Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 31, 2016 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | inContact, Inc. | |
Entity Central Index Key | 1,087,934 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | SAAS | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 62,622,908 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 40,873 | $ 29,050 |
Restricted cash | 81 | |
Investments | 38,299 | 75,109 |
Accounts and other receivables, net of allowance for uncollectible accounts of $2,140 and $2,555, respectively | 40,940 | 37,185 |
Other current assets | 10,883 | 9,243 |
Total current assets | 130,995 | 150,668 |
Property and equipment, net | 53,336 | 42,569 |
Intangible assets, net | 27,021 | 19,232 |
Goodwill | 49,016 | 39,247 |
Other assets | 3,866 | 2,421 |
Total assets | 264,234 | 254,137 |
Current liabilities: | ||
Trade accounts payable | 13,748 | 11,607 |
Accrued liabilities | 12,221 | 12,828 |
Accrued commissions | 5,187 | 4,615 |
Current portion of deferred revenue | 14,254 | 11,530 |
Total current liabilities | 45,410 | 40,580 |
Deferred revenue | 7,567 | 6,082 |
Deferred rent and lease incentive obligation | 6,657 | 3 |
Deferred tax liability, net | 466 | 230 |
Long-term debt | 85,215 | 81,985 |
Total liabilities | 145,315 | 128,880 |
Commitments and contingencies (see Note 10) | ||
Stockholders' equity: | ||
Common stock, $0.0001 par value; 100,000 shares authorized; 62,612 and 61,826 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively | 6 | 6 |
Additional paid-in capital | 264,616 | 253,986 |
Accumulated deficit | (145,702) | (128,654) |
Accumulated other comprehensive loss | (1) | (81) |
Total stockholders' equity | 118,919 | 125,257 |
Total liabilities and stockholders' equity | $ 264,234 | $ 254,137 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Statement Of Financial Position [Abstract] | ||
Accounts and other receivables, allowance for uncollectible accounts | $ 2,140 | $ 2,555 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 62,612,000 | 61,826,000 |
Common stock, shares outstanding | 62,612,000 | 61,826,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Net revenue: | ||||
Total net revenue | $ 67,018 | $ 56,078 | $ 193,203 | $ 160,487 |
Costs of revenue: | ||||
Total costs of revenue | 31,339 | 27,093 | 92,200 | 78,944 |
Gross profit | 35,679 | 28,985 | 101,003 | 81,543 |
Operating expenses: | ||||
Selling and marketing | 19,025 | 17,810 | 55,352 | 49,549 |
Research and development | 9,268 | 7,328 | 27,097 | 21,021 |
General and administrative | 12,377 | 7,750 | 32,326 | 25,699 |
Total operating expenses | 40,670 | 32,888 | 114,775 | 96,269 |
Loss from operations | (4,991) | (3,903) | (13,772) | (14,726) |
Other income (expense): | ||||
Interest expense | (1,816) | (1,738) | (5,400) | (3,940) |
Interest income | 151 | 125 | 478 | 183 |
Other income (expense) | (105) | 1 | (111) | 1 |
Total other income (expense) | (1,770) | (1,612) | (5,033) | (3,756) |
Loss before income taxes | (6,761) | (5,515) | (18,805) | (18,482) |
Income tax benefit (expense) | (100) | (163) | 2,296 | (474) |
Net loss | (6,861) | (5,678) | (16,509) | (18,956) |
Other comprehensive loss, net of taxes: | ||||
Net change in unrealized gain (loss) in available for sale investments | 69 | (15) | 80 | (35) |
Comprehensive loss | $ (6,792) | $ (5,693) | $ (16,429) | $ (18,991) |
Net loss per common share: | ||||
Basic and diluted | $ (0.11) | $ (0.09) | $ (0.26) | $ (0.31) |
Weighted average common shares outstanding: | ||||
Basic and diluted | 62,977 | 61,688 | 62,631 | 61,407 |
Software | ||||
Net revenue: | ||||
Total net revenue | $ 44,222 | $ 36,709 | $ 128,130 | $ 103,227 |
Costs of revenue: | ||||
Total costs of revenue | 18,534 | 14,815 | 52,473 | 42,872 |
Gross profit | 25,688 | 21,894 | 75,657 | 60,355 |
Operating expenses: | ||||
Total operating expenses | 39,020 | 30,884 | 109,863 | 90,220 |
Loss from operations | (13,332) | (8,990) | (34,206) | (29,865) |
Network Connectivity | ||||
Net revenue: | ||||
Total net revenue | 22,796 | 19,369 | 65,073 | 57,260 |
Costs of revenue: | ||||
Total costs of revenue | 12,805 | 12,278 | 39,727 | 36,072 |
Gross profit | 9,991 | 7,091 | 25,346 | 21,188 |
Operating expenses: | ||||
Total operating expenses | 1,650 | 2,004 | 4,912 | 6,049 |
Loss from operations | $ 8,341 | $ 5,087 | $ 20,434 | $ 15,139 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - 9 months ended Sep. 30, 2016 - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Treasury Stock | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) |
Balance at Dec. 31, 2015 | $ 125,257 | $ 6 | $ 253,986 | $ (128,654) | $ (81) | |
Balance, shares at Dec. 31, 2015 | 61,826,000 | 61,826,000 | ||||
Common stock received for settlement of taxes and forfeited restricted stock | $ (1,347) | $ (1,347) | ||||
Common stock received for settlement of taxes and forfeited restricted stock, shares | (153,000) | |||||
Common stock issued for options exercised | 3,398 | 2,791 | $ 1,068 | (461) | ||
Common stock issued for options exercised, shares | 412,000 | 118,000 | ||||
Common stock issued under the employee stock purchase plan | $ 826 | 753 | $ 129 | (56) | ||
Common stock issued under the employee stock purchase plan, shares | 96,000 | 96,000 | 9,000 | |||
Issuance of common stock for acquisition of a business | $ 344 | 344 | ||||
Issuance of common stock for acquisition of a business, shares | 64,000 | |||||
Stock-based compensation | 6,870 | 6,870 | ||||
Vesting of restricted stock units | (122) | $ 144 | (22) | |||
Vesting of restricted stock units, shares | 214,000 | 26,000 | ||||
Other comprehensive income | 80 | 80 | ||||
Net loss | (16,509) | (16,509) | ||||
Balance at Sep. 30, 2016 | $ 118,919 | $ 6 | $ 264,622 | $ (6) | $ (145,702) | $ (1) |
Balance, shares at Sep. 30, 2016 | 62,612,000 | 62,612,000 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (16,509) | $ (18,956) |
Adjustments to reconcile net loss to net cash from operating activities: | ||
Depreciation of property and equipment | 9,961 | 7,601 |
Amortization of software development costs | 6,289 | 4,876 |
Amortization of intangible assets | 3,837 | 3,776 |
Amortization of deferred debt issuance costs | 290 | 391 |
Stock-based compensation | 6,870 | 6,510 |
Loss on disposal of property and equipment | 1,444 | 148 |
Interest accretion | 2,940 | 1,843 |
Amortization of investment premium | 670 | 148 |
Deferred income taxes | (2,429) | |
Changes in operating assets and liabilities, net of business acquisitions: | ||
Accounts and other receivables, net | (3,657) | (11,564) |
Other current assets | (1,577) | (2,109) |
Other non-current assets | (1,445) | 11 |
Trade accounts payable | 1,647 | 2,467 |
Accrued liabilities | (990) | 1,021 |
Accrued commissions | 572 | 787 |
Deferred rent and lease incentive obligation | 6,988 | |
Other long-term liabilities | (220) | |
Deferred revenue | 3,954 | 4,246 |
Net cash provided by operating activities | 18,855 | 976 |
Cash flows from investing activities: | ||
Decrease in restricted cash | 81 | |
Sales and maturities of available for sale investments | 67,089 | 13,716 |
Purchases of available for sale investments | (30,868) | (89,879) |
Capitalized software development costs | (10,924) | (7,457) |
Purchases of property and equipment | (16,841) | (10,162) |
Business acquisitions, net of cash acquired | (18,446) | |
Payments made on deposits | (19) | |
Net cash used in investing activities | (9,909) | (93,801) |
Cash flows from financing activities: | ||
Proceeds from exercise of options | 3,398 | 2,603 |
Proceeds from sale of stock under employee stock purchase plan | 826 | 1,249 |
Principal payments under debt and capital lease obligations | (11,824) | |
Purchase of treasury stock | (1,347) | (643) |
Payments under revolving credit agreement | (11,000) | |
Proceeds from issuance of convertible notes, net | 111,190 | |
Net cash provided by financing activities | 2,877 | 91,575 |
Net (decrease) increase in cash and cash equivalents | 11,823 | (1,250) |
Cash and cash equivalents at the beginning of the period | 29,050 | 32,414 |
Cash and cash equivalents at the end of the period | 40,873 | 31,164 |
Supplemental schedule of non-cash investing and financing activities: | ||
Payments due for property and equipment included in trade accounts payable | 760 | 472 |
Unrealized gains (losses) on available for sale investments, net | 80 | $ (34) |
Issuance of common stock for acquisition of a business | $ 344 |
Organization and Basis of Prese
Organization and Basis of Presentation | 9 Months Ended |
Sep. 30, 2016 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Organization and Basis of Presentation | NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION Organization inContact, Inc. (“inContact,” “we,” “us,” “our,” or the “Company”) is incorporated in the state of Delaware. We provide cloud contact center software solutions through our inContact ® Proposed Merger by NICE-Systems Ltd. On May 17, 2016, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with NICE-Systems Ltd., a company organized under the laws of the State of Israel (“Parent” or “NICE”), and Victory Merger Sub Inc. (“Merger Sub”), a wholly owned indirect subsidiary of NICE, providing for the merger of Merger Sub with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned indirect subsidiary of NICE. In the Merger, each issued and outstanding share of our common stock will be cancelled and extinguished and automatically converted into the right to receive cash in an amount equal to $14.00, without interest thereon. Each outstanding and vested restricted stock unit or option to purchase Company’s common stock will be cancelled and extinguished and automatically converted into the right to receive an amount in cash equal to $14.00 per share less, in the case of options, the exercise price per share underlying such option. Each outstanding and unvested restricted stock unit, share or restricted stock and option to purchase Company stock or other right to purchase or receive Company stock will be converted into an option to purchase or right to purchase or receive American Depositary Shares of Parent, with the same vesting schedule of such equity award continuing after the Merger, subject to existing vesting conditions and the exercise price of options adjusted in accordance with applicable tax law. The transaction has received approval by the Company’s stockholders and is subject to certain regulatory approvals and other customary closing conditions. The Merger Agreement contains certain termination rights for each of the Parent, Merger Sub and the Company and provides certain circumstances as described in the Merger Agreement under which we may be required to pay NICE a termination fee of $34.1 million. See Note 8, “Long-Term Debt and Capital Lease Obligations” for discussion of the treatment of the Company’s 2.5% Convertible Senior Notes due 2022 in connection with the pending acquisition of inContact by NICE. The transaction is expected to close by December 31, 2016. The pending acquisition of inContact by NICE does not impact the basis of presentation in the accompanying financial statements. Following completion of the Merger, the Company will become a wholly-owned subsidiary of NICE, the Company’s common stock will be delisted from The NASDAQ Stock Market and deregistered under the Securities Exchange Act of 1934, as amended, and as such, the Company will no longer file periodic reports with the SEC. In connection with the proposed Merger, we have incurred certain costs related to professional services, regulatory fees and employee-related expenses. Basis of Presentation These unaudited Condensed Consolidated Financial Statements of inContact and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Such rules and regulations allow the omission of certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP, so long as the statements are not misleading. In the opinion of management, these financial statements and accompanying notes contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position and results of operations for the periods presented herein. These Condensed Consolidated Financial Statements should be read in conjunction with the consolidated audited financial statements and notes thereto contained in the Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on March 4, 2016. The results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of the results to be expected for the year ending December 31, 2016. Our significant accounting policies are set forth in Note 1 to the Consolidated Financial Statements in the 2015 Annual Report on Form 10-K and changes, if any, are included below. Revenue Recognition Revenue is recognized when all of the following four criteria are met: (1) persuasive evidence of an arrangement exists, (2) the fee is fixed or determinable, (3) collection is reasonably assured, and (4) delivery has occurred or services have been rendered. Determining whether and when some of these criteria have been satisfied often involves assumptions and judgments that can have a significant impact on the timing and amount of revenue we report. Our revenue is reported and recognized based on the type of services provided to the customer as follows: Software . Software revenue includes two main sources of revenue: (1) Software delivery and support of our inContact cloud software