018its Manila office space and are recorded in currentextended its lease for a portion of its Yokohama office space through May 2024.
Supplemental income statement information related to leases was as follows:
For the Three Months Ended March 31,
20212020
(in thousands)
Operating lease cost$2,941 $3,107 
Finance lease cost:
Amortization of leased assets159 188 
Interest on lease liabilities11 31 
Total finance lease cost170 219 
Sublease income(1,098)(892)
Net lease cost$2,013 $2,434 

Supplemental balance sheet information related to leases was as follows:
March 31, 2021December 31, 2020
(in thousands)
Operating leases:
ROU assets$27,515 $29,798 
Operating lease liabilities$10,365 $10,797 
Operating lease liabilities, net of current portion23,739 25,975 
Total operating lease liabilities$34,104 $36,772 
Finance leases:
Property and equipment$2,868 $2,880 
Accumulated depreciation(2,119)(1,963)
Property and equipment, net$749 $917 
Other current liabilities$499 $608 
Other long-term liabilities11 63 
Total finance lease liabilities$510 $671 
10
Lease term and discount rate information was as follows:
For the Three Months Ended March 31,
20212020
Weighted-average remaining lease term (in years):
Operating lease5.65.9
Finance lease0.81.6
Weighted-average discount rate:
Operating lease6.2 %6.4 %
Finance lease6.5 %7.8 %

Maturities of lease liabilities were as Convertible notes, net.follows as of March 31, 2021:
Operating LeasesOperating SubleaseFinance LeasesTotal
(in thousands)
Remainder of 2021$9,584 $(3,789)$461 $6,256 
20229,406 (2,538)64 6,932 
20234,434 (623)0 3,811 
20243,020 0 0 3,020 
20252,970 0 0 2,970 
Thereafter11,281 0 0 11,281 
Total lease payments40,695 (6,950)525 34,270 
Less: interest(6,591)— (15)(6,606)
Total$34,104 $(6,950)$510 $27,664 
Note 5 — Revenue Recognition
The Notes are governedfollowing tables present the disaggregation of revenue from contracts with our clients:
Revenue by an indenture, dated August 13, 2013 (the “Indenture”), betweenPerformance Obligation
For the Three Months Ended March 31,
20212020
(in thousands)
Selling services$44,328 $49,173 
Professional services695 941 
Total revenue$45,023 $50,114 
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Revenue by Geography
Revenue for each geography generally reflects commissions earned from sales of service contracts managed from revenue delivery centers in that geography and subscription sales and professional services to deploy the CompanyCompany's solutions. Predominantly all the service contracts sold and Wells Fargo Bank, National Association, as trustee. The Notes bear interest at a rate of 1.50% per year payable semi-annually in arrears on February 1 and August 1, beginning February 1, 2014.
The Notes are convertible at an initial conversion rate of 61.6770 shares of common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $16.21 per share of common stock, subjectmanaged by the revenue delivery centers relate to anti-dilution adjustments upon certain specified events as definedend customers located in the Indenture. Upon conversion,same geography. All NALA revenue represents revenue generated within the Notes will be settled in cash, sharesU.S.
For the Three Months Ended March 31,
20212020
(in thousands)
NALA$25,334 $28,473 
EMEA12,769 14,007 
APJ6,920 7,634 
Total revenue$45,023 $50,114 
Revenue by Contract Pricing
For the Three Months Ended March 31,
20212020
(in thousands)
Variable consideration$33,211 $36,366 
Fixed consideration11,812 13,748 
Total revenue$45,023 $50,114 
Contract Balances
As of March 31, 2021, contract assets and liabilities were $0.0 million and $0.2 million, respectively. As of December 31, 2020, contract assets and liabilities were $0.5 million and $0.4 million, respectively.
Transaction Price Allocated to Remaining Performance Obligations
As of March 31, 2021, assuming none of the Company’s common stock, or any combination thereof, atcurrent contracts with fixed consideration are renewed, the Company’s option.Company estimates receiving approximately $29.5 million in future selling services fixed consideration and approximately $0.2 million in professional services fixed consideration.
Prior to February 1, 2018, the Notes are convertible only upon the following circumstances:Contract Acquisition Costs
during any calendar quarter commencing afterAs of March 31, 2021 and December 31, 2013 (and only during such calendar quarter), if2020, capitalized contract acquisition costs were $0.8 million and $0.9 million, respectively. The Company recorded amortization expense related to capitalized contract acquisition costs of $0.2 million for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days endingthree months ended March 31, 2021 and 2020.
Impairment recognized on contract costs was insignificant for the last trading day ofthree months ended March 31, 2021 and 2020.
Note 6 — Stock-Based Compensation
ESPP
The Company previously offered an ESPP until its expiration in February 2021.
2021 PSU Awards
During March 2021, the immediately preceding calendar quarter,Company granted PSUs under the last reported sale price of common stock on such trading day is greater than or equal2020 Plan to 130% of the applicable conversion price on such trading day;
during the five business day period after any five consecutive trading day periodcertain executives in which the tradingnumber of shares ultimately received depends on the Company's achievement of 2 performance goals for fiscal year 2021 and a rTSR modifier based on the Company's rTSR for fiscal years 2021, 2022, and 2023 compared to a peer group. The aggregate target number of shares subject to these awards is 0.8 million. The awards were valued on the grant date using a Monte Carlo simulation for the rTSR modifier and using the Company’s closing stock price per $1,000 principal amountfor the performance metrics for an aggregate grant date fair value of $1.2 million. The number of shares ultimately received related to these awards will range from 0% to 173% of the Notes for each trading day of that five consecutive trading day period was less than 98%participant's target award and will vest on the third anniversary of the productgrant date. The Company's expense will be recognized over the service period and adjusted based on estimated achievement of the last reported sale price of common stock and the applicable conversion rate on each such trading day; orperformance goals.
upon the occurrence of specified corporate events described in the Indenture.
Holders of the Notes may convert their Notes at any time on or after February 1, 2018, until the close of business on the second scheduled trading day immediately preceding the maturity date, regardless of the foregoing circumstances.
The holders of the Notes may require the CompanyAdditionally, certain senior leaders elected to repurchase all orreceive a portion of their Notes at aannual cash repurchasecorporate incentive plan in PSUs. The Company granted the PSUs under the 2020 Plan during March 2021. The number of shares ultimately received depends on the
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Company's achievement of specified revenue, Adjusted EBITDA, and free cash flow performance goals for fiscal year 2021. The aggregate target number of shares subject to these awards is 0.4 million. The awards were valued using the Company's closing stock price equal to 100% of the principal amount of the Notes being repurchased, plus accrued and unpaid interest, if any, upon a fundamental change as defined in the Indenture. In addition, upon certain events of default as defined in the Indenture, the trustee or the holders of at least 25% in principal amount of the outstanding Notes may declare 100% of the principal amount of the Notes, plus accrued and unpaid interest, if any, on all the Notes to be due and payable. In case of certain events of bankruptcy, insolvency or reorganization involving the Company, 100% of the principal of and accrued and unpaid interest on the Notes will automatically become duegrant date and payable. The Notes were not subject to conversion or repurchase at September 30, 2017.
To account for the Notes at issuance, the Company separated the Notes into debt and equity components pursuant to the accounting standards for convertible debt instruments that may be fully or partially settled in cash upon conversion. Thehad an aggregate grant date fair value of debt component was estimated using an interest rate for nonconvertible debt, with terms similar$0.6 million. The number of shares ultimately received related to the Notes, excluding the conversion feature. The carrying amountthese awards ranges from 0% to 200% of the liability component was calculated by measuringparticipant's target award and will vest on the fair value of a similar liability that does not have an associated convertible feature. The excessfirst anniversary of the principal amountgrant date. The Company's expense will be recognized over the service period and adjusted based on estimated achievement of the Notes over the fair value of the debt component was recorded as a debt discount and a corresponding increase in additional paid-in capital. The debt discount is accreted to interest expense over the term of the Notes using the interest method. The amount recorded to additional paid-in capital is not to be remeasured as long as it continues to meet the conditions of equity classification. Upon issuance of the $150.0 million of Notes, the Company recorded $111.5 million to debt and $38.5 million to additional paid-in capital.performance targets.
The Company incurred transaction costs of approximately $4.9 million related to the issuance of the Notes. In accounting for these costs, the Company allocated the costs to the debt and equity components in proportion to the allocation of proceeds from the issuance of the Notes to such components. Transaction costs allocated to the debt component of $3.6 million are

