Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 24, 2020 | Jun. 30, 2019 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | INST | ||
Entity Registrant Name | Instructure, Inc. | ||
Entity Central Index Key | 0001355754 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Interactive Data Current | Yes | ||
Entity Public Float | $ 1,439,351,920 | ||
Entity Common Stock, Shares Outstanding | 38,263,210 | ||
Entity Shell Company | false | ||
Entity File Number | 001-37629 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 26-3505687 | ||
Entity Address, Address Line One | 6330 South 3000 East, Suite 700 | ||
Entity Address, City or Town | Salt Lake City | ||
Entity Address, State or Province | UT | ||
Entity Address, Postal Zip Code | 84121 | ||
City Area Code | 800 | ||
Local Phone Number | 203-6755 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Title of 12(b) Security | Common Stock, par value $0.0001 per share | ||
Security Exchange Name | NYSE | ||
Documents Incorporated by Reference | Part III incorporates information by reference from the Registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A, not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, in connection with the Registrant’s 2020 Annual Meeting of Stockholders (the “ 2020 Proxy Statement |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 101,236 | $ 94,320 |
Short-term marketable securities | 15,584 | 58,630 |
Accounts receivable—net of allowance of $871 and $1,092 at December 31, 2019 and 2018, respectively | 38,029 | 35,514 |
Prepaid expenses | 9,809 | 13,918 |
Deferred commissions | 10,256 | 8,226 |
Other current assets | 8,211 | 2,019 |
Total current assets | 183,125 | 212,627 |
Property and equipment, net | 28,076 | 27,388 |
Right-of-use assets | 36,514 | |
Goodwill | 69,614 | 12,354 |
Intangible assets, net | 32,513 | 6,262 |
Noncurrent prepaid expenses | 4,558 | 3,516 |
Deferred commissions, net of current portion | 12,303 | 11,404 |
Other assets | 797 | 446 |
Total assets | 367,500 | 273,997 |
Current liabilities: | ||
Accounts payable | 14,619 | 3,581 |
Accrued liabilities | 11,142 | 9,809 |
Deferred rent | 1,329 | |
Lease liabilities | 6,554 | |
Deferred revenue | 145,045 | 117,298 |
Total current liabilities | 177,360 | 132,017 |
Deferred revenue, net of current portion | 2,710 | 3,372 |
Lease liabilities, net of current portion | 41,793 | |
Deferred rent, net of current portion | 10,150 | |
Other long-term liabilities | 80 | 20 |
Total liabilities | 221,943 | 145,559 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Preferred stock, par value of $0.0001 per share; 10,000 shares authorized as of December 31, 2019 and 2018; no shares issued and outstanding as of December 31, 2019 and 2018 | ||
Common stock, par value of $0.0001 per share; 200,000 shares authorized as of December 31, 2019 and 2018; 38,257 shares issued and outstanding as of December 31, 2019; 35,386 shares issued and outstanding at December 31, 2018 | 3 | 3 |
Additional paid-in capital | 493,795 | 395,865 |
Accumulated other comprehensive loss | (8) | |
Accumulated deficit | (348,241) | (267,422) |
Total stockholders’ equity | 145,557 | 128,438 |
Total liabilities and stockholders’ equity | $ 367,500 | $ 273,997 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Statement Of Financial Position [Abstract] | ||
Accounts receivable, allowance | $ 871 | $ 1,092 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 38,257,326 | 35,385,810 |
Common stock, shares outstanding | 38,257,000 | 35,386,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue | $ 258,473 | $ 209,544 | $ 160,975 |
Cost of revenue | 82,826 | 61,843 | 46,562 |
Gross profit | 175,647 | 147,701 | 114,413 |
Operating expenses: | |||
Sales and marketing | 121,643 | 97,481 | 78,726 |
Research and development | 83,526 | 59,391 | 48,293 |
General and administrative | 56,471 | 35,602 | 31,196 |
Total operating expenses | 261,640 | 192,474 | 158,215 |
Loss from operations | (85,993) | (44,773) | (43,802) |
Other income (expense): | |||
Interest income | 1,795 | 2,413 | 361 |
Interest expense | (16) | (68) | (55) |
Other income (expense), net | (225) | (698) | 257 |
Total other income, net | 1,554 | 1,647 | 563 |
Loss before income tax benefit (expense) | (84,439) | (43,126) | (43,239) |
Income tax benefit (expense) | 3,620 | (339) | 155 |
Net loss | $ (80,819) | $ (43,465) | $ (43,084) |
Net loss per common share, basic and diluted | $ (2.19) | $ (1.27) | $ (1.47) |
Weighted-average common shares used in computing basic and diluted net loss per common share attributable to common stockholders | 36,892 | 34,248 | 29,401 |
Subscription and Support | |||
Revenue | $ 236,241 | $ 188,501 | $ 144,108 |
Cost of revenue | 64,170 | 46,706 | 34,351 |
Professional Services and Other | |||
Revenue | 22,232 | 21,043 | 16,867 |
Cost of revenue | $ 18,656 | $ 15,137 | $ 12,211 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement Of Income And Comprehensive Income [Abstract] | |||
Net loss | $ (80,819) | $ (43,465) | $ (43,084) |
Other comprehensive income (loss): | |||
Net change in unrealized gains (losses) on marketable securities | 8 | (7) | 11 |
Comprehensive loss | $ (80,811) | $ (43,472) | $ (43,073) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Accumulated Deficit |
Balances at Dec. 31, 2016 | $ 25,813 | $ 3 | $ 206,442 | $ (12) | $ (180,620) |
Balances, Shares at Dec. 31, 2016 | 28,554 | ||||
Exercise of common stock options | 5,371 | 5,371 | |||
Exercise of common stock options, Shares | 1,083 | ||||
Vested restricted stock units, Shares | 475 | ||||
Purchase of ESPP shares | 5,004 | 5,004 | |||
Purchase of ESPP shares, Shares | 254 | ||||
Stock-based compensation | 15,670 | 15,670 | |||
Common stock and options issued in acquisition | 18,451 | 18,451 | |||
Common stock and options issued in acquisition, Shares | 504 | ||||
Unrealized gain (loss) on marketable securities | 11 | 11 | |||
Shares withheld for tax withholding on vesting of restricted stock | (292) | (292) | |||
Shares withheld for tax withholding on vesting of restricted stock, Shares | (10) | ||||
Net loss | (43,084) | (43,084) | |||
Balances at Dec. 31, 2017 | 26,944 | $ 3 | 250,899 | (1) | (223,957) |
Balances, Shares at Dec. 31, 2017 | 30,860 | ||||
Cumulative-effect of change in accounting policy | 253 | (253) | |||
Exercise of common stock options | 6,281 | 6,281 | |||
Exercise of common stock options, Shares | 845 | ||||
Vested restricted stock units, Shares | 609 | ||||
Purchase of ESPP shares | 6,186 | 6,186 | |||
Purchase of ESPP shares, Shares | 203 | ||||
Stock-based compensation | 23,115 | 23,115 | |||
Common stock and options issued in acquisition, Shares | 2 | ||||
Secondary offering | 109,789 | 109,789 | |||
Secondary offering, Shares | 2,875 | ||||
Unrealized gain (loss) on marketable securities | (7) | (7) | |||
Shares withheld for tax withholding on vesting of restricted stock | (405) | (405) | |||
Shares withheld for tax withholding on vesting of restricted stock, Shares | (8) | ||||
Net loss | (43,465) | (43,465) | |||
Balances at Dec. 31, 2018 | 128,438 | $ 3 | 395,865 | (8) | (267,422) |
Balances, Shares at Dec. 31, 2018 | 35,386 | ||||
Exercise of common stock options | $ 6,601 | 6,601 | |||
Exercise of common stock options, Shares | 701 | 701 | |||
Vested restricted stock units, Shares | 1,387 | ||||
Purchase of ESPP shares | $ 6,267 | 6,267 | |||
Purchase of ESPP shares, Shares | 189 | ||||
Stock-based compensation | 58,287 | 58,287 | |||
Common stock and options issued in acquisition | 30,012 | 30,012 | |||
Common stock and options issued in acquisition, Shares | 666 | ||||
Unrealized gain (loss) on marketable securities | 8 | $ 8 | |||
Shares withheld for tax withholding on vesting of restricted stock | (3,237) | (3,237) | |||
Shares withheld for tax withholding on vesting of restricted stock, Shares | (72) | ||||
Net loss | (80,819) | (80,819) | |||
Balances at Dec. 31, 2019 | $ 145,557 | $ 3 | $ 493,795 | $ (348,241) | |
Balances, Shares at Dec. 31, 2019 | 38,257 |
Consolidated Statements of St_2
Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Common stock, par value | $ 0.0001 | $ 0.0001 | |
Common Stock | |||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating Activities: | |||
Net loss | $ (80,819) | $ (43,465) | $ (43,084) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation of property and equipment | 10,642 | 8,749 | 6,187 |
Amortization of intangible assets | 9,335 | 2,786 | 572 |
Amortization of deferred financing costs | 9 | 19 | 31 |
Change in fair value of mark-to-market liabilities | (1,266) | 97 | |
Stock-based compensation | 56,512 | 22,747 | 15,670 |
Other | (656) | (437) | (17) |
Changes in assets and liabilities: | |||
Accounts receivable, net | (2,217) | (2,643) | (14,882) |
Prepaid expenses and other assets | (6,836) | (2,553) | (9,176) |
Deferred commissions | (2,679) | (1,384) | (4,990) |
Right-of-use assets | 2,716 | ||
Accounts payable and accrued liabilities | 13,039 | (2,805) | 740 |
Deferred revenue | 22,166 | 19,008 | 26,763 |
Lease liabilities | (2,362) | ||
Deferred rent | 1,342 | 992 | |
Other liabilities | 11 | (32) | |
Net cash provided by (used in) operating activities | 18,861 | 98 | (21,129) |
Investing Activities: | |||
Purchases of property and equipment | (10,243) | (11,132) | (15,750) |
Purchases of intangible assets | (310) | ||
Proceeds from sale of property and equipment | 103 | 88 | 76 |
Purchases of marketable securities | (28,259) | (113,860) | (11,085) |
Maturities of marketable securities | 63,000 | 61,600 | 29,300 |
Sale of marketable securities | 8,786 | ||
Business acquisitions, net of cash received | (54,963) | ||
Net cash provided by (used in) investing activities | (21,576) | (63,304) | 2,231 |
Financing Activities: | |||
Proceeds from common stock offerings, net of offering costs | 109,789 | ||
Proceeds from issuance of common stock from employee equity plans | 12,868 | 12,467 | 10,375 |
Shares repurchased for tax withholdings on vesting of restricted stock | (3,237) | (405) | (292) |
Payments for financing costs | (18) | (31) | |
Net cash provided by financing activities | 9,631 | 121,833 | 10,052 |
Net increase (decrease) in cash and cash equivalents | 6,916 | 58,627 | (8,846) |
Cash and cash equivalents, beginning of period | 94,320 | 35,693 | 44,539 |
Cash and cash equivalents, end of period | 101,236 | 94,320 | 35,693 |
Supplemental cash flow disclosure: | |||
Cash paid for taxes | 247 | 198 | 276 |
Non-cash investing and financing activities: | |||
Capital expenditures incurred but not yet paid | 316 | $ 373 | 274 |
Issuance of common stock for acquisitions | 30,012 | $ 18,451 | |
Consideration not yet paid in connection with the acquisition of Portfolium, net | $ 50 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Description of Business and Summary of Significant Accounting Policies | 1. Description of Business and Summary of Significant Accounting Policies Organization Instructure provides innovative applications for learning, assessment, development and engagement. We enable organizations worldwide to develop, deliver, manage and track engaging academic and employee development programs. We offer our platform through a Software-as-a-Service, or SaaS, business model. We were incorporated in the state of Delaware in September 2008. We are headquartered in Salt Lake City, Utah, and have wholly-owned subsidiaries in the United Kingdom, Australia, the Netherlands, Hong Kong, Sweden, Brazil, Mexico and Hungary. Basis of Presentation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. The accompanying consolidated financial statements include our accounts and those of our wholly-owned subsidiaries. All intercompany transactions have been eliminated in consolidation. Effective January 1, 2018, we adopted the requirements of Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers Certain prior period amounts reported in our consolidated financial statements and notes thereto have been reclassified to conform to current period presentation. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management period of benefit for deferred commissions Operating Segments We operate in a single Net Loss Per Share Attributable to Common Stockholders Basic net loss per share attributable to common stockholders is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period, less the weighted-average unvested common stock subject to repurchase or forfeiture. Diluted net loss per share attributable to common stockholders is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period. For purposes of this calculation, options to purchase common stock and common stock warrants are considered to be common stock equivalents. A reconciliation of the denominator used in the calculation of basic and diluted net loss per share is as follows (in thousands, except per share amounts): Year Ended December 31, 2019 2018 2017 *As Adjusted Numerator: Net loss $ (80,819 ) $ (43,465 ) $ (43,084 ) Denominator: Weighted-average common shares outstanding—basic 36,892 34,248 29,401 Total weighted-average common shares outstanding—basic 36,892 34,248 29,401 Dilutive effect of share equivalents resulting from stock options, unvested restricted stock awards and common stock warrants — — — Weighted-average common shares outstanding-diluted 36,892 34,248 29,401 Net loss per common share $ (2.19 ) $ (1.27 ) $ (1.47 ) For the years ended December 31, 2019, 2018 and 2017, we incurred net losses and, therefore, the effect of our outstanding options to purchase common stock, common stock warrants and restricted stock units were not included in the calculation of diluted net loss per share as the effect would be anti-dilutive. The following table contains share totals with a potentially dilutive impact (in thousands): Year Ended December 31, 2019 2018 2017 Options to purchase common stock 601 1,303 2,010 Common stock warrants — — 17 Restricted stock units 2,584 1,690 1,514 Employee stock purchase plan 14 19 20 Total 3,199 3,012 3,561 Concentration of Credit Risk, Significant Customers and International Operations Financial instruments that potentially subject us to a concentration of credit risk consist principally of cash and accounts receivable. We deposit cash with high credit quality financial institutions, which at times, may exceed federally insured amounts. We have not experienced any losses on our deposits. We perform ongoing credit evaluations of our customers’ financial condition and generally require no collateral from our customers. We review the expected collectability of accounts receivable and record an allowance for doubtful accounts receivable for amounts that we determine are not collectible. There were no customers with revenue as a percentage of total revenue exceeding 10% for the periods presented. As of December 31, 2019 and 2018, our largest customers’ outstanding net accounts receivable balance as a percentage of the total outstanding net accounts receivable balance represented 8.4% and 14.0%, respectively. There were no other customers with outstanding net accounts receivable balances as a percentage of the total outstanding net accounts receivable balance greater than 10% as of December 31, 2019 and 2018. In 2014, we began international operations. Because our long-term growth strategy involves further expansion of our sales to customers outside of the United States, our business will be susceptible to risks associated with international operations. Refer to Note 7— Geographic Data for details. Cash and Cash Equivalents We consider all short-term highly liquid investments purchased with original maturities of three months or less at the time of acquisition to be cash equivalents. Marketable Securities We hold investments in marketable securities, consisting of corporate debt securities and commercial paper. We classify our marketable securities as available-for-sale investments as we neither buy and hold securities for the purpose of selling them in the near future nor intend to hold securities to maturity. We classify our marketable securities as short term on the consolidated balance sheets for all purchased investments with contractual maturities that are less than one year as of the balance sheet date. Our marketable securities are carried at estimated fair value with any unrealized gains and losses, net of taxes, included in accumulated other comprehensive income in stockholders’ equity. Unrealized losses are charged against other income, net when a decline in fair value is determined to be other-than-temporary. We have not recorded any such impairment charge in the periods presented. We determine realized gains or losses on sale or maturity of marketable securities on a specific identification method, and record such gains or losses as other income, net. Accounts Receivable Accounts receivable are carried at the original invoiced amount less an allowance for doubtful accounts based on the probability of future collection. When management becomes aware of circumstances that may decrease the likelihood of collection, it records a specific allowance against amounts due, which reduces the receivable to the amount that management reasonably believes will be collected. For all other customers, management determines the adequacy of the allowance based on historical loss patterns, the number of days that billings are past due and an evaluation of the potential risk of loss associated with specific accounts. Account balances are written off against the allowance for doubtful accounts receivable when the potential for recovery is remote. Recoveries of receivables previously written off are recorded when payment is received. Unbilled receivable balances as of December 31, 2019 and 2018 were $2,060,000 and $6,032,000, respectively. The following is a roll-forward of our allowance for doubtful accounts (in thousands): Balance Charged to Balance at Beginning Costs or End of of Period Expenses Deductions (1) Period Allowance for Doubtful Accounts Year ended December 31, 2019 $ 1,092 $ 377 $ (598 ) $ 871 Year ended December 31, 2018 $ 318 $ 1,399 $ (625 ) $ 1,092 Year ended December 31, 2017 $ 241 $ 197 $ (120 ) $ 318 (1) Deductions include actual accounts written-off, net of recoveries and revaluations. Property and Equipment and Intangible Assets Property and equipment are stated at cost less accumulated depreciation. Expenditures that materially increase values or capacities or extend useful lives of property and equipment are capitalized. Repairs and maintenance costs that do not extend the useful life or improve the related assets are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets or over the related lease terms (if shorter). The estimated useful life of each asset category is as follows: Estimated Useful Life Computer and office equipment 2-3 years Purchased software 2-3 years Furniture and fixtures 2-5 years Capitalized software development costs 3 years Leasehold improvements and other lesser of lease term or useful life (2-10 years) Certain costs incurred to develop software applications used in the cloud-based learning, assessment , development and engagement system are capitalized and included in property and equipment, net on the balance sheets. Capitalizable costs consist of (1) certain external direct costs of materials and services incurred in developing or obtaining internal-use software; and (2) payroll and payroll-related costs for employees who are directly associated with and who devote time to the project. These costs generally consist of internal labor during configuration, coding and testing activities. Research and development costs incurred during the preliminary project stage, or costs incurred for data conversion activities, training, maintenance and general and administrative or overhead costs, are expensed as incurred. Costs that cannot be separated between the maintenance of, and relatively minor upgrades and enhancements to, internal-use software are also expensed as incurred. Costs incurred during the application development stage that significantly enhance and add new functionality to the cloud-based learning, assessment , development and engagement system are capitalized as capitalized software development costs. Capitalization begins when: (1) the preliminary project stage is complete; (2) management with the relevant authority authorizes and commits to the funding of the software project; (3) it is probable the project will be completed; (4) the software will be used to perform the functions intended; and (5) certain functional and quality standards have been met. Acquired finite-lived intangibles are amortized on a straight-line basis over the estimated useful life of the asset, which is generally five years. When there are indicators of potential impairment, we evaluate recoverability of the carrying values of property and equipment and intangible assets by comparing the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds our estimated undiscounted future net cash flows, an impairment charge is recognized based on the amount by which the carrying value of the asset exceeds the fair value of the asset. We did not incur any impairment charges during the periods presented. Leases We lease our facilities under operating leases. For leases that contain rent escalation or rent concession provisions, we record rent expense for the total rent payable during the lease term on a straight-line basis over the term of the lease. We record the difference between the rent paid and the straight-line rent as a deferred rent liability in the accompanying balance sheets. Fair Value Our short-term financial instruments include accounts receivable, accounts payable and accrued liabilities and are carried on the consolidated financial statements as of December 31, 2019 and 2018 at amounts that approximate fair value due to their short-term maturity dates. Goodwill Goodwill represents the excess cost of the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Goodwill is not subject to amortization, but is monitored annually for impairment or more frequently if there are indicators of impairment. Management considers the following potential indicators of impairment: (1) significant underperformance relative to historical or projected future operating results; (2) significant changes in our use of acquired assets or the strategy of our overall business; (3) significant negative industry or economic trends; and (4) a significant decline in our stock price for a sustained period. We operate under one reporting unit and, as a result, evaluate goodwill impairment based on our fair value as a whole. Our current year impairment test did not result in any impairment of the goodwill balance. We did not recognize an impairment charge in any of the periods presented. We have no other intangible assets with indefinite useful lives. Change in Fair-Value of Contingent Liability We remeasure the estimated carrying value of the contingent liability each quarter, with any changes in the estimated fair value recorded within general and administrative expense on the statements of operations. The fair value is determined using significant unobservable inputs with a Monte Carlo simulation model. We remeasured the contingent liability at December 31, 2018, and as of that date we had $20,000 accrued in other long-term liabilities in connection with the estimated contingent liability associated with the acquisition of Practice. During 2019, we did not observe a significant change in Practice bookings and, therefore, we wrote-off the remaining balance. Revenue Recognition We generate revenue primarily from two main sources: (1) subscription and support revenue, which is comprised of SaaS fees from customers accessing our learning, assessment and talent management systems