solutions that are provided on a monthly subscription basis and associated professional services. Because our customers purchasing software and support services on a monthly recurring basis do not have the right to take possession of the software, we consider these arrangements to be service contracts and are not within the scope of Industry Topic 985, Software For subscription service contracts with multiple elements (hosted software, training, installation and long distance services), we follow the guidance provided in Accounting Standards Codification (“ASC”) 605-25, Revenue Recognition for Multiple Element Arrangements (2) Perpetual product and services revenues are primarily derived from the sale of licenses to our Workforce Optimization on-premise software products and services. For software license arrangements that do not require significant modification or customization of the underlying software, revenue is recognized when all revenue recognition criteria are met. Many of our customers purchase a combination of software, service, hardware, post contract customer support (“PCS”) and hosting. For software and software related multiple element arrangements that fall within the scope of the software revenue guidance in Topic 985, Software Product revenue from customers who purchase our products for resale is generally recognized when such products are released (on a “sell-through” basis). Periodically we review our reseller arrangements as our business and products change. Network Connectivity Service Revenue . Network Connectivity Services revenue is derived from network connectivity, such as dedicated transport, switched long distance and data services. These services are provided over our network or through third party network connectivity providers. Our network is the backbone of our subscription software and allows us to provide the all-in-one inContact cloud software solutions. Revenue for network connectivity usage is derived based on customer specific rate plans and the customer’s call usage and is recognized in the period the call is initiated. Customers are also billed monthly charges in arrears and revenue is recognized for such charges over the billing period. If the billing period spans more than one month, earned but unbilled revenues are recognized as revenue for incurred usage to date. Long-term Debt We record debt issuance costs as a direct deduction from the carrying amount of our long-term borrowings, as well as costs incurred for subsequent modification of debt, incurred in connection with our long-term borrowings and credit facilities. We amortize these costs as an adjustment to interest expense over the remaining contractual life of the associated long-term borrowing or credit facility using the effective interest method for term loans and convertible debt borrowings, and the straight-line method for revolving credit facilities. When unscheduled principal payments are made, we adjust the amortization of our deferred debt-related costs to reflect the expected remaining terms of the borrowing. Operating Leases Rent expense and lease incentives, including landlord construction allowances, are recognized on a straight-line basis over the lease term, commencing generally on the date the Company takes possession of the leased property. The unamortized portion of deferred rent is included in deferred rent and lease incentive obligation. Self-Funded Health Insurance In September 2016, the Company elected to partially self-fund its health insurance plan. The Company contracts with a third-party broker to facilitate, administer the plan and obtain individual and aggregate stop-loss insurance policies. The Company estimates its exposure for claims incurred but not paid at the end of each reporting period and uses historical claims data supplied by the Company’s broker to estimate its self-funded insurance liability. To reduce its risk related to high dollar claims, the Company maintains individual and aggregate stop-loss insurance policies. Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “ Revenue from Contracts with Customers Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients In March 2016, the FASB issued ASU No. 2016-08, “ Principal versus Agent Considerations (Reporting Revenue Gross versus Net) In April 2016, the FASB issued ASU No. 2016-10, “ Identifying Performance Obligations and Licensing In January 2016, the FASB issued ASU 2016-01, “ Recognition and Measurement of Financial Assets and Liabilities In February 2016, the FASB issued ASU 2016-02, “ Leases (Topic 842) In March 2016, the FASB issued ASU No. 2016-09, “ Improvements to Employee Share-Based Payment Accounting In June 2016, the FASB issued ASU No. 2016-13: Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments This ASU is effective in fiscal years beginning after December 15, 2019 and early adoption is permitted after December 15, 2018. and related disclosures In October 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory. We reviewed all other recently issued accounting standards to determine their effects, if any, on the consolidated financial statements. Based on that review, we believe that none of these standards will have a significant effect on current or future results of operations. |
Basic and Diluted Net Loss Per
Basic and Diluted Net Loss Per Common Share | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Net Loss Per Common Share | NOTE 2. BASIC AND DILUTED NET LOSS PER COMMON SHARE Basic earnings per common share is computed by dividing the net loss applicable to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is computed by dividing the net loss by the sum of the weighted-average number of common shares outstanding plus the weighted average common stock equivalents, which would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding options, unvested restricted stock awards, and potential shares from Convertible Notes. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per common share by application of the treasury method. As a result of incurring a net loss for the three and nine months ended September 30, 2016 and 2015, no potentially dilutive securities are included in the calculation of diluted earnings per share because such effect would be anti-dilutive. The following table summarizes potentially dilutive securities, using the above security classifications (in thousands): September 30, 2016 2015 Stock options 2,418 2,765 Restricted stock awards 1,727 1,317 Potential shares from Convertible Notes 8,082 8,082 Total potentially dilutive shares 12,226 12,164 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | NOTE 3. FAIR VALUE OF FINANCIAL INSTRUMENTS The accounting guidance for fair value measurements defines fair value, establishes a market-based framework or hierarchy for measuring fair value and expands disclosures about fair value measurements. The guidance is applicable whenever assets and liabilities are measured and included in the Condensed Consolidated Financial Statements at fair value. The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. The fair value hierarchy prioritizes the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Inputs that reflect quoted prices for identical assets or liabilities in less active markets; quoted prices for similar assets or liabilities in active markets; benchmark yields, reported trades, broker/dealer quotes, inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3: Unobservable inputs that reflect our own assumptions incorporated in valuation techniques used to measure fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. Assets Measured at Fair Value on a Recurring Basis: The following table summarizes our investments measured at fair value on a recurring basis using the above input categories. As of September 30, 2016 and December 31, 2015, we did not hold any Level 3 assets, and our Level 1 and Level 2 holdings were as follows (in thousands): September 30, 2016 December 31, 2015 Level 1 Level 2 Total Level 1 Level 2 Total Cash equivalents: Money market funds $ 28,382 $ - $ 28,382 $ 4,071 $ - $ 4,071 Commercial paper - - - - 999 999 Total cash equivalents 28,382 - 28,382 4,071 999 5,070 Investments: Commercial paper - 17,852 17,852 - 27,846 27,846 Corporate debt securities - 17,936 17,936 - 45,830 45,830 Municipal bonds - 2,511 2,511 - 1,433 1,433 Total investments - 38,299 38,299 - 75,109 75,109 Total assets measured at fair value $ 28,382 $ 38,299 $ 66,681 $ 4,071 $ 76,108 $ 80,179 Fair Value Measurements Money Market Funds – We value our money market funds using quoted active market prices for such funds. Commercial paper, Corporate debt securities, and Municipal bonds – The fair value of these securities are estimated using observable market prices for identical securities that may be traded in less-active markets, if available. When observable market prices for identical securities are not available, we value these securities using non-binding market price quotes from brokers which we review for reasonableness using observable market data; quoted prices for similar instruments; or pricing models, such as a discounted cash flows. Other Financial Instruments The carrying amounts of cash and cash equivalents (other than investments recorded on a fair value basis disclosed above), accounts and other receivables, and trade accounts payable approximate fair value because of the immediate or short-term maturities of these financial instruments. The fair value of the Convertible Notes is considered to be a Level 2 measurement because it is based on a recent bid price quote for the Convertible Notes, reflecting activity in a less than active market. The carrying value and estimated fair value of our Convertible Notes are as follows ( in thousands September 30, 2016 December 31, 2015 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Convertible notes $ 85,215 $ 138,792 $ 81,985 $ 108,330 |
Investments - Available for Sal
Investments - Available for Sale | 9 Months Ended |
Sep. 30, 2016 | |
Investments Debt And Equity Securities [Abstract] | |
Investments - Available for Sale | NOTE 4. INVESTMENTS – AVAILABLE FOR SALE Our investments generally consist of money market funds, commercial paper, corporate debt securities and municipal bonds. All of our investments have original maturities (maturity at the purchase date) of less than 12 months. Investments with original maturities of three months or less are classified as cash equivalents. We classify our investments as available for sale at the time of purchase and we reevaluate such classification as of each balance sheet date. These short-term investments are carried at fair value with unrealized gains or losses classified as a component of accumulated other comprehensive income (loss). Amortization of premiums and accretion of discounts to maturity are computed under the effective interest method and is included in interest income. Interest on securities is included in interest income when earned. Realized gains and losses on the sale of investments are determined using the specific identification method and recorded in "Other income (expense)” in the Condensed Consolidated Statements of Operations and Comprehensive Loss. Our investments as of September 30, 2016 and December 31, 2015 were as follows (in thousands) September 30, 2016 Amortized Cost Net Unrealized Gains (Losses) Fair Value/Net Carrying Value Cash and Cash Equivalents Investments Commercial paper $ 17,852 $ - $ 17,852 $ - $ 17,852 Corporate debt securities 17,935 1 17,936 - 17,936 Money market funds 28,382 - 28,382 28,382 - Municipal bonds 2,513 (2 ) 2,511 - 2,511 Total $ 66,682 $ (1 ) $ 66,681 $ 28,382 $ 38,299 December 31, 2015 Amortized Cost Net Unrealized Gains (Losses) Fair Value/Net Carrying Value Cash and Cash Equivalents Investments Commercial paper $ 28,845 $ - $ 28,845 $ 999 $ 27,846 Corporate debt securities 45,911 (81 ) 45,830 - 45,830 Money market funds 4,071 - 4,071 4,071 - Municipal bonds 1,433 - 1,433 - 1,433 Total $ 80,260 $ (81 ) $ 80,179 $ 5,070 $ 75,109 As of September 30, 2016 all our investments had contractual maturities of less than one year. At September 30, 2016 and December 31, 2015, we had $5,000 and $81,000 of gross unrealized losses on certain investments, respectively. We regularly review our investment portfolio to identify and evaluate investments that have indications of possible impairment that is other-than-temporary. Factors considered in determining whether a loss is temporary include: • the length of time and extent to which fair value has been lower than the cost basis; • the financial condition, credit quality and near-term prospects of the investee; and • whether it is more likely than not that the Company will be required to sell the security prior to recovery. We believe that there were no investments held at September 30, 2016 that were other-than-temporarily impaired. For the nine months ended September 30, 2016, proceeds from maturities of investments were $65.3 million for an immaterial realized gain, $1.0 million of these maturities were securities included in cash equivalents. We sold $2.8 million of investments for the nine months ended September 30, 2016. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Acquisitions | NOTE 5. ACQUISITIONS AC2 Acquisition On January 13, 2016, we acquired 100% of the outstanding shares of AC2 Solutions, Inc. (“AC2”), a Delaware corporation. AC2 provides Workforce Optimization products and services to call centers. inContact acquired AC2 for an aggregate purchase price of The acquisition of AC2 was accounted for under the purchase method of accounting in accordance with ASC 805, Business Combinations . Under the purchase method of accounting, the total purchase price is allocated to the preliminary tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values, as determined by management. The total purchase price was allocated using information currently available. The purchase price allocation for the AC2 acquisition will be finalized during calendar year 2016. As a result, we may continue to adjust the preliminary estimated purchase price allocation after obtaining more information regarding asset valuations, liabilities assumed, and revision of preliminary estimates. The following is the total preliminary purchase price allocation on estimated purchase consideration based on information available as of September 30, 2016 (in thousands) : Amount Assets acquired: Cash and cash equivalents $ 78 Accounts receivable 100 Other current assets 63 Intangible assets 6,710 Goodwill 8,243 Total assets acquired 15,194 Liabilities assumed: Accrued liabilities 136 Current portion of deferred revenue 74 Deferred tax liability 2,666 Total liabilities assumed 2,876 Net assets acquired $ 12,318 In connection with the acquisition, we incurred professional fees of $188,000, including transaction costs such as legal and valuation services, which were expensed as incurred. These costs are included within general and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss. The premium paid over the fair value of the net assets acquired in the purchase, or goodwill, represents future economic benefits expected to arise from deploying cutting edge technology to enhance our competitive differentiation. All of the goodwill was assigned to the Software segment. The entire amount allocated to goodwill is not expected to be deductible for tax purposes. Intangible assets acquired from the acquisition include customer relationships, which are amortized on a double-declining basis, technologies, patents and a non-competition agreement, which are amortized on a straight-line basis and in-process research and development which has an initial indefinite life and is expected to be amortized once technical feasibility is established. The fair values of the intangible assets were determined primarily using the income approach and the discount rates range from 20% to 25%. The following sets forth the intangible assets purchased as part of the AC2 acquisition and their respective preliminary estimated economic useful life at the date of the acquisition ( in thousands, except useful life : Amount Economic Useful Customer relationships $ 710 8 Technology 321 5 In-process research and development 3,014 Indefinite Patents 2,641 12 Non-competition agreement 24 2 Total intangible assets $ 6,710 The Company recorded a deferred tax benefit of $2.7 million at the time of the acquisition. The tax benefit related to recording a deferred tax liability upon acquisition of AC2 related to acquisition of intangibles for which no tax benefit will be derived. The reduction of carrying value resulted in a partial reversal of the deferred tax asset valuation allowance upon consolidation. Attensity Acquisition On February 8, 2016, we acquired certain intangible assets from Attensity Group, Inc., a Delaware corporation, Biz360, Inc., a California corporation, and Attensity Americas, Inc., a Delaware corporation (collectively “Attensity”). The purchase consideration was approximately $6.6 million in cash. The patents purchased from Attensity provide advanced analytics technology to corporate customers. The acquisition of Attensity technology was accounted for under the purchase method of accounting in accordance with ASC 805, Business Combinations to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values, as determined by management. The following is the total purchase price allocation as of September 30, 2016 (in thousands) : Amount Assets acquired: Property, plant and equipment and other assets $ 290 Intangible assets 4,917 Goodwill 1,525 Total assets acquired 6,732 Liabilities assumed: Current portion of deferred revenue 157 Long-term portion of deferred revenue 25 Total liabilities assumed 182 Net assets acquired $ 6,550 In connection with the acquisition, we incurred professional fees of $27,000, including transaction costs such as legal and valuation services, which were expensed as incurred. These costs are included within general and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss. The premium paid over the fair value of the net assets acquired in the purchase, or goodwill, represents future economic benefits expected to arise from synergies from enhancing our product offerings through the addition of text analysis technology. All of the goodwill was assigned to the Software segment. The entire amount allocated to goodwill is not expected to be deductible for tax purposes. Intangible assets acquired from the acquisition include customer relationships, which are amortized on a double-declining basis, technologies and patents, which are amortized on a straight-line basis and in-process research and development which has an initial indefinite life and is expected to be amortized once technical feasibility is established. The fair values of the intangible assets were determined primarily using the income approach and the discount rates range from 25% - 30%. The following sets forth the intangible assets purchased as part of the Attensity acquisition and their respective preliminary estimated economic useful life at the date of the acquisition ( in thousands, except useful life : Amount Economic Useful Customer relationships $ 140 5 Technology 141 5 In-process research and development 3,193 Indefinite Patents 1,443 8 Total intangible assets $ 4,917 |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Intangible Assets | NOTE 6. INTANGIBLE ASSETS Intangible assets consisted of the following ( in thousands September 30, 2016 December 31, 2015 Gross Accumulated Intangible Gross Accumulated Intangible Assets Amortization Assets, Net Assets Amortization Assets, Net Customer lists acquired $ 28,973 $ (22,412 ) $ 6,561 $ 28,123 $ (20,859 ) $ 7,264 Technology and patents 35,112 (16,148 ) 18,964 24,358 (14,222 ) 10,136 Trade names and trademarks 3,546 (2,050 ) 1,496 3,190 (1,358 ) 1,832 Total intangible assets $ 67,631 $ (40,610 ) $ 27,021 $ 55,671 $ (36,439 ) $ 19,232 Amortization expense was $3.8 million for both the nine months ended September 30, 2016 and 2015. Based on the recorded intangibles at September 30, 2016, estimated amortization expense is expected to be $1.3 million during the remainder of 2016, $5.0 million in 2017, $4.5 million in 2018, $4.1 million in 2019, $3.9 million in 2020 and $5.2 million thereafter. |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2016 | |
Payables And Accruals [Abstract] | |
Accrued Liabilities | NOTE 7. ACCRUED LIABILITIES Accrued liabilities consisted of the following ( in thousands September 30, December 31, 2016 2015 Accrued payroll and other compensation $ 5,775 $ 4,726 Accrued state sales taxes 3,215 3,939 Accrued vendor charges 236 1,281 Accrued interest - 717 Other 2,995 2,165 Total accrued liabilities $ 12,221 $ 12,828 |
Long-Term Debt and Capital Leas
Long-Term Debt and Capital Lease Obligations | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Long-Term Debt and Capital Lease Obligations | NOTE 8. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS Convertible Notes On March 30, 2015, we issued $115.0 million in aggregate principal amount of 2.50% Convertible Senior Notes (the “Convertible Notes”) due April 1, 2022, unless earlier converted by the holder pursuant to their terms. Net proceeds from the Convertible Notes were approximately $111.2 million, net of transaction fees. The Convertible Notes pay interest in cash semiannually in arrears at a rate of 2.50% per annum. The Convertible Notes are unsecured and will be senior in right of payment to any future debt that is expressly subordinated to the Convertible Notes. The Convertible Notes will be structurally subordinated to all debt and other liabilities and commitments of our subsidiaries, including trade payables and any guarantees that they may provide with respect to any of our existing or future debt, and will be effectively subordinated to any secured debt that we may incur to the extent of the assets securing such indebtedness. The Convertible Notes are convertible by the holders under certain circumstances. The conversion price of the Convertible Notes at any time is equal to $1,000 divided by the then-applicable conversion rate. The Convertible Notes have a conversion rate of 70.2790 shares of common stock per $1,000 principal amount of Convertible Notes, which represents an effective conversion price of approximately $14.23 per share of common stock and would result in the issuance of approximately 8.1 million shares if all of the Convertible Notes were converted. The conversion rate has not changed since issuance of the Convertible Notes, although throughout the term of the Convertible Notes, the conversion rate may be adjusted upon the occurrence of certain events, including a merger. Upon conversion, the Company has the option of satisfying the conversion obligation with cash, shares of Company common stock, or a combination of cash and common shares. Holders may tender their Convertible Notes for conversion at any time prior to the close of business on the business day immediately preceding October 1, 2021, only under the following circumstances: • during any calendar quarter commencing after the calendar quarter which ended on March 31, 2015, if the closing sale price of our common stock, for at least 20 trading days (whether or not consecutive) in the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter, is more than 130% of the conversion price of the Convertible Notes in effect on each applicable trading day; • during the ten consecutive business day period immediately after any five consecutive trading-day period in which the trading price for the Convertible Notes for each such trading day was less than 98% of the closing sale price of our common stock on such date multiplied by the then-current conversion rate; • upon the occurrence of specified corporate events, as described in the indenture governing the Convertible Notes, such as a consolidation, merger, or binding share exchange (a “Fundamental Change” as defined in the indenture); or • we have called the Convertible Notes for redemption. On or after October 1, 2021, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may tender their Convertible Notes for conversion regardless of whether any of the foregoing conditions have been satisfied. As of September 30, 2016, the Convertible Notes were not convertible. Under the terms of the Convertible Notes, the consummation of the proposed acquisition by NICE described in Note 1 will constitute a Fundamental Change, as defined in the indenture. As a result, holders of the Convertible Notes will be permitted to choose (i) to convert their Convertible Notes at a temporarily increased conversion rate, (ii) to require the Company to repurchase their Convertible Notes for a price equal to their principal amount plus accrued but unpaid interest up to but excluding the repurchase date, or (iii) to continue holding their Convertible Notes. If the Merger closes, the holders of the Convertible Notes would be expected to exercise the right to convert their Convertible Notes in accordance with their terms at a temporarily increased conversion rate shortly following the closing of the merger (although the holders’ actual decisions will depend upon their judgments based on the then prevailing market conditions) in which case the Convertible Notes will be converted into cash for the principal amount and the merger consideration with respect to the excess thereof. In accordance with accounting guidance for convertible debt with a cash conversion option, we separately accounted for the debt and equity components of the Convertible Notes in a manner that reflected our estimated nonconvertible debt borrowing rate. We estimated the carrying amount of the debt component of the Convertible Notes to be $81.6 million at the issuance date by measuring the fair value of a similar liability that does not have a convertible feature. The carrying amount of the equity component was determined to be approximately $33.4 million by deducting the carrying amount of the debt component from the principal amount of the Convertible Notes, and was recorded as an increase to additional paid-in capital. The excess of the principal amount of the debt component over its carrying amount (the “debt discount”) is being amortized as interest expense over the term of the Convertible Notes using the effective interest method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. We allocated transaction costs related to the issuance of the Convertible Notes, including underwriting discounts of $2.7 million and other transaction related fees of $1.1 million to the debt and equity components, respectively. Issuance costs attributable to the debt