Cover
Cover shares in Millions | 3 Months Ended |
Mar. 31, 2020shares | |
Cover [Abstract] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Mar. 31, 2020 |
Document Transition Report | false |
Entity File Number | 001-35580 |
Entity Registrant Name | SERVICENOW, INC. |
Entity Incorporation, State or Country Code | DE |
Entity Tax Identification Number | 20-2056195 |
Entity Address, Address Line One | 2225 Lawson Lane |
Entity Address, City or Town | Santa Clara |
Entity Address, State or Province | CA |
Entity Address, Postal Zip Code | 95054 |
City Area Code | 408 |
Local Phone Number | 501-8550 |
Title of 12(b) Security | Common stock, par value $0.001 per share |
Trading Symbol | NOW |
Security Exchange Name | NYSE |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 190.7 |
Entity Central Index Key | 0001373715 |
Amendment Flag | false |
Document Fiscal Year Focus | 2020 |
Document Fiscal Period Focus | Q1 |
Current Fiscal Year End Date | --12-31 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 808,725 | $ 775,778 |
Short-term investments | 1,049,980 | 915,317 |
Accounts receivable, net | 615,234 | 835,279 |
Current portion of deferred commissions | 182,830 | 175,039 |
Prepaid expenses and other current assets | 149,092 | 125,488 |
Total current assets | 2,805,861 | 2,826,901 |
Deferred commissions, less current portion | 339,727 | 333,448 |
Long-term investments | 1,077,938 | 1,013,332 |
Property and equipment, net | 470,969 | 468,085 |
Operating lease right-of-use assets | 464,576 | 402,428 |
Intangible assets, net | 171,049 | 143,850 |
Goodwill | 207,605 | 156,756 |
Deferred Income Tax Assets, Net | 586,021 | 599,633 |
Other assets | 73,670 | 77,997 |
Total assets | 6,197,416 | 6,022,430 |
Current liabilities: | ||
Accounts payable | 73,904 | 52,960 |
Accrued expenses and other current liabilities | 370,997 | 461,403 |
Current portion of deferred revenue | 2,215,265 | 2,185,754 |
Current portion of operating lease liabilities | 60,895 | 52,668 |
Total current liabilities | 2,721,061 | 2,752,785 |
Deferred revenue, less current portion | 40,477 | 40,038 |
Operating lease liabilities, less current portion | 440,938 | 383,221 |
Convertible senior notes, net | 701,288 | 694,981 |
Other long-term liabilities | 27,557 | 23,464 |
Total liabilities | 3,931,321 | 3,894,489 |
Stockholders’ equity: | ||
Common stock | 190 | 189 |
Additional paid-in capital | 2,584,298 | 2,454,741 |
Accumulated other comprehensive income (loss) | (14,380) | 25,255 |
Accumulated deficit | (304,013) | (352,244) |
Total stockholders’ equity | 2,266,095 | 2,127,941 |
Total liabilities and stockholders’ equity | $ 6,197,416 | $ 6,022,430 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | ||
Revenues: | |||
Total revenues | $ 1,046,340 | $ 788,926 | |
Cost of revenues: | |||
Total cost of revenues | [1] | 223,366 | 186,252 |
Gross profit | 822,974 | 602,674 | |
Operating expenses: | |||
Sales and marketing | [1] | 441,234 | 361,409 |
Research and development | [1] | 226,657 | 172,522 |
General and administrative | [1] | 105,748 | 84,456 |
Total operating expenses | [1] | 773,639 | 618,387 |
Income (loss) from operations | 49,335 | (15,713) | |
Interest expense | (8,570) | (8,168) | |
Interest income and other income, net | 7,597 | 12,425 | |
Income (loss) before income taxes | 48,362 | (11,456) | |
Provision for (benefit from) income taxes | 131 | (9,911) | |
Net income (loss) | $ 48,231 | $ (1,545) | |
Net income (loss) per share - basic (in dollars per share) | $ 0.25 | $ (0.01) | |
Net income (loss) per share - diluted (in dollars per share) | $ 0.24 | $ (0.01) | |
Weighted-average shares used to compute net income (loss) per share - basic (in shares) | 190,163 | 182,062 | |
Weighted-average shares used to compute net income (loss) per share - diluted (in shares) | 199,938 | 182,062 | |
Other comprehensive income (loss): | |||
Foreign currency translation adjustments | $ (20,393) | $ 9,635 | |
Unrealized gain (loss) on investments, net of tax | (19,242) | 4,723 | |
Other comprehensive income (loss), net of tax | (39,635) | 14,358 | |
Comprehensive income | 8,596 | 12,813 | |
Subscription | |||
Revenues: | |||
Total revenues | 994,702 | 739,986 | |
Cost of revenues: | |||
Total cost of revenues | [1] | 159,721 | 126,589 |
Professional services and other | |||
Revenues: | |||
Total revenues | 51,638 | 48,940 | |
Cost of revenues: | |||
Total cost of revenues | [1] | $ 63,645 | $ 59,663 |
[1] | Includes stock-based compensation as follows: Three Months Ended March 31, 2020 2019 Cost of revenues: Subscription $ 21,524 $ 16,022 Professional services and other 12,012 9,931 Sales and marketing 70,160 62,130 Research and development 58,903 43,582 General and administrative 25,686 25,785 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Stock-based compensation | $ 188,285 | $ 157,450 |
Cost of revenues | Subscription | ||
Stock-based compensation | 21,524 | 16,022 |
Cost of revenues | Professional services and other | ||
Stock-based compensation | 12,012 | 9,931 |
Sales and marketing | ||
Stock-based compensation | 70,160 | 62,130 |
Research and development | ||
Stock-based compensation | 58,903 | 43,582 |
General and administrative | ||
Stock-based compensation | $ 25,686 | $ 25,785 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Cumulative Effect, Period Of Adoption, Adjustment | Cumulative Effect, Period Of Adoption, AdjustmentAccumulated Deficit |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Cumulative effect adjustment for Topic 842 adoption | $ (162) | $ (162) | |||||
Beginning balance (in shares) at Dec. 31, 2018 | 180,175,000 | ||||||
Beginning balance at Dec. 31, 2018 | $ 1,111,199 | $ 180 | $ 2,093,834 | $ (978,780) | $ (4,035) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Common stock issued under employee stock plans (in shares) | 1,900,000 | 1,883,000 | |||||
Common stock issued under employee stock plans | $ 53,102 | $ 2 | 53,100 | ||||
Taxes paid related to net share settlement of equity awards | (139,470) | (139,470) | |||||
Stock-based compensation | 157,469 | 157,469 | |||||
Partial settlement of 2018 Warrants (in shares) | 2,681,000 | ||||||
Partial settlement of 2018 Warrants | $ 3 | (3) | |||||
Other comprehensive income (loss), net | 14,358 | 14,358 | |||||
Net income (loss) | (1,545) | (1,545) | |||||
Ending balance (in shares) at Mar. 31, 2019 | 184,739,000 | ||||||
Ending balance at Mar. 31, 2019 | 1,194,951 | $ 185 | 2,164,930 | (980,487) | 10,323 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Cumulative effect adjustment for Topic 842 adoption | (352,244) | ||||||
Beginning balance (in shares) at Dec. 31, 2019 | 189,461 | ||||||
Beginning balance at Dec. 31, 2019 | $ 2,127,941 | $ 189 | 2,454,741 | (352,244) | 25,255 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Common stock issued under employee stock plans (in shares) | 1,200,000 | 1,239 | |||||
Common stock issued under employee stock plans | $ 66,875 | $ 1 | 66,874 | ||||
Taxes paid related to net share settlement of equity awards | (125,706) | (125,706) | |||||
Stock-based compensation | $ 188,565 | $ 188,565 | |||||
Settlement of 2022 Notes conversion feature | (3,728,000) | (3,728,000) | |||||
Benefit from exercise of 2022 Note Hedge | 3,552,000 | 3,552,000 | |||||
Other comprehensive income (loss), net | $ (39,635) | (39,635) | |||||
Net income (loss) | 48,231 | 48,231 | |||||
Ending balance (in shares) at Mar. 31, 2020 | 190,700 | ||||||
Ending balance at Mar. 31, 2020 | 2,266,095 | $ 190 | $ 2,584,298 | $ (304,013) | $ (14,380) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Cumulative effect adjustment for Topic 842 adoption | $ (304,013) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 48,231 | $ (1,545) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 76,238 | 55,449 |
Amortization of deferred commissions | 49,481 | 39,557 |
Amortization of debt discount and issuance costs | 8,570 | 8,168 |
Stock-based compensation | 188,285 | 157,450 |
Deferred income taxes | (1,527) | (1,480) |
Repayments of convertible senior notes attributable to debt discount | (282) | 0 |
Other | 2,271 | 724 |
Changes in operating assets and liabilities, net of effect of business combinations: | ||
Accounts receivable | 208,789 | 151,105 |
Deferred commissions | (70,797) | (46,599) |
Prepaid expenses and other assets | (20,391) | (33,659) |
Accounts payable | 20,679 | 6,562 |
Deferred revenue | 59,847 | 61,370 |
Accrued expenses and other liabilities | (77,826) | (36,254) |
Net cash provided by operating activities | 491,568 | 360,848 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (83,207) | (47,124) |
Business combinations, net of cash acquired | (82,948) | 0 |
Purchases of investments | (527,819) | (438,782) |
Sales and maturities of investments | 312,560 | 262,885 |
Realized gains (losses) on derivatives not designated as hedging instruments, net | (3,620) | 22,148 |
Net cash used in investing activities | (385,034) | (200,873) |
Cash flows from financing activities: | ||
Repayments of convertible senior notes attributable to principal | (2,236) | 0 |
Proceeds from employee stock plans | 66,908 | 53,093 |
Taxes paid related to net share settlement of equity awards | (125,700) | (139,493) |
Net cash used in financing activities | (61,028) | (86,400) |
Foreign currency effect on cash, cash equivalents and restricted cash | (10,649) | 1,079 |
Net increase in cash, cash equivalents and restricted cash | 34,857 | 74,654 |
Cash, cash equivalents and restricted cash at beginning of period | 777,991 | 568,538 |
Cash, cash equivalents and restricted cash at end of period | 812,848 | 643,192 |
Cash, cash equivalents and restricted cash at end of period: | ||
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows | 812,848 | 643,192 |
Supplemental disclosures of other cash flow information: | ||
Income taxes paid, net of refunds | 6,966 | 8,109 |
Non-cash investing and financing activities: | ||
Settlement of 2022 Notes conversion feature | 3,728 | 0 |
Benefit from exercise of 2022 Note Hedge | 3,552 | 0 |
Property and equipment included in accounts payable and accrued expenses | $ 41,252 | $ 29,002 |
Description of the Business
Description of the Business | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of the Business | Description of the Business ServiceNow’s purpose is to make the world of work, work better for people. We believe that people should work the way they want to, so we build applications that help automate existing processes and create efficient, digitized workflows. Our products and services enable the steps of a job to flow naturally across disparate departments, systems and processes of a business. When work flows naturally, great experiences follow. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements and condensed footnotes have been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission (the SEC) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (GAAP) for complete financial statements due to the permitted exclusion of certain disclosures for interim reporting. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary under GAAP for fair statement of results for the interim periods presented have been included. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 or for other interim periods or future years. The condensed consolidated balance sheet as of December 31, 2019 is derived from audited financial statements; however, it does not include all of the information and footnotes required by GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2019 , which was filed with the SEC on February 20, 2020. Principles of Consolidation The condensed consolidated financial statements have been prepared in conformity with GAAP, and include our accounts and the accounts of our wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as reported amounts of revenues and expenses during the reporting period. Such management estimates and assumptions include, but are not limited to, evaluating the terms and conditions included within our customer contracts as well as determining the standalone selling price (SSP) for each distinct performance obligation included in customer contracts with multiple performance obligations, the period of benefit for deferred commissions, purchase price allocation for business combinations, stock-based compensation, the useful life of our property and equipment, goodwill and identifiable intangible assets, whether an arrangement is or contains a lease, the discount rate used for operating leases, fair value of convertible notes and income taxes. Actual results could differ from those estimates. Significant Accounting Policies Notwithstanding the addition of policies described below for investments and accounts receivable, there were no significant changes to our significant accounting policies disclosed in “Note 2 – Summary of Significant Accounting Policies” of our Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on February 20, 2020. Investments Investments consist of commercial paper, corporate notes and bonds, certificates of deposit and U.S. government and agency securities. We classify investments as available-for-sale at the time of purchase and re-evaluate such classification as of each balance sheet date. All investments are recorded at estimated fair value. Unrealized gains and losses for available-for-sale securities are included in accumulated other comprehensive income (loss), net of tax, a component of stockholders’ equity, except for credit-related impairment losses for available-for-sale debt securities. We evaluate our investments with unrealized loss positions for other than temporary impairment by assessing if they are related to deterioration in credit risk and whether we expect to recover the entire amortized cost basis of the security, our intent to sell and whether it is more likely than not that we will be required to sell the securities before the recovery of their cost basis. Credit-related impairment losses, not to exceed the amount that fair value is less than the amortized cost basis, are recognized through an allowance for credit losses with changes in the