and from customers purchasing additional support beyond the standard support that is included in the basic SaaS fees; and (2) related professional services revenue, which is comprised of training, implementation services and other types of professional services. Revenue is recognized when control of these services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. We determined revenue recognition through the following steps: • Identification of the contract, or contracts, with a customer • Identification of the performance obligations in the contract • Determination of the transaction price • Allocation of the transaction price to the performance obligations in the contract • Recognition of revenue when, or as, we satisfy a performance obligation The following describes the nature of our primary types of revenue and the revenue recognition policies and significant payment terms as they pertain to the types of transactions we enter into with our customers. Subscription and Support Subscription and support revenue is derived from fees from customers to access our learning, assessment and talent management systems and support beyond the standard support that is included with all subscriptions. The terms of our subscriptions do not provide customers the right to take possession of the software. Subscription and support revenue is generally recognized on a ratable basis over the contract term. Payments from customers are primarily due annually in advance. Professional Services and Other Professional services revenue is derived from implementation, training, and consulting services. Our professional services are typically considered distinct from the related subscription services as the promise to transfer the subscription can be fulfilled independently from the promise to deliver the professional services (i.e., customer receives standalone functionality from the subscription and the customer obtains the intended benefit of the subscription without the professional services). Professional services revenue is typically recognized over time as the services are rendered, using an efforts-expended (labor hours) input method. Implementation services also include nonrefundable upfront setup fees, which are allocated to the remaining performance obligations. Contracts with Multiple Performance Obligations Many of our contracts with customers contain multiple performance obligations. We account for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price (SSP) basis. We determine the standalone selling prices based on our overall pricing objectives by reviewing our significant pricing practices, including discounting practices, geographical locations, the size and volume of our transactions, the customer type, price lists, our pricing strategy, and historical standalone sales. Standalone selling price is analyzed on a periodic basis to identify if we have experienced significant changes in our selling prices. Deferred Commissions Sales commissions earned by our sales force, as well as related payroll taxes, are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and then amortized on a straight-line basis over a period of benefit that we have determined to be generally Deferred Revenue Deferred revenue consists of billings and payments received in advance of revenue recognition generated by our subscription and support services and professional services and other, as described above. ASC 606 introduced the concept of contract liabilities, which is substantially similar to deferred revenue under previous accounting guidance. Cost of Revenue Cost of subscription revenue consists primarily of our managed hosting provider and other third-party service providers, employee-related costs including payroll, benefits and stock-based compensation expense for our operations and customer support teams, amortization of capitalized software development costs and acquired technology, and allocated overhead costs, which we define as rent, facilities and costs related to information technology, or IT. Cost of professional services and other revenue consists primarily of personnel costs of our professional services organization, including salaries, benefits, travel, bonuses and stock-based compensation, as well as allocated overhead costs. Service Availability Warranty We warrant to our customers: (1) that commercially reasonable efforts will be made to maintain the online availability of the platform for a minimum availability in a trailing 365-day period (excluding scheduled outages, standard maintenance windows, force majeure, and outages that result from any technology issue originating from any customer or user); (2) the functionality or features of the platform may change but will not materially degrade during any paid term; and (3) that support may change but will not materially degrade during any paid term. To date, we have not experienced any significant losses under these warranties. Advertising Costs Advertising costs are expensed as incurred and are included in sales and marketing expenses. Advertising expenses totaled $12,524,000, $11,387,000, and $9,274,000 for 2019, 2018 and 2017, respectively. Stock-Based Compensation The Company accounts for all stock options and awards granted to employees and nonemployees using a fair value method. Stock-based compensation is recognized as an expense and is measured at the fair value of the award. The measurement date for employee awards is generally the date of the grant. Stock-based compensation costs are recognized as expense over the requisite service period, which is generally the vesting period for awards, on a straight-line basis for awards with only a service condition. Forfeitures are accounted for as they occur. We use the market closing price of our common stock as reported on the New York Stock Exchange for the fair value of restricted stock units (“RSUs”) granted. We use the Black-Scholes option pricing model to determine the fair value of stock options issued to our employees, as well as purchase rights issued to employees under our ESPP. The Black-Scholes option pricing model is affected by the unit price and a number of assumptions, including the award’s expected life, risk-free interest rate, the expected volatility of the underlying stock and expected dividends. These assumptions are estimated as follows: • Fair Value of Our Common Stock. We rely on the closing price of our common stock as reported by the New York Stock Exchange on the date of grant to determine the fair value of our common stock. • Risk-Free Interest Rate. We base the risk-free interest rate used in the Black-Scholes option pricing model on the implied yield available on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options. • Expected Term. We estimate the expected term for stock options using the simplified method due to the lack of historical exercise activity for our company. The simplified method calculates the expected term as the mid-point between the vesting date and the contractual expiration date of the award. For the ESPP, we use an expected term of 0.5 years to match the offering period. • Volatility. We estimate the price volatility factor based on the historical volatilities of our comparable companies as we do not have a sufficient trading history for our common stock. To determine our comparable companies, we consider public enterprise cloud-based application providers and select those that are similar to us in size, stage of life cycle, and financial leverage. We intend to continue to apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of our own common stock share price becomes available, or unless circumstances change such that the identified companies are no longer similar to us, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation. For the ESPP, we use the trading history of our own common stock to determine expected volatility. • Expected Dividend Yield. We have not paid and do not expect to pay dividends for the foreseeable future. Foreign Currency The functional currency of our foreign subsidiaries is the U.S. dollar. Monetary assets and liabilities denominated in a foreign currency are revalued into U.S. dollars at the exchange rates in effect at the balance sheet dates. Income and expense accounts are revalued on the date of the transaction using the exchange rate in effect on the transaction date. Non-monetary assets, liabilities, and equity transactions are converted at historical exchange rates in effect at the time of the transaction. Foreign currency transaction gains and losses are recorded in other income, net. During 2019, a net foreign currency transaction gain of $331,000 was recorded on the consolidated statements of operations. During 2018, a net foreign currency transaction loss of $794,000 was recorded on the consolidated statements of operations. During 2017, a net foreign currency transaction gain of $466,000 was recorded on the consolidated statements of operations. Research and Development With the exception of capitalized software development costs, research and development costs are expensed as incurred. Risks and Uncertainties We are subject to all of the risks inherent in an early stage business. These risks include, but are not limited to, a limited operating history, new and rapidly evolving markets, dependence on the development of new services, unfavorable economic and market conditions, changes in level of demand for our services, and the timing of new application introductions. If we fail to anticipate or to respond adequately to technological developments in our industry, changes in customer or supplier requirements, or changes in regulatory requirements or industry standards, or any significant delays in the development or introduction of services, our business could be harmed. Income Taxes Deferred tax assets and liabilities are accounted for using the asset and liability method and represent the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates that are expected to be in effect when these temporary differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized. At December 31, 2019 and 2018, the majority of our deferred tax assets were offset by a valuation allowance. We recognize interest and penalties as a component of income tax expense. Recent Accounting Pronouncements Adopted accounting pronouncements In October 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory”. This standard requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs, rather than when the asset has been sold to an outside party. The new standard must be adopted using a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings in the period of adoption. This standard is effective for annual reporting periods beginning after December 15, 2017. We adopted the new standard as of January 1, 2018 and it did not have a material impact on our consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“Topic 606”). Topic 606 supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) Topic 605, Revenue Recognition (“Topic 605”), and requires the recognition of revenue as promised goods or services are transferred to customers in an amount that reflects the consideration which the entity expects to be entitled to in exchange for those goods or services. Topic 606 also includes Subtopic 340-40, Other Assets and Deferred Costs - Contracts with Customers, which requires the deferral of incremental costs of obtaining a contract with a customer. Collectively, we refer to Topic 606 and Subtopic 340-40 as the “new standard”. We adopted the new standard as of January 1, 2018, utilizing the full retrospective method of transition. As a result, we recognized the cumulative effect of initially applying the new standard as an adjustment to the opening balance of equity on January 1, 2016. We have changed our accounting policy for revenue recognition as detailed above. The details of the significant changes and quantitative impact of the changes are disclosed below. We applied Topic 606 retrospectively using the following practical expedients in paragraph ASC 606-10-65-1(f). We do not disclose the amount of consideration allocated to the remaining performance obligations or an explanation of when we expect to recognize that amount as revenue for all reporting periods presented before the date of the initial application – i.e. January 1, 2018. Further, we do not retrospectively restate contracts modified before the beginning of the earliest reporting period presented but reflect the aggregate effect of all modifications that occur before the beginning of the earliest period presented. The primary impact of adopting the new standard related to the deferral of incremental commission costs to obtain customer contracts and the removal of the contingent revenue limitation. We previously expensed sales commission costs as incurred. Under the new standard, we capitalize and amortize these costs over a period of benefit that we have determined to be generally four years. We were also previously limiting the amount of revenue recognized for delivered elements to the amount that was not contingent on the future delivery of products or services, or subject to our future performance. Under the new standard, there is no requirement to limit the allocated transaction price to non-contingent amounts, therefore, we record unbilled revenue when transferred services are more than amounts billable to customers. In February 2016, the FASB issued Topic 842, which establishes a comprehensive new lease accounting model. Under the new guidance, at the commencement date, lessees are required to recognize a lease liability with a corresponding right-of-use (“ROU”) asset. On January 1, 2019, the Company adopted Topic 842 using the modified retrospective approach with the effective date as of the date of initial application. Consequently, results for the year ended December 31, 2019 are presented under Topic 842. No prior period amounts were adjusted and continue to be reported in accordance with previous lease guidance, ASC Topic 840, Leases. The Company elected to apply the package of practical expedients to not reassess under the new standard prior conclusions about lease identification, lease classification, and initial direct costs in relation to its leases in effect as of January 1, 2019. The Company also elected the practical expedient allowing the use of hindsight in determining the lease term and assessing impairment of right-of-use assets based on all facts and circumstances through the effective date of the new standard. Adoption of the new standard resulted in recording operating lease right-of-use assets and operating lease liabilities of approximately $ 34,726,000 and $ 46,205,000 , respectively, in our consolidated balance sheets as of January 1, 2019. Adoption of the standard did not have an impact on the Company’s beginning accumulated deficit, results from operations or cash flows. Effective January 1, 2019, the Company adopted ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of current stock compensation recognition standards to include share-based payment transactions for acquiring goods and services from nonemployees. The adoption of this guidance did not have a material impact on our consolidated financial statements and related notes. Effective January 1, 2019, the Company early adopted ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”) using a prospective approach. This guidance aligns the accounting for implementation costs related to a hosting arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software. on our consolidated financial statements and related notes. Impacts on Financial Statements Select audited consolidated statement of operations line items, which reflect the adoption of Topic 606, are as follows (in thousands): Year ended December 31, 2017 As previously reported Adjustments As adjusted Revenue: Subscription and support $ 139,925 $ 4,183 $ 144,108 Professional services and other 18,881 (2,014 ) 16,867 Total revenue 158,806 2,169 160,975 Cost of revenue: Professional services and other 12,026 185 12,211 Gross profit 112,429 1,984 114,413 Operating expenses: Sales and marketing 83,716 (4,990 ) 78,726 Loss before income tax benefit (expense) (50,213 ) 6,974 (43,239 ) Income tax expense 391 (236 ) 155 Net loss (49,822 ) 6,738 (43,084 ) Net loss per common share, basic and diluted (1.69 ) 0.22 (1.47 ) Select audited consolidated statement of cash flows line items, which reflect the adoption of Topic 606, are as follows (in thousands): Year ended December 31, 2017 As previously reported Adjustments As Adjusted Cash flows from operating activities: Net loss $ (49,822 ) $ 6,738 $ (43,084 ) Accounts receivable, net (12,830 ) (2,052 ) (14,882 ) Prepaid expenses and other assets (9,599 ) 423 (9,176 ) Deferred commissions — (4,990 ) (4,990 ) Deferred revenue 26,882 (119 ) 26,763 Net cash used in operating activities (21,129 ) — (21,129 ) Issued accounting pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses, a new standard to replace the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The new standard will require the use of a forward-looking expected credit loss model for accounts receivables, loans and other financial instruments. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The standard will be effective for us beginning January 1, 2020. We have completed our analysis of the impact of this guidance and the adoption of this standard will not have a m |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property Plant And Equipment [Abstract] | |
Property and Equipment | 2. Property and Equipment Property and equipment consisted of the following (in thousands): December 31, 2019 2018 Computer and office equipment $ 7,503 $ 6,204 Purchased software 1,071 1,071 Capitalized software development costs 27,420 22,181 Furniture and fixtures 5,184 4,688 Leasehold improvements and other 18,708 15,632 59,886 49,776 Less accumulated depreciation and amortization (31,810 ) (22,388 ) Total $ 28,076 $ 27,388 Accumulated amortization for capitalized software development costs was $14,314,000 and $9,035,000 at December 31, 2019 and 2018, respectively. Amortization expense for capitalized software development costs for the years ended December 31, 2019, 2018 and 2017 was $6,021,000, $4,563,000 and $2,486,000, respectively, and is recorded within subscription and support cost of revenue on the consolidated statements of operations. |
Acquisition
Acquisition | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Acquisition | 3. Acquisition On February 21, 2019 and April 5, 2019, we acquired all outstanding shares of Portfolium and MasteryConnect, respectively, for the purpose of enhancing our learning management system and human capital management offerings. We have included the operating results of the business combinations in our consolidated financial statements since the date of the acquisitions. The acquisitions did not have a material effect on our revenue or earnings in the consolidated statements of operations for the reporting periods presented. The following table summarizes the estimated fair values of the consideration transferred, assets acquired and liabilities assumed as of the date of the Portfolium acquisition (in thousands): Consideration transferred Cash paid (2) $ 25,552 Common stock 17,133 Fair value of assumed Portfolium awards attributable to pre-combination services 715 Total purchase consideration $ 43,400 Identifiable assets acquired Cash $ 604 Accounts receivable 273 Other assets 31 Intangible assets: developed technology 10,016 Intangible assets: customer relationships 8,560 Intangible assets: trade name 2,710 Total assets acquired $ 22,194 Liabilities assumed Accounts payable and accrued liabilities $ 115 Deferred revenue 1,535 Deferred tax liability, net (1) 3,911 Total liabilities assumed $ 5,561 Goodwill (1) (2) 26,767 Total purchase consideration $ 43,400 (1) During the second quarter of 2019, an adjustment of $1,199,000 was made to the provisional deferred tax liability. During the fourth quarter of 2019, an offsetting adjustment of $280,000 was made to the deferred tax liability, with a corresponding reduction to goodwill, upon finalizing and filing the Portfolium tax return. (2 ) During the third quarter of 2019, we recorded a $330,000 reduction to the provisional cash consideration, with a corresponding reduction to goodwill, as a result of finalizing a working capital adjustment. The following table summarizes the estimated fair values of the consideration transferred, assets acquired and liabilities assumed as of the date of the MasteryConnect acquisition (in thousands): Consideration transferred Cash paid $ 32,462 Common stock 12,163 Total purchase consideration $ 44,625 Identifiable assets acquired Cash $ 2,396 Accounts receivable 495 Other assets 1,919 Intangible assets: developed technology 9,191 Intangible assets: customer relationships 4,453 Intangible assets: trade name 656 Total assets acquired $ 19,110 Liabilities assumed Accounts payable and accrued liabilities $ 936 Deferred revenue 3,384 Deferred tax liability, net (1) 659 Total liabilities assumed $ 4,979 Goodwill (1) 30,494 Total purchase consideration $ 44,625 (1) During the fourth quarter of 2019, an adjustment of $57,000 was made to the deferred tax liability, with a corresponding reduction to goodwill, upon finalizing and filing the MasteryConnect tax return. The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill, none of which is expected to be deductible for tax purposes. The goodwill generated from these transactions is attributable to the expected synergies to be achieved upon consummation of the business combinations and the assembled workforce values. The fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed are based on management’s estimates and assumptions. Developed technology represents the estimated fair value of the acquired existing technology and is being amortized over its estimated remaining useful life of five years. Amortization of developed technology is included in subscription and support cost of revenue expenses in the accompanying consolidated statements of operations. Customer relationships represent the estimated fair value of the acquired customer bases and are amortized over the estimated remaining useful life of four years. The trade names acquired are amortized over the estimated remaining useful life of four years. Amortization of customer relationships and trade names is included in sales and marketing expenses in the accompanying consolidated statements of operations. The net deferred tax liability from these acquisitions provided a source of additional income to support the realizability of our pre-existing deferred tax assets and as a result, we released a portion of our valuation allowance. This resulted in an income tax benefit of $4,570,000 and an increase to goodwill of the same amount The unaudited pro forma financial information in the table below summarizes the combined results of operations for Instructure, MasteryConnect and Portfolium as if the companies were combined as of January 1, 2018. The unaudited pro forma financial information as presented below is for illustrative purposes and does not purport to represent what the results of operations would actually have been if the business combinations occurred as of the date indicated or what the results would be for any future periods. Year Ended December 31, 2019 2018 (in thousands) Pro forma revenue $ 261,957 $ 223,325 Pro forma net loss (1) (88,519 ) (55,731 ) Pro forma net loss per common share, basic and diluted $ (2.40 ) $ (1.63 ) (1) Pro forma net loss excludes the deferred income tax benefit from business combination in the amount of $4,570,000 for the year ended December 31, 2019. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 4. Goodwill and Intangible Assets Goodwill was $69,614,000 and $12,354,000 as of December 31, 2019 and 2018, respectively. Intangible assets consisted of the following (in thousands): Weighted-Average Remaining December 31, Useful Life 2019 2018 Domain names 0 Months $ 1,268 $ 1,268 Trademarks 0 Months 120 120 Software 3 Months 620 620 Capitalized learning content 22 Months 400 400 Trade names 29 Months 3,686 320 Developed technology 41 Months 24,527 5,320 Customer relationships 29 Months 15,923 2,910 Accumulated amortization (14,031 ) (4,696 ) Total $ 32,513 $ 6,262 Amortization expense for intangible assets was $9,335,000, $2,786,000 and $572,000 for the years ended December 31, 2019, 2018, and 2017, respectively. Amortization expense for capitalized learning content and developed technology is recorded within cost of revenue on the consolidated statements of operations. Based on the recorded intangible assets at December 31, 2019, estimated amortization expense is expected to be as follows (in thousands): Amortization Years Ending December 31, Expense 2020 $ 10,322 2021 9,186 2022 7,936 2023 4,446 2024 623 Total $ 32,513 |