component were recorded as a direct deduction to the related debt liability and are being amortized as interest expense over the term of the Convertible Notes, and issuance costs attributable to the equity component were netted with the equity component in additional paid-in capital. The carrying amount of the equity component, net of issuance costs, was $32.3 million. Including the impact of the debt discount and related deferred debt issuance costs, the effective interest rate on the Convertible Notes is approximately 8.29%. Based on the closing market price of our common stock on September 30, 2016, the if-converted value of the Convertible Notes was less than the aggregate principal amount of the Convertible Notes. The Convertible Notes at September (in thousands) September 30, 2016 2.50% Convertible Notes, bearing interest at 2.50% payable semi-annually with final principal payment to be made April 1, 2022 $ 115,000 Unamortized debt issuance costs (2,124 ) Unamortized debt discounts (27,661 ) Net carrying value of Convertible Notes $ 85,215 Revolving Credit Agreement On July 16, 2009, we entered into a revolving credit loan agreement (“Revolving Credit Agreement”) with Zions First National Bank (“Zions”), which was subsequently amended in June 2013 and August 2014. As of July 1, 2016, the Revolving Credit Agreement expired by its terms and was not renewed. Under the terms of the Revolving Credit Agreement, Zions agreed to loan up to $15.0 million. The Revolving Credit Agreement was collateralized by substantially all the assets of inContact. The balance outstanding under the Revolving Credit Agreement could not exceed the lesser of (a) $15.0 million or (b) the sum of 85% of eligible billed receivables, and 65% of eligible earned, but unbilled receivables as calculated on the 5th and 20th of each month. The interest rate on the Revolving Credit Agreement with Zions was 4.0% per annum above the ninety day LIBOR. We drew $11.0 million on the Revolving Credit Agreement in December 2014, which was repaid in March 2015. Interest under the Revolving Credit Agreement was paid monthly in arrears. In August 2014, we amended certain terms of the Revolving Credit Agreement, including, extending the term to July 2016, adding the Uptivity subsidiary as a guarantor, pledging Uptivity’s assets to Zions as additional security, and modifying certain financial covenants. Term Loans We entered into three term loan agreements (“Term Loans”) with Zions. We drew $4.0 million, $3.0 million, $1.0 million and $5.0 million from the Term Loans in April 2013, December 2013, June 2014 and December 2014, respectively. Interest on the Term Loans was due monthly in arrears and the principal was payable in 36 equal monthly installments. The interest rate on the Term Loans was between 4.0% and 4.5% per annum above the ninety day LIBOR rate, adjusted as of the date of any change in the ninety day LIBOR. The financial covenants of the Term Loans were the same as the Revolving Credit Agreement, were collateralized by the same assets as the Revolving Credit Agreement and could be prepaid without penalty or premium. During the nine months ended September 30, 2015, we paid $10.4 million of total term loan principal to Zions. There was no balance on the term loans at September 30, 2016 and December 31, 2015. Capital Leases During the nine months ended September 30, 2015, we paid $1.4 million of capital lease obligations. There was no capital lease obligation as of September 30, 2016 and December 31, 2015. Interest Expense: The following table presents the components of interest expense incurred on the Convertible Notes and on other borrowings (in thousands) Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 2.50% Convertible Notes: Interest expense at 2.50% coupon rate $ 725 $ 725 $ 2,166 $ 1,449 Amortization of debt discount 995 921 2,940 1,843 Amortization of deferred debt issuance costs 96 92 290 193 Total interest from 2.50% convertible notes 1,816 1,738 5,396 3,485 Other Borrowings: Interest from other borrowings - - 4 455 Total interest expense $ 1,816 $ 1,738 $ 5,400 $ 3,940 |
Capital Transactions
Capital Transactions | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Capital Transactions | NOTE 9. CAPITAL TRANSACTIONS During the nine months ended September 30, 2016, we received 153,000 shares of our common stock from cancelled restricted stock awards from separated employees and for the settlement of $1.3 million in payroll taxes, associated with the lapsing of the selling restriction of restricted stock units. From the exercise of stock options, we issued 412,000 shares of common stock and 118,000 shares of treasury stock for proceeds of $3.4 million during the nine months ended September 30, 2016. We issued 214,000 shares of common stock and 26,000 shares of treasury stock as a result of the vesting of restricted stock units. We issued 96,000 shares of common stock and 9,000 shares of treasury stock for proceeds of $0.8 million under the employee stock purchase plan during the nine months ended September 30, 2016. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 10. COMMITMENTS AND CONTINGENCIES Litigation In May 2009, inContact was served in a lawsuit titled California College, Inc., et al., v. UCN, Inc., et al. In the lawsuit, California College alleges that (1) inContact made fraudulent and/or negligent misrepresentations in connection with the sale of its services with those of Insidesales.com, Inc., another defendant in the lawsuit, (2) that inContact breached its service contract with California College and an alleged oral contract between the parties by failing to deliver contracted services and product and failing to abide by implied covenants of good faith and fair dealing, and (3) the conduct of inContact interfered with prospective economic business relations of California College with respect to enrolling students. California College filed an amended complaint that has been answered by Insidesales.com and inContact. California College originally sought damages in excess of $20.0 million. Furthermore, Insidesales.com and inContact filed cross-claims against one another, which they subsequently agreed to dismiss with prejudice. In October 2011, California College reached a settlement with Insidesales.com, the terms of which have not been disclosed and remain confidential. In June of 2013, California College amended its damages claim to $14.4 million, of which approximately $5.0 million was alleged pre-judgment interest. On September 10, 2013, the court issued an order on inContact's Motion for Partial Summary Judgment. The court determined that factual disputes exist as to several of the claims, but dismissed California College's cause of action for intentional interference with prospective economic relations and the claim for prejudgment interest. Dismissing the claim for prejudgment interest effectively reduced the claim for damages to approximately $9.2 million. In February 2016 the trial court granted the inContact motion to stay the trial without date pending an interlocutory appeal to the Utah Supreme Court of the trial court’s December 2015 ruling with respect to allowing California College’s experts to testify at trial. The interlocutory appeal was referred to the Utah Court of Appeals and the briefs will be filed in the matter in December 2016 and January 2017. inContact has denied all of the substantive allegations of the complaint and continues to defend the claims. Management believes the claims against inContact are without merit. We cannot determine at this time whether the chance of success on one or more of inContact’s defenses or claims is either probable or remote, and are unable to estimate the potential loss or range of loss should it not be successful. The Company believes that this matter will not have a material impact on our financial position, liquidity or results of operations. On January 15, 2014, Microlog Corporation (“Microlog”) filed a patent infringement suit against inContact in the United States District Court for the District of Delaware, Case No. 1:99-mc-09999, alleging that we are infringing one or more claims made in U.S. Patent No. 7,092,509 (the “’509 Patent”), entitled “Contact Center System Capable of Handling Multiple Media Types of Contacts and Method for Using the Same.” Microlog is seeking a declaratory judgment, injunctive relief, damages and an ongoing royalty, and costs, including attorney’s fees and expenses. In December 2014 inContact filed a Motion for Judgment on the Pleadings which is pending before the Court. inContact also filed a petition for Inter Partes Review (“IPR”) of the ‘509 Patent in January 2015 before the United States Patent and Trademark Office Patent Trial and Appeal board, and the PTAB instituted the IPR for the ‘509 Patent on all claims included in our petition. In a Final Written Decision entered on July 28, 2016 pursuant to the IPR rules, the PTAB held that all claims included in our IPR petition are invalid, meaning that the claims in the ‘509 Patent that Microlog alleged that we infringed cannot be enforced. Microlog has 30 days in which to file a request for rehearing of the PTAB Final Written Decision or 63 days in which to file an appeal of the Final Written Decision to the Court of Appeals for the Federal Circuit. The 30-day period for Microlog to file a request for rehearing of the PTAB Final Written Decision has expired and the Microlog claims are no longer actionable. On May 2, 2014, Info Directions, Inc. (“IDI”) notified inContact of a Demand for Arbitration regarding a dispute related to the Software as a Service Agreement between IDI and inContact dated December 19, 2012 pursuant to which IDI was to provide inContact with billing systems software. IDI asserted claims for breach of contract and is seeking compensatory and punitive damages totaling $3.6 million. inContact denied the claims by IDI and asserted its own counterclaims for breach of contract. The Arbitration Hearing in this matter was held in Rochester, New York in April 2016. In August 2016, the arbitrator awarded IDI $3.2 million in liquidated damages and denied the counterclaims asserted by inContact. All payments due IDI as a result of the arbitration were paid in full in September 2016. On June 10, 2016, a complaint captioned Natalie Gordon v. inContact, Inc., et al., Case No. 160903695 was filed in the Third Judicial District Court of Salt Lake County, State of Utah (the “Court”) naming as defendants inContact and its Board of Directors (the “Gordon Action”). The plaintiff filed an amended complaint in the Gordon Action on July 1, 2016. On July 5, 2016, a complaint captioned David Stern v. inContact, Inc., et al., Case No. 160904200 was filed in the same Court naming as defendants inContact and its Board of Directors (the “Stern Action”). On July 8, 2016, a complaint captioned Andre Davis v. inContact. Inc., et al., Case No. 160904272 was filed in the same Court naming as defendants inContact, its Board of Directors, Parent and Merger Subsidiary (the “Davis Action”). On July 14, 2016 the Court ordered the three actions consolidated and designated the amended complaint in the Gordon action as the operative complaint. The consolidated action purports to be a class action brought by shareholders alleging that inContact’s Board of Directors breached their fiduciary duties by approving the Merger Agreement with NICE pursuant to which the Company would be acquired as a wholly owned indirect subsidiary of NICE. The complaint seeks, among other things, either to enjoin the proposed transaction or to rescind the transaction in the event it is consummated. Without admitting to any fault, inContact and the Board of Directors have entered into a memorandum of understanding with the plaintiffs regarding settling the consolidated action. The parties are conducting confirmatory discovery prior to finalizing the settlement. We have established liabilities of $377,000 relative to all contingent matters above. We believe the amounts provided in our consolidated financial statements are adequate in light of the probable and estimable liabilities. We have certain contingencies which are reasonably possible, with exposures to loss which are in excess of the amount accrued. However, the remaining reasonably possible exposure to loss cannot currently be estimated. We are the subject of certain additional legal matters, which we consider incidental to our business activities. It is the opinion of management that the ultimate disposition of these other matters will not have a material impact on our financial position, liquidity or results of operations. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation | NOTE 11. STOCK-BASED COMPENSATION Stock-based compensation cost is measured at the grant date based on the fair value of the award granted and recognized as expense using the graded-vesting method over the period in which the award is expected to vest. Stock-based compensation expense recognized during a period is based on the value of the portion of stock-based awards that is ultimately expected to vest during the period. We record stock-based compensation expense (including stock options, restricted stock and employee stock purchase plan) to the same departments where cash compensation is recorded as follows ( in thousands Nine Months Ended September 30, 2016 2015 Costs of revenue $ 789 $ 810 Selling and marketing 1,140 1,024 Research and development 3,148 1,809 General and administrative 1,793 2,867 Total stock-based compensation expense $ 6,870 $ 6,510 We utilize the Black-Scholes model to determine the estimated fair value for grants of stock options. The Black-Scholes model requires the use of subjective and complex assumptions to determine the fair value of stock-based awards, including the option’s expected term, expected dividend yield, the risk-free interest rate and the price volatility of the underlying stock. The expected dividend yield is zero, based on our historical dividend rates and our intent to not declare dividends for the foreseeable future. Risk-free interest rates are based on U.S. Treasury rates. Volatility is based on historical stock prices over a period equal to the estimated life of the option. Stock options are issued with exercise prices representing the current market price of our common stock on the date of grant. Stock options issued are generally subject to a four-year vesting period with a contractual term of ten years. The grant date fair value of the restricted stock award is determined using the closing market price of the Company’s common stock on the grant date, with the associated compensation expense amortized over the vesting period of the restricted stock awards, net of estimated forfeitures. We estimated the fair value of options granted under our employee stock-based compensation arrangements at the date of grant using the following weighted-average expected assumptions: Nine Months Ended September 30, 2016 2015 Dividend yield None None Volatility 49% 49% Risk-free interest rate 1.90% 1.70% Expected life (years) 5.8 5.7 During the nine months ended September 30, 2016, we granted 536,000 stock options with exercise prices ranging from $8.36 to $8.43 and a weighted-average fair value of $3.95 and 1,065,000 restricted stock awards and units with a weighted-average fair value of $8.85. As of September 30, 2016, there was $6.3 million of unrecognized compensation cost related to non-vested stock-based compensation awards granted under our stock-based compensation plans. The compensation cost is expected to be recognized over a weighted average period of 1.4 years. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 12. RELATED PARTY TRANSACTIONS We paid our Chairman of the Board of Directors (the “Chairman”) $7,000 per month during the nine months ended September 30, 2016 and 2015 for consulting and other activities, and such amounts have been recognized in our financial statements as general and administrative expenses. Amounts payable to the Chairman for such services were $7,000 and $7,000 at September 30, 2016 and December 31, 2015, respectively. As a result of the May 2014 acquisition of Uptivity, we are a party to an agreement to sell software and services with a company that is owned by two employees and other minority shareholders of inContact. Revenue related to this agreement included in our Condensed Consolidated Statement of Operations and Comprehensive Loss was approximately $12,000 and $28,000 for the three and nine months ended September 30, 2016, respectively. Related accounts receivable at September 30, 2016 and 2015 was $0 and $3,000, respectively. The principal location of the employees from the May 2014 acquisition of Uptivity is in Columbus, Ohio. Their facility is a 36,000 square foot office that is leased from Cabo Leasing LLC, which is owned by two employees and other minority shareholders of inContact. The amount of rent for this facility included in our Condensed Consolidated Statement of Operations and Comprehensive Loss was approximately $200,000 and $600,000 for the three and nine months ended September 30, 2016, respectively. In October 2015, inContact entered into a referral agreement with a sales lead generation company in which two employees and other minority shareholders hold individual minority ownership interests. We pay commissions under this agreement based on sales generated. The amount of commission expense included in our Consolidated Statement of Operations and Comprehensive Loss was approximately $34,000 and $101,000 for the three and nine months ended September 30, 2016. There was a recorded payable of $11,000 on the balance sheet as of September 30, 2016, specific to this agreement. In connection with the proposed merger with NICE Ltd. we have entered into a referral and reseller agreement. |
Segments
Segments | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Segments | NOTE 13. SEGMENTS We operate under two business segments: Software and Network connectivity. The Software segment includes all monthly recurring revenue related to the delivery of our software applications, plus the associated professional services and setup fees. The Network connectivity segment includes all voice and data long distance services provided to customers. Management evaluates segment performance based on financial information such as revenue, costs of revenue, and other operating expenses. Management does not evaluate and manage segment performance based on assets. For segment reporting, we classify operating expenses as either “direct” or “indirect.” Direct expense refers to costs attributable solely to either selling and marketing efforts or research and development efforts, for a given segment. Indirect expense refers to costs that management considers to be overhead in running the business. Operating segment revenues and profitability for three and nine months ended September 30, 2016 and 2015 were as follows ( in thousands, except percentages Three Months Ended September 30, 2016 Three Months Ended September 30, 2015 Network Network Software Connectivity Consolidated Software Connectivity Consolidated Net revenue $ 44,222 $ 22,796 $ 67,018 $ 36,709 $ 19,369 $ 56,078 Costs of revenue 18,534 12,805 31,339 14,815 12,278 27,093 Gross profit 25,688 9,991 35,679 21,894 7,091 28,985 Gross margin 58 % 44 % 53 % 60 % 37 % 52 % Operating expenses: Direct selling and marketing 17,257 843 18,100 16,075 895 16,970 Direct research and development 8,617 - 8,617 6,866 - 6,866 Indirect 13,146 807 13,953 7,943 1,109 9,052 Total operating expenses 39,020 1,650 40,670 30,884 2,004 32,888 Income (Loss) from operations $ (13,332 ) $ 8,341 $ (4,991 ) $ (8,990 ) $ 5,087 $ (3,903 ) Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2015 Network Network Software Connectivity Consolidated Software Connectivity Consolidated Net revenue $ 128,130 $ 65,073 $ 193,203 $ 103,227 $ 57,260 $ 160,487 Costs of revenue 52,473 39,727 92,200 42,872 36,072 78,944 Gross profit 75,657 25,346 101,003 60,355 21,188 81,543 Gross margin 59 % 39 % 52 % 58 % 37 % 51 % Operating expenses: Direct selling and marketing 49,926 2,536 52,462 44,729 2,654 47,383 Direct research and development 25,065 - 25,065 19,818 - 19,818 Indirect 34,872 2,376 37,248 25,673 3,395 29,068 Total operating expenses 109,863 4,912 114,775 90,220 6,049 96,269 Income (Loss) from operations $ (34,206 ) $ 20,434 $ (13,772 ) $ (29,865 ) $ 15,139 $ (14,726 ) |
Organization and Basis of Pre20
Organization and Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Organization | Organization inContact, Inc. (“inContact,” “we,” “us,” “our,” or the “Company”) is incorporated in the state of Delaware. We provide cloud contact center software solutions through our inContact ® |
Proposed Merger by NICE-Systems Ltd. | Proposed Merger by NICE-Systems Ltd. On May 17, 2016, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with NICE-Systems Ltd., a company organized under the laws of the State of Israel (“Parent” or “NICE”), and Victory Merger Sub Inc. (“Merger Sub”), a wholly owned indirect subsidiary of NICE, providing for the merger of Merger Sub with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned indirect subsidiary of NICE. In the Merger, each issued and outstanding share of our common stock will be cancelled and extinguished and automatically converted into the right to receive cash in an amount equal to $14.00, without interest thereon. Each outstanding and vested restricted stock unit or option to purchase Company’s common stock will be cancelled and extinguished and automatically converted into the right to receive an amount in cash equal to $14.00 per share less, in the case of options, the exercise price per share underlying such option. Each outstanding and unvested restricted stock unit, share or restricted stock and option to purchase Company stock or other right to purchase or receive Company stock will be converted into an option to purchase or right to purchase or receive American Depositary Shares of Parent, with the same vesting schedule of such equity award continuing after the Merger, subject to existing vesting conditions and the exercise price of options adjusted in accordance with applicable tax law. The transaction has received approval by the Company’s stockholders and is subject to certain regulatory approvals and other customary closing conditions. The Merger Agreement contains certain termination rights for each of the Parent, Merger Sub and the Company and provides certain circumstances as described in the Merger Agreement under which we may be required to pay NICE a termination fee of $34.1 million. See Note 8, “Long-Term Debt and Capital Lease Obligations” for discussion of the treatment of the Company’s 2.5% Convertible Senior Notes due 2022 in connection with the pending acquisition of inContact by NICE. The transaction is expected to close by December 31, 2016. The pending acquisition of inContact by NICE does not impact the basis of presentation in the accompanying financial statements. Following completion of the Merger, the Company will become a wholly-owned subsidiary of NICE, the Company’s common stock will be delisted from The NASDAQ Stock Market and deregistered under the Securities Exchange Act of 1934, as amended, and as such, the Company will no longer file periodic reports with the SEC. In connection with the proposed Merger, we have incurred certain costs related to professional services, regulatory fees and employee-related expenses. |
Basis of Presentation | Basis of Presentation These unaudited Condensed Consolidated Financial Statements of inContact and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Such rules and regulations allow the omission of certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP, so long as the statements are not misleading. In the opinion of management, these financial statements and accompanying notes contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position and results of operations for the periods presented herein. These Condensed Consolidated Financial Statements should be read in conjunction with the consolidated audited financial statements and notes thereto contained in the Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on March 4, 2016. The results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of the results to be expected for the year ending December 31, 2016. Our significant accounting policies are set forth in Note 1 to the Consolidated Financial Statements in the 2015 Annual Report on Form 10-K and changes, if any, are included below. |
Revenue Recognition | Revenue Recognition Revenue is recognized when all of the following four criteria are met: (1) persuasive evidence of an arrangement exists, (2) the fee is fixed or determinable, (3) collection is reasonably assured, and (4) delivery has occurred or services have been rendered. Determining whether and when some of these criteria have been satisfied often involves assumptions and judgments that can have a significant impact on the timing and amount of revenue we report. Our revenue is reported and recognized based on the type of services provided to the customer as follows: Software . Software revenue includes two main sources of revenue: (1) Software delivery and support of our inContact cloud software solutions that are provided on a monthly subscription basis and associated professional services. Because our customers purchasing software and support services on a monthly recurring basis do not have the right to take possession of the software, we consider these arrangements to be service contracts and are not within the scope of Industry Topic 985, Software For subscription service contracts with multiple elements (hosted software, training, installation and long distance services), we follow the guidance provided in Accounting Standards Codification (“ASC”) 605-25, Revenue Recognition for Multiple Element Arrangements (2) Perpetual product and services revenues are primarily derived from the sale of licenses to our Workforce Optimization on-premise software products and services. For software license arrangements that do not require significant modification or customization of the underlying software, revenue is recognized when all revenue recognition criteria are met. Many of our customers purchase a combination of software, service, hardware, post contract customer support (“PCS”) and hosting. For software and software related multiple element arrangements that fall within the scope of the software revenue guidance in Topic 985, Software Product revenue from customers who purchase our products for resale is generally recognized when such products are released (on a “sell-through” basis). Periodically we review our reseller arrangements as our business and products change. Network Connectivity Service Revenue . Network Connectivity Services revenue is derived from network connectivity, such as dedicated transport, switched long distance and data services. These services are provided over our network or through third party network connectivity providers. Our network is the backbone of our subscription software and allows us to provide the all-in-one inContact cloud software solutions. Revenue for network connectivity usage is derived based on customer specific rate plans and the customer’s call usage and is recognized in the period the call is initiated. Customers are also billed monthly charges in arrears and revenue is recognized for such charges over the billing period. If the billing period spans more than one month, earned but unbilled revenues are recognized as revenue for incurred usage to date. |
