Cover
Cover - USD ($) shares in Millions, $ in Billions | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 25, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Current Fiscal Year End Date | --12-31 | ||
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 Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
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 | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 73.6 | ||
Entity Common Stock, Shares Outstanding | 203 | ||
Documents Incorporated by Reference | Portions of the registrant’s definitive proxy statement for its 2023 Annual Meeting of Stockholders (Proxy Statement) to be filed within 120 days of the registrant’s fiscal year ended December 31, 2022, are incorporated by reference in Part III of this Report on Form 10-K. Except with respect to information specifically incorporated by reference in this Form 10-K, the Proxy Statement is not deemed to be filed as part of this Form 10-K. | ||
Entity Central Index Key | 0001373715 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2022 | |
Audit Information [Abstract] | |
Auditor Name | PricewaterhouseCoopers LLP |
Auditor Firm ID | 238 |
Auditor Location | San Jose, California |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 1,470 | $ 1,728 |
Short-term investments | 2,810 | 1,576 |
Accounts receivable, net | 1,725 | 1,390 |
Current portion of deferred commissions | 369 | 303 |
Prepaid expenses and other current assets | 280 | 223 |
Total current assets | 6,654 | 5,220 |
Deferred commissions, less current portion | 742 | 623 |
Long-term investments | 2,117 | 1,630 |
Property and equipment, net | 1,053 | 766 |
Operating lease right-of-use assets | 682 | 591 |
Intangible assets, net | 232 | 287 |
Goodwill | 824 | 777 |
Deferred tax assets | 636 | 692 |
Other assets | 359 | 212 |
Total assets | 13,299 | 10,798 |
Current liabilities: | ||
Accounts payable | 274 | 89 |
Accrued expenses and other current liabilities | 975 | 850 |
Current portion of deferred revenue | 4,660 | 3,836 |
Current portion of operating lease liabilities | 96 | 82 |
Current debt, net | 0 | 92 |
Total current liabilities | 6,005 | 4,949 |
Deferred revenue, less current portion | 70 | 63 |
Operating lease liabilities, less current portion | 650 | 556 |
Long-term debt, net | 1,486 | 1,484 |
Other long-term liabilities | 56 | 51 |
Total liabilities | 8,267 | 7,103 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Preferred stock, $0.001 par value; 10,000 shares authorized; no shares issued or outstanding | 0 | 0 |
Common stock, $0.001 par value; 600,000 shares authorized; 202,882 and 199,608 shares issued and outstanding at December 31, 2022 and 2021, respectively | 0 | 0 |
Additional paid-in capital | 4,796 | 3,665 |
Accumulated other comprehensive income (loss) | (102) | 34 |
Retained earnings (accumulated deficit) | 338 | (4) |
Total stockholders’ equity | 5,032 | 3,695 |
Total liabilities and stockholders’ equity | $ 13,299 | $ 10,798 |
Common stock, shares authorized (in shares) | 600,000,000 | |
Common stock, shares, issued (in shares) | 202,882,000 | 199,608,000 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 600,000,000 | |
Common stock, shares, issued (in shares) | 202,882,000 | 199,608,000 |
Common stock, shares, outstanding (in shares) | 202,882,000 | 199,608,000 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | ||
Revenues: | ||||
Total revenues | $ 7,245 | $ 5,896 | $ 4,519 | |
Cost of revenues: | ||||
Total cost of revenues | [1] | 1,573 | 1,353 | 987 |
Gross profit | [1] | 5,672 | 4,543 | 3,532 |
Operating expenses: | ||||
Sales and marketing | [1] | 2,814 | 2,292 | 1,855 |
Research and development | [1] | 1,768 | 1,397 | 1,024 |
General and administrative | [1] | 735 | 597 | 454 |
Total operating expenses | [1] | 5,317 | 4,286 | 3,333 |
Income from operations | 355 | 257 | 199 | |
Interest expense | (27) | (28) | (33) | |
Other income (expense), net | 71 | 20 | (16) | |
Income before income taxes | 399 | 249 | 150 | |
Provision for income taxes | 74 | 19 | 31 | |
Net income | $ 325 | $ 230 | $ 119 | |
Net income per share - basic (in USD per share) | $ 1.61 | $ 1.16 | $ 0.61 | |