recorded within Convertible notes, net, and amortized to interest expense over the term of the Notes. The transaction costs allocated to the equity component of $1.3 million were recorded to additional paid-in capital.
The net carrying amount of the liability component of the Notes consists of the following (in thousands):
 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
Stock-Based Compensation Expense
The following table presents the interest expense recognized related to the Notes (in thousands):
 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 costs204
 189
 592
 551
Accretion of debt discount2,190
 2,028
 6,359
 5,913
Total$2,957
 $2,780
 $8,639
 $8,152
The net proceeds from the Notes were approximately $145.1 million after payment of the initial purchasers’ discount and offering expense. The Company used approximately $31.4 million of the net proceeds from the Notes to pay the cost of the Note Hedges described below, which was partially offset by $21.8 million of the proceeds from the Company’s sale of the Warrants also described below.
Note Hedges
Concurrent with the issuance of the Notes, the Company entered into note hedges (“Note Hedges”) with certain bank counterparties, with respect to its common stock. The Company paid $31.4 million for the Note Hedges. The Note Hedges cover approximately 9.25 million shares of the Company’s common stock at a strike price of $16.21 per share. The Note Hedges will expire upon the maturity of the Notes. The Note Hedges are intended to reduce the potential dilution to the Company’s common stock upon conversion of the Notes and/or offset the cash payment in excess of the principal amount of the Notes the Company is required to make in the event that the market value per share of the Company’s common stock at the time of exercise is greater than the conversion price of the Notes.
Warrants
Separately, the Company entered into warrant transactions, whereby it sold warrants to the same bank counterparties as the Note Hedges to acquire approximately 9.25 million shares of the Company’s common stock at an initial strike price of $21.02 per share (“Warrants”), subject to anti-dilution adjustments. The Company received proceeds of approximately $21.8 million from the sale of the Warrants. If the fair value per share of the Company’s common stock exceeds the strike price of the Warrants, the Warrants will have a dilutive effect on earnings per share, unless the Company elects, subject to certain conditions, to settle the Warrants in cash.
The amounts paid and received for the Note Hedges and the Warrants have been recorded in additional paid-in capital. The fair value of the Note Hedges and the Warrants are not remeasured through earnings each reporting period.
Note 5 — Commitments and Contingencies
Litigation
The Company is subject to various legal proceedings and claims arising in the ordinary course of our business, including the cases discussed below.  Although the results of litigation and claims cannot be predicted with certainty, the Company is currently not aware of any litigation or threats of litigation in which the final outcome could have a material adverse effect on our business, operating results, financial position or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. The Company records a contingent liability when it is probable that a loss has been incurred and the amount is reasonably estimable in accordance with accounting for contingencies. As of September 30, 2017, the Company has accrued a $1.5 million reserve relating to our potential liability for currently pending disputes, reflected in Accrued Expenses in the accompanying condensed consolidated balance sheets.

On August 23, 2016, the United States District Court for the Middle District of Tennessee granted conditional class certification in a lawsuit originally filed on September 21, 2015 by three former senior sales representatives. The lawsuit, Sarah Patton, et al v. ServiceSource Delaware, Inc., asserts a claim under the Fair Labor Standards Act alleging that certain sales account representatives and senior sales representatives in our Nashville location were not paid for all hours worked and were not properly paid for overtime hours worked.  The complaint also asserts claims under Tennessee state law for breach of contract and unjust enrichment; however, the plaintiffs have not yet filed a motion to certify the state law breach of contract and unjust enrichment claims as a class action. The Company will continue to vigorously defend itself against these claims.
Note 6 — Share Repurchase Program and Stock-Based Compensation
In August 2015, the Board authorized a stock repurchase program (the “Program”) with a maximum authorization to repurchase up to $30.0 million worth of common stock of the Company. This Program expired on August 17, 2017. No shares were repurchased under the Program during the quarter ended September 30, 2017.
The following table summarizes the consolidated stock-based compensation expense included inas allocated within the condensed consolidated statementsCompany's Consolidated Statements of operations (in thousands):Operations:
For the Three Months Ended March 31,
20212020
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2017 2016 2017 2016(in thousands)
Cost of revenue$385
 $299
 $969
 $1,146
Cost of revenue$130 $45 
Sales and marketing982
 565
 2,834
 2,152
Sales and marketing191 377 
Research and development42
 106
 107
 448
Research and development15 18 
General and administrative2,074
 1,276
 6,486
 3,695
General and administrative2,139 605 
Restructuring and other352
 —
 352
 —
Total stock-based compensation$3,835
 $2,246
 $10,748
 $7,441
Total stock-based compensation$2,475 $1,045 
The above table does not include $0.1 million of capitalized stock-based compensation related to internal-use software duringthat was insignificant for the three months ended September 30, 2017March 31, 2021 and 2016, respectively,2020.
Stock Awards
A summary of the Company's stock option activity and $0.4 million for the nine months ended September 30, 2017 and 2016, respectively.
Equity Incentive Plan
Option and restricted stock activity under the 2011 Equity Incentive Plan for the nine months ended September 30, 2017related information was as follows (shares in thousands):follows:
SharesWeighted-Average Exercise PriceWeighted-Average Remaining Contractual Life (Years)Intrinsic Value
(in thousands)(in thousands)
Outstanding as of December 31, 20203,030 $2.09 $1,372 
Exercised(268)$1.18 
Expired and/or forfeited(397)$2.03 
Outstanding as of March 31, 20212,365 $2.21 5.89$552 
Exercisable as of March 31, 20212,118 $2.33 5.61$431 
   Options Outstanding Restricted Stock
Outstanding
 Shares and Units
Available
for Grant		 Number
of Shares		 Weighted-
Average
Exercise
Price		 Number
of Shares
December 31, 201610,406
 7,495
 $4.63
 4,237
Additional shares reserved under the 2011 Equity Incentive Plan3,527
 —
 —
 —
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 taxes193
 —
 —
 —
Canceled/Forfeited1,499
 (922) 5.47
 (577)
September 30, 201712,410
 6,704
 $4.49
 4,896
The weighted average grant-date fair valueAs of employeeMarch 31, 2021, there was $0.1 million of unrecognized compensation expense related to previously granted stock options, which is expected to be recognized over a weighted-average period of 1.5 years.
A summary of the Company's RSU and PSU activity and related information was as follows:
UnitsWeighted-Average Grant Date Fair Value
(in thousands)
Non-vested as of December 31, 20207,015 $1.55 
Granted1,957 $1.59 
Vested(73)$1.98 
Forfeited(940)$1.69 
Non-vested as of March 31, 20217,959 $1.54 
As of March 31, 2021, there was $6.7 million of unrecognized compensation expense related to previously granted during the three months ended September 30, 2017RSUs and 2016 was $1.74 and $2.30 per share, respectively, and $1.90 and $2.03 per share for the nine months ended September 30, 2017 and 2016, respectively. The unamortized grant date fair valuePSUs, which is expected to be recognized over a weighted-average period of both stock options and restricted stock awards totaled $18.0 million at September 30, 2017.1.8 years.
Potential shares of common stock that are not included in the determination of diluted net loss per share because they are anti-dilutive for the periods presented consist of weighted stock options non-vested restricted stock and sharesunvested RSUs and PSUs. The Company excluded from diluted earnings per share the weighted-average common share equivalents related to be purchased under our Employee Stock Purchase Plan having an anti-dilutive effect of 7.01.2 million and 4.64.2 million shares for the