Long-term Debt | Long-term Debt We record debt issuance costs as a direct deduction from the carrying amount of our long-term borrowings, as well as costs incurred for subsequent modification of debt, incurred in connection with our long-term borrowings and credit facilities. We amortize these costs as an adjustment to interest expense over the remaining contractual life of the associated long-term borrowing or credit facility using the effective interest method for term loans and convertible debt borrowings, and the straight-line method for revolving credit facilities. When unscheduled principal payments are made, we adjust the amortization of our deferred debt-related costs to reflect the expected remaining terms of the borrowing. |
Operating Leases | Operating Leases Rent expense and lease incentives, including landlord construction allowances, are recognized on a straight-line basis over the lease term, commencing generally on the date the Company takes possession of the leased property. The unamortized portion of deferred rent is included in deferred rent and lease incentive obligation. |
Self-Funded Health Insurance | Self-Funded Health Insurance In September 2016, the Company elected to partially self-fund its health insurance plan. The Company contracts with a third-party broker to facilitate, administer the plan and obtain individual and aggregate stop-loss insurance policies. The Company estimates its exposure for claims incurred but not paid at the end of each reporting period and uses historical claims data supplied by the Company’s broker to estimate its self-funded insurance liability. To reduce its risk related to high dollar claims, the Company maintains individual and aggregate stop-loss insurance policies. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “ Revenue from Contracts with Customers Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients In March 2016, the FASB issued ASU No. 2016-08, “ Principal versus Agent Considerations (Reporting Revenue Gross versus Net) In April 2016, the FASB issued ASU No. 2016-10, “ Identifying Performance Obligations and Licensing In January 2016, the FASB issued ASU 2016-01, “ Recognition and Measurement of Financial Assets and Liabilities In February 2016, the FASB issued ASU 2016-02, “ Leases (Topic 842) In March 2016, the FASB issued ASU No. 2016-09, “ Improvements to Employee Share-Based Payment Accounting In June 2016, the FASB issued ASU No. 2016-13: Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments This ASU is effective in fiscal years beginning after December 15, 2019 and early adoption is permitted after December 15, 2018. and related disclosures In October 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory. We reviewed all other recently issued accounting standards to determine their effects, if any, on the consolidated financial statements. Based on that review, we believe that none of these standards will have a significant effect on current or future results of operations. |
Basic and Diluted Net Loss Pe21
Basic and Diluted Net Loss Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Summary of Potentially Dilutive Securities | The following table summarizes potentially dilutive securities, using the above security classifications (in thousands): September 30, 2016 2015 Stock options 2,418 2,765 Restricted stock awards 1,727 1,317 Potential shares from Convertible Notes 8,082 8,082 Total potentially dilutive shares 12,226 12,164 |
Fair Value of Financial Instr22
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Summary of Assets Measured at Fair Value on a Recurring Basis | The following table summarizes our investments measured at fair value on a recurring basis using the above input categories. As of September 30, 2016 and December 31, 2015, we did not hold any Level 3 assets, and our Level 1 and Level 2 holdings were as follows (in thousands): September 30, 2016 December 31, 2015 Level 1 Level 2 Total Level 1 Level 2 Total Cash equivalents: Money market funds $ 28,382 $ - $ 28,382 $ 4,071 $ - $ 4,071 Commercial paper - - - - 999 999 Total cash equivalents 28,382 - 28,382 4,071 999 5,070 Investments: Commercial paper - 17,852 17,852 - 27,846 27,846 Corporate debt securities - 17,936 17,936 - 45,830 45,830 Municipal bonds - 2,511 2,511 - 1,433 1,433 Total investments - 38,299 38,299 - 75,109 75,109 Total assets measured at fair value $ 28,382 $ 38,299 $ 66,681 $ 4,071 $ 76,108 $ 80,179 |
Carrying Value and Estimated Fair Value of Convertible Notes | The carrying value and estimated fair value of our Convertible Notes are as follows ( in thousands September 30, 2016 December 31, 2015 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Convertible notes $ 85,215 $ 138,792 $ 81,985 $ 108,330 |
Investments - Available for S23
Investments - Available for Sale (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Investments Debt And Equity Securities [Abstract] | |
Summary of Investments | Our investments as of September 30, 2016 and December 31, 2015 were as follows (in thousands) September 30, 2016 Amortized Cost Net Unrealized Gains (Losses) Fair Value/Net Carrying Value Cash and Cash Equivalents Investments Commercial paper $ 17,852 $ - $ 17,852 $ - $ 17,852 Corporate debt securities 17,935 1 17,936 - 17,936 Money market funds 28,382 - 28,382 28,382 - Municipal bonds 2,513 (2 ) 2,511 - 2,511 Total $ 66,682 $ (1 ) $ 66,681 $ 28,382 $ 38,299 December 31, 2015 Amortized Cost Net Unrealized Gains (Losses) Fair Value/Net Carrying Value Cash and Cash Equivalents Investments Commercial paper $ 28,845 $ - $ 28,845 $ 999 $ 27,846 Corporate debt securities 45,911 (81 ) 45,830 - 45,830 Money market funds 4,071 - 4,071 4,071 - Municipal bonds 1,433 - 1,433 - 1,433 Total $ 80,260 $ (81 ) $ 80,179 $ 5,070 $ 75,109 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
AC2 Solutions, Inc. | |
Business Acquisition [Line Items] | |
Summary of Total Preliminary Purchase Price Allocation of Acquired Assets And Liabilities | The following is the total preliminary purchase price allocation on estimated purchase consideration based on information available as of September 30, 2016 (in thousands) Amount Assets acquired: Cash and cash equivalents $ 78 Accounts receivable 100 Other current assets 63 Intangible assets 6,710 Goodwill 8,243 Total assets acquired 15,194 Liabilities assumed: Accrued liabilities 136 Current portion of deferred revenue 74 Deferred tax liability 2,666 Total liabilities assumed 2,876 Net assets acquired $ 12,318 |
Summary of Intangible Assets Purchased and Economic Useful Life | Intangible assets acquired from the acquisition include customer relationships, which are amortized on a double-declining basis, technologies, patents and a non-competition agreement, which are amortized on a straight-line basis and in-process research and development which has an initial indefinite life and is expected to be amortized once technical feasibility is established. The fair values of the intangible assets were determined primarily using the income approach and the discount rates range from 20% to 25%. The following sets forth the intangible assets purchased as part of the AC2 acquisition and their respective preliminary estimated economic useful life at the date of the acquisition ( in thousands, except useful life : Amount Economic Useful Customer relationships $ 710 8 Technology 321 5 In-process research and development 3,014 Indefinite Patents 2,641 12 Non-competition agreement 24 2 Total intangible assets $ 6,710 |
Attensity, Inc | |
Business Acquisition [Line Items] | |
Summary of Total Preliminary Purchase Price Allocation of Acquired Assets And Liabilities | The following is the total purchase price allocation as of September 30, 2016 (in thousands) Amount Assets acquired: Property, plant and equipment and other assets $ 290 Intangible assets 4,917 Goodwill 1,525 Total assets acquired 6,732 Liabilities assumed: Current portion of deferred revenue 157 Long-term portion of deferred revenue 25 Total liabilities assumed 182 Net assets acquired $ 6,550 |
Summary of Intangible Assets Purchased and Economic Useful Life | Intangible assets acquired from the acquisition include customer relationships, which are amortized on a double-declining basis, technologies and patents, which are amortized on a straight-line basis and in-process research and development which has an initial indefinite life and is expected to be amortized once technical feasibility is established. The fair values of the intangible assets were determined primarily using the income approach and the discount rates range from 25% - 30%. The following sets forth the intangible assets purchased as part of the Attensity acquisition and their respective preliminary estimated economic useful life at the date of the acquisition ( in thousands, except useful life : Amount Economic Useful Customer relationships $ 140 5 Technology 141 5 In-process research and development 3,193 Indefinite Patents 1,443 8 Total intangible assets $ 4,917 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Summary of Intangible Assets | Intangible assets consisted of the following ( in thousands September 30, 2016 December 31, 2015 Gross Accumulated Intangible Gross Accumulated Intangible Assets Amortization Assets, Net Assets Amortization Assets, Net Customer lists acquired $ 28,973 $ (22,412 ) $ 6,561 $ 28,123 $ (20,859 ) $ 7,264 Technology and patents 35,112 (16,148 ) 18,964 24,358 (14,222 ) 10,136 Trade names and trademarks 3,546 (2,050 ) 1,496 3,190 (1,358 ) 1,832 Total intangible assets $ 67,631 $ (40,610 ) $ 27,021 $ 55,671 $ (36,439 ) $ 19,232 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Payables And Accruals [Abstract] | |
Accrued Liabilities | Accrued liabilities consisted of the following ( in thousands September 30, December 31, 2016 2015 Accrued payroll and other compensation $ 5,775 $ 4,726 Accrued state sales taxes 3,215 3,939 Accrued vendor charges 236 1,281 Accrued interest - 717 Other 2,995 2,165 Total accrued liabilities $ 12,221 $ 12,828 |
Long-Term Debt and Capital Le27
Long-Term Debt and Capital Lease Obligations (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Summary of Convertible Notes | The Convertible Notes at September (in thousands) September 30, 2016 2.50% Convertible Notes, bearing interest at 2.50% payable semi-annually with final principal payment to be made April 1, 2022 $ 115,000 Unamortized debt issuance costs (2,124 ) Unamortized debt discounts (27,661 ) Net carrying value of Convertible Notes $ 85,215 |
Components of Interest Expense Incurred on Convertible Notes and on Other Borrowings | The following table presents the components of interest expense incurred on the Convertible Notes and on other borrowings (in thousands) Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 2.50% Convertible Notes: Interest expense at 2.50% coupon rate $ 725 $ 725 $ 2,166 $ 1,449 Amortization of debt discount 995 921 2,940 1,843 Amortization of deferred debt issuance costs 96 92 290 193 Total interest from 2.50% convertible notes 1,816 1,738 5,396 3,485 Other Borrowings: Interest from other borrowings - - 4 455 Total interest expense $ 1,816 $ 1,738 $ 5,400 $ 3,940 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation Expense | We record stock-based compensation expense (including stock options, restricted stock and employee stock purchase plan) to the same departments where cash compensation is recorded as follows ( in thousands Nine Months Ended September 30, 2016 2015 Costs of revenue $ 789 $ 810 Selling and marketing 1,140 1,024 Research and development 3,148 1,809 General and administrative 1,793 2,867 Total stock-based compensation expense $ 6,870 $ 6,510 |
Assumptions Used to Determine the Fair Value of Options Granted under Employee Stock-Based Compensation Arrangements | We estimated the fair value of options granted under our employee stock-based compensation arrangements at the date of grant using the following weighted-average expected assumptions: Nine Months Ended September 30, 2016 2015 Dividend yield None None Volatility 49% 49% Risk-free interest rate 1.90% 1.70% Expected life (years) 5.8 5.7 |
Segments (Tables)