Marketable Securities
Marketable Securities | 12 Months Ended |
Dec. 31, 2019 | |
Investments Debt And Equity Securities [Abstract] | |
Marketable Securities | 5. Marketable Securities Our investment policy is consistent with the definition of available-for-sale securities. We do not buy and hold securities principally for the purpose of selling them in the near future nor do we intend to hold securities to maturity. Rather, our policy is focused on the preservation of capital, liquidity and return. From time to time, we may sell certain securities but the objectives are generally not to generate profits on short-term differences in price. The following table summarizes, by major security type, our assets that are measured at fair value on a recurring basis (in thousands). December 31, 2019 Amortized Gross Unrealized Gross Unrealized Estimated Fair Cost Gains Losses Value Corporate debt securities $ 11,585 $ 1 $ — $ 11,586 Government treasury bills 3,999 — (1 ) 3,998 $ 15,584 $ 1 $ (1 ) $ 15,584 December 31, 2018 Amortized Gross Unrealized Gross Unrealized Estimated Fair Cost Gains Losses Value Corporate debt securities $ 31,977 $ 3 $ (7 ) $ 31,973 Government treasury bills 26,661 — (5 ) 26,656 $ 58,638 $ 3 $ (12 ) $ 58,629 There were no gross realized gains or losses from the sale or maturity of marketable securities during 2019, 2018 and 2017. During 2019, 2018 and 2017, we recognized gross interest income on securities of $621,000, $727,000 and $179,000, respectively. Net accretion income was $480,000, $696,000 and $39,000 during 2019, 2018 and 2017, respectively, and was reported within interest income on the consolidated statements of operations. The estimated fair value of investments by contractual maturity is as follows (in thousands): December 31, 2019 2018 Due within one year $ 15,584 $ 58,629 Total $ 15,584 $ 58,629 |
Credit Facility
Credit Facility | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Credit Facility | 6. Credit Facility In November 2012, we entered into a loan and security agreement with a financial institution, or the credit facility, allowing us to incur revolver borrowings of up to $7.0 million, or such lesser amount equal to a percentage of our monthly contracted recurring revenue. Interest on borrowings accrued at a rate equal to the prime rate plus 1.25% to 3.75%, with the exact interest rate determined by reference to a specified operating metric. Accrued interest is payable monthly on the first day of each month with all outstanding borrowings payable on the maturity date. In addition to an upfront facility fee, we are obligated to pay the lender a fee, payable quarterly in arrears, in an amount equal to 0.25% of the average unused portion of the available borrowings. The credit facility contains customary conditions to borrowing, events of default and covenants, including covenants that restrict our ability to dispose of assets, change our business, merge with or acquire other entities, incur indebtedness, incur encumbrances, make distributions to holders of our capital stock, make investments or engage in transactions with our affiliates. The agreement also includes a financial covenant requiring the achievement of minimum bookings on a trailing three-month basis, tested monthly. During the continuance of an event of default, SVB may accelerate amounts outstanding, terminate the credit facility, and foreclose on the collateral. Amounts borrowed under the credit facility are secured by a first priority security interest in substantially all of our assets other than intellectual property and more than 65% of the capital stock of any of our foreign subsidiaries. In June 2017, we entered into a second amended and restated loan and security agreement for a period of 12 months. The aggregate revolver borrowings were $15.0 million (subject to increase to $35.0 million, based on the borrowings base calculation) through its maturity date in June 2018 In June 2018, we entered into a second amendment to the second amended and restated loan and security agreement to extend the maturity date for a period of 12 months. The aggregate revolver borrowings are $5.0 million (subject to increase to $35.0 million, based on the borrowing base calculation) so long as we are in compliance with all terms and conditions under the credit facility. Including a minimum adjusted quick ratio that is measured each quarter. In June 2019, we entered into a third amendment to the second amended and restated loan and security agreement to extend the maturity date for a period of 12 months. The agreement provides for up to $5.0 million (subject to increase to $35.0 million, based on the borrowing base calculation) so long as we are in compliance with all terms and conditions under the credit facility. Availability is subject to a formula based upon a certain adjusted quick ratio. Advances under the credit facility accrue interest at a floating per year rate equal to the prime rate plus 0.5%. During the continuance of an event of default, the lender may accelerate amounts outstanding, terminate the credit facility, and foreclose on the collateral. |
Geographic Data and Revenue
Geographic Data and Revenue | 12 Months Ended |
Dec. 31, 2019 | |
Geographic Areas Revenues From External Customers [Abstract] | |
Geographic Data and Revenue | 7. Geographic Data and Revenue We have one operating segment, which is our cloud-based learning, assessment, development and engagement systems. Revenue by geographic region, based on the physical location of the customer, is (in thousands): Year Ended December 31, 2019 2018 2017 *As Adjusted United States $ 206,183 $ 169,643 $ 137,563 Foreign 52,290 39,901 23,412 Total revenue $ 258,473 $ 209,544 $ 160,975 Percentage of revenue generated outside of the United States 20 % 19 % 15 % * See Note 1 for a summary of adjustments Deferred Revenue and Performance Obligations During the year ended December 31, 2019, 45% to 55% of revenue recognized was included in our deferred revenue balance at the beginning of the period. Transaction Price Allocated to the Remaining Performance Obligations As of December 31, 2019, approximately $505 million of revenue is expected to be recognized from remaining performance obligations. We expect to recognize revenue on approximately 74% of these remaining performance obligations over the next 24 months, with the balance recognized thereafter. |
Deferred Commissions
Deferred Commissions | 12 Months Ended |
Dec. 31, 2019 | |
Deferred Costs [Abstract] | |
Deferred Commissions | 8. Deferred Commissions Deferred commissions primarily consist of sales commissions that are capitalized as incremental contract origination costs and were $22,559,000 and $19,630,000 as of December 31, 2019 and 2018, respectively. For the years ended December 31, 2019, 2018 and 2017, amortization expense for deferred commissions was $11,919,000, $10,088,000 and $7,231,000, respectively, and there was no impairment of deferred commissions during these periods. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders Equity Note [Abstract] | |
Stockholders' Equity | 9. Stockholders’ Equity Common Stock We had 200,000,000 shares of $0.0001 par value common stock authorized as of December 31, 2019 and 2018. There were 38,257,326 and 35,385,810 common shares issued at December 31, 2019 and 2018, respectively. There were no shares of common stock held in treasury at December 31, 2019 and 2018. Each share of common stock has the right to one vote on all matters submitted to a vote of stockholders. The holders of common stock are also entitled to receive dividends whenever funds are legally available and if declared by the board of directors, subject to prior rights of holders of all classes of stock outstanding having priority rights as to dividends. No dividends have been declared or paid on the common stock through December 31, 2019. Common Stock Warrants In November 2012, we issued a warrant to purchase 70,000 shares of common stock in connection with the credit facility. The warrant was fully exercisable with a ten-year In April 2014, we issued the lender a second warrant to purchase up to 33,332 shares of common stock in connection with an amendment of our credit facility at an exercise price of $4.47 per share, of which 16,666 were exercisable without contingency. The fair value of the warrant on the date of grant was $58,000 and was recorded as deferred financing costs and recognized as interest expense over the term of the credit facility. On February 2, 2016, warrants for 86,666 shares were exercised. At the lender’s request, we withheld 8,260 shares to cover the warrant exercise costs and issued 78,406 shares. In connection with the exercise of the warrant, the warrant liability was marked to market as of the settlement date and a portion of the warrant liability equal to $244,000 was reversed and recorded as additional paid-in capital. In March 2018, the remaining outstanding warrants to purchase shares of common stock were cancelled due to the Company renegotiating the terms of the restated loan and security agreement with the credit facility. There was an insignificant gain related to the extinguishment of the common stock warrant liability which was recognized in other income (expense) on the consolidated statements of operations for the year ended December 31, 2018. Preferred Stock O ur amended and restated certificate of incorporation authorizes shares of undesignated preferred stock. As of December 31, 2019 and 2018, we had 10,000,000 shares of $0.0001 par value preferred stock authorized, of which no shares were issued or outstanding at December 31, 2019 and 2018. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2019 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation | 10. Stock-Based Compensation The 2010 Equity Incentive Plan (the “2010 Plan”) was terminated in connection with our IPO, and accordingly no shares are available for issuance under the 2010 Plan. However, any outstanding options granted under the 2010 Plan will remain outstanding, subject to the terms of the 2010 Plan and stock options agreements, until such outstanding options are exercised or until they terminate or expire by their terms. The 2010 Plan provided for the grant of incentive stock options, nonqualified options, stock appreciation rights, and shares of restricted stock to our employees, officers, directors and outside consultants. As of December 31, 2019, 308,395 options to purchase common stock remained outstanding under the 2010 Plan. In August 2015, our board of directors adopted the 2015 Equity Inventive Plan (the “2015 Plan”) and our stockholders approved the 2015 Plan in October 2015. The 2015 Plan became effective in connection with the IPO and provides for the grant of incentive stock options, nonqualified options, restricted stock units, stock appreciation rights, and shares of restricted stock. As of December 31, 2019, there were 7,491,786 shares of common stock authorized under the 2015 Plan. The 2015 Plan also provides that the number of shares reserved and available for issuance under the plan automatically increases each January 1, beginning on January 1, 2016 and continuing through and including January 1, 2025, by 4.5% of the total number of shares of our capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by our board of directors. This number is subject to adjustment in the event of a stock split, stock dividend or other change in our capital structure. As of December 31, 2019, 2,583,736 RSUs remained outstanding under the 2015 Plan and 1,863,789 shares remaining for future grants. As of December 31, 2019, there were options to purchase 266,330 shares of common stock outstanding under the 2015 Plan. As part of our acquisition of Practice, we assumed the Practice 2014 Plan. No shares are available for issuance under the Practice 2014 Plan; however, any outstanding options granted under the Practice 2014 Plan will remain outstanding and subject to the terms of that plan until exercised, terminated or expired by their terms. As of December 31, 2019, options to purchase 381 shares of common stock remained outstanding under the Practice 2014 Plan. Additionally, as part of our acquisition of Portfolium, we assumed the Portfolium 2014 Plan The board of directors determines the terms of each grant. Generally, options have a vesting period ranging from one to four years. Stock options have a ten-year the market closing price of our common stock as reported on the New York Stock Exchange on the date of grant. In August 2015, our board of directors adopted the 2015 Employee Stock Purchase Plan (the “ESPP”). Our stockholders approved the ESPP in October 2015, which became effective on the date of the IPO. A total of 333,333 shares of our common stock were initially reserved for issuance under the ESPP. The number of shares reserved for issuance will increase automatically each year, beginning January 1, 2016 through and including January 1, 2025 by the lesser of 1% of the total number of shares of our common stock outstanding on December 31 of the preceding calendar year; 333,333 shares of common stock; or such lesser number as determined by our board of directors. As of December 31, 2019, there were 1,533,205 shares authorized under the ESPP. The plan allows eligible employees to purchase shares of our common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. Our board of directors approves the ESPP offerings. Each offering need not be identical, but may not exceed 27 months and may specify one or more shorter purchase periods within the offering. On each purchase date, eligible employees will purchase our stock at a price per share equal to 85% of the lesser of (1) the fair market value of our stock on the offering date or (2) the fair market value of our stock on the purchase date. During the year ended December 31, 2019, we issued 189,038 shares under the ESPP, with a weighted-average purchase price per share of $33.15. Total cash proceeds from the purchase of shares under the 2015 ESPP in 2019 was $6,316,955. As of December 31, 2019, 602,094 shares are reserved for future issuance under the ESPP. The following table summarizes the assumptions relating to our stock options and ESPP purchase rights used in a Black Scholes option pricing model Year Ended December 31, 2019 2018 2017 Employee Stock Options Dividend yield None None None Volatility 44.24% 46.02%—46.57% 62.95%—63.10% Risk-free interest rate 2.51% 2.50%—2.84% 2.12%—2.30% Expected life (years) 5.1 6.1 6.1—6.2 Fair value of common stock $42.78 $16.39—$20.57 $12.93—$13.37 Employee Stock Purchase Plan Dividend yield None None None Volatility 29.69%—45.46% 33.94%—45.46% 25.08%—29.89% Risk-free interest rate 1.62%—2.38% 2.1%—2.38% 1.07%—1.45% Expected life (years) 0.5 0.5 0.5 Fair value of common stock $38.14—$52.52 $38.14—$42.65 $27.00—$33.90 The following two tables show stock-based compensation expense by award type and where the stock-based compensation expense was recorded in our consolidated statements of operations (in thousands): Year Ended December 31, 2019 2018 2017 Options $ 1,997 $ 2,867 $ 3,806 Restricted stock units 53,991 17,560 9,969 Employee stock purchase plan 524 2,320 1,895 Total stock-based compensation $ 56,512 $ 22,747 $ 15,670 Year Ended December 31, 2019 2018 2017 Subscription and support cost of revenue $ 1,769 $ 1,235 $ 762 Professional services and other cost of revenue 2,111 975 596 Sales and marketing 15,098 6,022 4,331 Research and development 19,550 8,338 6,023 General and administrative 17,984 6,177 3,958 Total stock-based compensation $ 56,512 $ 22,747 $ 15,670 The following table summarizes the stock option activity for the year ended December 31, 2019 (in thousands, except per share amounts): Weighted- Weighted- Average Shares Average Remaining Aggregate Underlying Exercise Life Intrinsic Options Price (in years) Value Outstanding at January 1, 2019 1,303 $ 14.09 6.5 $ 30,552 Granted 41 3.54 Exercised (701 ) 9.42 Forfeited or cancelled (42 ) 21.45 Outstanding at December 31, 2019 601 18.25 6.2 17,992 Vested and expected to vest—December 31, 2019 601 18.25 6.2 17,992 Exercisable at December 31, 2019 442 14.01 5.6 15,130 The follow table summarizes the activity of our unvested stock options for the year ended December 31, 2019 (in thousands, except per share amounts): Weighted- Average Shares Grant Date Underlying Fair Value Options Per Share Unvested at January 1, 2019 266 $ 16.89 Granted 41 21.27 Vested (113 ) 20.88 Forfeited (35 ) 12.87 Unvested at December 31, 2019 159 17.92 The weighted-average grant-date fair value of each option granted during 2019, 2018 and 2017 was $21.27, $34.72 and $21.83, respectively. The total intrinsic value of options exercised was $25,036,000, $27,546,000, and $25,947,000 during 2019, 2018 and 2017, respectively. The total fair value of options vested during 2019, 2018 and 2017 was $2,380,000, $2,779,000, and $4,254,000, respectively. As of December 31, 2019 and 2018, we had $2,672,000 and $4,276,000, respectively, of unrecognized stock-based compensation costs related to non-vested options that are expected to be recognized over a weighted-average period of 2.1 years and 2.7 years, respectively. As of December 31, 2019 and 2018, we had $873,000 and $1,188,000 of unrecognized stock-based compensation expense related to our ESPP that is expected to be recognized over the remaining term of the current offering period through May 31, 2020. RSUs vest upon achievement of their respective service conditions. As soon as practicable following each vesting date, we will issue to the holder of the RSUs the number of shares of common stock equal to the aggregate number of RSUs that have vested. The The activity for RSUs for the year ended December 31, 2019 is as follows (in thousands, except per share amounts): RSUs Outstanding Weighted- Average Grant Date Fair Shares Value Per Share Unvested and outstanding at January 1, 2019 1,690 $ 32.87 Granted 2,706 42.59 Vested (1,388 ) 36.70 Cancelled (424 ) 36.71 Unvested and outstanding at December 31, 2019 2,584 40.38 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 11. Income Taxes Loss before provision for income taxes was as follows: Year Ended December 31, 2019 2018 2017 *As Adjusted (in thousands) United States $ (82,751 ) $ (38,205 ) $ (35,176 ) Foreign (1,688 ) (4,921 ) (8,063 ) Total $ (84,439 ) $ (43,126 ) $ (43,239 ) The components of the provision (benefit) for income taxes were as follows: Year Ended December 31, 2019 2018 2017 *As Adjusted (in thousands) Current: Federal $ — $ — $ — State 84 35 27 Foreign 771 192 215 Total 855 227 242 Deferred: Federal (4,560 ) 6 (632 ) State 1 2 (6 ) Foreign 84 104 241 Total (4,475 ) 112 (397 ) Provision (benefit) for income taxes $ (3,620 ) $ 339 $ (155 ) The following reconciles the differences between income taxes computed at the federal statutory rate of 21% and the provision for income taxes: Year Ended December 31, 2019 2018 2017 *As Adjusted (in thousands) Expected income tax benefit at the federal statutory rate $ (17,732 ) $ (9,056 ) $ (14,700 ) State tax net of federal benefit (7,011 ) (4,001 ) (3,909 ) Stock-based compensation (4,485 ) (4,426 ) (10,202 ) Stock warrant liability (26 ) 32 Difference in foreign tax rates 2,336 (589 ) 1,152 Research and development credits (3,079 ) (2,236 ) (1,636 ) Change in valuation allowance 25,798 20,656 6,124 Change in tax rate — 22,721 Other 553 17 263 Income tax provision (benefit) $ (3,620 ) $ 339 $ (155 ) Deferred Tax Assets and Liabilities Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities were as follows: Year Ended December 31, 2019 2018 2017 *As Adjusted (in thousands) Deferred tax assets: Net operating loss carryforwards $ 111,031 $ 78,356 $ 61,954 Research and development credits 10,838 7,075 4,211 Accruals and reserves 1,425 2,644 1,558 Depreciation and amortization 203 847 453 Lease liability 12,852 — — Stock-based compensation 2,783 2,377 1,986 Total deferred tax assets 139,132 91,299 70,162 Deferred tax liabilities: Depreciation and amortization (10,087 ) (1,697 ) (2,351 ) Deferred commissions (4,793 ) (5,159 ) (4,738 ) Right of use asset (9,671 ) — — Capitalized costs (3,530 ) (3,568 ) (2,743 ) Total deferred tax liabilities (28,081 ) (10,424 ) (9,832 ) Valuation allowance (111,691 ) (81,421 ) (60,765 ) Net deferred tax assets $ (640 ) $ (546 ) $ (435 ) At December 31, 2019, we had $111,031,000 in tax-effected federal, state and foreign net operating loss carryforwards that, if unused, begin expiring in 2020. Additionally, at December 31, 2019, we had $17,577,000 in income tax credits, consisting primarily of federal and state research and development tax credits. These tax credits, if unused, begin expiring in 2024. We review all available evidence to evaluate our recovery of deferred tax assets, including our recent history of accumulated losses in all tax jurisdictions over the most recent three years as well as our ability to generate income in future periods. We have provided a valuation allowance against our U.S. net deferred tax assets as it is more likely than not that these assets will not be realized given the nature of the assets and the likelihood of future utilization. The valuation allowance increased by $25,798,000 and $20,656,000 in 2019 and 2018, respectively, due to the increase in the deferred tax assets primarily due to the increase in the net operating loss carryforwards. U.S. income taxes on the undistributed earnings of our non-U.S. subsidiaries have not been provided for as we currently plan to indefinitely reinvest these amounts and have the ability to do so. Cumulative undistributed foreign earnings were not material at December 31, 2019 and December 31, 2018. We have federal net operating loss carryforwards of $393,602,000 and $262,702,000 at December 31, 2019 and 2018, respectively, which expire at various dates through 2040. We have federal research and development credit carryforwards of $13,270,000 at December 31, 2019 that expire at various dates through 2040. We also have state research and investment credit carryforwards of $4,300,000 that expire at various dates through 2034. The Tax Cuts and Jobs Act was enacted on December 22, 2017 and the Company has evaluated its impact. The Act reduces the U.S. federal corporate tax rate from 35 The Company recorded a revaluation of our deferred tax assets and liabilities as of December 31, 2017, at the new federal rate of 21 % , based upon balances in existence at the date of enactment. The provisional amount recorded related to the remeasurement of our deferred tax balance was $ 24,762,000 with an equal offset to valuation allowance. We have now concluded our evaluation of the tax effects of the Tax Cuts and Jobs Act and determined that no change to the provisional amount previously recorded is necessary. The one-time transition tax is based on our total post-1986 earnings and profits (E&P) that we previously deferred from U.S. income taxes. We have not booked an amount for the one-time transition tax liability because the Company is currently in an overall foreign loss position for E&P purposes. No additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax, or any additional outside basis difference inherent in these entities, as these amounts continue to be indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to any remaining undistributed foreign earnings not subject to the transition tax and additional outside basis difference in these entities is not practicable. Uncertain Tax Positions We account for uncertainty in income taxes using a two-step process. We first determine whether it is more likely than not that a tax position will be sustained upon examination by the tax authority, including resolutions of any related appeals or litigation processes, based on technical merit. If a tax position meets the more-likely-than-not recognition threshold it is then measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The following summarizes activity related to unrecognized tax benefits: Year Ended December 31, 2019 2018 2017 *As Adjusted (in thousands) Unrecognized benefit—beginning of the year $ 4,027 $ 2,267 $ 1,091 Gross increases (decreases)—current period positions 2,125 1,760 1,176 Unrecognized benefit—end of period $ 6,152 $ 4,027 $ 2,267 All of the unrecognized tax benefits decrease deferred tax assets with a corresponding decrease to the valuation allowance. None of the unrecognized tax benefits would affect our effective tax rate if recognized in the future. We have elected to recognize interest and penalties related to uncertain tax positions as a component of income tax expense. No interest or penalties have been recorded through December 31, 2019. We do not expect any significant change in our unrecognized tax benefits within the next 12 months. We file tax returns in the United States, the United Kingdom, Australia, the Netherlands, Hong Kong, Sweden, Hungary, Mexico, Brazil, China and various state jurisdictions. All of our tax years remain open to examination by major taxing jurisdictions to which we are subject, as carryforward attributes generated in past years may still be adjusted upon examination by the Internal Revenue Service or state and foreign tax authorities if they have or will be used in future periods. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | 12. Fair Value of Financial Instruments 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: Observable market based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs that are not corroborated by market data. There were no transfers between Level 1 and Level 2 of the fair value measurement hierarchy during 2019 and 2018. Assets and liabilities measured at fair value on a recurring basis as of December 31, 2019, were as follows (in thousands): December 31, 2019 Level 1 Level 2 Level 3 Total Assets: Money market funds $ 63,534 $ — $ — $ 63,534 Corporate debt securities — 11,586 — 11,586 U.S. Treasury bills 3,998 — — 3,998 Total assets $ 67,532 $ 11,586 $ — $ 79,118 Assets and liabilities measured at fair value on a recurring basis as of December 31, 2018, were as follows (in thousands): December 31, 2018 Level 1 Level 2 Level 3 Total Assets: Money market funds $ 32,458 $ — $ — $ 32,458 Corporate debt securities — 31,973 — 31,973 U.S. Treasury bills 26,656 — — 26,656 Total assets $ 59,114 $ 31,973 $ — $ 91,087 Liabilities: Contingent liability — — 20 20 Total liabilities $ — $ — $ 20 $ 20 The carrying amount of our cash, receivables, and payables approximates fair value because of the short-term nature of these items. The following table sets forth a summary of the change in fair value adjustments for liabilities that are required to be marked-to-market. The common stock warrants were cancelled in March 2018, and the gain related to the extinguishment of the common stock warrant liability was recognized in other income (expense) on the consolidated statements of operations. The change in fair value of the contingent liability was recognized in general and administrative expense on the consolidated statements of operations. The following balance is measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands): Fair value Measurements Using Significant Unobservable Inputs (Level 3) Balance at January 1, 2018 $ 1,286 Loss related to change in fair value warrant liability (122 ) Initial estimate of fair value of contingent liability (1,144 ) Balance at December 31, 2018 $ 20 Change in fair value of contingent liability (20 ) Balance at December 31, 2019 $ — We have classified our liability for contingent consideration relating to our acquisition of Practice, which we closed in November 2017, within Level 3 of the fair value hierarchy because the fair value is determined using the Monte Carlo simulation model and significant unobservable inputs, including forecasted net bookings attainment. During 2019, we did not observe a significant change in Practice bookings and, therefore, we wrote-off the remaining balance. Fair value is a market-based measurement that should be determined based on the assumptions that market participants would use in pricing an asset or liability. The hierarchy level assigned to each security in our marketable securities portfolio and cash equivalents is based on our assessment of the transparency and reliability of the inputs used in the valuation of such instrument at the measurement date. The fair value of cash equivalents included in the Level 1 category is based on quoted prices that are readily and regularly available in an active market. The fair value of the marketable securities included in the Level 2 category is based on observable inputs, such as quoted prices for similar assets at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly. These values were obtained from an independent pricing service and were evaluated using pricing models that vary by asset class and may incorporate available trade, bid and other market information and price quotes from well-established independent pricing vendors and broker-dealers. See Note 5 —Marketable Securities for further information regarding the fair value of our investments. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Leases | 13. Leases The Company leases office space under non-cancelable operating leases with lease terms ranging from one to ten years. These leases require monthly lease payments that may be subject to annual increases throughout the lease term. Certain of these leases also include renewal options at the election of the Company to renew or extend the lease for an additional three to five years. These optional periods have not been considered in the determination of the right-of-use assets or lease liabilities associated with these leases as the Company did not consider it reasonably certain it would exercise the options. The Company subleases two of its locations. The first sublease term has 12 months remaining and will expire in 2020. The second sublease term has 42 months remaining and will expire in 2023. Both subleases have no option for renewal. Operating lease right-of-use assets and operating lease liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. Right-of-use assets also include adjustments related to prepaid or deferred lease payments and lease incentives. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on information available at the lease commencement date to determine the present value of lease payments. The Company performed evaluations of its contracts and determined that each of its identified leases are operating leases. The components of operating lease expense were as follows: Year ended December 31, 2019 2018 2017 (in thousands) Operating lease cost, gross $ 8,563 $ 7,423 $ 5,593 Variable lease cost, gross (1) 2,791 — — Sublease income (456 ) — — Total lease costs (2) $ 10,898 $ 7,423 $ 5,593 (1) Variable rent expense was not included within the measurement of the Company's operating right-of-use assets and lease liabilities. Variable rent expense is comprised primarily of the Company's proportionate share of operating expenses, property taxes and insurance and is classified as lease expense due to the Company's election to not separate lease and non-lease components. (2) Short-term lease costs for the year ended December 31, 2019, 2018 and 2017 were not significant and are not included in the table above. Cash paid for amounts included in the measurement of operating lease liabilities for the year ended December 31, 2019 were $9,320,000 and was included in net cash provided by operating activities in the consolidated statements of cash flows. Right-of-use assets obtained in exchange for lease obligations for the year ended December 31, 2019 was $6,850,000. As of December 31, 2019, the maturities of the Company's operating lease liabilities were as follows (in thousands): 2020 $ 9,737 2021 9,139 2022 9,533 2023 8,964 2024 8,509 Thereafter 15,257 Total lease payments 61,139 Less: Imputed interest (12,792 ) Lease liabilities 48,347 Tenant improvement reimbursements included in the measurement of lease liabilities but not yet received (1,113 ) Lease liabilities, net 47,234 As of December 31, 2019, the weighted average remaining lease term is 6.6 years and the weighted average discount rate used to determine operating lease liabilities was 7.13%. Rent expense under operating leases for 2019, 2018 and 2017 was $10,898,000, $7,423,000 and $5,593,000, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 14. Commitments and Contingencies Letters of Credit As of December 31, 2019 and 2018, we had a total of $2.6 million and $2.4 million, respectively, of letters of credit outstanding that were issued for purposes of securing certain of the Company’s obligations under facility leases and other contractual arrangements. Litigation We are involved in various legal proceedings and claims, including challenges to trademarks, from time to time arising in the normal course of business. If we determine that it is probable that a loss has been incurred and the amount is reasonably estimable, we will record a liability. Between January 13, 2020 and January 30, 2020, five lawsuits were filed by purported stockholders of Instructure challenging the proposed acquisition of Instructure by Thoma Bravo. The first and second lawsuit, brought as putative class actions, are captioned Post v. Instructure, Inc., et al. Zhang v. Instructure, Inc., et al. Bushansky v. Instructure, Inc., et al. Domenico v. Instructure, Inc. et al. Rubin v. Instructure, Inc., et al. Zhang Post Rubin Post and that the outcome of these proceedings will not have a material impact on our consolidated results of operations, cash flows, or financial position. However, any litigation is inherently uncertain, and any judgment or injunctive relief entered against us or any adverse settlement could materially and adversely impact our business, results of operations, financial condition, and prospects. |
Employee Benefit Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2019 | |
Compensation And Retirement Disclosure [Abstract] | |
Employee Benefit Plan | 15. Employee Benefit Plan We sponsor a qualified 401(k) defined contribution plan (the “401(k) Plan”), available to all qualified employees. The 401(k) Plan allows employees to contribute gross salary though payroll deductions up to the legally mandated limit based on their jurisdiction. The 401(k) Plan provides for matching contributions equal to 50% of each participant’s elective contributions, not to exceed $1,000 per participant annually. Participants vest in matching contributions over a four-year one-year |
Related-Party Transactions
Related-Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | 16. Related-Party Transactions On May 27, 2019, we hired Jennifer Goldsmith as our Chief Strategy Officer. Ms. Goldsmith is the sibling of Dan Goldsmith, our Chief Executive Officer. Ms. Goldsmith’s initial cash base salary is $260,000 per year. Ms. Goldsmith also received a short-term salary grant of RSUS with a value of $65,000 and a long-term grant of RSUs with a value of $3,585,000. Pursuant to our policies and procedures with respect to related party transactions, the Audit Committee of our Board of Directors approved this related party transaction on April 24, 2019. |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (unaudited) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Selected Quarterly Financial Data (unaudited) | 17. Selected Quarterly Financial Data (unaudited) The following tables set forth selected unaudited quarterly consolidated statements of operations data for each of the eight quarters in 2019 and 2018 (in thousands except per share data): Three Months Ended Dec. 31, 2019 Sept. 30, 2019 June 30, 2019 March 31, 2019 Dec. 31, 2018 Sept. 30, 2018 June 30, 2018 March 31, 2018 (unaudited) (in thousands) Total revenues $ 69,195 $ 68,335 $ 62,867 $ 58,076 $ 56,251 $ 55,239 $ 50,063 $ 47,991 Gross profit 46,263 47,045 42,420 39,919 39,129 39,101 35,465 34,006 Loss from operations (23,403 ) (20,579 ) (22,552 ) (19,459 ) (8,259 ) (11,956 ) (12,425 ) (12,133 ) Net loss (23,005 ) (20,923 ) (20,749 ) (16,142 ) (7,587 ) (11,472 ) (12,538 ) (11,868 ) Net loss attributable to common stockholders (23,005 ) (20,923 ) (20,749 ) (16,142 ) (7,587 ) (11,472 ) (12,538 ) (11,868 ) Net loss per common share attributable to common stockholders, basic and diluted (0.61 ) (0.56 ) (0.56 ) (0.45 ) (0.22 ) (0.33 ) (0.36 ) (0.37 ) |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | 18. Subsequent Events On February 13, 2020, Daniel T. Goldsmith, Chief Executive Officer of Instructure informed the Board of his intent to step down as Chief Executive Officer and as a member of the Board. Mr. Goldsmith will remain with Instructure until March 6, 2020 to ensure an orderly transition, and Instructure’s executive team formed an Office of the CEO in the interim until a successor can be named. The Office of the CEO is currently comprised of Matthew Kaminer, Jeff Weber, Marta DeBellis, Frank Maylett, Melissa Loble, Mitch Benson, and John Knotwell. On February 17, 2020, we entered into the Merger Agreement with Parent and Purchaser. Pursuant to and subject to the terms of the Merger Agreement, Purchaser commenced the Offer on February 24, 2020 to purchase each share at the Offer Price. The Merger Agreement contemplates that the Merger will be effected pursuant to Section 251(h) of the DGCL, which permits completion of the Merger without a vote of the stockholders upon the acquisition by Purchaser of at least a majority of the issued and outstanding shares (other than certain specified shares as more specifically described in the definition of “Minimum Condition” set forth on Annex I to the Merger Agreement). At the Effective Time, each share (other than the shares accepted for payment in the Offer and shares held by stockholders who validly exercise appraisal rights under Section 262 of the DGCL or held by Instructure, Parent or their respective wholly owned subsidiaries), will be cancelled and converted into the right to receive the Offer Price. Under the Merger Agreement, as of the Effective Time, each (i) option to purchase shares that is unexpired, unexercised, outstanding, and vested as of immediately prior to the Effective Time (“Vested Company Option”) and (ii) each Company RSU Award (as defined in the Merger Agreement) that is unexpired, unsettled, outstanding, and vested as of immediately prior to the Effective Time will be cancelled and will be converted into the right to receive the Offer Price (less, in the case of Vested Company Options, the applicable exer cise price) in respect of each s hare underlying such award. With respect to each (i) option to purchase s hares that is unexpired, unexercised, outstanding, and unvested as of immediately prior to the Effective Time (“Unvested Company Option”) and (ii) each Company RSU Award (as defined in the Merger Agreement) that is unexpired, unsettled, outstanding, and unvested as of immediately prior to the Effective Time (“Unvested Company RSU Award”) in each case, except for certain specified Unvested Company Option and Unvested Company RSU Awards that are forfeited and canceled upon consummation of the Merger in accordance with the terms of that certain CIC Benefits Waiver (as defined in the Merger Agreement), will be cancelled and replaced with the right to receive the Offer Price (less, in the case of Unvested Company Options, the applicable exer cise price) in respect of each s hare underlying such award (“Cash Replacement Awards”), which Cash Replacement Award will, subject to the holder’s continued service through the applicable vesting dates, vest and be payable at the same time such Unvested Company Option or Unvested Company RSU Award would have vested pursuant to its terms. All Cash Replacement Awards will have the same terms and conditions as applied to the award of Unvested Company Options or Unvested Company RSU Awards for which they were exchanged, except for terms rendered inoperative by reason of the transactions or for such other administrative or ministerial changes as in the reasonable and good faith determination of Parent are appropriate to conform the administration of such Cash Replacement Awards. The Merger Agreement provides certain termination rights for both the Company and Parent, and further provides that a termination fee of $63,540,750 will be payable by the Company to Parent upon termination of the Merger Agreement under certain circumstances and that a reverse termination fee of $136,857,000 will be payable by Parent to the Company upon termination of the Merger Agreement under certain circumstances. |
Description of Business and S_2
Description of Business and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Organization | Organization Instructure provides innovative applications for learning, assessment, development and engagement. We enable organizations worldwide to develop, deliver, manage and track engaging academic and employee development programs. We offer our platform through a Software-as-a-Service, or SaaS, business model. We were incorporated in the state of Delaware in September 2008. We are headquartered in Salt Lake City, Utah, and have wholly-owned subsidiaries in the United Kingdom, Australia, the Netherlands, Hong Kong, Sweden, Brazil, Mexico and Hungary. |
Basis of Presentation | Basis of Presentation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. The accompanying consolidated financial statements include our accounts and those of our wholly-owned subsidiaries. All intercompany transactions have been eliminated in consolidation. Effective January 1, 2018, we adopted the requirements of Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers Certain prior period amounts reported in our consolidated financial statements and notes thereto have been reclassified to conform to current period presentation. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management period of benefit for deferred commissions |
Operating Segments | Operating Segments We operate in a single |
Net Loss Per Share Attributable to Common Stockholders | Net Loss Per Share Attributable to Common Stockholders Basic net loss per share attributable to common stockholders is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period, less the weighted-average unvested common stock subject to repurchase or forfeiture. Diluted net loss per share attributable to common stockholders is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period. For purposes of this calculation, options to purchase common stock and common stock warrants are considered to be common stock equivalents. A reconciliation of the denominator used in the calculation of basic and diluted net loss per share is as follows (in thousands, except per share amounts): Year Ended December 31, 2019 2018 2017 *As Adjusted Numerator: Net loss $ (80,819 ) $ (43,465 ) $ (43,084 ) Denominator: Weighted-average common shares outstanding—basic 36,892 34,248 29,401 Total weighted-average common shares outstanding—basic 36,892 34,248 29,401 Dilutive effect of share equivalents resulting from stock options, unvested restricted stock awards and common stock warrants — — — Weighted-average common shares outstanding-diluted 36,892 34,248 29,401 Net loss per common share $ (2.19 ) $ (1.27 ) $ (1.47 ) For the years ended December 31, 2019, 2018 and 2017, we incurred net losses and, therefore, the effect of our outstanding options to purchase common stock, common stock warrants and restricted stock units were not included in the calculation of diluted net loss per share as the effect would be anti-dilutive. The following table contains share totals with a potentially dilutive impact (in thousands): Year Ended December 31, 2019 2018 2017 Options to purchase common stock 601 1,303 2,010 Common stock warrants — — 17 Restricted stock units 2,584 1,690 1,514 Employee stock purchase plan 14 19 20 Total 3,199 3,012 3,561 |
Concentration of Credit Risk, Significant Customers and International Operations | Concentration of Credit Risk, Significant Customers and International Operations Financial instruments that potentially subject us to a concentration of credit risk consist principally of cash and accounts receivable. We deposit cash with high credit quality financial institutions, which at times, may exceed federally insured amounts. We have not experienced any losses on our deposits. We perform ongoing credit evaluations of our customers’ financial condition and generally require no collateral from our customers. We review the expected collectability of accounts receivable and record an allowance for doubtful accounts receivable for amounts that we determine are not collectible. There were no customers with revenue as a percentage of total revenue exceeding 10% for the periods presented. As of December 31, 2019 and 2018, our largest customers’ outstanding net accounts receivable balance as a percentage of the total outstanding net accounts receivable balance represented 8.4% and 14.0%, respectively. There were no other customers with outstanding net accounts receivable balances as a percentage of the total outstanding net accounts receivable balance greater than 10% as of December 31, 2019 and 2018. In 2014, we began international operations. Because our long-term growth strategy involves further expansion of our sales to customers outside of the United States, our business will be susceptible to risks associated with international operations. Refer to Note 7— Geographic Data for details. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all short-term highly liquid investments purchased with original maturities of three months or less at the time of acquisition to be cash equivalents. |
Marketable Securities | Marketable Securities We hold investments in marketable securities, consisting of corporate debt securities and commercial paper. We classify our marketable securities as available-for-sale investments as we neither buy and hold securities for the purpose of selling them in the near future nor intend to hold securities to maturity. We classify our marketable securities as short term on the consolidated balance sheets for all purchased investments with contractual maturities that are less than one year as of the balance sheet date. Our marketable securities are carried at estimated fair value with any unrealized gains and losses, net of taxes, included in accumulated other comprehensive income in stockholders’ equity. Unrealized losses are charged against other income, net when a decline in fair value is determined to be other-than-temporary. We have not recorded any such impairment charge in the periods presented. We determine realized gains or losses on sale or maturity of marketable securities on a specific identification method, and record such gains or losses as other income, net. |