allowance for credit losses recorded in interest income and other income , net in the condensed consolidated statements of comprehensive income (loss). For purposes of identifying and measuring impairment, the policy election was made to exclude the applicable accrued interest from both the fair value and amortized cost basis. Applicable accrued interest, net of the allowance for credit losses (if any) of $11.8 million and $10.7 million , is recorded in prepaid expenses and other current assets on the condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019 , respectively. Realized gains and losses and declines in value judged to be other than temporary are determined based on the specific identification method and are reported in interest income and other income (expense), net in the condensed consolidated statements of comprehensive income (loss). Accounts Receivable We record trade accounts receivable at the net invoice value and such receivables are non-interest bearing. We consider receivables past due based on the contractual payment terms. We review our exposure to accounts receivable and reserve for specific amounts if collectability is no longer reasonably assured based on assessment of various factors including historical loss rates and expectations of forward-looking loss estimates. Concentration of Credit Risk and Significant Customers Credit risk arising from accounts receivable is mitigated to a certain extent due to our large number of customers and their dispersion across various industries and geographies. As of March 31, 2020 , we had one customer that represented 13% of our accounts receivable balance and no customers that individually exceeded 10% of our total revenues. As of December 31, 2019 , there were no customers that represented more than 10% of our accounts receivable balance or that individually exceeded 10% of our total revenues. For purposes of assessing concentration of credit risk and significant customers, a group of customers under common control or customers that are affiliates of each other are regarded as a single customer. Accounting Pronouncements Adopted in 2020 Cloud computing arrangements implementation costs In August 2018, the Financial Accounting Standards Board (FASB) issued ASU 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The new standard requires capitalized costs to be amortized on a straight-line basis generally over the term of the arrangement, and the financial statement presentation for these capitalized costs would be the same as that of the fees related to the hosting arrangements. We adopted this standard on a prospective basis as of January 1, 2020. The adoption of this standard did not have a material impact on our previously reported consolidated financial statements for periods ended on or prior to December 31, 2019. Credit losses In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected, with further clarifications made more recently regarding the treatment of accrued interest, transfers between classifications for loans and debt securities, recoveries and the option to irrevocably elect the fair value option (on an instrument-by-instrument basis) for eligible financial assets at amortized costs. For trade receivables, loans, and other financial assets, we will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. Credit losses relating to available-for-sale debt securities are required to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. We adopted Topic 326 on a modified retrospective basis as of January 1, 2020. The adoption of this standard did not result in any cumulative effect adjustment on our condensed consolidated financial statements upon adoption as of January 1, 2020. Accounting Pronouncement Adopted in 2019 Leases In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which requires lessees to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use assets, and to recognize on the income statement the expenses in a manner similar to prior practice. We adopted Topic 842 using the modified retrospective method as of January 1, 2019 and elected the transition option that allows us not to restate the comparative periods in our financial statements in the year of adoption. We also elected the package of transition expedients available for expired or existing contracts, which allowed us to carryforward our historical assessment of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. As this standard was adopted on a modified prospective basis as of January 1, 2019, the adoption of this standard did not impact our previously reported consolidated financial statements for periods ended on or prior to December 31, 2018. Upon adoption, we recorded operating lease right-of-use assets of approximately $334.7 million and corresponding operating lease liabilities of $362.7 million on our condensed consolidated balance sheets. Recently Issued Accounting Pronouncement Pending Adoption Income taxes In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which simplifies the accounting for incomes taxes by removing certain exceptions to the general principles in Topic 740 and amending existing guidance to improve consistent application. This new standard is effective for our interim and annual periods beginning January 1, 2021 and earlier adoption is permitted. Most amendments within this standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. We are currently evaluating the impact of the adoption of this standard on our condensed consolidated financial statements. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2020 | |
Debt Securities, Available-for-sale [Abstract] | |
Investments | Investments Marketable Debt Securities The following is a summary of our available-for-sale debt securities recorded within short-term and long-term investments on the condensed consolidated balance sheets (in thousands): March 31, 2020 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Available-for-sale securities: Commercial paper $ 188,406 $ 242 $ (18 ) $ 188,630 Corporate notes and bonds 1,726,312 3,398 (17,367 ) 1,712,343 Certificates of deposit 27,407 8 (75 ) 27,340 U.S. government and agency securities 197,523 2,082 — 199,605 Total available-for-sale securities $ 2,139,648 $ 5,730 $ (17,460 ) $ 2,127,918 December 31, 2019 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Available-for-sale securities: Commercial paper $ 101,416 $ 83 $ (9 ) $ 101,490 Corporate notes and bonds 1,654,166 7,360 (196 ) 1,661,330 Certificates of deposit 38,007 38 — 38,045 U.S. government and agency securities 127,544 254 (14 ) 127,784 Total available-for-sale securities $ 1,921,133 $ 7,735 $ (219 ) $ 1,928,649 As of March 31, 2020 , the contractual maturities of our available-for-sale debt securities, excluding those securities classified within cash and cash equivalents on the condensed consolidated balance sheet, did not exceed 36 months . The fair values of available-for-sale securities, by remaining contractual maturity, are as follows (in thousands): March 31, 2020 Due within 1 year $ 1,049,980 Due in 1 year through 5 years 1,077,938 Total $ 2,127,918 The following table shows the fair values and the gross unrealized losses of these available-for-sale debt securities, classified by the length of time that the securities have been in a continuous unrealized loss position, and aggregated by investment types, excluding those securities classified within cash and cash equivalents on the condensed consolidated balance sheets (in thousands): March 31, 2020 Less than 12 Months 12 Months or Greater Total Fair Value Gross Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Commercial paper $ 16,731 $ (18 ) $ — $ — $ 16,731 $ (18 ) Corporate notes and bonds 1,140,793 (17,367 ) — — 1,140,793 (17,367 ) Certificates of deposit 16,402 (75 ) — — 16,402 (75 ) Total $ 1,173,926 $ (17,460 ) $ — $ — $ 1,173,926 $ (17,460 ) December 31, 2019 Less than 12 Months 12 Months or Greater Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Commercial paper $ 20,752 $ (9 ) $ — $ — $ 20,752 $ (9 ) Corporate notes and bonds 242,012 (181 ) 16,264 (15 ) 258,276 (196 ) U.S. government and agency securities 17,806 (14 ) — — 17,806 (14 ) Total $ 280,570 $ (204 ) $ 16,264 $ (15 ) $ 296,834 $ (219 ) As of March 31, 2020 , the decline in fair value below amortized cost basis was not considered other-than-temporary as it is more likely than not we will hold the securities until maturity or a recovery of the cost basis and minimal credit losses were identified. The available-for-sale debt securities with unrealized losses as of March 31, 2020 consist of investment-grade securities, of which $95.1 million was BBB+ or BBB per Standard & Poor's rating agency or Baa1 or Baa2 per Moody’s rating agency with $1.5 million gross unrealized losses and on average, less than one year to maturity. Credit-related impairment losses was not deemed material and the gross unrealized losses as of March 31, 2020 were primarily caused by global market disruptions resulting from the growing of a novel strain of Coronavirus disease (COVID-19) pandemic in March 2020 rather than credit risks associated with the respective issuers of the debt securities. Strategic Investments As of March 31, 2020 and December 31, 2019 , the total amount of equity investments in privately-held companies included in other assets on our condensed consolidated balance sheets was $23.4 million and $22.4 million , respectively. We classify these assets as Level 3 within the fair value hierarchy only if an impairment or observable adjustment is recognized on these non-marketable equity securities during the period as they are based on observable transaction price at the transaction date of identical or similar investment of the same issuer and other unobservable inputs such as volatility. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The following table presents our fair value hierarchy for our assets measured at fair value on a recurring basis as of March 31, 2020 (in thousands): Level 1 Level 2 Total Cash equivalents: Money market funds $ 451,298 $ — $ 451,298 Commercial paper — 76,832 76,832 Corporate notes and bonds — 3,500 3,500 Marketable securities: Commercial paper — 188,630 188,630 Corporate notes and bonds — 1,712,343 1,712,343 Certificates of deposit — 27,340 27,340 U.S. government and agency securities — 199,605 199,605 Total $ 451,298 $ 2,208,250 $ 2,659,548 The following table presents our fair value hierarchy for our assets measured at fair value on a recurring basis as of December 31, 2019 (in thousands): Level 1 Level 2 Total Cash equivalents: Money market funds $ 486,982 $ — $ 486,982 Commercial paper — 86,388 86,388 Marketable securities: Commercial paper — 101,490 101,490 Corporate notes and bonds — 1,661,330 1,661,330 Certificates of deposit — 38,045 38,045 U.S. government and agency securities — 127,784 127,784 Total $ 486,982 $ 2,015,037 $ 2,502,019 We determine the fair value of our security holdings based on pricing from our service providers and market prices from industry-standard independent data providers. Such market prices may be quoted prices in active markets for identical assets (Level 1 inputs) or pricing determined using inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs), such as yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures. Our equity investments in privately-held companies are not included in the table above and are discussed in Note 3 . See Note 8 for the fair value measurement of our derivative contracts and Note 10 for the fair value measurement of our convertible senior notes, which are also not included in the table above. |
Business Combinations
Business Combinations | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Business Combinations | Business Combinations On February 6, 2020, we completed an acquisition of a privately-held company, Loom Systems Ltd. (Loom) by acquiring all issued and outstanding shares of Loom for approximately $58.4 million in an all-cash transaction in order to extend our artificial intelligence of IT operations capabilities, providing customers with analytics solution capable of preventing IT incidents before customers are impacted. In allocating the aggregate purchase price based on the estimated fair values, we recorded $17.0 million of developed technology intangible assets (to be amortized over estimated useful lives of five years ), $3.9 million of deferred tax liabilities and $39.9 million of goodwill. On February 7, 2020, we completed an acquisition of another privately-held company, Rupert Labs, Inc. d/b/a Passage AI (Passage AI) by acquiring all issued and outstanding shares of Passage AI for approximately $33.2 million in an all-cash transaction in order to advance our deep learning of conversational AI capabilities. This acquisition will enhance the Now Platform and products, including ServiceNow Virtual Agent, Service Portal, and Workspaces by enabling support in multiple languages. In allocating the aggregate purchase price based on the estimated fair values, we recorded $21.5 million of developed technology intangible assets (to be amortized over estimated useful lives of five years ), $5.5 million of deferred tax liabilities and $14.8 million of goodwill. For both business combinations, the excess of purchase consideration over the fair value of net tangible and identifiable assets acquired was recorded as goodwill. We believe the goodwill balance associated with these business combinations represents the synergies expected from expanded market opportunities when integrating the acquired developed technologies with our offerings. Goodwill arising from these business combinations is not deductible for income tax purposes. Aggregate acquisition-related costs associated with our business combinations are not material for the three months ended March 31, 2020 and are included in general and administrative expenses in our condensed consolidated statement of comprehensive income (loss). The results of operations of these business combinations have been included in our condensed consolidated financial statements from their respective dates of purchase. These business combinations did not have a material impact on our condensed consolidated financial statements, and therefore historical and pro forma disclosures have not been presented. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill balances are presented below (in thousands): Carrying Amount Balance as of December 31, 2019 $ 156,756 Goodwill acquired 54,635 Foreign currency translation adjustments (3,786 ) Balance as of March 31, 2020 $ 207,605 Intangible assets consist of the following (in thousands): March 31, 2020 December 31, 2019 Developed technology $ 214,322 $ 177,746 Patents 67,730 67,730 Other 3,585 3,594 Intangible assets, gross 285,637 249,070 Less: accumulated amortization (114,588 ) (105,220 ) Intangible assets, net $ 171,049 $ 143,850 Amortization expense for intangible assets for the three months ended March 31, 2020 and 2019 was approximately $10.3 million and $7.0 million , respectively. The following table presents the estimated future amortization expense related to intangible assets held at March 31, 2020 (in thousands): Years Ending December 31, Remainder of 2020 $ 32,167 2021 40,903 2022 35,778 2023 33,570 2024 20,481 Thereafter 8,150 Total future amortization expense $ 171,049 |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment, net consists of the following (in thousands): March 31, 2020 December 31, 2019 Computer equipment $ 705,922 $ 680,160 Computer software 60,138 59,511 Leasehold and other improvements 125,521 125,299 Furniture and fixtures 52,708 53,651 Construction in progress 11,871 6,830 Property and equipment, gross 956,160 925,451 Less: Accumulated depreciation (485,191 ) (457,366 ) Property and equipment, net $ 470,969 $ 468,085 Construction in progress consists primarily of leasehold and other improvements and in-process software development costs. Depreciation expense for the three months ended March 31, 2020 and 2019 was $50.5 million and $37.1 million , respectively. |