Segments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Operating Segment Revenues and Profitability | Operating segment revenues and profitability for three and nine months ended September 30, 2016 and 2015 were as follows ( in thousands, except percentages Three Months Ended September 30, 2016 Three Months Ended September 30, 2015 Network Network Software Connectivity Consolidated Software Connectivity Consolidated Net revenue $ 44,222 $ 22,796 $ 67,018 $ 36,709 $ 19,369 $ 56,078 Costs of revenue 18,534 12,805 31,339 14,815 12,278 27,093 Gross profit 25,688 9,991 35,679 21,894 7,091 28,985 Gross margin 58 % 44 % 53 % 60 % 37 % 52 % Operating expenses: Direct selling and marketing 17,257 843 18,100 16,075 895 16,970 Direct research and development 8,617 - 8,617 6,866 - 6,866 Indirect 13,146 807 13,953 7,943 1,109 9,052 Total operating expenses 39,020 1,650 40,670 30,884 2,004 32,888 Income (Loss) from operations $ (13,332 ) $ 8,341 $ (4,991 ) $ (8,990 ) $ 5,087 $ (3,903 ) Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2015 Network Network Software Connectivity Consolidated Software Connectivity Consolidated Net revenue $ 128,130 $ 65,073 $ 193,203 $ 103,227 $ 57,260 $ 160,487 Costs of revenue 52,473 39,727 92,200 42,872 36,072 78,944 Gross profit 75,657 25,346 101,003 60,355 21,188 81,543 Gross margin 59 % 39 % 52 % 58 % 37 % 51 % Operating expenses: Direct selling and marketing 49,926 2,536 52,462 44,729 2,654 47,383 Direct research and development 25,065 - 25,065 19,818 - 19,818 Indirect 34,872 2,376 37,248 25,673 3,395 29,068 Total operating expenses 109,863 4,912 114,775 90,220 6,049 96,269 Income (Loss) from operations $ (34,206 ) $ 20,434 $ (13,772 ) $ (29,865 ) $ 15,139 $ (14,726 ) |
Organization and Basis of Pre30
Organization and Basis of Presentation (Details Textual) - USD ($) $ / shares in Units, $ in Millions | May 17, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Mar. 30, 2015 |
Network connectivity services | ||||
Organization and Basis of Presentation [Line Items] | ||||
Period to recognize unbilled revenue | Billing period spans more than one month, earned but unbilled revenues are recognized as revenue | |||
PCS | ||||
Organization and Basis of Presentation [Line Items] | ||||
Revenue recognized ratably over maintenance period | 15 months | |||
2.50% Convertible Notes | ||||
Organization and Basis of Presentation [Line Items] | ||||
Convertible notes stated interest percentage | 2.50% | 2.50% | 2.50% | |
Maturity date of convertible senior notes | Apr. 1, 2022 | |||
Proposed Merger by NICE-Systems Ltd | ||||
Organization and Basis of Presentation [Line Items] | ||||
Merger agreement date | May 17, 2016 | |||
Right to receive cash equal to per share | $ 14 | |||
Termination fee | $ 34.1 | |||
Proposed Merger by NICE-Systems Ltd | Outstanding and Vested Restricted Stock Unit or Option | ||||
Organization and Basis of Presentation [Line Items] | ||||
Right to receive cash equal to per share | $ 14 |
Basic and Diluted Net Loss Pe31
Basic and Diluted Net Loss Per Common Share (Details) - shares shares in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from the calculation of diluted earnings per share | 12,226 | 12,164 |
Stock options | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from the calculation of diluted earnings per share | 2,418 | 2,765 |
Restricted stock awards | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from the calculation of diluted earnings per share | 1,727 | 1,317 |
Potential shares from convertible notes | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from the calculation of diluted earnings per share | 8,082 | 8,082 |
Fair Value of Financial Instr32
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Fair Value Assets Measured On Recurring Basis [Line Items] | ||
Total cash equivalents | $ 28,382 | $ 5,070 |
Total investments | 38,299 | 75,109 |
Total assets measured at fair value | 66,681 | 80,179 |
Level 1 | ||
Fair Value Assets Measured On Recurring Basis [Line Items] | ||
Total cash equivalents | 28,382 | 4,071 |
Total assets measured at fair value | 28,382 | 4,071 |
Level 2 | ||
Fair Value Assets Measured On Recurring Basis [Line Items] | ||
Total cash equivalents | 999 | |
Total investments | 38,299 | 75,109 |
Total assets measured at fair value | 38,299 | 76,108 |
Money market funds | ||
Fair Value Assets Measured On Recurring Basis [Line Items] | ||
Total cash equivalents | 28,382 | 4,071 |
Money market funds | Level 1 | ||
Fair Value Assets Measured On Recurring Basis [Line Items] | ||
Total cash equivalents | 28,382 | 4,071 |
Commercial paper | ||
Fair Value Assets Measured On Recurring Basis [Line Items] | ||
Total cash equivalents | 999 | |
Total investments | 17,852 | 27,846 |
Commercial paper | Level 2 | ||
Fair Value Assets Measured On Recurring Basis [Line Items] | ||
Total cash equivalents | 999 | |
Total investments | 17,852 | 27,846 |
Corporate debt securities | ||
Fair Value Assets Measured On Recurring Basis [Line Items] | ||
Total investments | 17,936 | 45,830 |
Corporate debt securities | Level 2 | ||
Fair Value Assets Measured On Recurring Basis [Line Items] | ||
Total investments | 17,936 | 45,830 |
Municipal bonds | ||
Fair Value Assets Measured On Recurring Basis [Line Items] | ||
Total investments | 2,511 | 1,433 |
Municipal bonds | Level 2 | ||
Fair Value Assets Measured On Recurring Basis [Line Items] | ||
Total investments | $ 2,511 | $ 1,433 |
Fair Value of Financial Instr33
Fair Value of Financial Instruments (Details 1) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Carrying Value | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Convertible notes | $ 85,215 | $ 81,985 |
Estimated Fair Value | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Convertible notes | $ 138,792 | $ 108,330 |
Investments - Available for S34
Investments - Available for Sale (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | $ 66,682 | $ 80,260 |
Net Unrealized Gains (Losses) | (1) | (81) |
Fair Value/Net Carrying Value | 66,681 | 80,179 |
Cash and Cash Equivalents | 28,382 | 5,070 |
Investments | 38,299 | 75,109 |
Commercial paper | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 17,852 | 28,845 |
Fair Value/Net Carrying Value | 17,852 | 28,845 |
Cash and Cash Equivalents | 999 | |
Investments | 17,852 | 27,846 |
Corporate debt securities | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 17,935 | 45,911 |
Net Unrealized Gains (Losses) | 1 | (81) |
Fair Value/Net Carrying Value | 17,936 | 45,830 |
Investments | 17,936 | 45,830 |
Money market funds | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 28,382 | 4,071 |
Fair Value/Net Carrying Value | 28,382 | 4,071 |
Cash and Cash Equivalents | 28,382 | 4,071 |
Municipal bonds | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 2,513 | 1,433 |
Net Unrealized Gains (Losses) | (2) | |
Fair Value/Net Carrying Value | 2,511 | 1,433 |
Investments | $ 2,511 | $ 1,433 |
Investments - Available for S35
Investments - Available for Sale (Details Textual) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Schedule Of Available For Sale Securities [Line Items] | ||
Unrealized losses on available for sale investments | $ 5,000 | $ 81,000 |
Amount of investments held other-than-temporarily impaired | 0 | |
Proceeds from maturities of investments | 65,300,000 | |
Proceeds from sales of investments | 2,800,000 | |
Cash Equivalents | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Proceeds from maturities of investments | $ 1,000,000 |
Acquisitions (Details Textual)
Acquisitions (Details Textual) - USD ($) | Feb. 08, 2016 | Jan. 13, 2016 |
AC2 Solutions, Inc. | ||
Business Acquisition [Line Items] | ||
Percentage of outstanding shares acquired | 100.00% | |
Business acquisition, purchase price | $ 12,300,000 | |
Business acquisition, cash paid | $ 12,000,000 | |
Business acquisition, shares issued | 40,456 | |
Business acquisition, shares issued, value | $ 344,000 | |
Restricted common stock issued expiration period | 2 years | |
Issuance of restricted stock , shares | 505,700 | |
Professional fees | $ 188,000 | |
Deferred tax benefit | $ 2,700,000 | |
AC2 Solutions, Inc. | Minimum | ||
Business Acquisition [Line Items] | ||
Fair value of intangible assets discount rates | 20.00% | |
AC2 Solutions, Inc. | Maximum | ||
Business Acquisition [Line Items] | ||
Fair value of intangible assets discount rates | 25.00% | |
Attensity, Inc | ||
Business Acquisition [Line Items] | ||
Business acquisition, cash paid | $ 6,600,000 | |
Professional fees | $ 27,000 | |
Attensity, Inc | Minimum | ||
Business Acquisition [Line Items] | ||
Fair value of intangible assets discount rates | 25.00% | |
Attensity, Inc | Maximum | ||
Business Acquisition [Line Items] | ||
Fair value of intangible assets discount rates | 30.00% |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Jan. 13, 2016 | Dec. 31, 2015 |
Assets acquired: | |||
Goodwill | $ 49,016 | $ 39,247 | |
AC2 Solutions, Inc. | |||
Assets acquired: | |||
Cash and cash equivalents | $ 78 | ||
Accounts receivable | 100 | ||
Other current assets | 63 | ||
Intangible assets | 6,710 | ||
Goodwill | 8,243 | ||
Total assets acquired | 15,194 | ||
Liabilities assumed: | |||
Accrued liabilities | 136 | ||
Current portion of deferred revenue | 74 | ||
Deferred tax liability | 2,666 | ||
Total liabilities assumed | 2,876 | ||
Purchase price of acquired assets and liabilities | $ 12,318 |
Acquisitions (Details 1)
Acquisitions (Details 1) - AC2 Solutions, Inc. $ in Thousands | Jan. 13, 2016USD ($) |
Acquired Intangible Assets [Line Items] | |
Total intangible assets | $ 6,710 |
Customer relationships | |
Acquired Intangible Assets [Line Items] | |
Total intangible assets | $ 710 |
Economic Useful Life (in years) | 8 years |
Technology | |
Acquired Intangible Assets [Line Items] | |
Total intangible assets | $ 321 |
Economic Useful Life (in years) | 5 years |
In-process research and development | |
Acquired Intangible Assets [Line Items] | |
Total intangible assets | $ 3,014 |
Patents | |
Acquired Intangible Assets [Line Items] | |
Total intangible assets | $ 2,641 |
Economic Useful Life (in years) | 12 years |
Non-competition agreement | |
Acquired Intangible Assets [Line Items] | |
Total intangible assets | $ 24 |
Economic Useful Life (in years) | 2 years |
Acquisitions (Details 2)
Acquisitions (Details 2) - USD ($) $ in Thousands | Sep. 30, 2016 | Feb. 08, 2016 | Dec. 31, 2015 |
Assets acquired: | |||
Goodwill | $ 49,016 | $ 39,247 | |
Attensity, Inc | |||
Assets acquired: | |||
Property, plant and equipment and other assets | $ 290 | ||
Intangible assets | 4,917 | ||
Goodwill | 1,525 | ||
Total assets acquired | 6,732 | ||
Liabilities assumed: | |||
Current portion of deferred revenue | 157 | ||
Long-term portion of deferred revenue | 25 | ||
Total liabilities assumed | 182 | ||
Purchase price of acquired assets and liabilities | $ 6,550 |
Acquisitions (Details 3)
Acquisitions (Details 3) - Attensity, Inc $ in Thousands | Feb. 08, 2016USD ($) |
Acquired Intangible Assets [Line Items] | |
Total intangible assets | $ 4,917 |
Customer relationships | |
Acquired Intangible Assets [Line Items] | |
Total intangible assets | $ 140 |
Economic Useful Life (in years) | 5 years |
Technology | |
Acquired Intangible Assets [Line Items] | |
Total intangible assets | $ 141 |
Economic Useful Life (in years) | 5 years |
In-process research and development | |
Acquired Intangible Assets [Line Items] | |
Total intangible assets | $ 3,193 |
Patents | |
Acquired Intangible Assets [Line Items] | |
Total intangible assets | $ 1,443 |
Economic Useful Life (in years) | 8 years |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Summary of Intangible assets | ||
Gross Assets | $ 67,631 | $ 55,671 |
Accumulated Amortization | (40,610) | (36,439) |
Intangible Assets, Net | 27,021 | 19,232 |
Customer lists acquired | ||
Summary of Intangible assets | ||
Gross Assets | 28,973 | 28,123 |
Accumulated Amortization | (22,412) | (20,859) |
Intangible Assets, Net | 6,561 | 7,264 |
Technology and patents | ||
Summary of Intangible assets | ||
Gross Assets | 35,112 | 24,358 |
Accumulated Amortization | (16,148) | (14,222) |
Intangible Assets, Net | 18,964 | 10,136 |
Trade names and trademarks | ||
Summary of Intangible assets | ||
Gross Assets | 3,546 | 3,190 |
Accumulated Amortization | (2,050) | (1,358) |
Intangible Assets, Net | $ 1,496 | $ 1,832 |
Intangible Assets (Details Text
Intangible Assets (Details Textual) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
Amortization of intangible assets | $ 3,837 | $ 3,776 |
Estimated amortization expense remainder of 2016 | 1,300 | |
Estimated amortization expense 2017 | 5,000 | |
Estimated amortization expense 2018 | 4,500 | |
Estimated amortization expense 2019 | 4,100 | |
Estimated amortization expense 2020 | 3,900 | |
Estimated amortization expense thereafter | $ 5,200 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Accrued liabilities | ||
Accrued payroll and other compensation | $ 5,775 | $ 4,726 |
Accrued state sales taxes | 3,215 | 3,939 |
Accrued vendor charges | 236 | 1,281 |
Accrued interest | 717 | |
Other | 2,995 | 2,165 |
Total accrued liabilities | $ 12,221 | $ 12,828 |
Long-Term Debt and Capital Le44
Long-Term Debt and Capital Lease Obligations - Convertible Notes (Details Textual) - 2.50% Convertible Notes $ / shares in Units, shares in Millions | Mar. 30, 2015USD ($) | Sep. 30, 2016USD ($)d$ / sharesshares | Sep. 30, 2015 |
Debt Instrument [Line Items] | |||
Aggregate principal amount of convertible notes | $ 115,000,000 | $ 115,000,000 | |
Convertible notes stated interest percentage | 2.50% | 2.50% | 2.50% |