Accounts Receivable | Accounts Receivable Accounts receivable are carried at the original invoiced amount less an allowance for doubtful accounts based on the probability of future collection. When management becomes aware of circumstances that may decrease the likelihood of collection, it records a specific allowance against amounts due, which reduces the receivable to the amount that management reasonably believes will be collected. For all other customers, management determines the adequacy of the allowance based on historical loss patterns, the number of days that billings are past due and an evaluation of the potential risk of loss associated with specific accounts. Account balances are written off against the allowance for doubtful accounts receivable when the potential for recovery is remote. Recoveries of receivables previously written off are recorded when payment is received. Unbilled receivable balances as of December 31, 2019 and 2018 were $2,060,000 and $6,032,000, respectively. The following is a roll-forward of our allowance for doubtful accounts (in thousands): Balance Charged to Balance at Beginning Costs or End of of Period Expenses Deductions (1) Period Allowance for Doubtful Accounts Year ended December 31, 2019 $ 1,092 $ 377 $ (598 ) $ 871 Year ended December 31, 2018 $ 318 $ 1,399 $ (625 ) $ 1,092 Year ended December 31, 2017 $ 241 $ 197 $ (120 ) $ 318 (1) Deductions include actual accounts written-off, net of recoveries and revaluations. |
Property and Equipment and Intangible Assets | Property and Equipment and Intangible Assets Property and equipment are stated at cost less accumulated depreciation. Expenditures that materially increase values or capacities or extend useful lives of property and equipment are capitalized. Repairs and maintenance costs that do not extend the useful life or improve the related assets are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets or over the related lease terms (if shorter). The estimated useful life of each asset category is as follows: Estimated Useful Life Computer and office equipment 2-3 years Purchased software 2-3 years Furniture and fixtures 2-5 years Capitalized software development costs 3 years Leasehold improvements and other lesser of lease term or useful life (2-10 years) Certain costs incurred to develop software applications used in the cloud-based learning, assessment , development and engagement system are capitalized and included in property and equipment, net on the balance sheets. Capitalizable costs consist of (1) certain external direct costs of materials and services incurred in developing or obtaining internal-use software; and (2) payroll and payroll-related costs for employees who are directly associated with and who devote time to the project. These costs generally consist of internal labor during configuration, coding and testing activities. Research and development costs incurred during the preliminary project stage, or costs incurred for data conversion activities, training, maintenance and general and administrative or overhead costs, are expensed as incurred. Costs that cannot be separated between the maintenance of, and relatively minor upgrades and enhancements to, internal-use software are also expensed as incurred. Costs incurred during the application development stage that significantly enhance and add new functionality to the cloud-based learning, assessment , development and engagement system are capitalized as capitalized software development costs. Capitalization begins when: (1) the preliminary project stage is complete; (2) management with the relevant authority authorizes and commits to the funding of the software project; (3) it is probable the project will be completed; (4) the software will be used to perform the functions intended; and (5) certain functional and quality standards have been met. Acquired finite-lived intangibles are amortized on a straight-line basis over the estimated useful life of the asset, which is generally five years. When there are indicators of potential impairment, we evaluate recoverability of the carrying values of property and equipment and intangible assets by comparing the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds our estimated undiscounted future net cash flows, an impairment charge is recognized based on the amount by which the carrying value of the asset exceeds the fair value of the asset. We did not incur any impairment charges during the periods presented. |
Leases | Leases We lease our facilities under operating leases. For leases that contain rent escalation or rent concession provisions, we record rent expense for the total rent payable during the lease term on a straight-line basis over the term of the lease. We record the difference between the rent paid and the straight-line rent as a deferred rent liability in the accompanying balance sheets. |
Fair Value | Fair Value Our short-term financial instruments include accounts receivable, accounts payable and accrued liabilities and are carried on the consolidated financial statements as of December 31, 2019 and 2018 at amounts that approximate fair value due to their short-term maturity dates. |
Goodwill | Goodwill Goodwill represents the excess cost of the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Goodwill is not subject to amortization, but is monitored annually for impairment or more frequently if there are indicators of impairment. Management considers the following potential indicators of impairment: (1) significant underperformance relative to historical or projected future operating results; (2) significant changes in our use of acquired assets or the strategy of our overall business; (3) significant negative industry or economic trends; and (4) a significant decline in our stock price for a sustained period. We operate under one reporting unit and, as a result, evaluate goodwill impairment based on our fair value as a whole. Our current year impairment test did not result in any impairment of the goodwill balance. We did not recognize an impairment charge in any of the periods presented. We have no other intangible assets with indefinite useful lives. |
Change in Fair-Value of Contingent Liability | Change in Fair-Value of Contingent Liability We remeasure the estimated carrying value of the contingent liability each quarter, with any changes in the estimated fair value recorded within general and administrative expense on the statements of operations. The fair value is determined using significant unobservable inputs with a Monte Carlo simulation model. We remeasured the contingent liability at December 31, 2018, and as of that date we had $20,000 accrued in other long-term liabilities in connection with the estimated contingent liability associated with the acquisition of Practice. During 2019, we did not observe a significant change in Practice bookings and, therefore, we wrote-off the remaining balance. |
Revenue Recognition | Revenue Recognition We generate revenue primarily from two main sources: (1) subscription and support revenue, which is comprised of SaaS fees from customers accessing our learning, assessment and talent management systems and from customers purchasing additional support beyond the standard support that is included in the basic SaaS fees; and (2) related professional services revenue, which is comprised of training, implementation services and other types of professional services. Revenue is recognized when control of these services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. We determined revenue recognition through the following steps: • Identification of the contract, or contracts, with a customer • Identification of the performance obligations in the contract • Determination of the transaction price • Allocation of the transaction price to the performance obligations in the contract • Recognition of revenue when, or as, we satisfy a performance obligation The following describes the nature of our primary types of revenue and the revenue recognition policies and significant payment terms as they pertain to the types of transactions we enter into with our customers. Subscription and Support Subscription and support revenue is derived from fees from customers to access our learning, assessment and talent management systems and support beyond the standard support that is included with all subscriptions. The terms of our subscriptions do not provide customers the right to take possession of the software. Subscription and support revenue is generally recognized on a ratable basis over the contract term. Payments from customers are primarily due annually in advance. Professional Services and Other Professional services revenue is derived from implementation, training, and consulting services. Our professional services are typically considered distinct from the related subscription services as the promise to transfer the subscription can be fulfilled independently from the promise to deliver the professional services (i.e., customer receives standalone functionality from the subscription and the customer obtains the intended benefit of the subscription without the professional services). Professional services revenue is typically recognized over time as the services are rendered, using an efforts-expended (labor hours) input method. Implementation services also include nonrefundable upfront setup fees, which are allocated to the remaining performance obligations. Contracts with Multiple Performance Obligations Many of our contracts with customers contain multiple performance obligations. We account for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price (SSP) basis. We determine the standalone selling prices based on our overall pricing objectives by reviewing our significant pricing practices, including discounting practices, geographical locations, the size and volume of our transactions, the customer type, price lists, our pricing strategy, and historical standalone sales. Standalone selling price is analyzed on a periodic basis to identify if we have experienced significant changes in our selling prices. Deferred Commissions Sales commissions earned by our sales force, as well as related payroll taxes, are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and then amortized on a straight-line basis over a period of benefit that we have determined to be generally Deferred Revenue Deferred revenue consists of billings and payments received in advance of revenue recognition generated by our subscription and support services and professional services and other, as described above. ASC 606 introduced the concept of contract liabilities, which is substantially similar to deferred revenue under previous accounting guidance. |
Cost of Revenue | Cost of Revenue Cost of subscription revenue consists primarily of our managed hosting provider and other third-party service providers, employee-related costs including payroll, benefits and stock-based compensation expense for our operations and customer support teams, amortization of capitalized software development costs and acquired technology, and allocated overhead costs, which we define as rent, facilities and costs related to information technology, or IT. Cost of professional services and other revenue consists primarily of personnel costs of our professional services organization, including salaries, benefits, travel, bonuses and stock-based compensation, as well as allocated overhead costs. |
Service Availability Warranty | Service Availability Warranty We warrant to our customers: (1) that commercially reasonable efforts will be made to maintain the online availability of the platform for a minimum availability in a trailing 365-day period (excluding scheduled outages, standard maintenance windows, force majeure, and outages that result from any technology issue originating from any customer or user); (2) the functionality or features of the platform may change but will not materially degrade during any paid term; and (3) that support may change but will not materially degrade during any paid term. To date, we have not experienced any significant losses under these warranties. |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred and are included in sales and marketing expenses. Advertising expenses totaled $12,524,000, $11,387,000, and $9,274,000 for 2019, 2018 and 2017, respectively. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for all stock options and awards granted to employees and nonemployees using a fair value method. Stock-based compensation is recognized as an expense and is measured at the fair value of the award. The measurement date for employee awards is generally the date of the grant. Stock-based compensation costs are recognized as expense over the requisite service period, which is generally the vesting period for awards, on a straight-line basis for awards with only a service condition. Forfeitures are accounted for as they occur. We use the market closing price of our common stock as reported on the New York Stock Exchange for the fair value of restricted stock units (“RSUs”) granted. We use the Black-Scholes option pricing model to determine the fair value of stock options issued to our employees, as well as purchase rights issued to employees under our ESPP. The Black-Scholes option pricing model is affected by the unit price and a number of assumptions, including the award’s expected life, risk-free interest rate, the expected volatility of the underlying stock and expected dividends. These assumptions are estimated as follows: • Fair Value of Our Common Stock. We rely on the closing price of our common stock as reported by the New York Stock Exchange on the date of grant to determine the fair value of our common stock. • Risk-Free Interest Rate. We base the risk-free interest rate used in the Black-Scholes option pricing model on the implied yield available on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options. • Expected Term. We estimate the expected term for stock options using the simplified method due to the lack of historical exercise activity for our company. The simplified method calculates the expected term as the mid-point between the vesting date and the contractual expiration date of the award. For the ESPP, we use an expected term of 0.5 years to match the offering period. • Volatility. We estimate the price volatility factor based on the historical volatilities of our comparable companies as we do not have a sufficient trading history for our common stock. To determine our comparable companies, we consider public enterprise cloud-based application providers and select those that are similar to us in size, stage of life cycle, and financial leverage. We intend to continue to apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of our own common stock share price becomes available, or unless circumstances change such that the identified companies are no longer similar to us, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation. For the ESPP, we use the trading history of our own common stock to determine expected volatility. • Expected Dividend Yield. We have not paid and do not expect to pay dividends for the foreseeable future. |
Foreign Currency | Foreign Currency The functional currency of our foreign subsidiaries is the U.S. dollar. Monetary assets and liabilities denominated in a foreign currency are revalued into U.S. dollars at the exchange rates in effect at the balance sheet dates. Income and expense accounts are revalued on the date of the transaction using the exchange rate in effect on the transaction date. Non-monetary assets, liabilities, and equity transactions are converted at historical exchange rates in effect at the time of the transaction. Foreign currency transaction gains and losses are recorded in other income, net. During 2019, a net foreign currency transaction gain of $331,000 was recorded on the consolidated statements of operations. During 2018, a net foreign currency transaction loss of $794,000 was recorded on the consolidated statements of operations. During 2017, a net foreign currency transaction gain of $466,000 was recorded on the consolidated statements of operations. |
Research and Development | Research and Development With the exception of capitalized software development costs, research and development costs are expensed as incurred. |
Risks and Uncertainties | Risks and Uncertainties We are subject to all of the risks inherent in an early stage business. These risks include, but are not limited to, a limited operating history, new and rapidly evolving markets, dependence on the development of new services, unfavorable economic and market conditions, changes in level of demand for our services, and the timing of new application introductions. If we fail to anticipate or to respond adequately to technological developments in our industry, changes in customer or supplier requirements, or changes in regulatory requirements or industry standards, or any significant delays in the development or introduction of services, our business could be harmed. |
Income Taxes | Income Taxes Deferred tax assets and liabilities are accounted for using the asset and liability method and represent the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates that are expected to be in effect when these temporary differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized. At December 31, 2019 and 2018, the majority of our deferred tax assets were offset by a valuation allowance. We recognize interest and penalties as a component of income tax expense. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Adopted accounting pronouncements In October 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory”. This standard requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs, rather than when the asset has been sold to an outside party. The new standard must be adopted using a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings in the period of adoption. This standard is effective for annual reporting periods beginning after December 15, 2017. We adopted the new standard as of January 1, 2018 and it did not have a material impact on our consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“Topic 606”). Topic 606 supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) Topic 605, Revenue Recognition (“Topic 605”), and requires the recognition of revenue as promised goods or services are transferred to customers in an amount that reflects the consideration which the entity expects to be entitled to in exchange for those goods or services. Topic 606 also includes Subtopic 340-40, Other Assets and Deferred Costs - Contracts with Customers, which requires the deferral of incremental costs of obtaining a contract with a customer. Collectively, we refer to Topic 606 and Subtopic 340-40 as the “new standard”. We adopted the new standard as of January 1, 2018, utilizing the full retrospective method of transition. As a result, we recognized the cumulative effect of initially applying the new standard as an adjustment to the opening balance of equity on January 1, 2016. We have changed our accounting policy for revenue recognition as detailed above. The details of the significant changes and quantitative impact of the changes are disclosed below. We applied Topic 606 retrospectively using the following practical expedients in paragraph ASC 606-10-65-1(f). We do not disclose the amount of consideration allocated to the remaining performance obligations or an explanation of when we expect to recognize that amount as revenue for all reporting periods presented before the date of the initial application – i.e. January 1, 2018. Further, we do not retrospectively restate contracts modified before the beginning of the earliest reporting period presented but reflect the aggregate effect of all modifications that occur before the beginning of the earliest period presented. The primary impact of adopting the new standard related to the deferral of incremental commission costs to obtain customer contracts and the removal of the contingent revenue limitation. We previously expensed sales commission costs as incurred. Under the new standard, we capitalize and amortize these costs over a period of benefit that we have determined to be generally four years. We were also previously limiting the amount of revenue recognized for delivered elements to the amount that was not contingent on the future delivery of products or services, or subject to our future performance. Under the new standard, there is no requirement to limit the allocated transaction price to non-contingent amounts, therefore, we record unbilled revenue when transferred services are more than amounts billable to customers. In February 2016, the FASB issued Topic 842, which establishes a comprehensive new lease accounting model. Under the new guidance, at the commencement date, lessees are required to recognize a lease liability with a corresponding right-of-use (“ROU”) asset. On January 1, 2019, the Company adopted Topic 842 using the modified retrospective approach with the effective date as of the date of initial application. Consequently, results for the year ended December 31, 2019 are presented under Topic 842. No prior period amounts were adjusted and continue to be reported in accordance with previous lease guidance, ASC Topic 840, Leases. The Company elected to apply the package of practical expedients to not reassess under the new standard prior conclusions about lease identification, lease classification, and initial direct costs in relation to its leases in effect as of January 1, 2019. The Company also elected the practical expedient allowing the use of hindsight in determining the lease term and assessing impairment of right-of-use assets based on all facts and circumstances through the effective date of the new standard. Adoption of the new standard resulted in recording operating lease right-of-use assets and operating lease liabilities of approximately $ 34,726,000 and $ 46,205,000 , respectively, in our consolidated balance sheets as of January 1, 2019. Adoption of the standard did not have an impact on the Company’s beginning accumulated deficit, results from operations or cash flows. Effective January 1, 2019, the Company adopted ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of current stock compensation recognition standards to include share-based payment transactions for acquiring goods and services from nonemployees. The adoption of this guidance did not have a material impact on our consolidated financial statements and related notes. Effective January 1, 2019, the Company early adopted ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”) using a prospective approach. This guidance aligns the accounting for implementation costs related to a hosting arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software. on our consolidated financial statements and related notes. Impacts on Financial Statements Select audited consolidated statement of operations line items, which reflect the adoption of Topic 606, are as follows (in thousands): Year ended December 31, 2017 As previously reported Adjustments As adjusted Revenue: Subscription and support $ 139,925 $ 4,183 $ 144,108 Professional services and other 18,881 (2,014 ) 16,867 Total revenue 158,806 2,169 160,975 Cost of revenue: Professional services and other 12,026 185 12,211 Gross profit 112,429 1,984 114,413 Operating expenses: Sales and marketing 83,716 (4,990 ) 78,726 Loss before income tax benefit (expense) (50,213 ) 6,974 (43,239 ) Income tax expense 391 (236 ) 155 Net loss (49,822 ) 6,738 (43,084 ) Net loss per common share, basic and diluted (1.69 ) 0.22 (1.47 ) Select audited consolidated statement of cash flows line items, which reflect the adoption of Topic 606, are as follows (in thousands): Year ended December 31, 2017 As previously reported Adjustments As Adjusted Cash flows from operating activities: Net loss $ (49,822 ) $ 6,738 $ (43,084 ) Accounts receivable, net (12,830 ) (2,052 ) (14,882 ) Prepaid expenses and other assets (9,599 ) 423 (9,176 ) Deferred commissions — (4,990 ) (4,990 ) Deferred revenue 26,882 (119 ) 26,763 Net cash used in operating activities (21,129 ) — (21,129 ) Issued accounting pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses, a new standard to replace the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The new standard will require the use of a forward-looking expected credit loss model for accounts receivables, loans and other financial instruments. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The standard will be effective for us beginning January 1, 2020. We have completed our analysis of the impact of this guidance and the adoption of this standard will not have a material impact on our consolidated financial statements . In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles and also simplification of areas such as franchise taxes, step up in tax basis goodwill, separate entity financial statements and interim recognition of enactment of tax laws or rate changes. The standard will be effective for us beginning January 1, 2021. We are evaluating the impact of adopting this new accounting guidance on our consolidated financial statements. |