Derivative Contracts
Derivative Contracts | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Contracts | Derivative Contracts As of March 31, 2020 and December 31, 2019 , we had foreign currency forward contracts with total notional values of $263.6 million and $358.0 million , respectively, which are not designated as hedging instruments. Our foreign currency contracts are classified within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments in active markets, such as currency spot and forward rates. The fair value of these outstanding derivative contracts was as follows (in thousands): Condensed Consolidated Balance Sheet Location March 31, 2020 December 31, 2019 Derivative Assets: Foreign currency derivative contracts Prepaid expenses and other current assets $ 2,222 $ 2,237 Derivative Liabilities: Foreign currency derivative contracts Accrued expenses and other current liabilities $ 915 $ 1,362 |
Deferred Revenue and Performanc
Deferred Revenue and Performance Obligations | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Deferred Revenue and Performance Obligations | Deferred Revenue and Performance Obligations Revenues recognized during the three months ended March 31, 2020 from amounts included in deferred revenue as of December 31, 2019 were $0.8 billion . Revenues recognized during the three months ended March 31, 2019 from amounts included in deferred revenue as of December 31, 2018 were $0.6 billion . Remaining Performance Obligations Transaction price allocated to remaining performance obligations (RPO) represents contracted revenue that has not yet been recognized, which includes deferred revenue and non-cancelable amounts that will be invoiced and recognized as revenues in future periods. RPO excludes contracts that are billed in arrears, such as certain time and materials contracts, as we apply the “right to invoice” practical expedient under relevant accounting guidance. As of March 31, 2020 , the total non-cancelable RPO under our contracts with customers was approximately $6.6 billion and we expect to recognize revenues on approximately 51% of these RPO over the following 12 months , with the balance to be recognized thereafter. |
Convertible Senior Notes
Convertible Senior Notes | 3 Months Ended |
Mar. 31, 2020 | |
Convertible Notes Payable [Abstract] | |
Convertible Senior Notes | Convertible Senior Notes In May and June 2017, we issued an aggregate of $782.5 million of 0% convertible senior notes (the 2022 Notes), which are due June 1, 2022 (Maturity Date) unless earlier converted or repurchased in accordance with their terms. The 2022 Notes do not bear interest, and we cannot redeem the 2022 Notes prior to maturity. The 2022 Notes are unsecured obligations and do not contain any financial covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by us or any of our subsidiaries. Upon conversion of the 2022 Notes, we may choose to pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock upon settlement. We currently intend to settle the principal amount of the 2022 Notes with cash. Convertible Date Initial Conversion Price per Share Initial Conversion Rate per $1,000 Par Value Initial Number of Shares 2022 Notes February 1, 2022 $ 134.75 7.42 shares 5,807 Conversion of the 2022 Notes prior to the Convertible Date . At any time prior to the close of business on the business day immediately preceding February 1, 2022 (Convertible Date), holders of the 2022 Notes may convert their Notes at their option, only if one of the following conditions are met: • during any calendar quarter (and only during such calendar quarter) if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day (in each case, the Conversion Condition); or • during the five -business day period after any five -consecutive trading day period, or the measurement period, in which the trading price per $1,000 principal amount of the 2022 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; or • upon the occurrence of specified corporate events. Conversion of the 2022 Notes on or after the Convertible Date. On or after the Convertible Date, a holder may convert all or any portion of its Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the Maturity Date, regardless of the foregoing conditions, and such conversions will settle upon the Maturity Date. Upon settlement, we will pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. The conversion price of the 2022 Notes will be subject to adjustment in some events. Holders of the 2022 Notes who convert their 2022 Notes in connection with certain corporate events that constitute a “make-whole fundamental change” are, under certain circumstances, entitled to an increase in the conversion rate. Additionally, in the event of a corporate event that constitutes a “fundamental change,” holders of the 2022 Notes may require us to purchase with cash all or a portion of the 2022 Notes upon the occurrence of a fundamental change, at a purchase price equal to 100% of the principal amount of the 2022 Notes plus any accrued and unpaid special interest, if any. In accounting for the issuance of the 2022 Notes and the related transaction costs, we separated the 2022 Notes into liability and equity components. The 2022 Notes consisted of the following (in thousands): March 31, 2020 December 31, 2019 Liability component: Principal $ 779,962 $ 782,491 Less: debt issuance cost and debt discount, net of amortization (78,674 ) (87,510 ) Net carrying amount $ 701,288 $ 694,981 2022 Notes Equity component recorded at issuance: Note $ 162,039 Issuance cost (2,148 ) Net amount recorded in equity $ 159,891 The Conversion Condition for the 2022 Notes was met for all the quarters ended June 30, 2018 through March 31, 2020, except for the quarter ended December 31, 2018. Therefore, our 2022 Notes became convertible at the holders’ option beginning on July 1, 2018 and continue to be convertible through June 30, 2020, except for the quarter ended March 31, 2019 because the Conversion Condition for the 2022 Notes was not met for the quarter ended December 31, 2018. During the three months ended March 31, 2020 , we paid cash to settle approximately $2.5 million in principal of the 2022 Notes and the loss on the early note conversions was not material. As a result of the settlements, we also recorded a net reduction to additional paid-in capital, reflecting $3.7 million fair value adjustments to the settled conversion option partially offset by a $3.5 million benefit from the 2022 Note Hedge (as defined below). Based on conversion requests we have received through the filing date, we expect to settle in cash an aggregate of approximately $15.2 million in principal amount of the 2022 Notes during the second quarter of 2020. We may receive additional conversion requests that require settlement in the second quarter of 2020. We consider the fair value of the 2022 Notes at March 31, 2020 to be a Level 2 measurement. The estimated fair value of the 2022 Notes at March 31, 2020 and December 31, 2019 based on the closing trading price per $100 of the 2022 Notes was as follows (in thousands): March 31, 2020 December 31, 2019 2022 Notes $ 1,709,677 $ 1,645,970 As of March 31, 2020 , the remaining life of the 2022 Notes is 26 months. The following table sets forth total interest expense recognized related to the 2022 Notes (in thousands): Three Months Ended March 31, 2020 2019 Amortization of debt issuance cost $ 414 $ 394 Amortization of debt discount 8,156 7,774 Total $ 8,570 $ 8,168 Effective interest rate of the liability component 4.75% Note Hedge To minimize the impact of potential economic dilution upon conversion of the 2022 Notes, we entered into convertible note hedge transactions (the 2022 Note Hedge) with certain investment banks, with respect to our common stock concurrently with the issuance of the 2022 Notes. Purchase Initial Shares Shares as of March 31, 2020 (in thousands) 2022 Note Hedge $ 128,017 5,807 5,788 The 2022 Note Hedge covers shares of our common stock at a strike price per share that corresponds to the initial conversion price of the 2022 Notes, subject to adjustment, and are exercisable upon conversion of the 2022 Notes. If exercised, we may elect to receive cash, shares of our common stock, or a combination of cash and shares. The 2022 Note Hedge will expire upon the maturity of the 2022 Notes. The 2022 Note Hedge is intended to reduce the potential economic dilution upon conversion of the 2022 Notes in the event that the fair value per share of our common stock at the time of exercise is greater than the conversion price of the 2022 Notes. The 2022 Note Hedge is a separate transaction and is not part of the terms of the 2022 Notes. Holders of the 2022 Notes will not have any rights with respect to the 2022 Note Hedge. The 2022 Note Hedge does not impact earnings per share, as it was entered into to offset any dilution from the 2022 Notes. Warrants Proceeds Initial Shares Strike Price First Expiration Date Shares as of March 31, 2020 (in thousands) (in thousands) (in thousands) 2022 Warrants $ 54,071 5,807 $ 203.40 September 1, 2022 5,807 Separately, we entered into warrant transactions with certain investment banks, whereby we sold warrants to acquire, subject to adjustment, the number of shares of our common stock shown in the table above (the 2022 Warrants). If the average market value per share of our common stock for the reporting period, as measured under the 2022 Warrants, exceeds the strike price of the respective 2022 Warrants, such 2022 Warrants would have a dilutive effect on our earnings per share to the extent we report net income. The 2022 Warrants are separate transactions and are not remeasured through earnings each reporting period. The 2022 Warrants are not part of the 2022 Notes or 2022 Note Hedge. According to the terms, the 2022 Warrants will be net share settled and automatically exercised over a 60 trading day period beginning on the first expiration date as set forth above based on the daily volume-weighted average stock prices over the same 60 trading day period . We expect to issue additional shares of our common stock in the second half of 2022 upon the automatic exercise of the 2022 Warrants. The 2022 Warrants could have a dilutive effect to the extent that the daily volume-weighted average stock prices over a 60 trading day period beginning on September 1, 2022 exceeds the strike price of the 2022 Warrants. Based on the volume-weighted average stock price on March 31, 2020 , the total number of shares of our common stock to be issued upon the automatic exercise of the 2022 Warrants would be approximately 1.7 million . The actual number of shares of our common stock issuable upon the automatic exercise of the 2022 Warrants, if any, is unknown at this time. In November 2013, we issued $575.0 million of 0% convertible senior notes, which were earlier converted prior to and cash settled on November 1, 2018, in accordance with their terms. The related warrant transactions with certain investment banks (the 2018 Warrants) were net share settled based on the daily volume-weighted average stock prices over a 60 trading day period beginning on the first expiration date, February 1, 2019. According to the terms of the 2018 Warrants, we issued approximately 2.7 million shares of our common stock upon the automatic exercise of a portion of the 2018 Warrants during the three months ended March 31, 2019 and approximately 1.6 million additional shares of our common stock upon the automatic exercise of the remaining 2018 Warrants during the second quarter of 2019. The 2018 Warrants were no longer outstanding as of the second quarter of 2019. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The components of accumulated other comprehensive income (loss), net of tax, consist of the following (in thousands): March 31, 2020 December 31, 2019 Foreign currency translation adjustment $ 491 $ 20,884 Net unrealized gain (loss) on investments, net of tax (14,871 ) 4,371 Accumulated other comprehensive income (loss) $ (14,380 ) $ 25,255 Reclassification adjustments out of accumulated other comprehensive income (loss) into net income (loss) were immaterial for all periods presented. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity Common Stock We are authorized to issue 600.0 million shares of common stock as of March 31, 2020 . Holders of our common stock are not entitled to receive dividends unless declared by our board of directors. As of March 31, 2020 , we had 190.7 million shares of common stock outstanding and had reserved shares of common stock for future issuance as follows (in thousands): March 31, 2020 Stock plans: Options outstanding 994 RSUs (1) 10,082 Shares of common stock available for future grants: 2012 Equity Incentive Plan (2) 27,480 2012 Employee Stock Purchase Plan (2) 9,927 Total shares of common stock reserved for future issuance 48,483 (1) Represents the number of shares issuable upon settlement of outstanding restricted stock units (RSUs) and performance-based RSUs, assuming 100% of the target number of shares for performance-based RSUs, as discussed under the section entitled “RSUs” in Note 13 . (2) Refer to Note 13 for a description of these plans. During the three months ended March 31, 2020 and 2019 , we issued a total of 1.2 million shares and 1.9 million shares, respectively, from stock option exercises, vesting of RSUs, net of employee payroll taxes, and purchases from the employee stock purchase plan (ESPP). In addition, as described in Note 10 , we issued approximately 2.7 million shares of our common stock upon the automatic exercise of a portion of the 2018 Warrants during the three months ended March 31, 2019 |