Maturity date of convertible senior notes | Apr. 1, 2022 | ||
Net proceeds from the convertible notes net of transaction fees | $ 111,200,000 | ||
Convertible notes interest payable term | Semiannually | ||
Proportion of principal amount of notes | $ 1,000 | ||
Proportion of shares of common stock | 70.2790 | ||
Effective conversion price of common stock, per share | $ / shares | $ 14.23 | ||
Number of shares issued upon conversion | shares | 8.1 | ||
Carrying amount of debt component of convertible notes | $ 81,600,000 | ||
Carrying amount of equity component | 33,400,000 | ||
Transaction costs on debt related to issuance of convertible notes | 2,700,000 | ||
Transaction costs on equity related to issuance of convertible notes | 1,100,000 | ||
Carrying amount of equity component, net of issuance costs | $ 32,300,000 | ||
Debt instrument, effective interest rate | 8.29% | ||
During Twenty Trading Days in Period of Thirty Consecutive Trading Days | |||
Debt Instrument [Line Items] | |||
Number of trading days | d | 20 | ||
Number of consecutive trading days | 30 days | ||
Percentage of conversion price of convertible notes on applicable trading day | 130.00% | ||
During Ten Consecutive Business Day Immediately After Any Five Consecutive Trading Day | |||
Debt Instrument [Line Items] | |||
Number of trading days | d | 10 | ||
Number of consecutive trading days | 5 days | ||
During Ten Consecutive Business Day Immediately After Any Five Consecutive Trading Day | Maximum | |||
Debt Instrument [Line Items] | |||
Percentage of closing sale price of common stock | 98.00% |
Long-Term Debt and Capital Le45
Long-Term Debt and Capital Lease Obligations - Convertible Notes (Details) - 2.50% Convertible Notes - USD ($) | Sep. 30, 2016 | Mar. 30, 2015 |
Debt Instrument [Line Items] | ||
Aggregate principal amount of convertible notes | $ 115,000,000 | $ 115,000,000 |
Unamortized debt issuance costs | (2,124,000) | |
Unamortized debt discounts | (27,661,000) | |
Net carrying value of Convertible Notes | $ 85,215,000 |
Long-Term Debt and Capital Le46
Long-Term Debt and Capital Lease Obligations - Convertible Notes (Parenthetical) (Details) - 2.50% Convertible Notes | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Mar. 30, 2015 | |
Debt Instrument [Line Items] | |||
Convertible notes stated interest percentage | 2.50% | 2.50% | 2.50% |
Maturity date of convertible senior notes | Apr. 1, 2022 |
Long-Term Debt and Capital Le47
Long-Term Debt and Capital Lease Obligations - Revolving Credit Agreement (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Dec. 31, 2014 | Mar. 31, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Jul. 16, 2009 | |
Debt Instrument [Line Items] | ||||||
Repayment on Revolving Credit Agreement | $ 11,000,000 | |||||
Revolving Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Revolving credit loan agreement | $ 15,000,000 | |||||
Percentage of billed receivable for calculation of outstanding debt | 85.00% | |||||
Percentage of unbilled receivable for calculation of outstanding debt | 65.00% | |||||
Revolving credit interest rate description | 4.0% per annum | |||||
Interest rate of revolving credit agreement | 4.00% | |||||
Number of days related to LIBOR interest rate | 90 days | |||||
Period of interest rate related to LIBOR, description | Ninety day LIBOR | |||||
Borrowings under revolving credit agreement | $ 11,000,000 | |||||
Repayment on Revolving Credit Agreement | $ 11,000,000 | |||||
Revolving Credit Agreement interest payable term | Monthly | |||||
Revolving credit facility Term, Description | extending the term to July 2016 | |||||
Balance of Revolving Credit Agreement | $ 0 |
Long-Term Debt and Capital Le48
Long-Term Debt and Capital Lease Obligations - Term Loans (Details Textual) - Term Loan - USD ($) | 9 Months Ended | ||||||
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Apr. 30, 2013 | |
Debt Instrument [Line Items] | |||||||
Term loan maximum drawing limit | $ 5,000,000 | $ 1,000,000 | $ 3,000,000 | $ 4,000,000 | |||
Term of Principal payments description | 36 equal monthly installments | ||||||
Term of principal payments | 36 months | ||||||
Period of interest rate related to LIBOR | 90 days | ||||||
Interest rate of term loan description | The interest rate on the Term Loans was between 4.0% and 4.5% per annum above the ninety day LIBOR rate, adjusted as of the date of any change in the ninety day LIBOR. | ||||||
Term Loan, principal payment | $ 10,400,000 | ||||||
Long-term portion of Convertible Notes | $ 0 | $ 0 | |||||
Minimum | 90 Day LIBOR Rate | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate on term loans | 4.00% | ||||||
Maximum | 90 Day LIBOR Rate | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate on term loans | 4.50% |
Long-Term Debt and Capital Le49
Long-Term Debt and Capital Lease Obligations - Capital Leases (Details Textual) - USD ($) | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2016 | Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |||
Capital lease obligation paid | $ 1,400,000 | ||
Capital lease obligations | $ 0 | $ 0 |
Long-Term Debt and Capital Le50
Long-Term Debt and Capital Lease Obligations - Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Debt Instrument [Line Items] | ||||
Amortization of deferred debt issuance costs | $ 290 | $ 391 | ||
Total interest expense | $ 1,816 | $ 1,738 | 5,400 | 3,940 |
2.50% Convertible Notes | ||||
Debt Instrument [Line Items] | ||||
Interest expense at 2.50% coupon rate | 725 | 725 | 2,166 | 1,449 |
Amortization of debt discount | 995 | 921 | 2,940 | 1,843 |
Amortization of deferred debt issuance costs | 96 | 92 | 290 | 193 |
Total interest expense | $ 1,816 | $ 1,738 | 5,396 | 3,485 |
Other Borrowings | ||||
Debt Instrument [Line Items] | ||||
Total interest expense | $ 4 | $ 455 |
Long-Term Debt and Capital Le51
Long-Term Debt and Capital Lease Obligations - Interest Expense (Parenthetical) (Details) | Sep. 30, 2016 | Sep. 30, 2015 | Mar. 30, 2015 |
2.50% Convertible Notes | |||
Debt Instrument [Line Items] | |||
Convertible notes stated interest percentage | 2.50% | 2.50% | 2.50% |
Capital Transactions (Details T
Capital Transactions (Details Textual) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Subsidiary Sale Of Stock [Line Items] | ||
Number of common stock | 153,000 | |
Payroll taxes in form of stock | $ 1,300 | |
Proceeds from exercise of stock options | $ 3,398 | $ 2,603 |
Common stock issued under the employee stock purchase plan, shares | 96,000 | |
Proceeds from sale of stock under employee stock purchase plan | $ 826 | $ 1,249 |
Employee Stock | ||
Subsidiary Sale Of Stock [Line Items] | ||
Treasury stock reissued, shares | 9,000 | |
Proceeds from sale of stock under employee stock purchase plan | $ 800 | |
Stock Options | ||
Subsidiary Sale Of Stock [Line Items] | ||
Treasury stock reissued, shares | 118,000 | |
Common Stock | ||
Subsidiary Sale Of Stock [Line Items] | ||
Common stock issued from exercise of stock options, shares | 412,000 | |
Issuance of restricted stock units, shares | 214,000 | |
Common stock issued under the employee stock purchase plan, shares | 96,000 | |
Treasury Stock | ||
Subsidiary Sale Of Stock [Line Items] | ||
Common stock issued from exercise of stock options, shares | 118,000 | |
Issuance of restricted stock units, shares | 26,000 | |
Common stock issued under the employee stock purchase plan, shares | 9,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details Textual) - USD ($) | Jul. 28, 2016 | May 02, 2014 | Sep. 10, 2013 | Aug. 31, 2016 | May 31, 2009 | Jun. 30, 2013 | Sep. 30, 2016 |
Loss Contingency [Abstract] | |||||||
Contingent liabilities established | $ 377,000 | ||||||
California College | |||||||
Loss Contingency [Abstract] | |||||||
Damages sought | $ 9,200,000 | $ 14,400,000 | |||||
Alleged pre-judgment interest | $ 5,000,000 | ||||||
California College | Minimum | |||||||
Loss Contingency [Abstract] | |||||||
Damages sought | $ 20,000,000 | ||||||
Microlog Corporation | |||||||
Loss Contingency [Abstract] | |||||||
Loss contingency, number of days to file request for rehearing final written decision | 30 days | ||||||
Loss Contingency, number of days to file appeal on final written decision | 63 days | ||||||
Info Directions, Inc. | |||||||
Loss Contingency [Abstract] | |||||||
Damages sought | $ 3,600,000 | ||||||
Damages awarded | $ 3,200,000 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | $ 6,870 | $ 6,510 |
Costs of revenue | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | 789 | 810 |
Selling and marketing | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | 1,140 | 1,024 |
Research and development | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | 3,148 | 1,809 |
General and administrative | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | $ 1,793 | $ 2,867 |
Stock-Based Compensation (Det55
Stock-Based Compensation (Details Textual) - USD ($) $ / shares in Units, $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Expected dividend yield | 0.00% | 0.00% |
Stock options, granted | 536,000 | |
Stock options, weighted average fair value | $ 3.95 | |
Restricted stock awards | 1,065,000 | |
Restricted stock awards, weighted-average fair value | $ 8.85 | |
Unrecognized compensation cost related to non-vested stock-based compensation, granted | $ 6.3 | |
Compensation cost recognition period | 1 year 4 months 24 days | |
Minimum | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Stock options, exercise price | $ 8.36 | |
Maximum | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Stock options, exercise price | $ 8.43 | |
Stock Options | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Stock options vesting period | 4 years | |
Contractual term | 10 years |
Stock-Based Compensation (Det56
Stock-Based Compensation (Details 1) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Assumptions used to determine the fair value of options granted under employee stock-based compensation arrangements | ||
Dividend yield | 0.00% | 0.00% |
Volatility | 49.00% | 49.00% |
Risk-free interest rate | 1.90% | 1.70% |
Expected life (years) | 5 years 9 months 18 days | 5 years 8 months 12 days |
Related Party Transactions (Det
Related Party Transactions (Details Textual) ft² in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016USD ($)ft² | Sep. 30, 2016USD ($)ft² | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
Board of Directors Chairman | ||||
Related Party Transaction [Line Items] | ||||
Amounts payable to the Chairman | $ 7,000 | $ 7,000 | $ 7,000 | |
Two Employees and Other Minority Shareholder, Group One | Reseller Agreement | ||||
Related Party Transaction [Line Items] | ||||
Software revenue | 12,000 | 28,000 | ||
Related party accounts receivable | $ 0 | $ 0 | $ 3,000 | |
Two Employees and Other Minority Shareholder, Group Two | Columbus, Ohio | ||||
Related Party Transaction [Line Items] | ||||
Area of office facility | ft² | 36 | 36 | ||
Rent paid | $ 200,000 | $ 600,000 | ||
Two Employees and Other Minority Shareholder | Referral Agreement | ||||
Related Party Transaction [Line Items] | ||||
Payments for commissions | 34,000 | 101,000 | ||
Related party accounts payable | $ 11,000 | 11,000 | ||
General and administrative | Board of Directors Chairman | Monthly Payment | ||||
Related Party Transaction [Line Items] | ||||
Consulting and other activities, expense paid per month | $ 7,000 | $ 7,000 |
Segments (Details Textual)
Segments (Details Textual) | 9 Months Ended |
Sep. 30, 2016Segment | |
Segment Reporting [Abstract] | |
Number of operating business segment | 2 |
Segments (Details)
Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Segment Reporting Information [Line Items] | ||||
Net revenue | $ 67,018 | $ 56,078 | $ 193,203 | $ 160,487 |
Costs of revenue | 31,339 | 27,093 | 92,200 | 78,944 |
Gross profit | $ 35,679 | $ 28,985 | $ 101,003 | $ 81,543 |
Gross margin | 53.00% | 52.00% | 52.00% | 51.00% |
Operating expenses: | ||||
Direct selling and marketing | $ 18,100 | $ 16,970 | $ 52,462 | $ 47,383 |
Direct research and development | 8,617 | 6,866 | 25,065 | 19,818 |
Indirect | 13,953 | 9,052 | 37,248 | 29,068 |
Total operating expenses | 40,670 | 32,888 | 114,775 | 96,269 |
Loss from operations | (4,991) | (3,903) | (13,772) | (14,726) |
Software | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 44,222 | 36,709 | 128,130 | 103,227 |
Costs of revenue | 18,534 | 14,815 | 52,473 | 42,872 |
Gross profit | $ 25,688 | $ 21,894 | $ 75,657 | $ 60,355 |
Gross margin | 58.00% | 60.00% | 59.00% | 58.00% |
Operating expenses: | ||||
Direct selling and marketing | $ 17,257 | $ 16,075 | $ 49,926 | $ 44,729 |
Direct research and development | 8,617 | 6,866 | 25,065 | 19,818 |
Indirect | 13,146 | 7,943 | 34,872 | 25,673 |
Total operating expenses | 39,020 | 30,884 | 109,863 | 90,220 |
Loss from operations | (13,332) | (8,990) | (34,206) | (29,865) |
Network Connectivity | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 22,796 | 19,369 | 65,073 | 57,260 |
Costs of revenue | 12,805 | 12,278 | 39,727 | 36,072 |
Gross profit | $ 9,991 | $ 7,091 | $ 25,346 | $ 21,188 |
Gross margin | 44.00% | 37.00% | 39.00% | 37.00% |
Operating expenses: | ||||
Direct selling and marketing | $ 843 | $ 895 | $ 2,536 | $ 2,654 |
Indirect | 807 | 1,109 | 2,376 | 3,395 |
Total operating expenses | 1,650 | 2,004 | 4,912 | 6,049 |
Loss from operations | $ 8,341 | $ 5,087 | $ 20,434 | $ 15,139 |