Description of Business and S_3
Description of Business and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Reconciliation of the Denominator Used in the Calculation of Basic and Diluted Net Loss Per Share | A reconciliation of the denominator used in the calculation of basic and diluted net loss per share is as follows (in thousands, except per share amounts): Year Ended December 31, 2019 2018 2017 *As Adjusted Numerator: Net loss $ (80,819 ) $ (43,465 ) $ (43,084 ) Denominator: Weighted-average common shares outstanding—basic 36,892 34,248 29,401 Total weighted-average common shares outstanding—basic 36,892 34,248 29,401 Dilutive effect of share equivalents resulting from stock options, unvested restricted stock awards and common stock warrants — — — Weighted-average common shares outstanding-diluted 36,892 34,248 29,401 Net loss per common share $ (2.19 ) $ (1.27 ) $ (1.47 ) |
Summary of Shares Excluded from Calculation of Diluted Net Loss Per Share with a Potential Dilutive Impact | The following table contains share totals with a potentially dilutive impact (in thousands): Year Ended December 31, 2019 2018 2017 Options to purchase common stock 601 1,303 2,010 Common stock warrants — — 17 Restricted stock units 2,584 1,690 1,514 Employee stock purchase plan 14 19 20 Total 3,199 3,012 3,561 |
Summary of Estimated Useful Life of Each Asset Category | The estimated useful life of each asset category is as follows: Estimated Useful Life Computer and office equipment 2-3 years Purchased software 2-3 years Furniture and fixtures 2-5 years Capitalized software development costs 3 years Leasehold improvements and other lesser of lease term or useful life (2-10 years) |
Summary of Adoption of Topic 606 | Select audited consolidated statement of operations line items, which reflect the adoption of Topic 606, are as follows (in thousands): Year ended December 31, 2017 As previously reported Adjustments As adjusted Revenue: Subscription and support $ 139,925 $ 4,183 $ 144,108 Professional services and other 18,881 (2,014 ) 16,867 Total revenue 158,806 2,169 160,975 Cost of revenue: Professional services and other 12,026 185 12,211 Gross profit 112,429 1,984 114,413 Operating expenses: Sales and marketing 83,716 (4,990 ) 78,726 Loss before income tax benefit (expense) (50,213 ) 6,974 (43,239 ) Income tax expense 391 (236 ) 155 Net loss (49,822 ) 6,738 (43,084 ) Net loss per common share, basic and diluted (1.69 ) 0.22 (1.47 ) Select audited consolidated statement of cash flows line items, which reflect the adoption of Topic 606, are as follows (in thousands): Year ended December 31, 2017 As previously reported Adjustments As Adjusted Cash flows from operating activities: Net loss $ (49,822 ) $ 6,738 $ (43,084 ) Accounts receivable, net (12,830 ) (2,052 ) (14,882 ) Prepaid expenses and other assets (9,599 ) 423 (9,176 ) Deferred commissions — (4,990 ) (4,990 ) Deferred revenue 26,882 (119 ) 26,763 Net cash used in operating activities (21,129 ) — (21,129 ) |
Allowance for Doubtful Accounts | |
Summary of Allowance for Doubtful Accounts | The following is a roll-forward of our allowance for doubtful accounts (in thousands): Balance Charged to Balance at Beginning Costs or End of of Period Expenses Deductions (1) Period Allowance for Doubtful Accounts Year ended December 31, 2019 $ 1,092 $ 377 $ (598 ) $ 871 Year ended December 31, 2018 $ 318 $ 1,399 $ (625 ) $ 1,092 Year ended December 31, 2017 $ 241 $ 197 $ (120 ) $ 318 (1) Deductions include actual accounts written-off, net of recoveries and revaluations. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property Plant And Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consisted of the following (in thousands): December 31, 2019 2018 Computer and office equipment $ 7,503 $ 6,204 Purchased software 1,071 1,071 Capitalized software development costs 27,420 22,181 Furniture and fixtures 5,184 4,688 Leasehold improvements and other 18,708 15,632 59,886 49,776 Less accumulated depreciation and amortization (31,810 ) (22,388 ) Total $ 28,076 $ 27,388 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Combined Results of Operations for Instructure, MasteryConnect and Portfolium | The unaudited pro forma financial information in the table below summarizes the combined results of operations for Instructure, MasteryConnect and Portfolium as if the companies were combined as of January 1, 2018. The unaudited pro forma financial information as presented below is for illustrative purposes and does not purport to represent what the results of operations would actually have been if the business combinations occurred as of the date indicated or what the results would be for any future periods. Year Ended December 31, 2019 2018 (in thousands) Pro forma revenue $ 261,957 $ 223,325 Pro forma net loss (1) (88,519 ) (55,731 ) Pro forma net loss per common share, basic and diluted $ (2.40 ) $ (1.63 ) (1) Pro forma net loss excludes the deferred income tax benefit from business combination in the amount of $4,570,000 for the year ended December 31, 2019. |
Portfolium | |
Summary of Estimated Fair Values of Consideration transferred, Assets Acquired and Liabilities Assumed | The following table summarizes the estimated fair values of the consideration transferred, assets acquired and liabilities assumed as of the date of the Portfolium acquisition (in thousands): Consideration transferred Cash paid (2) $ 25,552 Common stock 17,133 Fair value of assumed Portfolium awards attributable to pre-combination services 715 Total purchase consideration $ 43,400 Identifiable assets acquired Cash $ 604 Accounts receivable 273 Other assets 31 Intangible assets: developed technology 10,016 Intangible assets: customer relationships 8,560 Intangible assets: trade name 2,710 Total assets acquired $ 22,194 Liabilities assumed Accounts payable and accrued liabilities $ 115 Deferred revenue 1,535 Deferred tax liability, net (1) 3,911 Total liabilities assumed $ 5,561 Goodwill (1) (2) 26,767 Total purchase consideration $ 43,400 (1) During the second quarter of 2019, an adjustment of $1,199,000 was made to the provisional deferred tax liability. During the fourth quarter of 2019, an offsetting adjustment of $280,000 was made to the deferred tax liability, with a corresponding reduction to goodwill, upon finalizing and filing the Portfolium tax return. (2 ) During the third quarter of 2019, we recorded a $330,000 reduction to the provisional cash consideration, with a corresponding reduction to goodwill, as a result of finalizing a working capital adjustment. |
MasteryConnect | |
Summary of Estimated Fair Values of Consideration transferred, Assets Acquired and Liabilities Assumed | The following table summarizes the estimated fair values of the consideration transferred, assets acquired and liabilities assumed as of the date of the MasteryConnect acquisition (in thousands): Consideration transferred Cash paid $ 32,462 Common stock 12,163 Total purchase consideration $ 44,625 Identifiable assets acquired Cash $ 2,396 Accounts receivable 495 Other assets 1,919 Intangible assets: developed technology 9,191 Intangible assets: customer relationships 4,453 Intangible assets: trade name 656 Total assets acquired $ 19,110 Liabilities assumed Accounts payable and accrued liabilities $ 936 Deferred revenue 3,384 Deferred tax liability, net (1) 659 Total liabilities assumed $ 4,979 Goodwill (1) 30,494 Total purchase consideration $ 44,625 (1) During the fourth quarter of 2019, an adjustment of $57,000 was made to the deferred tax liability, with a corresponding reduction to goodwill, upon finalizing and filing the MasteryConnect tax return. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Summary of Intangible Assets | Intangible assets consisted of the following (in thousands): Weighted-Average Remaining December 31, Useful Life 2019 2018 Domain names 0 Months $ 1,268 $ 1,268 Trademarks 0 Months 120 120 Software 3 Months 620 620 Capitalized learning content 22 Months 400 400 Trade names 29 Months 3,686 320 Developed technology 41 Months 24,527 5,320 Customer relationships 29 Months 15,923 2,910 Accumulated amortization (14,031 ) (4,696 ) Total $ 32,513 $ 6,262 |
Estimated Amortization Expense | Based on the recorded intangible assets at December 31, 2019, estimated amortization expense is expected to be as follows (in thousands): Amortization Years Ending December 31, Expense 2020 $ 10,322 2021 9,186 2022 7,936 2023 4,446 2024 623 Total $ 32,513 |
Marketable Securities (Tables)
Marketable Securities (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Investments Debt And Equity Securities [Abstract] | |
Summary of Major Security Type Assets Measured at Fair Value on Recurring Basis | The following table summarizes, by major security type, our assets that are measured at fair value on a recurring basis (in thousands). December 31, 2019 Amortized Gross Unrealized Gross Unrealized Estimated Fair Cost Gains Losses Value Corporate debt securities $ 11,585 $ 1 $ — $ 11,586 Government treasury bills 3,999 — (1 ) 3,998 $ 15,584 $ 1 $ (1 ) $ 15,584 December 31, 2018 Amortized Gross Unrealized Gross Unrealized Estimated Fair Cost Gains Losses Value Corporate debt securities $ 31,977 $ 3 $ (7 ) $ 31,973 Government treasury bills 26,661 — (5 ) 26,656 $ 58,638 $ 3 $ (12 ) $ 58,629 |
Schedule of Estimated Fair Value of Investments by Contractual Maturity | The estimated fair value of investments by contractual maturity is as follows (in thousands): December 31, 2019 2018 Due within one year $ 15,584 $ 58,629 Total $ 15,584 $ 58,629 |
Geographic Data and Revenue (Ta
Geographic Data and Revenue (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Geographic Areas Revenues From External Customers [Abstract] | |
Schedule of Revenue by Geographic Region | Revenue by geographic region, based on the physical location of the customer, is (in thousands): Year Ended December 31, 2019 2018 2017 *As Adjusted United States $ 206,183 $ 169,643 $ 137,563 Foreign 52,290 39,901 23,412 Total revenue $ 258,473 $ 209,544 $ 160,975 Percentage of revenue generated outside of the United States 20 % 19 % 15 % * See Note 1 for a summary of adjustments |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Assumptions Relating to Stock Options and ESPP Purchase Rights | The following table summarizes the assumptions relating to our stock options and ESPP purchase rights used in a Black Scholes option pricing model Year Ended December 31, 2019 2018 2017 Employee Stock Options Dividend yield None None None Volatility 44.24% 46.02%—46.57% 62.95%—63.10% Risk-free interest rate 2.51% 2.50%—2.84% 2.12%—2.30% Expected life (years) 5.1 6.1 6.1—6.2 Fair value of common stock $42.78 $16.39—$20.57 $12.93—$13.37 Employee Stock Purchase Plan Dividend yield None None None Volatility 29.69%—45.46% 33.94%—45.46% 25.08%—29.89% Risk-free interest rate 1.62%—2.38% 2.1%—2.38% 1.07%—1.45% Expected life (years) 0.5 0.5 0.5 Fair value of common stock $38.14—$52.52 $38.14—$42.65 $27.00—$33.90 |
Summary of Stock-Based Compensation Expense by Award Type | stock-based compensation expense by award type Year Ended December 31, 2019 2018 2017 Options $ 1,997 $ 2,867 $ 3,806 Restricted stock units 53,991 17,560 9,969 Employee stock purchase plan 524 2,320 1,895 Total stock-based compensation $ 56,512 $ 22,747 $ 15,670 |
Summary of Stock-Based Compensation Expense Recorded in Consolidated Statement of Operations | the stock-based compensation expense was recorded in our consolidated statements of operations (in thousands): Year Ended December 31, 2019 2018 2017 Subscription and support cost of revenue $ 1,769 $ 1,235 $ 762 Professional services and other cost of revenue 2,111 975 596 Sales and marketing 15,098 6,022 4,331 Research and development 19,550 8,338 6,023 General and administrative 17,984 6,177 3,958 Total stock-based compensation $ 56,512 $ 22,747 $ 15,670 |
Summary of Stock Option Activity | The following table summarizes the stock option activity for the year ended December 31, 2019 (in thousands, except per share amounts): Weighted- Weighted- Average Shares Average Remaining Aggregate Underlying Exercise Life Intrinsic Options Price (in years) Value Outstanding at January 1, 2019 1,303 $ 14.09 6.5 $ 30,552 Granted 41 3.54 Exercised (701 ) 9.42 Forfeited or cancelled (42 ) 21.45 Outstanding at December 31, 2019 601 18.25 6.2 17,992 Vested and expected to vest—December 31, 2019 601 18.25 6.2 17,992 Exercisable at December 31, 2019 442 14.01 5.6 15,130 |
Summary of Activity of Unvested Stock Options | The follow table summarizes the activity of our unvested stock options for the year ended December 31, 2019 (in thousands, except per share amounts): Weighted- Average Shares Grant Date Underlying Fair Value Options Per Share Unvested at January 1, 2019 266 $ 16.89 Granted 41 21.27 Vested (113 ) 20.88 Forfeited (35 ) 12.87 Unvested at December 31, 2019 159 17.92 |
Summary of Restricted Stock Units Activity | The activity for RSUs for the year ended December 31, 2019 is as follows (in thousands, except per share amounts): RSUs Outstanding Weighted- Average Grant Date Fair Shares Value Per Share Unvested and outstanding at January 1, 2019 1,690 $ 32.87 Granted 2,706 42.59 Vested (1,388 ) 36.70 Cancelled (424 ) 36.71 Unvested and outstanding at December 31, 2019 2,584 40.38 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Loss Before Provision for Income Taxes | Loss before provision for income taxes was as follows: Year Ended December 31, 2019 2018 2017 *As Adjusted (in thousands) United States $ (82,751 ) $ (38,205 ) $ (35,176 ) Foreign (1,688 ) (4,921 ) (8,063 ) Total $ (84,439 ) $ (43,126 ) $ (43,239 ) |
Components of Provision (Benefit) for Income Taxes | The components of the provision (benefit) for income taxes were as follows: Year Ended December 31, 2019 2018 2017 *As Adjusted (in thousands) Current: Federal $ — $ — $ — State 84 35 27 Foreign 771 192 215 Total 855 227 242 Deferred: Federal (4,560 ) 6 (632 ) State 1 2 (6 ) Foreign 84 104 241 Total (4,475 ) 112 (397 ) Provision (benefit) for income taxes $ (3,620 ) $ 339 $ (155 ) |
Reconciliation of Income Taxes Computed at Federal Statutory Rate and Provision for Income Taxes | The following reconciles the differences between income taxes computed at the federal statutory rate of 21% and the provision for income taxes: Year Ended December 31, 2019 2018 2017 *As Adjusted (in thousands) Expected income tax benefit at the federal statutory rate $ (17,732 ) $ (9,056 ) $ (14,700 ) State tax net of federal benefit (7,011 ) (4,001 ) (3,909 ) Stock-based compensation (4,485 ) (4,426 ) (10,202 ) Stock warrant liability (26 ) 32 Difference in foreign tax rates 2,336 (589 ) 1,152 Research and development credits (3,079 ) (2,236 ) (1,636 ) Change in valuation allowance 25,798 20,656 6,124 Change in tax rate — 22,721 Other 553 17 263 Income tax provision (benefit) $ (3,620 ) $ 339 $ (155 ) |
Significant Components of Deferred Tax Assets and Liabilities | Significant components of our deferred tax assets and liabilities were as follows: Year Ended December 31, 2019 2018 2017 *As Adjusted (in thousands) Deferred tax assets: Net operating loss carryforwards $ 111,031 $ 78,356 $ 61,954 Research and development credits 10,838 7,075 4,211 Accruals and reserves 1,425 2,644 1,558 Depreciation and amortization 203 847 453 Lease liability 12,852 — — Stock-based compensation 2,783 2,377 1,986 Total deferred tax assets 139,132 91,299 70,162 Deferred tax liabilities: Depreciation and amortization (10,087 ) (1,697 ) (2,351 ) Deferred commissions (4,793 ) (5,159 ) (4,738 ) Right of use asset (9,671 ) — — Capitalized costs (3,530 ) (3,568 ) (2,743 ) Total deferred tax liabilities (28,081 ) (10,424 ) (9,832 ) Valuation allowance (111,691 ) (81,421 ) (60,765 ) Net deferred tax assets $ (640 ) $ (546 ) $ (435 ) |
Summary of Activity Related to Unrecognized Tax Benefits | The following summarizes activity related to unrecognized tax benefits: Year Ended December 31, 2019 2018 2017 *As Adjusted (in thousands) Unrecognized benefit—beginning of the year $ 4,027 $ 2,267 $ 1,091 Gross increases (decreases)—current period positions 2,125 1,760 1,176 Unrecognized benefit—end of period $ 6,152 $ 4,027 $ 2,267 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis | There were no transfers between Level 1 and Level 2 of the fair value measurement hierarchy during 2019 and 2018. Assets and liabilities measured at fair value on a recurring basis as of December 31, 2019, were as follows (in thousands): December 31, 2019 Level 1 Level 2 Level 3 Total Assets: Money market funds $ 63,534 $ — $ — $ 63,534 Corporate debt securities — 11,586 — 11,586 U.S. Treasury bills 3,998 — — 3,998 Total assets $ 67,532 $ 11,586 $ — $ 79,118 Assets and liabilities measured at fair value on a recurring basis as of December 31, 2018, were as follows (in thousands): December 31, 2018 Level 1 Level 2 Level 3 Total Assets: Money market funds $ 32,458 $ — $ — $ 32,458 Corporate debt securities — 31,973 — 31,973 U.S. Treasury bills 26,656 — — 26,656 Total assets $ 59,114 $ 31,973 $ — $ 91,087 Liabilities: Contingent liability — — 20 20 Total liabilities $ — $ — $ 20 $ 20 |
Summary of Changes in Fair Value Adjustments for Liabilities | The carrying amount of our cash, receivables, and payables approximates fair value because of the short-term nature of these items. The following table sets forth a summary of the change in fair value adjustments for liabilities that are required to be marked-to-market. The common stock warrants were cancelled in March 2018, and the gain related to the extinguishment of the common stock warrant liability was recognized in other income (expense) on the consolidated statements of operations. The change in fair value of the contingent liability was recognized in general and administrative expense on the consolidated statements of operations. The following balance is measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands): Fair value Measurements Using Significant Unobservable Inputs (Level 3) Balance at January 1, 2018 $ 1,286 Loss related to change in fair value warrant liability (122 ) Initial estimate of fair value of contingent liability (1,144 ) Balance at December 31, 2018 $ 20 Change in fair value of contingent liability (20 ) Balance at December 31, 2019 $ — |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Schedule of Components of Operating Lease Expense | The Company performed evaluations of its contracts and determined that each of its identified leases are operating leases. The components of operating lease expense were as follows: Year ended December 31, 2019 2018 2017 (in thousands) Operating lease cost, gross $ 8,563 $ 7,423 $ 5,593 Variable lease cost, gross (1) 2,791 — — Sublease income (456 ) — — Total lease costs (2) $ 10,898 $ 7,423 $ 5,593 (1) Variable rent expense was not included within the measurement of the Company's operating right-of-use assets and lease liabilities. Variable rent expense is comprised primarily of the Company's proportionate share of operating expenses, property taxes and insurance and is classified as lease expense due to the Company's election to not separate lease and non-lease components. (2) Short-term lease costs for the year ended December 31, 2019, 2018 and 2017 were not significant and are not included in the table above. |
Schedule of Maturities of Operating Lease Liabilities | As of December 31, 2019, the maturities of the Company's operating lease liabilities were as follows (in thousands): 2020 $ 9,737 2021 9,139 2022 9,533 2023 8,964 2024 8,509 Thereafter 15,257 Total lease payments 61,139 Less: Imputed interest (12,792 ) Lease liabilities 48,347 Tenant improvement reimbursements included in the measurement of lease liabilities but not yet received (1,113 ) Lease liabilities, net 47,234 |
Selected Quarterly Financial _2
Selected Quarterly Financial Data (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Summary of Selected Unaudited Quarterly Consolidated Statements of Operations Data | The following tables set forth selected unaudited quarterly consolidated statements of operations data for each of the eight quarters in 2019 and 2018 (in thousands except per share data): Three Months Ended Dec. 31, 2019 Sept. 30, 2019 June 30, 2019 March 31, 2019 Dec. 31, 2018 Sept. 30, 2018 June 30, 2018 March 31, 2018 (unaudited) (in thousands) Total revenues $ 69,195 $ 68,335 $ 62,867 $ 58,076 $ 56,251 $ 55,239 $ 50,063 $ 47,991 Gross profit 46,263 47,045 42,420 39,919 39,129 39,101 35,465 34,006 Loss from operations (23,403 ) (20,579 ) (22,552 ) (19,459 ) (8,259 ) (11,956 ) (12,425 ) (12,133 ) Net loss (23,005 ) (20,923 ) (20,749 ) (16,142 ) (7,587 ) (11,472 ) (12,538 ) (11,868 ) Net loss attributable to common stockholders (23,005 ) (20,923 ) (20,749 ) (16,142 ) (7,587 ) (11,472 ) (12,538 ) (11,868 ) Net loss per common share attributable to common stockholders, basic and diluted (0.61 ) (0.56 ) (0.56 ) (0.45 ) (0.22 ) (0.33 ) (0.36 ) (0.37 ) |
Description of Business and S_4
Description of Business and Summary of Significant Accounting Policies - Additional Information (Details) | 12 Months Ended | |||
Dec. 31, 2019USD ($)Segment | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Jan. 01, 2019USD ($) | |
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | ||||
Entity incorporation date | 2008-09 | |||
Number of operating segment | Segment | 1 | |||
Unbilled receivable, balance | $ 2,060,000 | $ 6,032,000 | ||
Finite lived intangible asset, estimated useful life | 5 years | |||
Other Indefinite-lived Intangible Assets | $ 0 | |||
Accrued estimate contingent liability associated with acquisition | 20,000 | |||
Deferred costs amortization period | 4 years | |||
Minimum availability training period | 365 days | |||