three months ended September 30, 2017March 31, 2021 and 2016,2020, respectively, because their effect would have been anti-dilutive.
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Note 7 — Restructuring and 5.8Other Related Costs
The Company has undergone restructuring efforts to better align its cost structure with its business and market conditions. These restructuring efforts include severance and other employee costs, lease and other contract termination costs and asset impairments. Severance and other employee costs include severance payments, related employee benefits, stock-based compensation related to the accelerated vesting of certain equity awards and employee-related legal fees. Lease and other contract termination costs include charges related to lease consolidation and abandonment of spaces no longer utilized and the cancellation of certain contracts with outside vendors. Asset impairments include charges related to leasehold improvements and furniture in spaces vacated or no longer in use. The restructuring plans and future cash outlays are recorded in "Accrued expenses," "Accrued compensation," and "Other long-term liabilities" in the Consolidated Balance Sheetsas of March 31, 2021 and December 31, 2020.
During 2020, the Company announced a restructuring effort to align with its virtual-first operating model and reduce the operating cost structure resulting in a reduction of headcount and office lease costs. The Company recognized charges related to this restructuring effort of $0.9 million and 10.4 million shares for the ninethree months ended September 30, 2017March 31, 2021 and 2016, respectively.expects to incur approximately $0.1 million in additional costs through 2021.
The following table presents a reconciliation of the beginning and ending fair value liability balance related to the 2020 restructuring effort:
Severance and Other Employee CostsLease Termination CostsTotal
(in thousands)
Balance as of January 1, 2020$0 $0 $0 
Restructuring and other related costs780 59 839 
Cash paid(442)0 (442)
Balance as of December 31, 2020338 59 397 
Restructuring and other related costs842 78 920 
Cash paid(968)(59)(1,027)
Balance as of March 31, 2021$212 $78 $290 
Note 78 — Income Taxes
The Company is subject to taxation in the United StatesU.S. and various state and foreign jurisdictions. Earnings from non-U.S. activities are subject to local country income tax. The Company computes its quarterly income tax provision by using a forecasted annual effective tax rate and adjusts for any discrete items arising during the quarter. The primary difference between the effective tax rate and the federal statutory tax rate relates to the valuation allowances on the Company’s net operating losses and foreign tax rate differences. IncomeThe "Provision for income tax expenseexpense" in the Consolidated Statements of Operations primarily consists of income and withholding taxes for foreign and state jurisdictions where the Company has profitable operations, as well as valuation allowance adjustments for certain U.S. tax jurisdictions. No tax benefit was provided for losses incurred in United Statesthe U.S., Ireland and Singapore because those losses are offset by a full valuation allowance. The tax years 20102012 through 20172020 generally remain subject to examination by federal, state and foreign tax authorities.
The gross amount of the Company’s unrecognized tax benefits was $0.9$1.0 million as of September 30, 2017March 31, 2021 and December 31, 2016, none2020, NaN of which, if recognized, would affect the Company’s effective tax rate. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. During the three months ended March 31, 2021 and 2020, interest and penalties recognized were insignificant.
Note 89 — RestructuringCommitments and OtherContingencies
Letters of Credit
In early May 2017,connection with 2 of our leased facilities, the Company announced a restructuring effortis required to better align its cost structure with current business andmaintain 2 letters of credit totaling $2.3 million. The letters of credit are secured by $2.3 million of cash in money market conditions, including a headcount reduction andaccounts, which are classified as restricted cash in "Other assets" in the reductionConsolidated Balance Sheets.
14
Table of office space in four locations. The restructuring plan is accounted for in accordance with ASC 420, Exit or Disposal Cost Obligations. The Company recognized restructuring and other chargesContents
Non-cancelable Service Contract Commitments
Future minimum payments under non-cancelable service contract commitments were as follows:
March 31, 2021
(in thousands)
Remainder of 2021$10,308 
202210,266 
20238,183 
2024828 
Thereafter0 
Total$29,585 
15
Table of $0.5 million and $6.3 million during the three and nine months ended September 30, 2017, respectively. Severance and other employee costs include stock compensation related to the accelerated vesting of certain equity awards, severance payments, related employee benefits and employee-related legal fees. Lease and other contract termination costs include charges related to lease consolidation and abandonment of spaces no longer utilized and the cancellation of certain contracts with outside vendors. Asset impairments include charges related to leasehold improvements and furniture in spaces vacated or no longer in use. The Company expects to have restructuring and other related expenses through the remainder of 2017, as restructuring activities targeted at reducing the overall cost structure of the business will continue over several quarters. Also, future cash outlays related to these restructuring activities are expected to total $1.3 million. These amounts are reflected in Accounts payable, Accrued compensation and benefits and Accrued expenses as of September 30, 2017.
Restructuring and other liability activities for the period ended September 30, 2017 is summarized as follows (in thousands):
Contents
 Severance and Other Employee Costs Lease and Other Contract Termination Costs Asset Impairments Total
Restructuring and other liability at January 1, 2017$—
 $—
 $—
 $—
Restructuring and other charges3,399
 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