Equity Awards
Equity Awards | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Equity Awards | Equity Awards We currently have two equity incentive plans, our 2005 Stock Option Plan (the 2005 Plan) and our 2012 Equity Incentive Plan (the 2012 Plan). Our 2005 Plan was terminated in connection with our initial public offering in 2012 but continues to govern the terms of outstanding stock options that were granted prior to the termination of the 2005 Plan. We no longer grant equity awards pursuant to our 2005 Plan. Our 2012 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, RSUs, performance-based stock awards and other forms of equity compensation (collectively, equity awards). In addition, the 2012 Plan provides for the grant of performance cash awards. Incentive stock options may be granted only to employees. All other equity awards may be granted to employees, including officers, as well as directors and consultants. The share reserve may increase to the extent outstanding stock options under the 2005 Plan expire or terminate unexercised. Prior to January 2019, the share reserve also automatically increased on January 1 of each year until January 1, 2022, by up to 5% of the total number of shares of common stock outstanding on December 31 of the preceding year as determined by our board of directors. Our board of directors elected not to increase the number of shares of common stock reserved for issuance under the 2012 Plan pursuant to the provision described in the preceding sentence for the year ending December 31, 2019 . In January 2019, our Board of Directors amended the 2012 Plan to remove the automatic increase provision. Therefore, for the remaining term of the 2012 Plan, the share reserve will not be increased without stockholder approval. Our 2012 Employee Stock Purchase Plan (the 2012 ESPP) authorizes the issuance of shares of common stock pursuant to purchase rights granted to our employees. The price at which common stock is purchased under the 2012 ESPP is equal to 85% of the fair market value of our common stock on the first or last day of the offering period, whichever is lower. Offering periods are six months long and begin on February 1 and August 1 of each year. The number of shares of common stock reserved for issuance automatically increases on January 1 of each year until January 1, 2022, by up to 1% of the total number of shares of common stock outstanding on December 31 of the preceding year as determined by our board of directors. Our board of directors elected not to increase the number of shares of common stock reserved for issuance under the 2012 ESPP pursuant to the provision described in the preceding sentence for the years ending December 31, 2020 and 2019 . Stock Options Stock options are exercisable at a price equal to the market value of the underlying shares of common stock on the date of the grant as determined by our board of directors or, for those stock options issued subsequent to our initial public offering, the closing price of our common stock as reported on the New York Stock Exchange on the date of grant. Stock options granted under our 2005 Plan and the 2012 Plan to new employees generally vest 25% one year from the date the requisite service period begins and continue to vest monthly for each month of continued employment over the remaining three years . Options granted generally are exercisable for a period of up to ten years contingent on each holder’s continuous status as a service provider. A summary of stock option activity for the three months ended March 31, 2020 was as follows: Number of Shares Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value (in thousands) (in years) (in thousands) Outstanding at December 31, 2019 1,154 $ 77.70 Exercised (149 ) $ 28.47 $ 44,465 Canceled (11 ) $ 75.77 Outstanding at March 31, 2020 994 $ 85.08 5.2 $ 200,386 Vested and expected to vest as of March 31, 2020 964 $ 79.67 5.1 $ 199,465 Vested and exercisable as of March 31, 2020 783 $ 47.79 4.2 $ 187,073 Aggregate intrinsic value represents the difference between the estimated fair value of our common stock and the exercise price of outstanding, in-the-money options. The total fair value of stock options vested during the three months ended March 31, 2020 was $0.8 million . As of March 31, 2020 , total unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested stock options was approximately $15.3 million . The weighted-average remaining vesting period of unvested stock options at March 31, 2020 was 4.4 years . RSUs A summary of RSU activity for the three months ended March 31, 2020 was as follows: Number of Shares Weighted-Average Grant-Date Fair Value Per Share Aggregate Intrinsic Value (in thousands) (in thousands) Outstanding at December 31, 2019 8,733 $ 185.39 Granted 2,810 $ 352.87 Vested (1,183 ) $ 151.19 $ 411,813 Forfeited (278 ) $ 199.48 Outstanding at March 31, 2020 10,082 $ 235.99 $ 2,889,333 RSUs outstanding as of March 31, 2020 were comprised of 9.4 million RSUs with only service conditions and 0.7 million RSUs with both service conditions and performance conditions. RSUs granted with only service vesting criteria under the 2012 Plan to employees generally vest over a four -year period. Performance-based RSUs (PRSUs) with both service and performance-based vesting criteria are considered as eligible to vest when approved by the compensation committee of our board of directors in January of the year following the grant. The ultimate number of shares eligible to vest for PRSUs range from 0% to 180% of the target number of shares depending on achievement relative to the performance metric over the applicable period. The eligible shares subject to PRSUs granted during the three months ended March 31, 2020 will vest 33% in February 2021 and continue to vest quarterly for the remaining two subsequent years, contingent on each holder’s continuous status as a service provider on the applicable vesting dates. The number of PRSUs granted shown in the table above reflects the shares that could be eligible to vest at 100% of target for PRSUs and includes adjustments for over or under achievement for PRSUs granted in the prior year. We recognized $13.7 million and $22.6 million of stock-based compensation, net of actual and estimated forfeitures, associated with PRSUs on a graded vesting basis during the three months ended March 31, 2020 and 2019 , respectively. As of March 31, 2020 , total unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested RSUs was approximately $1.8 billion and the weighted-average remaining vesting period was 3.2 years . |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | Net Income (Loss) Per Share Basic net income (loss) per share attributable to common stockholders is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, adjusted for the effects of dilutive shares of common stock, which are comprised of outstanding stock options, RSUs, ESPP obligations, the 2022 Notes, the 2022 Warrants and the 2018 Warrants. Stock awards with performance conditions are included in dilutive shares to the extent the performance condition is met. The dilutive potential shares of common stock are computed using the treasury stock method or the as-if converted method, as applicable. The effects of outstanding stock options, RSUs, ESPP obligations, Notes and Warrants are excluded from the computation of diluted net income (loss) per share in periods in which the effect would be antidilutive. The following tables present the calculation of basic and diluted net income (loss) per share attributable to common stockholders (in thousands, except per share data): Three Months Ended March 31, 2020 2019 Numerator: Net income (loss) $ 48,231 $ (1,545 ) Denominator: Weighted-average shares outstanding - basic 190,163 182,062 Weighted-average effect of potentially dilutive securities: Common stock options 756 — RSUs 3,751 — 2022 Convertible senior notes 3,229 — 2020 Convertible senior notes settlements 10 — 2022 Warrants 2,029 — Weighted-average shares outstanding - diluted 199,938 182,062 Net income (loss) per share - basic $ 0.25 $ (0.01 ) Net income (loss) per share - diluted $ 0.24 $ (0.01 ) Potentially dilutive securities that are not included in the calculation of diluted net income (loss) per share because doing so would be antidilutive are as follows (in thousands): Three Months Ended March 31, 2020 2019 Common stock options 161 1,579 RSUs 2,494 12,162 ESPP obligations 178 212 2018 Warrants — 2,854 2022 Notes — 5,807 2022 Warrants — 5,807 Total potentially dilutive securities 2,833 28,421 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We compute our provision for income taxes by applying the estimated annual effective tax rate to year-to-date income from recurring operations and adjust the provision for discrete tax items recorded in the period. Our income tax expense was $0.1 million for the three months ended March 31, 2020 . The income tax expense was primarily attributable to foreign taxes, a valuation allowance release resulting from an acquisition and excess tax benefits of stock-based compensation. Our income tax benefit was $9.9 million for the three months ended March 31, 2019 . The income tax benefit was primarily attributable to foreign taxes and mix of earnings and losses in countries with differing statutory tax rates. Governments in certain countries where we do business have enacted legislation in response to the COVID-19 pandemic, including the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) enacted by the United States on March 27, 2020. We are continuing to analyze these legislative developments and believe that they have not had a material impact on our provision for income taxes for the three months ended March 31, 2020 . We are subject to taxation in the United States and foreign jurisdictions. As of March 31, 2020 , our tax years 2004 to 2019 remain subject to examination in most jurisdictions. Due to differing interpretations of tax laws and regulations, tax authorities may dispute our tax filings positions. We periodically evaluate our exposures associated with our tax filing positions and believe that adequate amounts have been reserved for adjustments that may result from tax examinations. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Leases For some of our offices and data centers, we have entered into non-cancelable operating lease agreements with various expiration dates through 2035 . Certain lease agreements include options to renew or terminate the lease, which are not reasonably certain to be exercised and therefore are not factored into our determination of lease payments. Total operating lease costs were $19.4 million and $14.7 million , excluding short-term lease costs, variable lease costs and sublease income each of which were immaterial, for the three months ended March 31, 2020 and 2019 , respectively. For the three months ended March 31, 2020 , cash paid for amounts included in the measurement of operating lease liabilities was $11.0 million and operating lease liabilities arising from obtaining operating right-of-use assets totaled $81.2 million . As of March 31, 2020 , the weighted-average remaining lease term is 8.9 years , and the weighted-average discount rate is 3.7% . Maturities of operating lease liabilities as of March 31, 2020 are presented in the table below (in thousands): Years Ending December 31, Remainder of 2020 $ 56,146 2021 73,473 2022 71,917 2023 67,474 2024 52,520 Thereafter 241,505 Total operating lease payments 563,035 Less: imputed interest (61,202 ) Present value of operating lease liabilities $ 501,833 In addition to the amounts above, as of March 31, 2020 , we have operating leases, primarily for offices, that have not yet commenced with undiscounted cash flows of $403.6 million . These operating leases will commence between 2020 and 2022 with lease terms of 2 to 15 years . Other Contractual Commitments Other contractual commitments consist of data center and IT operations and sales and marketing activities. There were no material contractual obligations that were entered into during the three months ended March 31, 2020 that were outside the ordinary course of business. In addition to the amounts above, the repayment of our 2022 Notes with an aggregate principal amount of $780.0 million is due on June 1, 2022. Refer to Note 10 for further information regarding our Notes. Also, approximately $6.6 million of unrecognized tax benefits have been recorded as liabilities as of March 31, 2020 . Letters of Credit As of March 31, 2020 , we had letters of credit in the aggregate amount of $18.1 million , primarily in connection with our customer contracts and operating leases. Legal Proceedings From time to time, we are party to litigation and other legal proceedings in the ordinary course of business. While the results of any litigation or other legal proceedings are uncertain, management does not believe the ultimate resolution of any pending legal matters is likely to have a material adverse effect on our financial position, results of operations or cash flows, except for those matters for which we have recorded a loss contingency. We accrue for loss contingencies when it is both probable that we will incur the loss and when we can reasonably estimate the amount of the loss or range of loss. Generally, our subscription agreements require us to defend our customers for third-party intellectual property infringement and other claims. Any adverse determination related to intellectual property claims or other litigation could prevent us from offering our services and adversely affect our financial condition and results of operations. |