Advertising expense | $ 12,524,000 | 11,387,000 | $ 9,274,000 | |
Foreign currency transaction gain (loss) | 331,000 | $ (794,000) | $ 466,000 | |
Operating lease right-of-use assets | 36,514,000 | |||
Operating lease liabilities | $ 47,234,000 | |||
Adoption of New Standard | ||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | ||||
Capitalized contract costs amortization period | 4 years | |||
ASU No 2016-02 | ||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | ||||
Operating lease right-of-use assets | $ 34,726,000 | |||
Operating lease liabilities | $ 46,205,000 | |||
2015 ESPP | ||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | ||||
Employee stock purchase plan, fair value assumption, expected term | 6 months | |||
Accounts Receivable Net | Customer Concentration Risk | ||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | ||||
Concentration risk, percentage | 8.40% | 14.00% |
Description of Business and S_5
Description of Business and Summary of Significant Accounting Policies - Summary of Reconciliation of the Denominator Used in the Calculation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Numerator: | |||||||||||
Net loss | $ (23,005) | $ (20,923) | $ (20,749) | $ (16,142) | $ (7,587) | $ (11,472) | $ (12,538) | $ (11,868) | $ (80,819) | $ (43,465) | $ (43,084) |
Denominator: | |||||||||||
Weighted-average common shares outstanding—basic | 36,892 | 34,248 | 29,401 | ||||||||
Total weighted-average common shares outstanding—basic | 36,892 | 34,248 | 29,401 | ||||||||
Weighted-average common shares outstanding-diluted | 36,892 | 34,248 | 29,401 | ||||||||
Net loss per common share | $ (0.61) | $ (0.56) | $ (0.56) | $ (0.45) | $ (0.22) | $ (0.33) | $ (0.36) | $ (0.37) | $ (2.19) | $ (1.27) | $ (1.47) |
Description of Business and S_6
Description of Business and Summary of Significant Accounting Policies - Summary of Shares Excluded from Calculation of Diluted Net Loss Per Share with a Potential Dilutive Impact (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Shares excluded from calculation of diluted loss per share with a potential dilutive impact | 3,199 | 3,012 | 3,561 |
Options to Purchase Common Stock | |||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Shares excluded from calculation of diluted loss per share with a potential dilutive impact | 601 | 1,303 | 2,010 |
Common Stock Warrants | |||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Shares excluded from calculation of diluted loss per share with a potential dilutive impact | 17 | ||
Employee Stock Purchase Plan | |||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Shares excluded from calculation of diluted loss per share with a potential dilutive impact | 14 | 19 | 20 |
Restricted Stock Units | |||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Shares excluded from calculation of diluted loss per share with a potential dilutive impact | 2,584 | 1,690 | 1,514 |
Description of Business and S_7
Description of Business and Summary of Significant Accounting Policies - Summary of Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Receivables [Abstract] | ||||
Allowance for doubtful accounts, beginning balance | $ 1,092 | $ 318 | $ 241 | |
Allowance for doubtful accounts, charged to costs or expenses | 377 | 1,399 | 197 | |
Allowance for doubtful accounts, deductions | [1] | (598) | (625) | (120) |
Allowance for doubtful accounts, ending balance | $ 871 | $ 1,092 | $ 318 | |
[1] | Deductions include actual accounts written-off, net of recoveries and revaluations. |
Description of Business and S_8
Description of Business and Summary of Significant Accounting Policies - Summary of Estimated Useful Life Assets Category (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Capitalized Software Development Costs | |
Property Plant And Equipment [Line Items] | |
Estimated Useful Life | 3 years |
Minimum | Computer and Office Equipment | |
Property Plant And Equipment [Line Items] | |
Estimated Useful Life | 2 years |
Minimum | Purchased Software | |
Property Plant And Equipment [Line Items] | |
Estimated Useful Life | 2 years |
Minimum | Furniture and Fixtures | |
Property Plant And Equipment [Line Items] | |
Estimated Useful Life | 2 years |
Minimum | Leasehold Improvements and Other | |
Property Plant And Equipment [Line Items] | |
Estimated Useful Life | 2 years |
Maximum | Computer and Office Equipment | |
Property Plant And Equipment [Line Items] | |
Estimated Useful Life | 3 years |
Maximum | Purchased Software | |
Property Plant And Equipment [Line Items] | |
Estimated Useful Life | 3 years |
Maximum | Furniture and Fixtures | |
Property Plant And Equipment [Line Items] | |
Estimated Useful Life | 5 years |
Maximum | Leasehold Improvements and Other | |
Property Plant And Equipment [Line Items] | |
Estimated Useful Life | 10 years |
Description of Business and S_9
Description of Business and Summary of Significant Accounting Policies - Summary of Consolidated Statement of Operations Reflecting Adoption of Topic 606 (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | |||||||||||
Revenue | $ 69,195 | $ 68,335 | $ 62,867 | $ 58,076 | $ 56,251 | $ 55,239 | $ 50,063 | $ 47,991 | $ 258,473 | $ 209,544 | $ 160,975 |
Cost of revenues | 82,826 | 61,843 | 46,562 | ||||||||
Gross profit | 46,263 | 47,045 | 42,420 | 39,919 | 39,129 | 39,101 | 35,465 | 34,006 | 175,647 | 147,701 | 114,413 |
Operating expenses: | |||||||||||
Sales and marketing | 121,643 | 97,481 | 78,726 | ||||||||
Other income (expense): | |||||||||||
Other income (expense), net | (225) | (698) | 257 | ||||||||
Loss before income tax benefit (expense) | (84,439) | (43,126) | (43,239) | ||||||||
Income tax benefit (expense) | 3,620 | (339) | 155 | ||||||||
Net loss | $ (23,005) | $ (20,923) | $ (20,749) | $ (16,142) | $ (7,587) | $ (11,472) | $ (12,538) | $ (11,868) | $ (80,819) | $ (43,465) | $ (43,084) |
Net loss per common share, basic and diluted | $ (0.61) | $ (0.56) | $ (0.56) | $ (0.45) | $ (0.22) | $ (0.33) | $ (0.36) | $ (0.37) | $ (2.19) | $ (1.27) | $ (1.47) |
Subscription and Support | |||||||||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | |||||||||||
Revenue | $ 236,241 | $ 188,501 | $ 144,108 | ||||||||
Cost of revenues | 64,170 | 46,706 | 34,351 | ||||||||
Professional Services and Other | |||||||||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | |||||||||||
Revenue | 22,232 | 21,043 | 16,867 | ||||||||
Cost of revenues | $ 18,656 | $ 15,137 | 12,211 | ||||||||
As Previously Reported | Adoption of New Standard | |||||||||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | |||||||||||
Revenue | 158,806 | ||||||||||
Gross profit | 112,429 | ||||||||||
Operating expenses: | |||||||||||
Sales and marketing | 83,716 | ||||||||||
Other income (expense): | |||||||||||
Loss before income tax benefit (expense) | (50,213) | ||||||||||
Income tax benefit (expense) | 391 | ||||||||||
Net loss | $ (49,822) | ||||||||||
Net loss per common share, basic and diluted | $ (1.69) | ||||||||||
As Previously Reported | Subscription and Support | Adoption of New Standard | |||||||||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | |||||||||||
Revenue | $ 139,925 | ||||||||||
As Previously Reported | Professional Services and Other | Adoption of New Standard | |||||||||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | |||||||||||
Revenue | 18,881 | ||||||||||
Cost of revenues | 12,026 | ||||||||||
Adjustments | Adoption of New Standard | |||||||||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | |||||||||||
Revenue | 2,169 | ||||||||||
Gross profit | 1,984 | ||||||||||
Operating expenses: | |||||||||||
Sales and marketing | (4,990) | ||||||||||
Other income (expense): | |||||||||||
Loss before income tax benefit (expense) | 6,974 | ||||||||||
Income tax benefit (expense) | (236) | ||||||||||
Net loss | $ 6,738 | ||||||||||
Net loss per common share, basic and diluted | $ 0.22 | ||||||||||
Adjustments | Subscription and Support | Adoption of New Standard | |||||||||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | |||||||||||
Revenue | $ 4,183 | ||||||||||
Adjustments | Professional Services and Other | Adoption of New Standard | |||||||||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | |||||||||||
Revenue | (2,014) | ||||||||||
Cost of revenues | $ 185 |
Description of Business and _10
Description of Business and Summary of Significant Accounting Policies - Summary of Consolidated Statement of Cash Flows Reflecting Adoption of Topic 606 (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | |||
Net loss | $ (80,819) | $ (43,465) | $ (43,084) |
Accounts receivable, net | (2,217) | (2,643) | (14,882) |
Prepaid expenses and other assets | (6,836) | (2,553) | (9,176) |
Deferred commissions | (2,679) | (1,384) | (4,990) |
Deferred revenue | 22,166 | 19,008 | 26,763 |
Other liabilities | 11 | (32) | |
Net cash used in operating activities | $ 18,861 | $ 98 | (21,129) |
As Previously Reported | Adoption of New Standard | |||
Cash flows from operating activities: | |||
Net loss | (49,822) | ||
Accounts receivable, net | (12,830) | ||
Prepaid expenses and other assets | (9,599) | ||
Deferred revenue | 26,882 | ||
Net cash used in operating activities | (21,129) | ||
Adjustments | Adoption of New Standard | |||
Cash flows from operating activities: | |||
Net loss | 6,738 | ||
Accounts receivable, net | (2,052) | ||
Prepaid expenses and other assets | 423 | ||
Deferred commissions | (4,990) | ||
Deferred revenue | $ (119) |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Property Plant And Equipment [Line Items] | ||
Total property and equipment | $ 59,886 | $ 49,776 |
Less accumulated depreciation and amortization | (31,810) | (22,388) |
Total | 28,076 | 27,388 |
Computer and Office Equipment | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment | 7,503 | 6,204 |
Purchased Software | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment | 1,071 | 1,071 |
Capitalized Software Development Costs | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment | 27,420 | 22,181 |
Furniture and Fixtures | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment | 5,184 | 4,688 |
Leasehold Improvements and Other | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment | $ 18,708 | $ 15,632 |
Property and Equipment - Additi
Property and Equipment - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property Plant And Equipment [Abstract] | |||
Accumulated amortization for capitalized software development costs | $ 14,314,000 | $ 9,035,000 | |
Amortization expense for capitalized software development costs | $ 6,021,000 | $ 4,563,000 | $ 2,486,000 |
Acquisition - Additional Inform
Acquisition - Additional Information (Details) - USD ($) | Apr. 05, 2019 | Feb. 21, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Business Acquisition [Line Items] | |||||
Finite lived intangible asset, estimated useful life | 5 years | ||||
Income tax benefit | $ 4,475,000 | $ (112,000) | $ 397,000 | ||
Developed Technology | |||||
Business Acquisition [Line Items] | |||||
Finite lived intangible asset, estimated useful life | 41 months | ||||
Trade Name | |||||
Business Acquisition [Line Items] | |||||
Finite lived intangible asset, estimated useful life | 29 months | ||||
Portfolium | |||||
Business Acquisition [Line Items] | |||||
Business acquisition, acquisition date | Feb. 21, 2019 | ||||
Income tax benefit | $ 4,570,000 | ||||
Increase to goodwill | $ 4,570,000 | ||||
Portfolium | Developed Technology | |||||
Business Acquisition [Line Items] | |||||
Finite lived intangible asset, estimated useful life | 5 years | ||||
Portfolium | Customer Lists | |||||
Business Acquisition [Line Items] | |||||
Finite lived intangible asset, estimated useful life | 4 years | ||||
Portfolium | Trade Name | |||||
Business Acquisition [Line Items] | |||||
Finite lived intangible asset, estimated useful life | 4 years | ||||
MasteryConnect | |||||
Business Acquisition [Line Items] | |||||
Business acquisition, acquisition date | Apr. 5, 2019 | ||||
Income tax benefit | $ 4,570,000 | ||||
Increase to goodwill | $ 4,570,000 | ||||
MasteryConnect | Developed Technology | |||||
Business Acquisition [Line Items] | |||||
Finite lived intangible asset, estimated useful life | 5 years | ||||
MasteryConnect | Customer Lists | |||||
Business Acquisition [Line Items] | |||||
Finite lived intangible asset, estimated useful life | 4 years | ||||
MasteryConnect | Trade Name | |||||
Business Acquisition [Line Items] | |||||
Finite lived intangible asset, estimated useful life | 4 years |
Acquisitions - Summary of Estim
Acquisitions - Summary of Estimated Fair Values of Consideration transferred, Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Apr. 05, 2019 | Feb. 21, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Liabilities assumed | |||||
Goodwill | $ 69,614 | $ 12,354 | |||
Portfolium | |||||
Consideration transferred | |||||
Cash paid | [1] | $ 25,552 | |||
Common stock | 17,133 | ||||
Fair value of assumed Portfolium awards attributable to pre-combination services | 715 | ||||
Total purchase consideration | 43,400 | ||||
Identifiable assets acquired | |||||
Cash | 604 | ||||
Accounts receivable | 273 | ||||
Other assets | 31 | ||||
Total assets acquired | 22,194 | ||||
Liabilities assumed | |||||
Accounts payable and accrued liabilities | 115 | ||||
Deferred revenue | 1,535 | ||||
Deferred tax liability, net | [1] | 3,911 | |||
Total liabilities assumed | 5,561 | ||||
Goodwill | [1],[2] | 26,767 | |||
Total purchase consideration | (43,400) | ||||
Portfolium | Developed Technology | |||||
Identifiable assets acquired | |||||
Intangible assets | 10,016 | ||||
Portfolium | Customer Relationships | |||||
Identifiable assets acquired | |||||
Intangible assets | 8,560 | ||||
Portfolium | Trade Name | |||||
Identifiable assets acquired | |||||
Intangible assets | $ 2,710 | ||||
MasteryConnect | |||||
Consideration transferred | |||||
Cash paid | $ 32,462 | ||||
Common stock | 12,163 | ||||
Total purchase consideration | 44,625 | ||||
Identifiable assets acquired | |||||
Cash | 2,396 | ||||
Accounts receivable | 495 | ||||
Other assets | 1,919 | ||||
Total assets acquired | 19,110 | ||||
Liabilities assumed | |||||
Accounts payable and accrued liabilities | 936 | ||||
Deferred revenue | 3,384 | ||||
Deferred tax liability, net | 659 | ||||
Total liabilities assumed | 4,979 | ||||
Goodwill | [3] | 30,494 | |||
Total purchase consideration | (44,625) | ||||
MasteryConnect | Developed Technology | |||||
Identifiable assets acquired | |||||
Intangible assets | 9,191 | ||||
MasteryConnect | Customer Relationships | |||||
Identifiable assets acquired | |||||
Intangible assets | 4,453 | ||||
MasteryConnect | Trade Name | |||||
Identifiable assets acquired | |||||
Intangible assets | $ 656 | ||||
[1] | During the second quarter of 2019, an adjustment of $1,199,000 was made to the provisional deferred tax liability. During the fourth quarter of 2019, an offsetting adjustment of $280,000 was made to the deferred tax liability, with a corresponding reduction to goodwill, upon finalizing and filing the Portfolium tax return. | ||||
[2] | During the third quarter of 2019, we recorded a $330,000 reduction to the provisional cash consideration, with a corresponding reduction to goodwill, as a result of finalizing a working capital adjustment. | ||||
[3] | During the fourth quarter of 2019, an adjustment of $57,000 was made to the deferred tax liability, with a corresponding reduction to goodwill, upon finalizing and filing the MasteryConnect tax return. |
Acquisitions - Summary of Est_2
Acquisitions - Summary of Estimated Fair Values of Consideration transferred, Assets Acquired and Liabilities Assumed (Parenthetical) (Details) - USD ($) | 3 Months Ended | ||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | |
Business Acquisition [Line Items] | |||
Reduction to provisional cash consideration | $ 330,000 | ||
Portfolium | |||
Business Acquisition [Line Items] | |||
Adjustment of provisional deferred tax liability | $ 280,000 | $ 1,199,000 | |
MasteryConnect | |||
Business Acquisition [Line Items] | |||
Adjustment of provisional deferred tax liability | $ 57,000 |
Acquistions - Summary of Combin
Acquistions - Summary of Combined Results of Operations for Instructure, MasteryConnect and Portfolium (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | ||
Business Acquisition Pro Forma Information [Abstract] | |||
Pro forma revenue | $ 261,957 | $ 223,325 | |
Pro forma net loss | [1] | $ (88,519) | $ (55,731) |
Pro forma net loss per common share, basic and diluted | $ (2.40) | $ (1.63) | |
[1] | Pro forma net loss excludes the deferred income tax benefit from business combination in the amount of $4,570,000 for the year ended December 31, 2019. |
Acquistions - Summary of Comb_2
Acquistions - Summary of Combined Results of Operations for Instructure, MasteryConnect and Portfolium (Parenthetical) (Details) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Business Acquisition Pro Forma Information [Abstract] | |
Pro forma net loss excludes deferred income tax benefit from business combination | $ 4,570,000 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |||
Goodwill | $ 69,614 | $ 12,354 | |
Amortization of intangible assets | $ 9,335 | $ 2,786 | $ 572 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Summary of Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Finite Lived Intangible Assets [Line Items] | ||
Accumulated amortization | $ (14,031) | $ (4,696) |
Total | $ 32,513 | 6,262 |
Intangible assets, Weighted Average Remaining Useful Life | 5 years | |
Domain Names | ||
Finite Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 1,268 | 1,268 |
Intangible assets, Weighted Average Remaining Useful Life | 0 months | |
Trademarks | ||
Finite Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 120 | 120 |
Intangible assets, Weighted Average Remaining Useful Life | 0 months | |
Software | ||
Finite Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 620 | 620 |
Intangible assets, Weighted Average Remaining Useful Life | 3 months | |
Capitalized Learning Content | ||
Finite Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 400 | 400 |
Intangible assets, Weighted Average Remaining Useful Life | 22 months | |
Trade names | ||
Finite Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 3,686 | 320 |
Intangible assets, Weighted Average Remaining Useful Life | 29 months | |
Developed Technology | ||
Finite Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 24,527 | 5,320 |
Intangible assets, Weighted Average Remaining Useful Life | 41 months | |
Customer Relationships | ||
Finite Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 15,923 | $ 2,910 |
Intangible assets, Weighted Average Remaining Useful Life | 29 months |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Estimated Amortization Expense (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Finite Lived Intangible Assets Net [Abstract] | ||
2020 | $ 10,322 | |
2021 | 9,186 | |
2022 | 7,936 | |
2023 | 4,446 | |
2024 | 623 | |
Total | $ 32,513 | $ 6,262 |
Marketable Securities - Summary
Marketable Securities - Summary of Major Security Type Assets Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | $ 15,584 | $ 58,638 |
Gross Unrealized Gains | 1 | 3 |
Gross Unrealized Losses | (1) | (12) |
Estimated Fair Value | 15,584 | 58,629 |
Corporate Debt Securities | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 11,585 | 31,977 |
Gross Unrealized Gains | 1 | 3 |
Gross Unrealized Losses | 0 | (7) |
Estimated Fair Value | 11,586 | 31,973 |
Government Treasury Bills | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 3,999 | 26,661 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (1) | (5) |
Estimated Fair Value | $ 3,998 | $ 26,656 |
Marketable Securities - Additio
Marketable Securities - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Investments Debt And Equity Securities [Abstract] | |||
Gross realized gains or losses from sale or maturity of marketable securities | $ 0 | $ 0 | $ 0 |
Gross interest income on securities | 621,000 | 727,000 | 179,000 |
Accretion income on securities | $ 480,000 | $ 696,000 | $ 39,000 |
Marketable Securities - Schedul
Marketable Securities - Schedule of Estimated Fair Value of Investments by Contractual Maturity (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Investments Debt And Equity Securities [Abstract] | ||
Due within one year | $ 15,584 | $ 58,629 |
Total | $ 15,584 | $ 58,629 |
Credit Facility - Additional In
Credit Facility - Additional Information (Details) - Revolver Borrowings - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | Nov. 30, 2012 | Dec. 31, 2019 |
Line Of Credit Facility [Line Items] | |||||
Maximum revolver borrowing amount | $ 5,000,000 | $ 5,000,000 | $ 15,000,000 | $ 7,000,000 | |
Variable interest rate | 0.50% | ||||
Quarterly fee payable percentage on unused portion of available borrowing | 0.25% | ||||
Line of credit facility, description | The credit facility contains customary conditions to borrowing, events of default and covenants, including covenants that restrict our ability to dispose of assets, change our business, merge with or acquire other entities, incur indebtedness, incur encumbrances, make distributions to holders of our capital stock, make investments or engage in transactions with our affiliates. The agreement also includes a financial covenant requiring the achievement of minimum bookings on a trailing three-month basis, tested monthly. During the continuance of an event of default, SVB may accelerate amounts outstanding, terminate the credit facility, and foreclose on the collateral. | ||||
Maximum revolver borrowing amount based on borrowing base calculation | $ 35,000,000 | $ 35,000,000 | $ 35,000,000 | ||
Execution period of amended credit facility | 12 months | 12 months | 12 months | ||
Credit facility maturity date | Jun. 30, 2018 | ||||
Minimum | |||||
Line Of Credit Facility [Line Items] | |||||
Variable interest rate | 1.25% | ||||
Percentage of security of capital stock in foreign subsidiaries | 65.00% | ||||
Maximum | |||||
Line Of Credit Facility [Line Items] | |||||
Variable interest rate | 3.75% |
Geographic Data and Revenue - A
Geographic Data and Revenue - Additional Information (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($)Segment | |
Disaggregation Of Revenue [Line Items] | |
Number of operating segment | Segment | 1 |
Revenue, remaining performance obligation expected to be recognized | $ | $ 505 |
Minimum | |
Disaggregation Of Revenue [Line Items] | |
Percentage of revenue recognized included in deferred revenue | 45.00% |
Maximum | |
Disaggregation Of Revenue [Line Items] | |
Percentage of revenue recognized included in deferred revenue | 55.00% |
Geographic Data and Revenue - S
Geographic Data and Revenue - Schedule of Revenue by Geographic Region (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disaggregation Of Revenue [Line Items] | |||||||||||
Revenue | $ 69,195 | $ 68,335 | $ 62,867 | $ 58,076 | $ 56,251 | $ 55,239 | $ 50,063 | $ 47,991 | $ 258,473 | $ 209,544 | $ 160,975 |
United States | |||||||||||
Disaggregation Of Revenue [Line Items] | |||||||||||
Revenue | 206,183 | 169,643 | 137,563 | ||||||||
Foreign | |||||||||||
Disaggregation Of Revenue [Line Items] | |||||||||||
Revenue | $ 52,290 | $ 39,901 | $ 23,412 | ||||||||
Sales Revenue | Customer Concentration Risk | Foreign | |||||||||||
Disaggregation Of Revenue [Line Items] | |||||||||||
Percentage of revenue generated outside of the United States | 20.00% | 19.00% | 15.00% |
Geographic Data and Revenue -_2
Geographic Data and Revenue - Additional Information (Details1) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2019-01-01 | Dec. 31, 2019 |
Disaggregation Of Revenue [Line Items] | |