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)&A should be read in conjunction with our unaudited consolidated financial statementsConsolidated Financial Statements and notes thereto which appear elsewhere in this Quarterly Reportquarterly report on Form 10-Q.
This report including this MD&A, includes estimates, projections, statements relating to our business plans, objectives, and expected operating results that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934.1934, as amended.Forward looking statements may appear throughout this report. These forward-looking statements are generally are identified by the words “believe,” “project,” "target," "forecast," “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and variations of such words or similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially. Factors that could cause or contribute to such differences include, but are not limited to, those identified elsewhere in this report, including the risks and uncertainties related to the impact and duration of the COVID-19 pandemic, as well as those discussed in the sections of our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on February 24, 2021 entitled “Special Note Regarding Forward“Forward Looking Statements and Industry Data”Statements” and “Risk Factors” and in our other filings with the Securities and Exchange Commission (“SEC”).SEC. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise.otherwise, except as required by applicable law.
All dollar amounts expressed
Overview
ServiceSource is a leading provider of BPaaS solutions that enable the transformation of go-to-market organizations and functions for global technology clients. We design, deploy, and operate a suite of innovative solutions and complex processes that support and augment our clients’ B2B customer acquisition, engagement, expansion and retention activities. Our clients - ranging from Fortune 500 technology titans to high-growth disruptors and innovators - rely on our holistic customer engagement methodology and process excellence, global scale and delivery footprint, and data analytics and business insights to deliver trusted business outcomes that have a meaningful and material positive impact to their long-term revenue and profitability objectives. Through our unique integration of people, process and technology - leveraged against our more than 20 years of experience and domain expertise in the cloud, software, hardware, medical device and diagnostic equipment, and industrial IoT sectors - we effect and transact billions of dollars of B2B commerce in more than 175 countries on our clients’ behalf annually.
“ServiceSource,” “the Company,” “we,” “us,” or “our,” as numbers in this MD&A are in millions unless otherwise noted.
OVERVIEW
used herein, refer to ServiceSource International, Inc. isand its wholly owned subsidiaries, unless the context indicates otherwise.
For a summary of commonly used industry terms and abbreviations used in this Form 10-Q, see the Glossary of Terms.
Impact of the COVID-19 Pandemic
With the global leader in outsourced, performance-based customer successoutbreak of COVID-19 and revenue growth solutions. Throughthe declaration of a pandemic by the World Health Organization on March 11, 2020, we created a dedicated crisis team to proactively implement our people, processes and technology, we find, convert, grow and retain revenue on behalfbusiness continuity plans. By March 19, 2020, more than 95% of our clients—someemployees had moved from an in-office to a work-from-home environment and as of April 1, 2020, we transitioned to a 100% virtual operating model. As a result of this successful work-from-home implementation, we have shifted to a virtual-first operating model whereby our employees will continue to primarily work from their home offices and our facilities will be used for collaboration, innovation, and connection. Additionally, this model includes virtual sourcing, hiring, and onboarding for new employees as well as a process for driving performance and culture in a virtual environment. As a result of the world’s leading business-to-business companies—implementation of these business continuity measures, we have not experienced material disruptions in more than 35 languages. Our solutions help our clients strengthenoperations.
We believe we have sufficient liquidity on hand to continue business operations during this volatile period. As of March 31, 2021, we had total available liquidity of $48.9 million consisting of cash on hand and availability under our Revolver. See "Liquidity and Capital Resources" for additional information.
There was no material adverse impact on the results of operations for the three months ended March 31, 2021 as a result of the COVID-19 pandemic. We expect to continue to invest capital to allow our employees to function in our virtual, work-from-home operating model. However, we are benefiting and will continue to benefit from decreases in certain costs related to our facilities and reduced travel and entertainment costs.
During 2020, ServiceSource received various grants from the Singapore government, including the Job Support Scheme, which assists enterprises in retaining their customer relationships, drive improved customer adoption, expansionlocal employees during the COVID-19 pandemic. ServiceSource received $1.3 million related to these grants during the year ended December 31, 2020 and retentionis expected to receive an additional $0.2 million through August 2021.
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Table of Contents
The situation surrounding COVID-19 remains fluid and minimize churn. Our technology platformthe potential for a negative impact on our financial condition and best-practice business processes combinedresults of operations increases the longer the virus impacts the economic activity in the U.S. and globally. See “Risk Factors” in Part I, Item 1A of our annual report on Form 10-K for the year ended December 31, 2020 for additional information.
Key Financial Results for the Three Months Ended March 31, 2021
•GAAP revenue was $45.0 million compared with our highly-trained, client-focused revenue delivery professionals$50.1 million reported for the same period in 2020.
•GAAP net loss was $8.8 million or $0.09 per diluted share, compared with GAAP net loss of $5.9 million or $0.06 per diluted share reported for the same period in 2020.
•Adjusted EBITDA, a non-GAAP financial measure, was negative $0.2 million compared with positive $0.1 million reported for the same period in 2020. See “Non-GAAP Financial Measurements” below for a reconciliation of Adjusted EBITDA from net loss.
•Ended the quarter with $36.5 million of cash and data from over 15 yearscash equivalents and restricted cash and $15.0 million of operating experience enable usborrowings under the Company’s $40.0 million Revolver.
Results of Operations
For the Three Months Ended March 31, 2021 Compared to provide our clients greater value for our customer success services than attained by our clients’ in-house customer success teams.
Basis of Presentationthe Same Period Ended March 31, 2020
Net Revenue, Cost of Revenue and Gross Profit
Substantially all of our netNet revenue is primarily attributable to commissions we earn from the sale of renewals of maintenance, support and subscription agreements on behalf of our clients. We generally invoice our clients for our services in arrears on a monthly basis for sales commissions, and on a quarterly basis for certain performance sales commissions; accordingly, we typically have no deferred revenue related to thesealso generate revenues from selling professional services. We do not set the price, terms or scope of services in the service contracts with end customers and do not have any obligations related to the underlying service contracts between our clients and their end customers.
We also earn revenue from the sale of subscriptions to our cloud-based applications. To date, subscription revenue has been a small percentage of total revenue. We expect revenues generated from subscriptions of Renew OnDemand to continue declining for the remainder of 2017. Subscription fees are accounted for separately from commissions, and they are billed in advance over a monthly, quarterly or annual basis. Subscription revenue is recognized ratably over the related subscription term.
We have generated a significant portion of our revenue from a limited number of clients. Our top ten customers accounted for 67% and 65% of our net revenue for the nine months ended September 30, 2017 and 2016, respectively.
The loss of revenue from any of our top clients for any reason, including the failure to renew our contracts, termination of some or all of our services, a change of relationship with any of our key clients or their acquisition, can cause a significant decrease in our revenue.
Our business is geographically diversified. Through the first three quarters of 2017, 64% of our net revenue was earned in North America and Latin America (“NALA”), 24% in Europe, Middle East and Africa (“EMEA”) and 12% in Asia Pacific Japan (“APJ”). Net revenue for a particular geography generally reflects commissions earned from sales of service contracts managed from our revenue delivery centers in that geography. Predominantly all of the service contracts sold and managed by our revenue delivery centers relate to end customers located in the same geography. In addition, our Kuala Lumpur, Manila and Sofia locations are revenue delivery centers where we have centralized, for our worldwide operations, the key contract renewal processes that do not require regional expertise, such as client data management and quoting.