Information about Geographic Ar
Information about Geographic Areas and Products | 3 Months Ended |
Mar. 31, 2020 | |
Segments, Geographical Areas [Abstract] | |
Information about Geographic Areas and Products | Information about Geographic Areas and Products Revenues by geographic area, based on the location of our users, were as follows for the periods presented (in thousands): Three Months Ended March 31, 2020 2019 North America (1) $ 701,764 $ 525,551 EMEA (2) 250,831 193,832 Asia Pacific and other 93,745 69,543 Total revenues $ 1,046,340 $ 788,926 Property and equipment, net by geographic area were as follows (in thousands): March 31, 2020 December 31, 2019 North America (3) $ 267,731 $ 269,754 EMEA (2) 130,772 118,399 Asia Pacific and other 72,466 79,932 Property and equipment, net $ 470,969 $ 468,085 (1) Revenues attributed to the United States were approximately 94% of North America revenues for each of the three months ended March 31, 2020 and 2019 . (2) Europe, the Middle East and Africa. (3) Property and equipment, net attributed to the United States were approximately 76% and 73% of property and equipment, net attributable to North America as of March 31, 2020 and December 31, 2019 , respectively. Subscription revenues consist of the following (in thousands): Three Months Ended March 31, 2020 2019 Digital workflow products $ 867,285 $ 638,657 ITOM products 127,417 101,329 Total subscription revenues $ 994,702 $ 739,986 Our digital workflow products include the Now Platform, Now IT Service Management, Now IT Business Management, Now DevOps, Now IT Asset Management, Now Security Operations, Now Integrated Risk Management, Now HR Service Delivery, Now Finance Operations Management, Now Customer Service Management, and Now Field Service Management, and are generally priced on a per user basis. Our ITOM products are generally priced on a per node (physical or virtual server) basis. In previously issued consolidated financial statements, we referred to digital workflow products as “service management products.” |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements and condensed footnotes have been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission (the SEC) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (GAAP) for complete financial statements due to the permitted exclusion of certain disclosures for interim reporting. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary under GAAP for fair statement of results for the interim periods presented have been included. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 or for other interim periods or future years. The condensed consolidated balance sheet as of December 31, 2019 is derived from audited financial statements; however, it does not include all of the information and footnotes required by GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2019 , which was filed with the SEC on February 20, 2020. |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements have been prepared in conformity with GAAP, and include our accounts and the accounts of our wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as reported amounts of revenues and expenses during the reporting period. Such management estimates and assumptions include, but are not limited to, evaluating the terms and conditions included within our customer contracts as well as determining the standalone selling price (SSP) for each distinct performance obligation included in customer contracts with multiple performance obligations, the period of benefit for deferred commissions, purchase price allocation for business combinations, stock-based compensation, the useful life of our property and equipment, goodwill and identifiable intangible assets, whether an arrangement is or contains a lease, the discount rate used for operating leases, fair value of convertible notes and income taxes. Actual results could differ from those estimates. |
Investments | Investments Investments consist of commercial paper, corporate notes and bonds, certificates of deposit and U.S. government and agency securities. We classify investments as available-for-sale at the time of purchase and re-evaluate such classification as of each balance sheet date. All investments are recorded at estimated fair value. Unrealized gains and losses for available-for-sale securities are included in accumulated other comprehensive income (loss), net of tax, a component of stockholders’ equity, except for credit-related impairment losses for available-for-sale debt securities. We evaluate our investments with unrealized loss positions for other than temporary impairment by assessing if they are related to deterioration in credit risk and whether we expect to recover the entire amortized cost basis of the security, our intent to sell and whether it is more likely than not that we will be required to sell the securities before the recovery of their cost basis. Credit-related impairment losses, not to exceed the amount that fair value is less than the amortized cost basis, are recognized through an allowance for credit losses with changes in the allowance for credit losses recorded in interest income and other income , net in the condensed consolidated statements of comprehensive income (loss). For purposes of identifying and measuring impairment, the policy election was made to exclude the applicable accrued interest from both the fair value and amortized cost basis. Applicable accrued interest, net of the allowance for credit losses (if any) of $11.8 million and $10.7 million , is recorded in prepaid expenses and other current assets on the condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019 , respectively. Realized gains and losses and declines in value judged to be other than temporary are determined based on the specific identification method and are reported in interest income and other income (expense), net in the condensed consolidated statements of comprehensive income (loss). |
Accounts Receivable | Accounts Receivable We record trade accounts receivable at the net invoice value and such receivables are non-interest bearing. We consider receivables past due based on the contractual payment terms. We review our exposure to accounts receivable and reserve for specific amounts if collectability is no longer reasonably assured based on assessment of various factors including historical loss rates and expectations of forward-looking loss estimates. |
Concentration of Credit Risk and Significant Customers | Concentration of Credit Risk and Significant Customers Credit risk arising from accounts receivable is mitigated to a certain extent due to our large number of customers and their dispersion across various industries and geographies. As of March 31, 2020 , we had one customer that represented 13% of our accounts receivable balance and no customers that individually exceeded 10% of our total revenues. As of December 31, 2019 , there were no customers that represented more than 10% of our accounts receivable balance or that individually exceeded 10% of our total revenues. For purposes of assessing concentration of credit risk and significant customers, a group of customers under common control or customers that are affiliates of each other are regarded as a single customer. |
Accounting Pronouncements Adopted in 2020, Accounting Pronouncement Adopted in 2019, and Recently Issued Accounting Pronouncement Pending Adoption | Accounting Pronouncements Adopted in 2020 Cloud computing arrangements implementation costs In August 2018, the Financial Accounting Standards Board (FASB) issued ASU 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The new standard requires capitalized costs to be amortized on a straight-line basis generally over the term of the arrangement, and the financial statement presentation for these capitalized costs would be the same as that of the fees related to the hosting arrangements. We adopted this standard on a prospective basis as of January 1, 2020. The adoption of this standard did not have a material impact on our previously reported consolidated financial statements for periods ended on or prior to December 31, 2019. Credit losses In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected, with further clarifications made more recently regarding the treatment of accrued interest, transfers between classifications for loans and debt securities, recoveries and the option to irrevocably elect the fair value option (on an instrument-by-instrument basis) for eligible financial assets at amortized costs. For trade receivables, loans, and other financial assets, we will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. Credit losses relating to available-for-sale debt securities are required to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. We adopted Topic 326 on a modified retrospective basis as of January 1, 2020. The adoption of this standard did not result in any cumulative effect adjustment on our condensed consolidated financial statements upon adoption as of January 1, 2020. Accounting Pronouncement Adopted in 2019 Leases In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which requires lessees to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use assets, and to recognize on the income statement the expenses in a manner similar to prior practice. We adopted Topic 842 using the modified retrospective method as of January 1, 2019 and elected the transition option that allows us not to restate the comparative periods in our financial statements in the year of adoption. We also elected the package of transition expedients available for expired or existing contracts, which allowed us to carryforward our historical assessment of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. As this standard was adopted on a modified prospective basis as of January 1, 2019, the adoption of this standard did not impact our previously reported consolidated financial statements for periods ended on or prior to December 31, 2018. Upon adoption, we recorded operating lease right-of-use assets of approximately $334.7 million and corresponding operating lease liabilities of $362.7 million on our condensed consolidated balance sheets. Recently Issued Accounting Pronouncement Pending Adoption Income taxes In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which simplifies the accounting for incomes taxes by removing certain exceptions to the general principles in Topic 740 and amending existing guidance to improve consistent application. This new standard is effective for our interim and annual periods beginning January 1, 2021 and earlier adoption is permitted. Most amendments within this standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. We are currently evaluating the impact of the adoption of this standard on our condensed consolidated financial statements. |
Fair Value Measurements | We determine the fair value of our security holdings based on pricing from our service providers and market prices from industry-standard independent data providers. Such market prices may be quoted prices in active markets for identical assets (Level 1 inputs) or pricing determined using inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs), such as yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures. Our equity investments in privately-held companies are not included in the table above and are discussed in Note 3 |
Legal Proceedings | From time to time, we are party to litigation and other legal proceedings in the ordinary course of business. While the results of any litigation or other legal proceedings are uncertain, management does not believe the ultimate resolution of any pending legal matters is likely to have a material adverse effect on our financial position, results of operations or cash flows, except for those matters for which we have recorded a loss contingency. We accrue for loss contingencies when it is both probable that we will incur the loss and when we can reasonably estimate the amount of the loss or range of loss. Generally, our subscription agreements require us to defend our customers for third-party intellectual property infringement and other claims. Any adverse determination related to intellectual property claims or other litigation could prevent us from offering our services and adversely affect our financial condition and results of operations. |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Securities, Available-for-sale [Abstract] | |
Schedule of Marketable Debt Securities | The following is a summary of our available-for-sale debt securities recorded within short-term and long-term investments on the condensed consolidated balance sheets (in thousands): March 31, 2020 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Available-for-sale securities: Commercial paper $ 188,406 $ 242 $ (18 ) $ 188,630 Corporate notes and bonds 1,726,312 3,398 (17,367 ) 1,712,343 Certificates of deposit 27,407 8 (75 ) 27,340 U.S. government and agency securities 197,523 2,082 — 199,605 Total available-for-sale securities $ 2,139,648 $ 5,730 $ (17,460 ) $ 2,127,918 December 31, 2019 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Available-for-sale securities: Commercial paper $ 101,416 $ 83 $ (9 ) $ 101,490 Corporate notes and bonds 1,654,166 7,360 (196 ) 1,661,330 Certificates of deposit 38,007 38 — 38,045 U.S. government and agency securities 127,544 254 (14 ) 127,784 Total available-for-sale securities $ 1,921,133 $ 7,735 $ (219 ) $ 1,928,649 |