Net income per share - diluted (in USD per share) | $ 1.60 | $ 1.13 | $ 0.59 | |
Weighted-average shares used to compute net income per share - basic (in shares) | 201,430,000 | 198,094,000 | 193,096,000 | |
Weighted-average shares used to compute net income per share - diluted (in shares) | 203,535,000 | 203,167,000 | 202,478,000 | |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments | $ (70) | $ (41) | $ 66 | |
Unrealized gains (losses) on investments, net of tax | (66) | (19) | 3 | |
Other comprehensive income (loss) | (136) | (60) | 69 | |
Comprehensive income | 189 | 170 | 188 | |
Subscription | ||||
Revenues: | ||||
Total revenues | 6,891 | 5,573 | 4,286 | |
Cost of revenues: | ||||
Total cost of revenues | [1] | 1,187 | 1,022 | 731 |
Professional services and other | ||||
Revenues: | ||||
Total revenues | 354 | 323 | 233 | |
Cost of revenues: | ||||
Total cost of revenues | [1] | $ 386 | $ 331 | $ 256 |
[1]Includes stock-based compensation as follows: Year Ended December 31, 2022 2021 2020 Cost of revenues: Subscription $ 157 $ 128 $ 98 Professional services and other 67 59 52 Operating expenses: Sales and marketing 459 389 320 Research and development 495 395 282 General and administrative 223 160 118 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stock-based compensation | $ 1,401 | $ 1,131 | $ 870 |
Sales and marketing | |||
Stock-based compensation | 459 | 389 | 320 |
Research and development | |||
Stock-based compensation | 495 | 395 | 282 |
General and administrative | |||
Stock-based compensation | 223 | 160 | 118 |
Subscription | Cost of revenues | |||
Stock-based compensation | 157 | 128 | 98 |
Professional services and other | Cost of revenues | |||
Stock-based compensation | $ 67 | $ 59 | $ 52 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Millions | Total | Cumulative Effect, Period of Adoption, Adjustment | Common Stock | Additional Paid-in Capital | Additional Paid-in Capital Cumulative Effect, Period of Adoption, Adjustment | Retained Earnings (Accumulated Deficit) | Retained Earnings (Accumulated Deficit) Cumulative Effect, Period of Adoption, Adjustment | Accumulated Other Comprehensive Income (Loss) |
Beginning balance (in shares) at Dec. 31, 2019 | 189,461 | |||||||
Beginning balance at Dec. 31, 2019 | $ 2,127 | $ 0 | $ 2,455 | $ (353) | $ 25 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Common stock issued under employee stock plans (in shares) | 4,099 | |||||||
Common stock issued under employee stock plans | 152 | 152 | ||||||
Taxes paid related to net share settlement of equity awards | (509) | (509) | ||||||
Stock-based compensation | 874 | 874 | ||||||
Settlement of 2022 warrants (in shares) | 2,285 | |||||||
Settlement of 2022 notes conversion feature | (1,377) | (1,377) | ||||||
Benefit from exercise of Note Hedge | 1,379 | 1,379 | ||||||
Other comprehensive loss, net of tax | 69 | 69 | ||||||
Net income | 119 | 119 | ||||||
Ending balance (in shares) at Dec. 31, 2020 | 195,845 | |||||||
Ending balance at Dec. 31, 2020 | $ 2,834 | $ 0 | 2,974 | (234) | 94 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Common stock issued under employee stock plans (in shares) | 3,200 | 3,227 | ||||||
Common stock issued under employee stock plans | $ 168 | 168 | ||||||
Taxes paid related to net share settlement of equity awards | (612) | (612) | ||||||
Stock-based compensation | 1,130 | 1,130 | ||||||
Settlement of 2022 warrants (in shares) | 536 | |||||||
Settlement of 2022 notes conversion feature | (225) | (225) | ||||||
Shares granted related to business combination | 6 | 6 | ||||||
Benefit from exercise of Note Hedge | 224 | 224 | ||||||
Other comprehensive loss, net of tax | (60) | (60) | ||||||
Net income | 230 | 230 | ||||||
Ending balance (in shares) at Dec. 31, 2021 | 199,608 | |||||||
Ending balance at Dec. 31, 2021 | $ 3,695 | $ (2) | $ 0 | 3,665 | $ (19) | (4) | $ 17 | 34 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Accounting Standards Update [Extensible List] | Accounting Standards Update 2020-06 | |||||||
Common stock issued under employee stock plans (in shares) | 2,700 | 2,671 | ||||||
Common stock issued under employee stock plans | $ 177 | 177 | ||||||