Cost of Revenue and Gross Profit
Our cost of revenue expenses includeincludes employee compensation, technology costs, including those related to the delivery of our cloud-based technologies, and allocated overhead costs. Compensation expense includes salary, bonus, benefits and stock-based compensation for our dedicated service sales teams. Our allocated overhead includes costs for facilities, information technology andexpenses which consist of depreciation, including amortization of internal-useinternally developed software, associated with our servicefacility and technology costs.
 For the Three Months Ended March 31,
 20212020
Amount% of Net RevenueAmount% of Net Revenue$ Change% Change
(in thousands)(in thousands)(in thousands)
Net revenue$45,023 100 %$50,114 100 %$(5,091)(10)%
Cost of revenue34,067 76 %35,560 71 %(1,493)(4)%
Gross profit$10,956 24 %$14,554 29 %$(3,598)(25)%
Net revenue technology platformdecreased $5.1 million, or 10%, for the three months ended March 31, 2021 compared to the same period in 2020, primarily due to client churn and cloud applications. Allocated costslower bookings.
Cost of revenue decreased $1.5 million, or 4%, for facilities consist of rent, maintenance and compensation of personnelthe three months ended March 31, 2021 compared to the same period in our facilities departments. Our allocated costs for information technology include2020, primarily due to the following:
•$1.2 million decrease in employee related costs associated with third-party data centers where we maintain our data servers, compensationa reduction in headcount and lower travel and entertainment expenditures;
•$0.8 million decrease in facility costs primarily related to reduced headcount, transitioning to a virtual-first operating model, and sublease income; partially offset by
•$0.6 million increase in depreciation and amortization expense.
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Table of our information technology personnel and the cost of support and maintenance contracts associated with computer hardware and software. To the extent our client base or business with our existing client base expands, we may need to hire additional service sales personnel and invest in infrastructure to support such growth. Our cost of revenue may fluctuate significantly and increase or decrease on an absolute basis and as a percentage of revenue in the near term, including for the reasons discussed under, “Factors Affecting Our Performance—Implementation Cycle” in our 2016 Annual Report on Form 10-K.Contents
Operating Expenses
For the Three Months Ended March 31,
20212020
Amount% of Net RevenueAmount% of Net Revenue$ Change% Change
(in thousands)(in thousands)(in thousands)
Operating expenses:
Sales and marketing$4,030 9 %$7,268 15 %$(3,238)(45)%
Research and development1,160 3 %1,181 2 %(21)(2)%
General and administrative12,190 27 %10,688 21 %1,502 14 %
Restructuring and other related costs920 2 %467 1 %453 97 %
Total operating expenses$18,300 41 %$19,604 39 %$(1,304)(7)%
Sales and Marketing. Marketing
Sales and marketing expenses are a significant componentprimarily consist of our operating costs and consist primarily ofemployee compensation expensesexpense and sales commissions forpaid to our sales and marketing staff, allocated expenses andemployees, amortization of contract acquisition costs, marketing programs and events. We sell our solutions through our global sales organization,events, and allocated overhead expenses, which is organized acrossconsist of depreciation, amortization of internally developed software, and facility and technology costs.
Sales and marketing expenses decreased $3.2 million, or 45%, for the three geographic regions: NALA, EMEAmonths ended March 31, 2021 compared to the same period in 2020, primarily due to a $2.3 million decrease in employee related costs associated with a reduction in headcount, lower bookings, and APJ. Our commission plans provide that payment of commissionslower travel and entertainment expenditures, a $0.8 million decrease in information technology and facility costs related to our sales representatives is contingent on their continued employment,transitioning to a virtual-first operating model, and we recognize expense over a period that is generally between the contract signing date and twelve to fourteen months following the execution of the applicable contract. When commissions are paid upon contract signing and are not contingent on future payments and continued employment, we consider that portion of the commission to be earned and therefore expensed at contract signing.$0.2 million decrease in marketing cost.
Research and Development. Development
Research and development expenses primarily consist primarily of employee compensation expense, allocatedthird-party consultant costs and the costallocated overhead expenses, which consist of third-party service providers. We focus our researchamortization of internally developed software, facility and technology costs.
Research and development efforts on developing new products and applicationsexpenses decreased 2%, for the three months ended March 31, 2021 compared to the same period in 2020, primarily due to $0.2 million decrease in information technology costs related to our technology platform. We capitalize certain expenditures relatedtransitioning to thea virtual-first operating model, offset by a $0.2 million reduction in third-party capitalizable software development costs and enhancement of internal-use software related to our technology platform.other professional fees.
General and Administrative. Administrative
General and administrative expenses primarily consist primarily of employee compensation expense for our executive, finance, human resources, finance and legal functions and related expenses for professional fees for accounting, tax and legal services, as well as allocated overhead expenses, which consistsconsist of depreciation, amortization of internally developed software, facilitiesfacility and technology costs.
RestructuringGeneral and Other. Restructuring and otheradministrative expenses consist primarily of employees’ severance payments, related employee benefits, stock compensation related to the accelerated vesting of certain equity awards, related legal fees, asset impairment charges and charges related to leases and other contract termination costs.
Interest Expense and Other, Net and Gain (Loss) on Cost Basis Equity Investment
Interest expense. Interest expense consists of interest expense associated with our convertible debt, imputed interest from capital lease payments, accretion of debt discount and amortization of debt issuance costs. We recognize accretion of debt discount and amortization of interest costs using the effective interest method. We expect our interest expense to increase slightly for the remainder of 2017 from accretion of debt discount, amortization of deferred financing costs and contractual interest costs as a result of our August 2013 issuance of $150.0 million aggregate principal amount of convertible notes due August 2018.
Other, net. Other, net consists primarily of foreign exchange gains and losses and the interest income earned on our cash, cash equivalents and marketable securities investments. We expect other income to vary depending on the movement in foreign currency exchange rates and the related impact on our foreign exchange gain (loss) and the return of interest on our investments.
Gain (loss) on cost basis equity investment. In 2013, we made an equity investment in a private company for $4.5 million, which represented less than 5% of the outstanding equity of that company. Based on unfavorable growth trends and declining financial performance of this private company, we determined this investment was fully impaired and recorded a $2.3 million and $2.2 million impairment charge in the third and fourth quarters of 2016, respectively. During the quarter ended September 30, 2017, we sold this investment for $2.1 million in cash and recorded the proceeds as a gain.

Income Tax Provision (Benefit)
We account for income taxes using an asset and liability method, which requires the recognition of taxes payable or refundable for the current year and deferred tax assets and liabilities for the expected future tax consequences of temporary differences that currently exist between the tax basis and the financial reporting basis of our taxable subsidiaries’ assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in operations in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are not expected to be realized.
We evaluate our ability to realize the tax benefits associated with deferred tax assets on a jurisdictional basis. This evaluation utilizes the framework contained in ASC 740, Income Taxes, wherein management analyzes all positive and negative evidence available at the balance sheet date to determine whether all or some portion of our deferred tax assets will not be realized. Under this guidance, a valuation allowance must be established for deferred tax assets when it is more likely than not (a probability level of more than 50 percent) that they will not be realized. In assessing the realization of our deferred tax assets, we consider all available evidence, both positive and negative, and place significant emphasis on guidance contained in ASC 740, which states that “a cumulative loss in recent years is a significant piece of negative evidence that is difficult to overcome.”
We account for unrecognized tax benefits using a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. We establish reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. We record an income tax liability, if any, for the difference between the benefit recognized and measured and the tax position taken or expected to be taken on our tax returns. To the extent that the assessment of such tax positions change, the change in estimate is recorded in the period in which the determination is made. The reserves are adjusted in light of changing facts and circumstances, such as the outcome of a tax audit. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate.
Results of Operations
The following table sets forth our operating results as a percentage of net revenue:
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
 (as % of net revenue)
Net revenue100 % 100 % 100 % 100 %
Cost of revenue70 % 65 % 70 % 67 %
Gross profit30 % 35 % 30 % 33 %
Operating expenses:       
Sales and marketing13 % 14 % 14 % 17 %
Research and development2 % 3 % 3 % 3 %
General and administrative22 % 23 % 23 % 21 %
Restructuring and other1 % — % 4 % — %
Total operating expenses38 % 40 % 44 % 41 %
Loss from operations(8)% (5)% (14)% (8)%

Three and Nine Months Ended September 30, 2017 and 2016.

Net Revenue, Cost of Revenue and Gross Profit

 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 Revenue40,803
 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)%
                
Net revenue decreased $4.4increased $1.5 million, or 7%14%, for the third quarter of 2017 compared to the third quarter of 2016. The overall decrease was due to contractions and lower production with certain existing customers that was not offset by production related to expansions and new business in the third quarter of 2017.
Our cost of revenue in the third quarter of 2017 was consistent with the third quarter of 2016 as a result of a $0.9 million decrease in employee related costs as a result of shifting headcount to lower cost offices and locations, all related to our continuous efforts to better align employee costs with revenue, a decrease of $0.5 million in temporary labor and consulting costs, $0.2 million decrease in recruitment costs, $0.4 million decrease in information technology, offset by a $1.2 million increase in depreciation and amortization costs and $0.8 million of overhead allocations.
Gross profit in the third quarter of 2017 decreased by $4.4 million, or 20%,three months ended March 31, 2021 compared to the same period in 2016 which is consistent with the decrease in revenue.
Net revenue decreased $11.1 million, or 6%, for the nine months ended September 30, 2017 compared2020, primarily due to the nine months ended September 30, 2016. The overall decrease was due to contractions and lower production with certain existing customers that was not offset by production related to expansions and new business.following:
The $0.8•$1.5 million or 1%, decreaseincrease in our cost of revenue in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 reflects a $2.6stock-based compensation costs;
•$1.0 million decrease in employee related costs as a result of shifting headcount to lower cost offices and locations, all related to our continuous efforts to better align employee costs with revenue, a decrease of $1.5 million in temporary labor and consulting costs, $0.6 million decrease in recruitment costs, $0.9 million decreaseincrease in information technology and facility costs due to lower headcount in cost of revenue; partially offset by a $2.6 million increase in depreciation and amortization costs and $2.1 million of overhead allocations.
Gross profit in the nine months ended September 30, 2017 decreased by $10.3 million, or 17%, compared to the same period in 2016, which is in line with the decrease in revenue.