Investments Classified by Contractual Maturity Date | The fair values of available-for-sale securities, by remaining contractual maturity, are as follows (in thousands): March 31, 2020 Due within 1 year $ 1,049,980 Due in 1 year through 5 years 1,077,938 Total $ 2,127,918 |
Fair Values and Gross Unrealized Losses of Available-for-Sale Securities Aggregated by Investment Category | The following table shows the fair values and the gross unrealized losses of these available-for-sale debt securities, classified by the length of time that the securities have been in a continuous unrealized loss position, and aggregated by investment types, excluding those securities classified within cash and cash equivalents on the condensed consolidated balance sheets (in thousands): March 31, 2020 Less than 12 Months 12 Months or Greater Total Fair Value Gross Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Commercial paper $ 16,731 $ (18 ) $ — $ — $ 16,731 $ (18 ) Corporate notes and bonds 1,140,793 (17,367 ) — — 1,140,793 (17,367 ) Certificates of deposit 16,402 (75 ) — — 16,402 (75 ) Total $ 1,173,926 $ (17,460 ) $ — $ — $ 1,173,926 $ (17,460 ) December 31, 2019 Less than 12 Months 12 Months or Greater Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Commercial paper $ 20,752 $ (9 ) $ — $ — $ 20,752 $ (9 ) Corporate notes and bonds 242,012 (181 ) 16,264 (15 ) 258,276 (196 ) U.S. government and agency securities 17,806 (14 ) — — 17,806 (14 ) Total $ 280,570 $ (204 ) $ 16,264 $ (15 ) $ 296,834 $ (219 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Assets Measured at Fair Value on Recurring Basis | The following table presents our fair value hierarchy for our assets measured at fair value on a recurring basis as of March 31, 2020 (in thousands): Level 1 Level 2 Total Cash equivalents: Money market funds $ 451,298 $ — $ 451,298 Commercial paper — 76,832 76,832 Corporate notes and bonds — 3,500 3,500 Marketable securities: Commercial paper — 188,630 188,630 Corporate notes and bonds — 1,712,343 1,712,343 Certificates of deposit — 27,340 27,340 U.S. government and agency securities — 199,605 199,605 Total $ 451,298 $ 2,208,250 $ 2,659,548 The following table presents our fair value hierarchy for our assets measured at fair value on a recurring basis as of December 31, 2019 (in thousands): Level 1 Level 2 Total Cash equivalents: Money market funds $ 486,982 $ — $ 486,982 Commercial paper — 86,388 86,388 Marketable securities: Commercial paper — 101,490 101,490 Corporate notes and bonds — 1,661,330 1,661,330 Certificates of deposit — 38,045 38,045 U.S. government and agency securities — 127,784 127,784 Total $ 486,982 $ 2,015,037 $ 2,502,019 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Goodwill balances are presented below (in thousands): Carrying Amount Balance as of December 31, 2019 $ 156,756 Goodwill acquired 54,635 Foreign currency translation adjustments (3,786 ) Balance as of March 31, 2020 $ 207,605 |
Schedule of Intangible Assets | Intangible assets consist of the following (in thousands): March 31, 2020 December 31, 2019 Developed technology $ 214,322 $ 177,746 Patents 67,730 67,730 Other 3,585 3,594 Intangible assets, gross 285,637 249,070 Less: accumulated amortization (114,588 ) (105,220 ) Intangible assets, net $ 171,049 $ 143,850 |
Schedule of Estimated Future Amortization Expense Related to Intangible Assets | The following table presents the estimated future amortization expense related to intangible assets held at March 31, 2020 (in thousands): Years Ending December 31, Remainder of 2020 $ 32,167 2021 40,903 2022 35,778 2023 33,570 2024 20,481 Thereafter 8,150 Total future amortization expense $ 171,049 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property and Equipment, Net | Property and equipment, net consists of the following (in thousands): March 31, 2020 December 31, 2019 Computer equipment $ 705,922 $ 680,160 Computer software 60,138 59,511 Leasehold and other improvements 125,521 125,299 Furniture and fixtures 52,708 53,651 Construction in progress 11,871 6,830 Property and equipment, gross 956,160 925,451 Less: Accumulated depreciation (485,191 ) (457,366 ) Property and equipment, net $ 470,969 $ 468,085 |
Derivative Contracts (Tables)
Derivative Contracts (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Fair Values of Outstanding Derivative Contracts | The fair value of these outstanding derivative contracts was as follows (in thousands): Condensed Consolidated Balance Sheet Location March 31, 2020 December 31, 2019 Derivative Assets: Foreign currency derivative contracts Prepaid expenses and other current assets $ 2,222 $ 2,237 Derivative Liabilities: Foreign currency derivative contracts Accrued expenses and other current liabilities $ 915 $ 1,362 |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Convertible Notes Payable [Abstract] | |
Summary of Convertible Senior Notes | Convertible Date Initial Conversion Price per Share Initial Conversion Rate per $1,000 Par Value Initial Number of Shares 2022 Notes February 1, 2022 $ 134.75 7.42 shares 5,807 March 31, 2020 December 31, 2019 Liability component: Principal $ 779,962 $ 782,491 Less: debt issuance cost and debt discount, net of amortization (78,674 ) (87,510 ) Net carrying amount $ 701,288 $ 694,981 2022 Notes Equity component recorded at issuance: Note $ 162,039 Issuance cost (2,148 ) Net amount recorded in equity $ 159,891 |
Schedule of Estimated Fair Values of Convertible Senior Notes | he estimated fair value of the 2022 Notes at March 31, 2020 and December 31, 2019 based on the closing trading price per $100 of the 2022 Notes was as follows (in thousands): March 31, 2020 December 31, 2019 2022 Notes $ 1,709,677 $ 1,645,970 |
Schedule of Interest Expense Related to Convertible Senior Notes | s of March 31, 2020 , the remaining life of the 2022 Notes is 26 months. The following table sets forth total interest expense recognized related to the 2022 Notes (in thousands): Three Months Ended March 31, 2020 2019 Amortization of debt issuance cost $ 414 $ 394 Amortization of debt discount 8,156 7,774 Total $ 8,570 $ 8,168 Effective interest rate of the liability component 4.75% |
Schedule of Note Hedges | |
Schedule of Warrants |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss), Net of Tax | The components of accumulated other comprehensive income (loss), net of tax, consist of the following (in thousands): March 31, 2020 December 31, 2019 Foreign currency translation adjustment $ 491 $ 20,884 Net unrealized gain (loss) on investments, net of tax (14,871 ) 4,371 Accumulated other comprehensive income (loss) $ (14,380 ) $ 25,255 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Schedule of Common Stock Outstanding and Reserved Shares of Common Stock for Future Issuance | As of March 31, 2020 , we had 190.7 million shares of common stock outstanding and had reserved shares of common stock for future issuance as follows (in thousands): March 31, 2020 Stock plans: Options outstanding 994 RSUs (1) 10,082 Shares of common stock available for future grants: 2012 Equity Incentive Plan (2) 27,480 2012 Employee Stock Purchase Plan (2) 9,927 Total shares of common stock reserved for future issuance 48,483 (1) Represents the number of shares issuable upon settlement of outstanding restricted stock units (RSUs) and performance-based RSUs, assuming 100% of the target number of shares for performance-based RSUs, as discussed under the section entitled “RSUs” in Note 13 . (2) Refer to Note 13 for a description of these plans. |
Equity Awards (Tables)
Equity Awards (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock Option Activity | A summary of stock option activity for the three months ended March 31, 2020 was as follows: Number of Shares Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value (in thousands) (in years) (in thousands) Outstanding at December 31, 2019 1,154 $ 77.70 Exercised (149 ) $ 28.47 $ 44,465 Canceled (11 ) $ 75.77 Outstanding at March 31, 2020 994 $ 85.08 5.2 $ 200,386 Vested and expected to vest as of March 31, 2020 964 $ 79.67 5.1 $ 199,465 Vested and exercisable as of March 31, 2020 783 $ 47.79 4.2 $ 187,073 |
Schedule of Restricted Stock Unit Activity | A summary of RSU activity for the three months ended March 31, 2020 was as follows: Number of Shares Weighted-Average Grant-Date Fair Value Per Share Aggregate Intrinsic Value (in thousands) (in thousands) Outstanding at December 31, 2019 8,733 $ 185.39 Granted 2,810 $ 352.87 Vested (1,183 ) $ 151.19 $ 411,813 Forfeited (278 ) $ 199.48 Outstanding at March 31, 2020 10,082 $ 235.99 $ 2,889,333 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Net Loss Per Share | The following tables present the calculation of basic and diluted net income (loss) per share attributable to common stockholders (in thousands, except per share data): Three Months Ended March 31, 2020 2019 Numerator: Net income (loss) $ 48,231 $ (1,545 ) Denominator: Weighted-average shares outstanding - basic 190,163 182,062 Weighted-average effect of potentially dilutive securities: Common stock options 756 — RSUs 3,751 — 2022 Convertible senior notes 3,229 — 2020 Convertible senior notes settlements 10 — 2022 Warrants 2,029 — Weighted-average shares outstanding - diluted 199,938 182,062 Net income (loss) per share - basic $ 0.25 $ (0.01 ) Net income (loss) per share - diluted $ 0.24 $ (0.01 ) |
Schedule of Potentially Dilutive Securities | Potentially dilutive securities that are not included in the calculation of diluted net income (loss) per share because doing so would be antidilutive are as follows (in thousands): Three Months Ended March 31, 2020 2019 Common stock options 161 1,579 RSUs 2,494 12,162 ESPP obligations 178 212 2018 Warrants — 2,854 2022 Notes — 5,807 2022 Warrants — 5,807 Total potentially dilutive securities 2,833 28,421 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Payments | Maturities of operating lease liabilities as of March 31, 2020 are presented in the table below (in thousands): Years Ending December 31, Remainder of 2020 $ 56,146 2021 73,473 2022 71,917 2023 67,474 2024 52,520 Thereafter 241,505 Total operating lease payments 563,035 Less: imputed interest (61,202 ) Present value of operating lease liabilities $ 501,833 |
Information about Geographic _2
Information about Geographic Areas and Products (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segments, Geographical Areas [Abstract] | |
Revenues by Geographic Area, Based on Billing Location of Customer | Revenues by geographic area, based on the location of our users, were as follows for the periods presented (in thousands): Three Months Ended March 31, 2020 2019 North America (1) $ 701,764 $ 525,551 EMEA (2) 250,831 193,832 Asia Pacific and other 93,745 69,543 Total revenues $ 1,046,340 $ 788,926 |
Schedule of Long Lived Assets by Geographic Area | Property and equipment, net by geographic area were as follows (in thousands): March 31, 2020 December 31, 2019 North America (3) $ 267,731 $ 269,754 EMEA (2) 130,772 118,399 Asia Pacific and other 72,466 79,932 Property and equipment, net $ 470,969 $ 468,085 (1) Revenues attributed to the United States were approximately 94% of North America revenues for each of the three months ended March 31, 2020 and 2019 . (2) Europe, the Middle East and Africa. (3) Property and equipment, net attributed to the United States were approximately 76% and 73% of property and equipment, net attributable to North America as of March 31, 2020 and December 31, 2019 , respectively. |
Schedule of Subscription Revenue | Subscription revenues consist of the following (in thousands): Three Months Ended March 31, 2020 2019 Digital workflow products $ 867,285 $ 638,657 ITOM products 127,417 101,329 Total subscription revenues $ 994,702 $ 739,986 Our digital workflow products include the Now Platform, Now IT Service Management, Now IT Business Management, Now DevOps, Now IT Asset Management, Now Security Operations, Now Integrated Risk Management, Now HR Service Delivery, Now Finance Operations Management, Now Customer Service Management, and Now Field Service Management, and are generally priced on a per user basis. Our ITOM products are generally priced on a per node (physical or virtual server) basis. In previously issued consolidated financial statements, we referred to digital workflow products as “service management products.” |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Dec. 31, 2019 | Jan. 01, 2019 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Accrued interest net of credit losses | $ 11,800 | $ 10,700 | |
Operating lease right-of-use assets | 464,576 | $ 402,428 | |
Operating lease liability | $ 501,833 | ||
Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease right-of-use assets | $ 334,700 | ||
Operating lease liability | $ 362,700 | ||
Accounts Receivable | Customer Concentration Risk | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Concentration risk (percentage) | 13.00% |
Investments - Summary of Invest
Investments - Summary of Investments (Detail) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 2,139,648 | $ 1,921,133 |
Gross Unrealized Gains | 5,730 | 7,735 |
Gross Unrealized Losses | (17,460) | (219) |
Estimated Fair Value | 2,127,918 | 1,928,649 |
Commercial paper | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 188,406 | 101,416 |
Gross Unrealized Gains | 242 | 83 |
Gross Unrealized Losses | (18) | (9) |
Estimated Fair Value | 188,630 | 101,490 |
Corporate notes and bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 1,726,312 | 1,654,166 |
Gross Unrealized Gains | 3,398 | 7,360 |
Gross Unrealized Losses | (17,367) | (196) |
Estimated Fair Value | 1,712,343 | 1,661,330 |