Revenue, Remaining performance obligation period | 24 months |
Revenue, Remaining performance obligation, percentage | 74.00% |
Deferred Commissions - Addition
Deferred Commissions - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Deferred Costs [Abstract] | |||
Deferred commissions | $ 22,559,000 | $ 19,630,000 | |
Amortization expense for deferred commissions | 11,919,000 | 10,088,000 | $ 7,231,000 |
Deferred commissions impairment charges | $ 0 | $ 0 | $ 0 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Details) | Feb. 02, 2016USD ($)shares | Apr. 30, 2014USD ($)$ / sharesshares | Nov. 30, 2012$ / sharesshares | Dec. 31, 2019USD ($)VotingRight$ / sharesshares | Dec. 31, 2018$ / sharesshares |
Class Of Stock [Line Items] | |||||
Common stock, authorized | 200,000,000 | 200,000,000 | |||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | |||
Common stock, Issued | 38,257,326 | 35,385,810 | |||
Retirement of treasury stock, Shares | 0 | 0 | |||
Common stock voting rights | Each share of common stock has the right to one vote on all matters submitted to a vote of stockholders. | ||||
Dividends paid or declared | $ | $ 0 | ||||
Number of common stock voting rights | VotingRight | 1 | ||||
Warrants issued to purchase common stock | 78,406 | 70,000 | |||
Warrant exercise term | 10 years | ||||
Warrant exercise price | $ / shares | $ 4.47 | $ 0.99 | |||
Fair value of warrant on the date of grant recorded as deferred financing costs | $ | $ 58,000 | ||||
Warrants exercised | 86,666 | ||||
Shares withheld to cover warrant exercise costs | 8,260 | ||||
Adjustments to additional paid in capital for warrant liability reversed | $ | $ 244,000 | ||||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | |||
Preferred stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | |||
Preferred stock, shares issued | 0 | 0 | |||
Preferred stock, shares outstanding | 0 | 0 | |||
Common Stock Warrant Without Contingency | |||||
Class Of Stock [Line Items] | |||||
Warrants issued to purchase common stock | 16,666 | ||||
Maximum | |||||
Class Of Stock [Line Items] | |||||
Warrants issued to purchase common stock | 33,332 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2015 | Oct. 31, 2015 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Options outstanding | 601,000 | 1,303,000 | |||
Common stock, authorized | 200,000,000 | 200,000,000 | |||
Stock options contractual life | 10 years | ||||
Weighted-average grant-date fair value option granted | $ 21.27 | $ 34.72 | $ 21.83 | ||
Total intrinsic value of options exercised | $ 25,036,000 | $ 27,546,000 | $ 25,947,000 | ||
Total fair value of options vested | 2,380,000 | 2,779,000 | $ 4,254,000 | ||
Unrecognized stock-based compensation costs related to non-vested awards | $ 2,672,000 | $ 4,276,000 | |||
Weighted-average period for unrecognized compensation cost expected to be recognized | 2 years 1 month 6 days | 2 years 8 months 12 days | |||
Number of shares expected to vest | 601,000 | ||||
Aggregate intrinsic value of shares expected to vest | $ 17,992,000 | ||||
Minimum | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Vesting period | 1 year | ||||
Maximum | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Vesting period | 4 years | ||||
Restricted Stock Units | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Shares outstanding | 2,584,000 | 1,690,000 | |||
Unrecognized stock-based compensation costs related to non-vested awards | $ 94,869,000 | ||||
Weighted-average period for unrecognized compensation cost expected to be recognized | 3 years | ||||
Number of shares expected to vest | 2,584,000 | ||||
Aggregate intrinsic value of shares expected to vest | $ 124,562,000 | ||||
Total fair value of shares vested | $ 50,890,000 | $ 24,979,000 | |||
Restricted Stock Units | Minimum | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Vesting period | 1 year | ||||
Restricted Stock Units | Maximum | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Vesting period | 4 years | ||||
2010 Equity Incentive Plan | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Shares available for future grants | 0 | ||||
Options outstanding | 308,395 | ||||
2015 Equity Incentive Plan | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Options outstanding | 266,330 | ||||
Common stock, authorized | 7,491,786 | ||||
Percentage of outstanding stock | 4.50% | ||||
2015 Equity Incentive Plan | Restricted Stock Units | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Shares available for future grants | 1,863,789 | ||||
Shares outstanding | 2,583,736 | ||||
2014 Equity Incentive Plan | Practice XYZ, Inc. | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Shares available for future grants | 0 | ||||
Options outstanding | 381 | ||||
2014 Equity Incentive Plan | Portfolium | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Shares available for future grants | 0 | ||||
Options outstanding | 25,492 | ||||
ESPP | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Percentage of outstanding stock | 1.00% | ||||
Common stock reserved for future issuance | 602,094 | 333,333 | |||
Shares authorized ESPP | 1,533,205 | ||||
Percentage of discount through payroll deductions to eligible employees to purchase common stock | 15.00% | ||||
Initial offering expiration period | 27 months | ||||
Percentage stock purchase price per share | 85.00% | ||||
Common stock issued under ESPP | 189,038 | ||||
Stock price per share under ESPP | $ 33.15 | ||||
Cash proceeds from issuance of common stock under ESPP | $ 6,316,955 | ||||
Unrecognized stock-based compensation costs | $ 873,000 | $ 1,188,000 | |||
Weighted average date for unrecognized compensation cost to expected to be recognized | May 31, 2020 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Assumptions Relating to Stock Options and ESPP Purchase Rights (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Options | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Dividend yield | 0.00% | 0.00% | 0.00% |
Volatility | 44.24% | ||
Volatility, minimum | 46.02% | 62.95% | |
Volatility, maximum | 46.57% | 63.10% | |
Risk-free interest rate | 2.51% | ||
Risk-free interest rate, minimum | 2.50% | 2.12% | |
Risk-free interest rate, maximum | 2.84% | 2.30% | |
Expected life (years) | 5 years 1 month 6 days | 6 years 1 month 6 days | |
Fair value of common stock | $ 42.78 | ||
Employee Stock Purchase Plan | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Dividend yield | 0.00% | 0.00% | 0.00% |
Volatility, minimum | 29.69% | 33.94% | 25.08% |
Volatility, maximum | 37.46% | 45.46% | 29.89% |
Risk-free interest rate, minimum | 1.62% | 2.10% | 1.07% |
Risk-free interest rate, maximum | 2.35% | 2.38% | 1.45% |
Expected life (years) | 6 months | 6 months | 6 months |
Minimum | Options | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Expected life (years) | 6 years 1 month 6 days | ||
Fair value of common stock | $ 16.39 | $ 12.93 | |
Minimum | Employee Stock Purchase Plan | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Fair value of common stock | $ 38.14 | 38.14 | $ 27 |
Maximum | Options | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Expected life (years) | 6 years 2 months 12 days | ||
Fair value of common stock | 20.57 | $ 13.37 | |
Maximum | Employee Stock Purchase Plan | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Fair value of common stock | $ 39.87 | $ 42.65 | $ 33.90 |
Stock-Based Compensation - Su_2
Stock-Based Compensation - Summary of Stock-Based Compensation Expense by Award Type (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Total stock-based compensation | $ 56,512 | $ 22,747 | $ 15,670 |
Options | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Total stock-based compensation | 1,997 | 2,867 | 3,806 |
Restricted Stock Units | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Total stock-based compensation | 53,991 | 17,560 | 9,969 |
Employee Stock Purchase Plan | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Total stock-based compensation | $ 524 | $ 2,320 | $ 1,895 |
Stock-Based Compensation - Su_3
Stock-Based Compensation - Summary of Stock-Based Compensation Expense Recorded in Consolidated Statement of Operations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Total stock-based compensation | $ 56,512 | $ 22,747 | $ 15,670 |
Subscription and Support Cost of Revenue | |||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Total stock-based compensation | 1,769 | 1,235 | 762 |
Professional Services and Other Cost of Revenue | |||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Total stock-based compensation | 2,111 | 975 | 596 |
Sales and Marketing | |||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Total stock-based compensation | 15,098 | 6,022 | 4,331 |
Research and Development | |||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Total stock-based compensation | 19,550 | 8,338 | 6,023 |
General and Administrative | |||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Total stock-based compensation | $ 17,984 | $ 6,177 | $ 3,958 |
Stock-Based Compensation - Su_4
Stock-Based Compensation - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ||
Shares Underlying Options, Outstanding, Beginning Balance | 1,303 | |
Shares Underlying Options, Granted | 41 | |
Shares Underlying Options, Exercised | (701) | |
Shares Underlying Options, Forfeited or Cancelled | (42) | |
Shares Underlying Options, Outstanding, Ending Balance | 601 | 1,303 |
Shares Underlying Options, Vested and Expected to Vest | 601 | |
Shares Underlying Options, Exercisable | 442 | |
Weighted-Average Exercise Price, Outstanding, Beginning Balance | $ 14.09 | |
Weighted-Average Exercise Price, Granted | 3.54 | |
Weighted-Average Exercise Price, Exercised | 9.42 | |
Weighted-Average Exercise Price, Forfeited or Cancelled | 21.45 | |
Weighted-Average Exercise Price, Outstanding, Ending Balance | 18.25 | $ 14.09 |
Weighted-Average Exercise Price, Vested and Expected to Vest | 18.25 | |
Weighted-Average Exercise Price, Exercisable | $ 14.01 | |
Weighted-Average Remaining Life, Outstanding | 6 years 2 months 12 days | 6 years 6 months |
Weighted-Average Remaining Life, Vested and Expected to Vest | 6 years 2 months 12 days | |
Weighted-Average Remaining Life, Exercisable | 5 years 7 months 6 days | |
Aggregate Intrinsic Value, Outstanding | $ 17,992 | $ 30,552 |
Aggregate Intrinsic Value, Vested and Expected to Vest | 17,992 | |
Aggregate Intrinsic Value, Exercisable | $ 15,130 |
Stock-Based Compensation - Su_5
Stock-Based Compensation - Summary of Activity of Unvested Stock Options (Details) shares in Thousands | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Shares Underlying Options, Unvested, Beginning Balance | shares | 266 |
Shares Underlying Options, Granted | shares | 41 |
Shares Underlying Options, Vested | shares | (113) |
Shares Underlying Options, Forfeited | shares | (35) |
Shares Underlying Options, Unvested, Ending Balance | shares | 159 |
Weighted-Average Grant Date Fair Value Per Share, Unvested, Beginning Balance | $ / shares | $ 16.89 |
Weighted-Average Grant Date Fair Value Per Share, Granted | $ / shares | 21.27 |
Weighted-Average Grant Date Fair Value Per Share, Vested | $ / shares | 20.88 |
Weighted-Average Grant Date Fair Value Per Share, Forfeited | $ / shares | 12.87 |
Weighted-Average Grant Date Fair Value Per Share, Unvested, Ending Balance | $ / shares | $ 17.92 |
Stock-Based Compensation - Su_6
Stock-Based Compensation - Summary of Restricted Stock Units Activity (Details) - Restricted Stock Units shares in Thousands | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Shares, Unvested and Outstanding, Beginning Balance | shares | 1,690 |
Shares, Granted | shares | 2,706 |
Shares, Vested | shares | (1,388) |
Shares, Cancelled | shares | (424) |
Shares, Unvested and Outstanding, Ending Balance | shares | 2,584 |
Weighted-Average Grant Date Fair Value Per Share, Unvested and Outstanding, Beginning Balance | $ / shares | $ 32.87 |
Weighted-Average Grant Date Fair Value Per Share, Granted | $ / shares | 42.59 |
Weighted-Average Grant Date Fair Value Per Share, Vested | $ / shares | 36.70 |
Weighted-Average Grant Date Fair Value Per Share, Cancelled | $ / shares | 36.71 |
Weighted-Average Grant Date Fair Value Per Share, Unvested and Outstanding, Ending Balance | $ / shares | $ 40.38 |
Income Taxes - Schedule of Loss
Income Taxes - Schedule of Loss Before Provision for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
United States | $ (82,751) | $ (38,205) | $ (35,176) |
Foreign | (1,688) | (4,921) | (8,063) |
Loss before income tax benefit (expense) | $ (84,439) | $ (43,126) | $ (43,239) |
Income Taxes - Components of Pr
Income Taxes - Components of Provision (Benefit) for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Current: | |||
State | $ 84 | $ 35 | $ 27 |
Foreign | 771 | 192 | 215 |
Total | 855 | 227 | 242 |
Deferred: | |||
Federal | (4,560) | 6 | (632) |
State | 1 | 2 | (6) |
Foreign | 84 | 104 | 241 |
Total | (4,475) | 112 | (397) |
Provision (benefit) for income taxes | $ (3,620) | $ 339 | $ (155) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes [LineItems] | |||
Federal statutory income tax rate | 21.00% | 35.00% | |
Accumulated losses evaluation period | 3 years | ||
Increase in valuation allowance | $ 25,798,000 | $ 20,656,000 | |
Tax cuts and jobs act, remeasurement of deferred tax balance with equal offset to valuation allowance | 24,762,000 | ||
Interest or penalties recognized | $ 0 | ||
Minimum | |||
Income Taxes [LineItems] | |||
Uncertain tax positions percentage | 50.00% | ||
Federal, State and Foreign | |||
Income Taxes [LineItems] | |||
Net operating loss carryforwards | $ 111,031,000 | ||
Operating loss carryforwards expiration beginning year | 2020 | ||
Federal and State | Research And Development Tax Credit Carryforward | |||
Income Taxes [LineItems] | |||
Tax credit carryforwards | $ 17,577,000 | ||
Tax credit carryforward expiration beginning year | 2024 | ||
Federal | |||
Income Taxes [LineItems] | |||
Net operating loss carryforwards | $ 393,602,000 | $ 262,702,000 | |
Operating loss carryforwards, terms of expiration | expire at various dates through 2040 | ||
Federal | Research And Development Tax Credit Carryforward | |||
Income Taxes [LineItems] | |||
Tax credit carryforwards | $ 13,270,000 | ||
Tax credit carryforwards, terms of expiration | expire at various dates through 2040 | ||
State | Research And Investment Tax Credit Carryforward | |||
Income Taxes [LineItems] | |||
Tax credit carryforwards | $ 4,300,000 | ||
Tax credit carryforwards, terms of expiration | expire at various dates through 2034 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Income Taxes Computed at Federal Statutory Rate and Provision for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Expected income tax benefit at the federal statutory rate | $ (17,732) | $ (9,056) | $ (14,700) |
State tax net of federal benefit | (7,011) | (4,001) | (3,909) |
Stock-based compensation | (4,485) | (4,426) | (10,202) |
Stock warrant liability | (26) | 32 | |
Difference in foreign tax rates | 2,336 | (589) | 1,152 |
Research and development credits | (3,079) | (2,236) | (1,636) |
Change in valuation allowance | 25,798 | 20,656 | 6,124 |
Change in tax rate | 22,721 | ||
Other | 553 | 17 | 263 |
Provision (benefit) for income taxes | $ (3,620) | $ 339 | $ (155) |
Income Taxes - Significant Comp
Income Taxes - Significant Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | |||
Net operating loss carryforwards | $ 111,031 | $ 78,356 | $ 61,954 |
Research and development credits | 10,838 | 7,075 | 4,211 |
Accruals and reserves | 1,425 | 2,644 | 1,558 |
Depreciation and amortization | 203 | 847 | 453 |
Lease liability | 12,852 | ||
Stock-based compensation | 2,783 | 2,377 | 1,986 |
Total deferred tax assets | 139,132 | 91,299 | 70,162 |
Deferred tax liabilities: | |||
Depreciation and amortization | (10,087) | (1,697) | (2,351) |
Deferred commissions | (4,793) | (5,159) | (4,738) |
Right of use asset | (9,671) | ||
Capitalized costs | (3,530) | (3,568) | (2,743) |
Total deferred tax liabilities | (28,081) | (10,424) | (9,832) |
Valuation allowance | (111,691) | (81,421) | (60,765) |
Net deferred tax liabilities | $ (640) | $ (546) | $ (435) |
Income Taxes - Summary of Activ
Income Taxes - Summary of Activity Related to Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Unrecognized benefit—beginning of the year | $ 4,027 | $ 2,267 | $ 1,091 |
Gross increases (decreases)—current period positions | 2,125 | 1,760 | 1,176 |
Unrecognized benefit—end of period | $ 6,152 | $ 4,027 | $ 2,267 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Additional Information (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Fair Value Disclosures [Abstract] | ||
Transfers between Level 1 and Level 2 of the fair value measurement | $ 0 | $ 0 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Fair Value Measurements Recurring - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total assets | $ 79,118 | $ 91,087 |
Total liabilities | 20 | |
Money Market Funds | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total assets | 63,534 | 32,458 |
Corporate Debt Securities | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total assets | 11,586 | 31,973 |
U.S. Treasury bills | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total assets | 3,998 | 26,656 |
Contingent Liability | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total liabilities | 20 | |
Level 1 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total assets | 67,532 | 59,114 |
Level 1 | Money Market Funds | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total assets | 63,534 | 32,458 |
Level 1 | U.S. Treasury bills | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total assets | 3,998 | 26,656 |
Level 2 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total assets | 11,586 | 31,973 |
Level 2 | Corporate Debt Securities | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total assets | $ 11,586 | 31,973 |
Level 3 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total liabilities | 20 | |
Level 3 | Contingent Liability | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Total liabilities | $ 20 |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments - Summary of Changes in Fair Value Adjustments for Liabilities (Details) - Warrant Liability And Earn-Out Consideration - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||
Beginning Balance | $ 20 | $ 1,286 |
Loss related to change in fair value warrant liability | (122) | |
Initial estimate of fair value of contingent liability | (1,144) | |
Change in fair value of contingent liability | $ (20) | |
Ending Balance | $ 20 |
Leases - Additional Information
Leases - Additional Information (Details) | 12 Months Ended | ||
Dec. 31, 2019USD ($)Location | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Lessee Lease Description [Line Items] | |||
Lessee, operating lease, existence of option to extend [true false] | true | ||
Number of locations subleased | Location | 2 | ||
Lessee, operating sublease, existence of option to extend [true false] | false | ||
Operating lease liabilities, cash paid | $ 9,320,000 | ||
Right-of-use assets obtained in exchange for lease obligations | $ 6,850,000 | ||
Weighted average discount rate | 7.13% | ||
Weighted average remaining lease term | 6 years 7 months 6 days | ||
Rent expense under operating leases | $ 10,898,000 | $ 7,423,000 | $ 5,593,000 |
First Sublease | |||
Lessee Lease Description [Line Items] | |||
Lessee operating sublease remaining term | 12 months | ||
Operating leases sublease expiry date | 2020 | ||
Second Sublease | |||
Lessee Lease Description [Line Items] | |||
Lessee operating sublease remaining term | 42 months | ||
Operating leases sublease expiry date | 2023 | ||
Minimum | |||
Lessee Lease Description [Line Items] | |||
Operating lease term | 1 year | ||
Operating lease, renewal term | 3 years | ||
Maximum | |||
Lessee Lease Description [Line Items] | |||
Operating lease term | 10 years | ||
Operating lease, renewal term | 5 years |
Leases - Schedule of Components
Leases - Schedule of Components of Operating Lease Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Lease Cost [Abstract] | ||||
Operating lease cost, gross | $ 8,563 | $ 7,423 | $ 5,593 | |
Variable lease cost, gross | [1] | 2,791 | ||
Sublease income | (456) | |||
Total lease costs | [2] | $ 10,898 | $ 7,423 | $ 5,593 |
[1] | Variable rent expense was not included within the measurement of the Company's operating right-of-use assets and lease liabilities. Variable rent expense is comprised primarily of the Company's proportionate share of operating expenses, property taxes and insurance and is classified as lease expense due to the Company's election to not separate lease and non-lease components. | |||
[2] | Short-term lease costs for the year ended December 31, 2019, 2018 and 2017 were not significant and are not included in the table above. |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Operating Lease Liabilities (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Property Plant And Equipment [Abstract] | |
2020 | $ 9,737 |
2021 | 9,139 |
2022 | 9,533 |
2023 | 8,964 |
2024 | 8,509 |
Thereafter | 15,257 |
Total lease payments | 61,139 |
Imputed interest | (12,792) |
Lease liabilities | 48,347 |
Tenant improvement reimbursements included in the measurement of lease liabilities but not yet received | (1,113) |
Lease liabilities, net | $ 47,234 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Commitments And Contingencies Disclosure [Abstract] | ||
Letters of credit outstanding | $ 2.6 | $ 2.4 |
Employee Benefit Plan - Additio
Employee Benefit Plan - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Compensation And Retirement Disclosure [Abstract] | |||
Employers matching contribution, percentage | 50.00% | ||
Maximum annual contributions per employee | $ 1,000 | ||
Participants matching contribution vesting period | 4 years | ||
Participants matching contribution cliff vest period | 1 year | ||
Cost recognized under 401(k) plan | $ 917,000 | $ 931,000 | $ 808,000 |
Related-Party Transactions - Ad
Related-Party Transactions - Additional Information (Details) - Chief Executive Officer | May 27, 2019USD ($) |
Related Party Transaction [Line Items] | |
Initial cash base salary | $ 260,000 |
Restricted Stock Units | |
Related Party Transaction [Line Items] | |
RSUs grant value, short term | 65,000 |
RSUs grant value, long term | $ 3,585,000 |
Selected Quarterly Financial _3
Selected Quarterly Financial Data (unaudited) - Summary of Selected Unaudited Quarterly Consolidated Statements of Operations Data (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Total revenues | $ 69,195 | $ 68,335 | $ 62,867 | $ 58,076 | $ 56,251 | $ 55,239 | $ 50,063 | $ 47,991 | $ 258,473 | $ 209,544 | $ 160,975 |
Gross profit | 46,263 | 47,045 | 42,420 | 39,919 | 39,129 | 39,101 | 35,465 | 34,006 | 175,647 | 147,701 | 114,413 |
Loss from operations | (23,403) | (20,579) | (22,552) | (19,459) | (8,259) | (11,956) | (12,425) | (12,133) | (85,993) | (44,773) | (43,802) |
Net loss | (23,005) | (20,923) | (20,749) | (16,142) | (7,587) | (11,472) | (12,538) | (11,868) | $ (80,819) | $ (43,465) | $ (43,084) |
Net loss attributable to common stockholders | $ (23,005) | $ (20,923) | $ (20,749) | $ (16,142) | $ (7,587) | $ (11,472) | $ (12,538) | $ (11,868) | |||
Net loss per common share, basic and diluted | $ (0.61) | $ (0.56) | $ (0.56) | $ (0.45) | $ (0.22) | $ (0.33) | $ (0.36) | $ (0.37) | $ (2.19) | $ (1.27) | $ (1.47) |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) - Subsequent Event - Merger Agreement | Feb. 17, 2020USD ($) |
Subsequent Event [Line Items] | |
Termination fee | $ 63,540,750 |
Reverse termination fee | $ 136,857,000 |