Operating Expenses
 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 development1,048
 1,952
 (904) (46)% 4,534
 6,132
 (1,598) (26)%
General and administrative12,543
 14,638
 (2,095) (14)% 40,029
 38,233
 1,796
 5 %
Restructuring and other545
 —
 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 development42
 106
 (64)   107
 448
 (341)  
General and administrative2,074
 1,276
 798
   6,486
 3,695
 2,791
  
Restructuring and other352
 —
 352
   352
 —
 352
  
Total stock-based compensation$3,450
 $1,947
 $1,503
   $9,779
 $6,295
 $3,484
  
Sales and marketing expenses
The $1.0 million, or 12%, decrease in sales and marketing expenses in the third quarter of 2017 compared to the third quarter of 2016 resulted from a $0.7 million decrease in employee related costs, a $0.4 million decrease in travel costs and $0.1 million in overhead allocations, offset by a $0.2 million increase in marketing programs.
The $5.8 million, or 19%, decrease in sales and marketing expenses in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 resulted from a $4.5 million decrease in employee related costs, a $1.3 million decrease in travel costs, a $0.1 million decrease in temporary labor and consulting costs, a $0.1 million decrease in recruitment expense and $0.3 million of overhead allocation. These decreases were offset by a $0.6 million increase in marketing programs costs.
Research and development expenses
The $0.9 million, or 46%, decrease in research and development expense in the third quarter of 2017 compared to the third quarter of 2016 was primarily due to a $0.6 million decrease in employee related costs associated with decrease in headcount and a $0.2 million decrease in temporary labor and $0.1 million decrease in overhead allocations.
Internal-use software development capitalization decreased $0.4 million for the three months ended September 30, 2017 compared to the three months ended September 30, 2016, primarily due to decreased development efforts related to our Renew OnDemand platform.
The $1.6 million, or 26%, decrease in research and development expense in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 was primarily due to $1.5•$0.8 million decrease in employee related costs associated with a decreasereduction in headcount, a $0.1headcount; and
•$0.3 million decrease in travel costs and a $0.1 million decrease in rent and facility expense. These decreases were offset by a $0.1 million increase in information technology costs.
Internal-use software development capitalization increased by $0.1 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, primarily due to continued development efforts related to our internal managed services platforms.
General and administrative expenses
The $2.1 million, or 14%, decrease in general and administrative expense in the third quarter of 2017 compared to the third quarter of 2016 reflected a $1.0 million decrease in employee related costs, a $0.5 million decrease in temporary labor and consulting costs, a $0.2 decrease in rent and facility costs, a $0.3 decrease in travel costs, a $0.7 million decrease in overhead allocations and a $1.5 million decrease due to a non-recurring legal reserve recorded in the third quarter of 2016. Offsetting these decreases was a $0.4 million increase in marketing programs, a $0.3 million increase in recruitment costs, $0.3 million increase in information technology costs and a $1.1 million increase in depreciation and amortization costs.expense.

The $1.8 million, or 5%, increase in generalRestructuring and administrative expense in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 reflected a $1.3 million increase in employee related costs, $0.9 million increase in recruitment costs, a $0.8 increase in information technology, a $2.9 million increase in depreciation expense and a $0.4 million increase in marketing costs. Offsetting these increases was a $0.8 million decrease in travel costs, $0.4 million decrease in temporary labor and consulting fees, $1.5 million decrease related to a non-recurring legal reserve recorded in the third quarter of 2016 and a $1.9 million decrease in overhead allocations.Other Related Costs
Restructuring and other expensesrelated costs consist primarily of employees’ severance payments and related employee benefits, related legal fees and charges related to lease termination costs.
TheRestructuring and other related costs increased $0.5 million, and $6.3 million increase in restructuring and other in the three and nine months ended September 30, 2017, respectively, compared to the three and nine months ended September 30, 2016 was related to our recognition of restructuring and other charges during the second and third quarter of 2017. During the second quarter we announced an effort to better align our cost structure with current revenue levels.

Interest Expense and Other, Net and (Gain) Loss on Cost Basis Equity Investment
 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 %

Interest expense increased by $0.2 million, or 6%, in the third quarter of 2017 compared to the third quarter of 2016 and was due to the increased accretion of debt discount under the effective interest method related to the convertible notes issued in August 2013.
Other, net decreased by $0.4 million, or 75%, in97% for the three months ended September 30, 2017March 31, 2021 compared to the same period in 2020, due to the 2020 restructuring effort resulting in a reduction of headcount and office lease costs compared to the three months ended September 30, 2016,March 31, 2020.
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Interest and Other Expense, Net
Interest and other expense, net consists of interest expense associated with our Revolver, imputed interest from finance lease payments, interest income earned on our cash and cash equivalents, amortization of debt issuance costs and foreign exchange gains and losses. 
For the Three Months Ended March 31,
20212020
Amount% of Net RevenueAmount% of Net Revenue$ Change% Change
(in thousands)(in thousands)(in thousands)
Interest expense$(158)— %$(81)— %$(77)(95)%
Other expense, net$(1,002)(2)%$(793)(2)%$(209)(26)%
Interest expense increased $0.1 million, or 95%, for the three months ended March 31, 2021 compared to the same period in 2020, primarily due to the timing of borrowings on the Company's Revolver.
Other expense, net increased $0.2 million, or 26%, for the three months ended March 31, 2021 compared to the same period in 2020, primarily due to foreign currency fluctuations.
InterestProvision for Income Tax Expense
For the Three Months Ended March 31,
20212020
Amount% of Net RevenueAmount% of Net Revenue$ Change% Change
(in thousands)(in thousands)(in thousands)
Provision for income tax expense$(331)(1)%$(18)— %$(313)*
Provision for income tax expense resulted primarily from profitable jurisdictions where no valuation allowance has been provided. Provision for income tax increased by $0.5$0.3 million or 6%, infor the ninethree months ended September 30, 2017March 31, 2021 compared to the nine months ended September 30, 2016 and wassame period in 2020, due to the increased accretion of debt discount under the effective interest method related to the convertible notes issuedan increase in August 2013.
Other, net decreased by $1.6 million, or 59%,profitable operations in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, primarily due tocertain foreign currency fluctuations.
(Gain) loss on cost basis equity investment of $2.1 million in the three and nine months ended September 30, 2017 is related to the sale of our equity investment in a private company which was originally purchased for $4.5 million we made in 2013. Based on unfavorable growth trends and declining financial performance of this private company, we determined this investment was fully impaired and recorded a $2.3 million and $2.2 million impairment charge in the third and fourth quarters of 2016, respectively.

Income Tax (Benefit) Provision
 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) *
jurisdictions.
*Not considered meaningful.
For the third quarter of 2017, we recorded an income tax benefit of approximately $0.2 million. The tax benefit resulted primarily from a taxable loss in a foreign affiliate. Income tax expense decreased in the third quarter of 2017 by $1.1 million compared to the third quarter of 2016 primarily due to state valuation allowance recorded in 2016.