Certificates of deposit | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 27,407 | 38,007 |
Gross Unrealized Gains | 8 | 38 |
Gross Unrealized Losses | (75) | 0 |
Estimated Fair Value | 27,340 | 38,045 |
U.S. government and agency securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 197,523 | 127,544 |
Gross Unrealized Gains | 2,082 | 254 |
Gross Unrealized Losses | 0 | (14) |
Estimated Fair Value | $ 199,605 | $ 127,784 |
Investments - Additional Inform
Investments - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Financing Receivable, Recorded Investment [Line Items] | ||
Contractual maturities | 36 months | |
Unrealized loss | $ 1,173,926 | $ 296,834 |
Gross unrealized loss | 17,460 | 219 |
Strategic investments | 23,400 | $ 22,400 |
Standard & Poor's, BBB Rating | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Unrealized loss | 95,100 | |
Gross unrealized loss | $ 1,500 |
Investments - Maturities of Ava
Investments - Maturities of Available-for-Sale Investments (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Securities, Available-for-sale [Abstract] | ||
Due within 1 year | $ 1,049,980 | |
Due in 1 year through 5 years | 1,077,938 | |
Total | $ 2,127,918 | $ 1,928,649 |
Investments - Fair Values and G
Investments - Fair Values and Gross Unrealized Losses of Available-for-Sale Securities Aggregated by Investment Category (Detail) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Securities, Available-for-sale [Line Items] | ||
Continuous unrealized loss position, less than 12 months, fair value | $ 1,173,926 | $ 280,570 |
Continuous unrealized loss position, less than 12 months, gross unrealized losses | (17,460) | (204) |
Continuous unrealized loss position, 12 months or greater, fair value | 0 | 16,264 |
Continuous unrealized loss position, 12 months or greater, gross unrealized loss | 0 | (15) |
Continuous unrealized loss position, fair value | 1,173,926 | 296,834 |
Continuous unrealized loss position, gross unrealized losses | (17,460) | (219) |
Commercial paper | ||
Debt Securities, Available-for-sale [Line Items] | ||
Continuous unrealized loss position, less than 12 months, fair value | 16,731 | 20,752 |
Continuous unrealized loss position, less than 12 months, gross unrealized losses | (18) | (9) |
Continuous unrealized loss position, 12 months or greater, fair value | 0 | 0 |
Continuous unrealized loss position, 12 months or greater, gross unrealized loss | 0 | 0 |
Continuous unrealized loss position, fair value | 16,731 | 20,752 |
Continuous unrealized loss position, gross unrealized losses | (18) | (9) |
Corporate notes and bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Continuous unrealized loss position, less than 12 months, fair value | 1,140,793 | 242,012 |
Continuous unrealized loss position, less than 12 months, gross unrealized losses | (17,367) | (181) |
Continuous unrealized loss position, 12 months or greater, fair value | 0 | 16,264 |
Continuous unrealized loss position, 12 months or greater, gross unrealized loss | 0 | (15) |
Continuous unrealized loss position, fair value | 1,140,793 | 258,276 |
Continuous unrealized loss position, gross unrealized losses | (17,367) | (196) |
Certificates of deposit | ||
Debt Securities, Available-for-sale [Line Items] | ||
Continuous unrealized loss position, less than 12 months, fair value | 16,402 | |
Continuous unrealized loss position, less than 12 months, gross unrealized losses | (75) | |
Continuous unrealized loss position, 12 months or greater, fair value | 0 | |
Continuous unrealized loss position, 12 months or greater, gross unrealized loss | 0 | |
Continuous unrealized loss position, fair value | 16,402 | |
Continuous unrealized loss position, gross unrealized losses | $ (75) | |
U.S. government and agency securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Continuous unrealized loss position, less than 12 months, fair value | 17,806 | |
Continuous unrealized loss position, less than 12 months, gross unrealized losses | (14) | |
Continuous unrealized loss position, 12 months or greater, fair value | 0 | |
Continuous unrealized loss position, 12 months or greater, gross unrealized loss | 0 | |
Continuous unrealized loss position, fair value | 17,806 | |
Continuous unrealized loss position, gross unrealized losses | $ (14) |
Fair Value Measurements (Detail
Fair Value Measurements (Detail) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | $ 2,659,548 | $ 2,502,019 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | 451,298 | 486,982 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | 2,208,250 | 2,015,037 |
Cash equivalents | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 451,298 | 486,982 |
Cash equivalents | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 76,832 | 86,388 |
Cash equivalents | Corporate notes and bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 3,500 | |
Cash equivalents | Level 1 | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 451,298 | 486,982 |
Cash equivalents | Level 1 | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Cash equivalents | Level 1 | Corporate notes and bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | |
Cash equivalents | Level 2 | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Cash equivalents | Level 2 | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 76,832 | 86,388 |
Cash equivalents | Level 2 | Corporate notes and bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 3,500 | |
Investments | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 188,630 | 101,490 |
Investments | Corporate notes and bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 1,712,343 | 1,661,330 |
Investments | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 27,340 | 38,045 |
Investments | U.S. government and agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 199,605 | 127,784 |
Investments | Level 1 | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | 0 |
Investments | Level 1 | Corporate notes and bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | 0 |
Investments | Level 1 | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | 0 |
Investments | Level 1 | U.S. government and agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | 0 |
Investments | Level 2 | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 188,630 | 101,490 |
Investments | Level 2 | Corporate notes and bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 1,712,343 | 1,661,330 |
Investments | Level 2 | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 27,340 | 38,045 |
Investments | Level 2 | U.S. government and agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | $ 199,605 | $ 127,784 |
Business Combinations (Details)
Business Combinations (Details) - USD ($) $ in Thousands | Feb. 07, 2020 | Feb. 06, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 207,605 | $ 156,756 | ||
Loom Systems Ltd. | ||||
Business Acquisition [Line Items] | ||||
Cash payment to acquire businesses | $ 58,400 | |||
Net deferred tax liabilities | 3,900 | |||
Goodwill | 39,900 | |||
Rupert Labs, Inc. | ||||
Business Acquisition [Line Items] | ||||
Cash payment to acquire businesses | $ 33,200 | |||
Net deferred tax liabilities | 5,500 | |||
Goodwill | 14,800 | |||
Developed technology | Loom Systems Ltd. | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | $ 17,000 | |||
Weighted average useful life | 5 years | |||
Developed technology | Rupert Labs, Inc. | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | $ 21,500 | |||
Weighted average useful life | 5 years |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Schedule of Goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, beginning of period | $ 156,756 |
Goodwill acquired | 54,635 |
Foreign currency translation adjustments | (3,786) |
Goodwill, end of period | $ 207,605 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 285,637 | $ 249,070 |
Less: accumulated amortization | (114,588) | (105,220) |
Intangible assets, net | 171,049 | 143,850 |
Remainder of 2020 | 32,167 | |
2021 | 40,903 | |
2022 | 35,778 | |
2023 | 33,570 | |
2024 | 20,481 | |
Thereafter | 8,150 | |
Total future amortization expense | 171,049 | |
Developed technology | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 214,322 | 177,746 |
Patents | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 67,730 | 67,730 |
Other | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 3,585 | $ 3,594 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | ||
Amortization expense | $ 10.3 | $ 7 |
Property and Equipment (Detail)
Property and Equipment (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 956,160 | $ 925,451 | |
Less: Accumulated depreciation | (485,191) | (457,366) | |
Property and equipment, net | 470,969 | 468,085 | |
Depreciation | 50,500 | $ 37,100 | |
Computer equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 705,922 | 680,160 | |
Computer software | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 60,138 | 59,511 | |
Leasehold and other improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 125,521 | 125,299 | |
Furniture and fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 52,708 | 53,651 | |
Construction in progress | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 11,871 | $ 6,830 |
Derivative Contracts (Details)
Derivative Contracts (Details) - Foreign currency derivative contracts - Not Designated as Hedging Instruments - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Derivatives, Fair Value [Line Items] | ||
Derivative, notional amount | $ 263,600 | $ 358,000 |
Level 2 | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | 2,222 | 2,237 |
Level 2 | Accrued expenses and other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liabilities | $ 915 | $ 1,362 |
Deferred Revenue and Performa_2
Deferred Revenue and Performance Obligations - Revenues Recognized from Deferred Revenues (Details) - USD ($) $ in Billions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | ||
Deferred revenue recognized | $ 0.8 | $ 0.6 |
Deferred Revenue and Performa_3
Deferred Revenue and Performance Obligations - Transaction Price Allocated to the Remaining Performance Obligations (Details) $ in Billions | Mar. 31, 2020USD ($) |
Revenue from Contract with Customer [Abstract] | |
Remaining non-cancelable performance obligations | $ 6.6 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied (percent) | 51.00% |
Performance obligations period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied (percent) | 49.00% |
Performance obligations period |
Convertible Senior Notes - Addi
Convertible Senior Notes - Additional Information (Details) shares in Millions | 3 Months Ended | ||||||
Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($)daytrading_dayshares | Jun. 30, 2019shares | Mar. 31, 2019shares | Dec. 31, 2019USD ($) | Jun. 30, 2017USD ($) | Nov. 30, 2013USD ($) | |
Debt Instrument [Line Items] | |||||||
Percentage of purchase price of notes which should be paid upon fundamental change (percent) | 100.00% | ||||||
Estimated fair value of the note based on the closing trading price | $ 100 | $ 100 | |||||
Warrant exercise period | trading_day | 60 | ||||||
2018 Warrants | |||||||
Debt Instrument [Line Items] | |||||||
Number of shares to be issued upon exercise of the Warrants (in shares) | shares | 1.6 | 2.7 | |||||
2022 Warrants | |||||||
Debt Instrument [Line Items] | |||||||
Number of potential securities issued upon automatic exercise of the Warrants (in shares) | shares | 1.7 | ||||||
Stock Price Trigger Measurement | |||||||
Debt Instrument [Line Items] | |||||||
Trading days threshold | day | 20 | ||||||
Consecutive trading days threshold, total | day | 30 | ||||||
Threshold percentage of stock price trigger (percent) | 130.00% | ||||||
Notes Price Trigger Measurement | |||||||
Debt Instrument [Line Items] | |||||||
Trading days threshold | day | 5 | ||||||
Consecutive trading days threshold, total | day | 5 | ||||||
Threshold percentage of stock price trigger (percent) | 98.00% | ||||||
Conversion of notes base conversion price | $ 1,000 | ||||||
2022 Notes | |||||||
Debt Instrument [Line Items] | |||||||
Face amount of debt | 779,962,000 | $ 782,491,000 | $ 782,500,000 | ||||
Stated interest rate | 0.00% | ||||||
Cash paid for settlement of debt | 2,500,000 | ||||||
Fair value adjustments | 3,700,000 | ||||||
Benefit from the 2022 Note Hedge | $ 3,500,000 | ||||||
Remaining discount amortization period | 26 months | ||||||
2018 Notes | |||||||
Debt Instrument [Line Items] | |||||||
Face amount of debt | $ 575,000,000 | ||||||
Stated interest rate | 0.00% | ||||||
Scenario, Forecast | 2022 Notes | |||||||
Debt Instrument [Line Items] | |||||||
Cash paid for settlement of debt | $ 15,200,000 |
Convertible Senior Notes - Sche
Convertible Senior Notes - Schedule of Conversion (Details) - Amortization of debt issuance cost | 2 Months Ended |
Jun. 30, 2017shares$ / shares | |
Debt Instrument [Line Items] | |
Initial Conversion Price per Share (in dollars per share) | $ / shares | $ 134.75 |
Initial Conversion Rate | 0.00742 |
Initial Number of Shares (in shares) | shares | 5,807,000 |
Convertible Senior Notes - Sc_2
Convertible Senior Notes - Schedule of Notes Payable (Details) - Amortization of debt issuance cost - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2017 |
Debt Instrument [Line Items] | |||
Principal | $ 779,962,000 | $ 782,491,000 | $ 782,500,000 |
Less: debt issuance cost and debt discount, net of amortization | (78,674,000) | (87,510,000) | |
Net carrying amount | $ 701,288,000 | $ 694,981,000 |
Convertible Senior Notes - Sc_3
Convertible Senior Notes - Schedule of Equity Components (Details) - Amortization of debt issuance cost $ in Thousands | Mar. 31, 2020USD ($) |
Debt Instrument [Line Items] | |
Note | $ 162,039 |
Issuance cost | (2,148) |
Net amount recorded in equity | $ 159,891 |
Convertible Senior Notes - Sc_4
Convertible Senior Notes - Schedule of Fair Value (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Level 2 | Amortization of debt issuance cost | ||
Debt Instrument [Line Items] | ||
Estimated fair values of notes | $ 1,709,677 | $ 1,645,970 |
Convertible Senior Notes - Sc_5