For the nine months ended September 30, 2017, we recorded income tax expense of approximately $0.2 million. This amount primarily represents anticipated taxes in jurisdictions where we have profitable operations, including certain U.S. states and foreign jurisdictions. Income tax expense decreased in the third quarter of 2017 by $2.3 million compared to the third quarter of 2016 primarily due to certain state deferred tax assets.
As of September 30, 2017, we have recorded a full valuation allowance on our state deferred tax assets. No benefit was provided for losses incurred in U.S. and Singapore because those losses are offset by a full valuation allowance.
Liquidity and Capital Resources
At September 30, 2017, we had cash, cash equivalents and short-term investments of $179.8 million, which primarily consisted of demand deposits, money market mutual funds, corporate bonds and United States government obligations held by well-capitalized financial institutions. In addition, at September 30, 2017, we had cash and cash equivalents of $6.5 million held outside of the U.S. by our foreign subsidiaries that was generated by such subsidiaries and which is used to satisfy their current operating requirements. We consider the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested in foreign operations and we do not have current plans to repatriate these earnings to fund our U.S. operations as we have sufficient cash, cash equivalents and short-term investments held in the United States.
Our primary operating cash requirements include the payment of compensation and related employee costs working capital requirements related to accounts receivable and accounts payable, as well as costs for our facilities and information technology infrastructure. Historically, we have financed our operations principally from cash provided by our operating activities, proceeds from stock offerings and the exercise of stock options.activities. We believe our existing cash and cash equivalents and short-term investments will be sufficient to meet our working capital and capital expenditure needs for at leastover the next twelve months.
We have considered the effects of the COVID-19 pandemic, including customer purchasing and renewal decisions,in our assessment of the sufficiency of our liquidity and capital resources. We will continue to monitor our financial position to the extent that pandemic-related challenges continue.
As of March 31, 2021, we had cash and cash equivalents of $34.2 million, which primarily consist of demand deposits and money market mutual funds. Included in cash and cash equivalents was $6.4 million held by our foreign subsidiaries used to satisfy their operating requirements. We consider the undistributed earnings of ServiceSource Europe Ltd. and ServiceSource International Singapore Pte. Ltd. permanently reinvested in foreign operations and have not provided for U.S. income taxes on such earnings. As of March 31, 2021, the Company had no unremitted earnings from our foreign subsidiaries.
In August 2013, we issued $150 million aggregate principal amount of 1.50% convertible notes due August 1,July 2018, (the “Notes”) and concurrentlythe Company entered into convertible notes hedgesa $40.0 million Revolver that allows it and separate warrant transactions.the other Borrower named therein to borrow against its domestic receivables as defined in the Credit Agreement. The Notes will matureRevolver matures July 2021 and bears interest at a variable rate per annum based on August 1, 2018, unless converted earlier. Upon conversion, the Notes will be settled in cash, shares of our stock, or any combination thereof, at our option. We received proceeds of $145.1 million from the issuancegreater of the convertible notes, netprime rate, the Federal Funds rate plus 0.50% or the one-month LIBOR rate plus 1.00%, plus, in each case, a margin of associated fees, received $21.81.00% for base rate borrowings or 2.00% for Eurodollar borrowings.
As of March 31, 2021 the Company had $15.0 million fromof borrowings under the issuanceRevolver through a one-month Eurodollar borrowing at an effective interest rate of 2.11% maturing April 2021. An additional $14.7 million was available for borrowing under the Revolver as of March 31, 2021. The Eurodollar borrowings may be extended upon maturity, converted into a base rate borrowing upon maturity or require an incremental payment if the borrowing base decreases below the current amount outstanding during the term of the warrantsEurodollar borrowing.
Subsequent to March 31, 2021, the one-month $15.0 million Eurodollar borrowing was extended at an effective interest rate of approximately 2.11% maturing May 2021.
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The obligations under the Credit Agreement are secured by substantially all the assets of the Borrowers and paid $31.4 million forcertain of their subsidiaries, including pledges of equity in certain of the note hedges.Company’s subsidiaries. The Notes were not subject to conversion or repurchase at September 30, 2017Revolver has financial covenants which the Company was in compliance with as of March 31, 2021 and are classified as a current liability on our condensed consolidated balance sheet. We believe we will have sufficient cash and liquid short-term investments to repay the Note at maturity.December 31, 2020.
LetterLetters of Credit and Restricted Cash
In connection with onetwo of our leased facilities, the Company is required to maintain a $1.2 million letter of credit. The lettertwo letters of credit istotaling $2.3 million. The letters of credit are secured by $1.2$2.3 million of acash in money market accountaccounts, which isare classified as Other assets, netrestricted cash in our condensed consolidated balance sheet as of September 30, 2017."Other assets" in the Consolidated Balance Sheets.
Summary Cash Flows
The following table sets forthpresents a summary of our cash flows (in thousands):flows:
For the Three Months Ended March 31,
20212020
(in thousands)
Net cash provided by (used in) operating activities$537 $(5,669)
Net cash used in investing activities(1,019)(1,557)
Net cash (used in) provided by financing activities(29)26,838 
Effect of exchange rate changes on cash and cash equivalents and restricted cash650 480 
Net change in cash and cash equivalents and restricted cash$139 $20,092 
 Nine Months Ended
September 30,
 2017 2016
Net cash provided by operating activities$6,516
 $9,706
Net cash used in investing activities(13,707) (23,887)
Net cash provided by (used in) financing activities275
 (4,777)
Net decrease in cash and cash equivalents, net of impact of exchange rate changes on cash(8,107) (20,639)
Depreciation and amortization expense were comprised of the following:
For the Three Months Ended March 31,
20212020
(in thousands)
Internally developed software amortization$2,192 $1,765 
Property and equipment depreciation1,465 1,631 
Total depreciation and amortization$3,657 $3,396 
Operating Activities
Net cash provided by operating activities was $6.5increased $6.2 million duringfor the ninethree months ended September 30, 2017. Net loss duringMarch 31, 2021 compared to the period was $29.9 million adjusted by non-cash charges of $17.2 million for depreciation and amortization, $7.0 million of amortization of debt discount and issuance costs, $0.2 million for deferred income taxes, $10.4 million for stock-based compensation, $2.5 million for restructuring and other costs and a $2.1 million gain on the sale of our cost basis equity investment. Cash provided by operationsthree months ended March 31, 2020, primarily as a result of improved cash collections from our clients during the changescurrent period compared to the prior period.
Investing Activities
Net cash used in our working capital include a $12.3investing activities decreased $0.5 million decrease in accounts receivable, net. Usesfor the three months ended March 31, 2021 compared to the three months ended March 31, 2020, due to decreased cash outflows from purchases of cash were related to a $2.4 million decrease in deferred revenue, a $0.8 million decrease in accounts payable, a $0.8 million decrease in accrued expenses, $1.0 million decrease in accrued taxes, $4.7 million decrease in accrued compensationproperty and benefits and a $1.4 million decrease in other liabilities.equipment during the three months ended March 31, 2021.

Financing Activities
Net cash provided by operatingfinancing activities was $9.7decreased $26.9 million duringfor the ninethree months ended September 30, 2016. Net loss duringMarch 31, 2021 compared to the period was $23.6 million adjusted by non-cash charges of $11.6 million for depreciation and amortization, $6.5 million of amortization of debt discount and issuance costs, $1.7 million for deferred income taxes, $7.4 million for stock-based compensation and a $2.3 million loss on our cost basis equity investment. Cash provided by operationsthree months ended March 31, 2020, primarily as a result of $27.0 million in net cash inflows from borrowings on the changes in our working capital include a $2.8 million decrease in accounts receivable, net, a $0.4 million increase in accounts payable and a $1.7 million increase in accrued expenses. Uses of cash were related to a $0.8 million decrease in deferred revenue and a $1.5 million decrease in accrued compensation and benefits
Investing Activities
DuringRevolver during the ninethree months ended September 30, 2017, cash used in investing activities was principally related to the proceeds from the sale of cost basis equity investment of $2.1 million, net purchase, sale and maturities of short-term investments of $2.0 million and property and equipment additions of $13.8 million. Property and equipment additions include $9.8 million of capitalized internal-use software development cost.March 31, 2020.
During the nine months ended September 30, 2016, cash used in investing activities was principally related to the net purchase, sale and maturities of short-term investments of $2.7 million and property and equipment additions of $21.2 million. Property and equipment additions include $9.7 million of capitalized internal-use software development cost.
Financing Activities
Cash provided by financing activities of $0.3 million in the nine months ended September 30, 2017 primarily resulted from the exercise of common stock options and the purchase of common stock under our employee stock purchase plan of $1.1 million offset by the minimum tax withholding requirement of $0.7 million.
Cash used in financing activities of $4.8 million in the nine months ended September 30, 2016 primarily resulted from the $8.9 million repurchase of common stock offset by the exercise of common stock options and the purchase of common stock under our employee stock purchase plan of $5.0 million.
Off-Balance Sheet Arrangements
We doAs of March 31, 2021, we did not have any relationships with other entities or financial partnerships such as entities often referred to as structured finance or special-purpose entities, which have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.arrangements.
Contractual Obligations and Commitments
There have been no material changes in our contractual obligations and commercial commitments other than in the ordinary course of business since the end of fiscal 2016.
Critical Accounting Policies and Estimates
Management has determined that our most criticalThe preparation of financial statements in conformity with GAAP requires management to use judgment in the application of accounting policies, are those related to revenue recognition, stock-based compensation, goodwillincluding making estimates and intangible assets and income taxes. There have been no material changes in our criticalassumptions. The Company's significant accounting policies and estimates during the nine months ended September 30, 2017 as compared to the critical accounting policies and estimates disclosedare described in “Management’s"Management's Discussion and Analysis of Financial Condition and Results of Operations–Operations - Critical Accounting Policies and Estimates” ofEstimates" in our Annual Report on Form 10-K for the year ended December 31, 2016 as filed2020. These policies
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were followed in preparing the Consolidated Financial Statements for the three months ended March 31, 2021 and are consistent with the SEC on March 6, 2017.year ended December 31, 2020.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements, see Note 2 - "Summary of Significant Accounting Policies" to the Consolidated Financial Statements.
Non-GAAP Financial Measurements
ServiceSource believes net income (loss), as defined by GAAP, is the most appropriate financial measure of our operating performance; however, ServiceSource considers Adjusted EBITDA to be useful supplemental, non-GAAP financial measure of our operating performance. We believe Adjusted EBITDA can assist investors in understanding and assessing our operating performance on a consistent basis, as it removes the impact of the Company's capital structure and other non-cash or non-recurring items from operating results and provides an additional tool to compare ServiceSource's financial results with other companies in the industry, many of which present similar non-GAAP financial measures.
EBITDA consists of net income (loss) plus provision for income tax expense (benefit), interest and other expense (income), net and depreciation and amortization. Adjusted EBITDA consists of EBITDA plus stock-based compensation, restructuring and other related costs, and amortization of contract acquisition costs related to the initial adoption of ASC 606.
This non-GAAP measure should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP.
The information contained in Note 1following table presents the reconciliation of "Net loss" to our condensed consolidated financial statements in Item 1 under the heading, “Recent Accounting Pronouncements,” is incorporated by reference into this Item 2.Adjusted EBITDA:
For the Three Months Ended March 31,
20212020
(in thousands)
Net loss$(8,835)$(5,942)
Provision for income tax expense331 18 
Interest and other expense, net1,160 874 
Depreciation and amortization3,657 3,396 
EBITDA(3,687)(1,654)
Stock-based compensation2,475 1,045 
Restructuring and other related costs920 467 
Amortization of contract acquisition asset costs - ASC 606 initial adoption84 218 
Adjusted EBITDA$(208)$76 
Item 3.Quantitative and Qualitative Disclosures About Market Risk
We believe that there have been no significant changes in our market risk exposures for the nine months ended September 30, 2017,Not applicable to smaller reporting companies as compared with those discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.defined by Item 10(f)(1) of Regulation S-K.
Item 4.Controls and Procedures
(a)Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officerCEO and principal financial officer,CFO, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act, of 1934, as amended (the “Exchange Act”) of the end of the period covered by this report (the “Evaluation Date”).report.
In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Based on management’s evaluation, our chief executive officerCEO and chief financial officerCFO concluded that our disclosure controls and procedures are designed to, and are effective to, provide assurance at a reasonable assurance level, that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in
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SEC rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officerCEO and chief financial officer,CFO, as appropriate, to allow timely decisions regarding required disclosures.
(b)Changes in Internal Control Over Financial Reporting
We continue to monitor the design and operating effectiveness of our internal controls for any effect resulting from the COVID-19 pandemic. There has not been any change in our internal control over financial reporting during the quarter covered by this report that materially affected or is reasonably likely to materially affect our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.Legal Proceedings
For a discussion of legal proceedings in which we are involved, see Note 5 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.None.
Item 1A.Risk Factors
AFor a summary of factors which could affect results and cause results to differ materially from those expressed in any forward-looking statements made by us, or on our behalf, are further described under the captionsee “Risk Factors” in Part I, Item 1A of our 2016 Annual Reportannual report on Form 10-K.10-K for the year ended December 31, 2020. There have been no material changes to the risk factors as disclosed in our annual report on Form 10-K for the nature of these factors sinceyear ended December 31, 2016.2020.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3.Defaults Upon Senior Securities
None.
Item 4.Mine Safety Disclosures
None.
Item 5.Other Information
None.
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Item 6.Exhibits

Exhibit NumberDescription of Document
Exhibit
Number
Description of Document
31.1*
10.1*
10.2*
10.3*
10.4*
10.5*
31.1*
31.2*
32.1**
32.2**
101101.SCH*
Interactive data files (XBRL) pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016, (ii) the Condensed Consolidated Statement of Operations
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*Inline XBRL for the three and nine months ended September 30, 2017 and 2016, (iii)cover page of this Quarterly Report on Form 10-Q, included in the Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2017 and 2016, (iv) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016 and (v) the Notes to Condensed Consolidated Financial Statements.Exhibit 101 Inline XBRL Document Set.
* Filed herewith.

** Furnished herewith.

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GLOSSARY OF TERMS
The following abbreviations or acronyms used in this Form 10-Q are defined below:
Abbreviations or acronymsDefinition
2020 Plan2020 Equity Incentive Plan
APJAsia Pacific-Japan
ASC 606Accounting Standards Codification Topic 606, Revenue from Contracts with Customers
ASC 740Accounting Standards Codification Topic 740, Income Taxes
ASUAccounting Standards Update
B2BBusiness-to-business
BorrowersServiceSource International, Inc. and ServiceSource Delaware, Inc.
BPaaSBusiness Process-as-a-Service
CEOChief Executive Officer
CFOChief Financial Officer
COVID-19Coronavirus disease 2019
Credit AgreementRevolving Loan Credit Agreement, dated as of July 30, 2018, among the Borrowers and Compass Bank, as Lender
EMEAEurope, Middle East and Africa
ESPP2011 Employee Stock Purchase Plan
FASBFinancial Accounting Standards Board
GAAPUnited States Generally Accepted Accounting Principles
IoTInternet of things
MD&AManagement’s Discussion and Analysis of Financial Condition and Results of Operations
NALANorth America and Latin America
PSUPerformance-based restricted stock unit
RevolverSenior secured revolving line of credit
ROURight-of-use
RSURestricted stock unit
rTSRRelative total stockholder return
SECSecurities and Exchange Commission
U.S.United States

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SERVICESOURCE INTERNATIONAL, INC.
(Registrant)
Date:November 8, 2017April 28, 2021By:/s/ ROBERT N. PINKERTONCHAD W. LYNE
Robert N. PinkertonChad W. Lyne
Chief Financial Officer
(Principal Financial and Accounting Officer)

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