Convertible Senior Notes - Schedule of Interest Expense Recognized (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Debt Instrument [Line Items] | ||
Total | $ 8,570 | $ 8,168 |
Amortization of debt issuance cost | ||
Debt Instrument [Line Items] | ||
Amortization of debt issuance cost | 414 | 394 |
Amortization of debt discount | 8,156 | 7,774 |
Total | $ 8,570 | $ 8,168 |
Effective interest rate of the liability component | 4.75% |
Convertible Senior Notes - Sc_6
Convertible Senior Notes - Schedule of Note Hedges (Details) - 2022 Note Hedge - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Jun. 30, 2017 | |
Derivative [Line Items] | ||
Purchase | $ 128,017 | |
Initial Shares (in shares) | 5,807,000 | |
Shares as of March 31, 2020 (in shares) | 5,788,000 |
Convertible Senior Notes - Sc_7
Convertible Senior Notes - Schedule of Warrants (Details) - 2022 Warrants $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($)$ / sharesshares | |
Class of Warrant or Right [Line Items] | |
Proceeds | $ | $ 54,071 |
Initial Shares (in shares) | 5,807 |
Strike Price (in dollars per share) | $ / shares | $ 203.40 |
Shares as of March 31, 2020 | 5,807 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated other comprehensive income (loss) | $ 2,266,095 | $ 2,127,941 | $ 1,194,951 | $ 1,111,199 |
Foreign currency translation adjustment | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated other comprehensive income (loss) | 491 | 20,884 | ||
Net unrealized gain (loss) on investments, net of tax | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated other comprehensive income (loss) | (14,871) | 4,371 | ||
Accumulated other comprehensive income (loss) | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated other comprehensive income (loss) | $ (14,380) | $ 25,255 | $ 10,323 | $ (4,035) |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Detail) - shares | 3 Months Ended | ||
Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | |
Equity [Abstract] | |||
Shares of common stock, authorized (in shares) | 600,000,000 | ||
Shares of common stock, issued and sold (in shares) | 190,700,000 | ||
Stock issued during period, shares, new issues (in shares) | 1,200,000 | 1,900,000 | |
2018 Warrants | |||
Class of Stock [Line Items] | |||
Number of shares to be issued upon exercise of the Warrants (in shares) | 1,600,000 | 2,700,000 |
Stockholders' Equity - Outstand
Stockholders' Equity - Outstanding and Reserved Shares of Common Stock for Future Issuance (Detail) - shares | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Common stock outstanding and reserved shares of common stock for future issuance | ||
Options outstanding (in shares) | 994,000 | 1,154,000 |
Total shares of common stock reserved for future issuance (in shares) | 48,483,000 | |
2012 Equity Incentive Plan | ||
Common stock outstanding and reserved shares of common stock for future issuance | ||
Total shares of common stock reserved for future issuance (in shares) | 27,480,000 | |
2012 Employee Stock Purchase Plan | ||
Common stock outstanding and reserved shares of common stock for future issuance | ||
Total shares of common stock reserved for future issuance (in shares) | 9,927,000 | |
Options outstanding | ||
Common stock outstanding and reserved shares of common stock for future issuance | ||
Options outstanding (in shares) | 994,000 | |
RSUs | ||
Common stock outstanding and reserved shares of common stock for future issuance | ||
RSUs (in shares) | 10,082,000 | 8,733,000 |
Performance-based RSUs | ||
Common stock outstanding and reserved shares of common stock for future issuance | ||
Number of shares eligible to vest (percent) | 100.00% |
Equity Awards - Additional Info
Equity Awards - Additional Information (Detail) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020USD ($)incentive_planshares | Mar. 31, 2019USD ($) | Dec. 31, 2019shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of equity incentive plans | incentive_plan | 2 | ||
Fair value of stock options vested | $ 0.8 | ||
Total unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested stock options | $ 15.3 | ||
Options outstanding | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Remaining weighted-average period | 4 years 4 months 24 days | ||
Restricted stock units with service condition only | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares outstanding (in shares) | shares | 9,400,000 | ||
Restricted stock units with service and performance conditions | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares outstanding (in shares) | shares | 700,000 | ||
Performance-based RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares eligible to vest (percent) | 100.00% | ||
Stock-based compensation expense, net of actual and estimated forfeitures | $ 13.7 | $ 22.6 | |
Performance-based RSUs | Vesting, tranche one | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting percentage | 33.00% | ||
Performance-based RSUs | Vesting, tranche two | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting term | 2 years | ||
Performance-based RSUs | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares eligible to vest (percent) | 0.00% | ||
Performance-based RSUs | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares eligible to vest (percent) | 180.00% | ||
Restricted stock units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Remaining weighted-average period | 3 years 2 months 12 days | ||
Number of shares outstanding (in shares) | shares | 10,082,000 | 8,733,000 | |
Unrecognized compensation expense expected to be recognized | $ 1,800 | ||
2012 Equity Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares of common stock outstanding, increase, percentage | 5.00% | ||
2012 Equity Incentive Plan | Restricted stock units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting term | 4 years | ||
2012 Employee Stock Purchase Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares of common stock outstanding, increase, percentage | 1.00% | ||
Common stock purchase price percentage | 85.00% | ||
Award offering period | 6 months | ||
2005 Equity Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock options granted to new employees vest, percentage per annum | 25.00% | ||
Requisite service period to vest employment continuation period | 3 years | ||
Options granted, exercisable period | 10 years |
Equity Awards - Summary of Stoc
Equity Awards - Summary of Stock Option Activity (Detail) $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($)$ / sharesshares | |
Number of Shares | |
Outstanding, beginning balance (in shares) | shares | 1,154,000 |
Exercised (in shares) | shares | (149,000) |
Canceled (in shares) | shares | (11,000) |
Outstanding, ending balance (in shares) | shares | 994,000 |
Vested and expected to vest (in shares) | shares | 964,000 |
Vested and exercisable (in shares) | shares | 783,000 |
Weighted- Average Exercise Price Per Share | |
Outstanding, beginning balance (in dollars per share) | $ / shares | $ 77.70 |
Exercised (in dollars per share) | $ / shares | 28.47 |
Canceled (in dollars per share) | $ / shares | 75.77 |
Outstanding, ending balance (in dollars per share) | $ / shares | 85.08 |
Vested and expected to vest (in dollars per share) | $ / shares | 79.67 |
Vested and exercisable (in dollars per share) | $ / shares | $ 47.79 |
Weighted-average remaining contractual term, outstanding | 5 years 2 months 12 days |
Weighted-average remaining contractual term, vested and expected to vest | 5 years 1 month 6 days |
Weighted-average remaining contractual term, vested and exercisable | 4 years 2 months 12 days |
Aggregate intrinsic value, exercised | $ | $ 44,465 |
Aggregate intrinsic value, outstanding | $ | 200,386 |
Aggregate intrinsic value, vested and expected to vest | $ | 199,465 |
Aggregate intrinsic value, vested and exercisable | $ | $ 187,073 |
Equity Awards - Restricted Stoc
Equity Awards - Restricted Stock Unit Table (Details) - Restricted stock units (RSUs) $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($)$ / sharesshares | |
Number of Shares | |
Outstanding, beginning balance (in shares) | shares | 8,733,000 |
Granted (in shares) | shares | 2,810,000 |
Vested (in shares) | shares | (1,183,000) |
Forfeited (in shares) | shares | (278,000) |
Outstanding, ending balance (in shares) | shares | 10,082,000 |
Weighted-Average Grant-Date Fair Value Per Share | |
Outstanding, beginning balance (in dollar per share) | $ / shares | $ 185.39 |
Granted (in dollar per share) | $ / shares | 352.87 |
Vested (in dollar per share) | $ / shares | 151.19 |
Forfeited (in dollar per share) | $ / shares | 199.48 |
Outstanding, ending balance (in dollar per share) | $ / shares | $ 235.99 |
Aggregate Intrinsic Value | |
Aggregate intrinsic value, vested | $ | $ 411,813 |
Aggregate intrinsic value, outstanding | $ | $ 2,889,333 |
Net Income (Loss) Per Share - S
Net Income (Loss) Per Share - Schedule of Basic and Diluted Net Loss Per Share Attributable to Common Stockholders (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Numerator: | ||
Net income (loss) | $ 48,231 | $ (1,545) |
Denominator: | ||
Weighted-average shares outstanding - basic (in shares) | 190,163 | 182,062 |
Weighted-average shares outstanding - diluted (in shares) | 199,938 | 182,062 |
Net income (loss) per share - basic (in dollars per share) | $ 0.25 | $ (0.01) |
Net income (loss) per share - diluted (in dollars per share) | $ 0.24 | $ (0.01) |
Common stock options | ||
Denominator: | ||
Potentially dilutive securities | 756 | 0 |
Restricted stock units (RSUs) | ||
Denominator: | ||
Potentially dilutive securities | 3,751 | 0 |
2022 Notes | Convertible senior notes | ||
Denominator: | ||
2022 Convertible senior notes | 3,229 | 0 |
2020 Convertible senior notes settlements | 10 | 0 |
2022 Warrants | Warrants | ||
Denominator: | ||
2022 Warrants | 2,029 | 0 |
Net Income (Loss) Per Share -_2
Net Income (Loss) Per Share - Schedule of Potentially Dilutive Securities (Detail) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive securities (in shares) | 2,833 | 28,421 |
Common stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive securities (in shares) | 161 | 1,579 |
RSUs | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive securities (in shares) | 2,494 | 12,162 |
ESPP obligations | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive securities (in shares) | 178 | 212 |
Convertible senior notes | 2022 Notes | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive securities (in shares) | 0 | 5,807 |
Warrants related to the issuance of convertible senior notes | 2018 convertible senior notes | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive securities (in shares) | 0 | 2,854 |
Warrants related to the issuance of convertible senior notes | 2022 convertible senior notes | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive securities (in shares) | 0 | 5,807 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Taxes [Line Items] | ||
Income tax (benefit) provision | $ 131 | $ (9,911) |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Jun. 30, 2017 | |
Debt Instrument [Line Items] | ||||
Operating lease costs | $ 19,400,000 | $ 14,700,000 | ||
Operating lease liabilities, payments | 11,000,000 | |||
Right-of-use assets obtained in exchange for operating lease liabilities | $ 81,200,000 | |||
Weighted-average lease remaining lease term | 8 years 10 months 24 days | |||
Weighted-average discount rate | 3.70% | |||
Undiscounted cash flows | $ 403,600,000 | |||
Unrecognized tax benefits | 6,600,000 | |||
Letters of credit | 18,100,000 | |||
Amortization of debt issuance cost | ||||
Debt Instrument [Line Items] | ||||
Principal | $ 779,962,000 | $ 782,491,000 | $ 782,500,000 | |
Minimum | ||||
Debt Instrument [Line Items] | ||||
Operating lease term | 2 years | |||
Maximum | ||||
Debt Instrument [Line Items] | ||||
Operating lease term | 15 years |
Commitments and Contingencies_2
Commitments and Contingencies - Maturity of Operating Lease Liabilities (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Remainder of 2020 | $ 56,146 |
2021 | 73,473 |
2022 | 71,917 |
2023 | 67,474 |
2024 | 52,520 |
Thereafter | 241,505 |
Total operating lease payments | 563,035 |
Less: imputed interest | (61,202) |
Present value of operating lease liabilities | $ 501,833 |
Information about Geographic _3
Information about Geographic Areas and Products - Geographic Disclosures (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Revenues by geography | |||
Total revenues | $ 1,046,340 | $ 788,926 | |
Percentage of U.S. revenues in North America | 94.00% | 94.00% | |
Property and equipment by geography | |||
Property and equipment, net | $ 470,969 | $ 468,085 | |
Percentage of U.S. net property and equipment in North America | 76.00% | 73.00% | |
North America | |||
Revenues by geography | |||
Total revenues | $ 701,764 | $ 525,551 | |
Property and equipment by geography | |||
Property and equipment, net | 267,731 | $ 269,754 | |
EMEA | |||
Revenues by geography | |||
Total revenues | 250,831 | 193,832 | |
Property and equipment by geography | |||
Property and equipment, net | 130,772 | 118,399 | |
Asia Pacific and other | |||
Revenues by geography | |||
Total revenues | 93,745 | $ 69,543 | |
Property and equipment by geography | |||
Property and equipment, net | $ 72,466 | $ 79,932 |
Information about Geographic _4
Information about Geographic Areas and Products - Subscription Revenues (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Segment Reporting Information [Line Items] | ||
Subscription revenues | $ 1,046,340 | $ 788,926 |
Digital workflow products | ||
Segment Reporting Information [Line Items] | ||
Subscription revenues | 867,285 | 638,657 |
ITOM products | ||
Segment Reporting Information [Line Items] | ||
Subscription revenues | 127,417 | 101,329 |
Total subscription revenues | ||
Segment Reporting Information [Line Items] | ||
Subscription revenues | $ 994,702 | $ 739,986 |
Uncategorized Items - now-20200
Label | Element | Value |
Restricted Cash, Current | us-gaap_RestrictedCashCurrent | $ 3,470,000 |
Restricted Cash, Current | us-gaap_RestrictedCashCurrent | $ 4,123,000 |