Taxes paid related to net share settlement of equity awards | (427) | (427) | ||||||
Stock-based compensation | 1,400 | 1,400 | ||||||
Settlement of 2022 warrants (in shares) | 603 | |||||||
Settlement of 2022 notes conversion feature | (233) | (233) | ||||||
Benefit from exercise of Note Hedge | 233 | 233 | ||||||
Other comprehensive loss, net of tax | (136) | (136) | ||||||
Net income | 325 | 325 | ||||||
Ending balance (in shares) at Dec. 31, 2022 | 202,882 | |||||||
Ending balance at Dec. 31, 2022 | $ 5,032 | $ 0 | $ 4,796 | $ 338 | $ (102) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | |||
Net income | $ 325 | $ 230 | $ 119 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 433 | 472 | 336 |
Amortization of deferred commissions | 358 | 294 | 218 |
Amortization of debt discount and issuance costs | 0 | 7 | 24 |
Stock-based compensation | 1,401 | 1,131 | 870 |
Deferred income taxes | 15 | (34) | (24) |
Repayments of convertible senior notes attributable to debt discount | 0 | (15) | (82) |
Loss on extinguishment of 2022 Notes | 0 | 3 | 47 |
Other | 17 | 45 | (2) |
Changes in operating assets and liabilities, net of effect of business combinations: | |||
Accounts receivable | (340) | (401) | (152) |
Deferred commissions | (566) | (565) | (365) |
Prepaid expenses and other assets | (39) | (93) | (55) |
Accounts payable | 172 | 55 | (34) |
Deferred revenue | 904 | 960 | 711 |
Accrued expenses and other liabilities | 43 | 102 | 175 |
Net cash provided by operating activities | 2,723 | 2,191 | 1,786 |
Cash flows from investing activities: | |||
Purchases of property and equipment | (550) | (392) | (419) |
Business combinations, net of cash acquired | (91) | (785) | (107) |
Purchases of intangibles | 0 | (7) | (13) |
Purchases of investments | (4,038) | (2,485) | (2,922) |
Purchases of non-marketable investments | (167) | (71) | (12) |
Sales and maturities of investments | 2,245 | 2,119 | 1,965 |
Other | 18 | 14 | 1 |
Net cash used in investing activities | (2,583) | (1,607) | (1,507) |
Cash flows from financing activities: | |||
Net proceeds from borrowings on 2030 Notes | 0 | 0 | 1,482 |
Repayments of convertible senior notes attributable to principal | (94) | (61) | (1,628) |
Net proceeds from unwind of 2022 Note Hedge | 0 | 0 | 1,106 |
Proceeds from employee stock plans | 177 | 167 | 146 |
Taxes paid related to net share settlement of equity awards | (427) | (612) | (509) |
Net cash provided by (used in) financing activities | (344) | (506) | 597 |
Foreign currency effect on cash, cash equivalents and restricted cash | (53) | (25) | 25 |
Net change in cash, cash equivalents and restricted cash | (257) | 53 | 901 |
Cash, cash equivalents and restricted cash at beginning of period | 1,732 | 1,679 | 778 |
Cash, cash equivalents and restricted cash at end of period | 1,475 | 1,732 | 1,679 |
Cash, cash equivalents and restricted cash at end of period: | |||
Cash and cash equivalents | 1,470 | 1,728 | 1,677 |
Restricted cash included in prepaid expenses and other current assets | 5 | 4 | 2 |
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows | 1,475 | 1,732 | 1,679 |
Supplemental disclosures of other cash flow information: | |||
Interest paid | 24 | 41 | 0 |
Income taxes paid, net of refunds | 45 | 36 | 39 |
Non-cash investing and financing activities: | |||
Settlement of 2022 Notes conversion feature | 233 | 225 | 275 |
Benefit from exercise of 2022 Note Hedge | 233 | 224 | 273 |
Property and equipment included in accounts payable, accrued expenses and other liabilities | $ 74 | $ 63 | $ 35 |
Description of the Business
Description of the Business | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of the Business | Description of the Business ServiceNow was founded on a simple premise: a better technology platform will help work flow better. We help global enterprises across industries, universities and governments to digitize their workflows. We organize our workflow applications along four primary areas: Technology, Customer and Industry, Employee and Creator. The products under each of our workflows help customers connect, automate and empower work across systems and silos to enable great outcomes for businesses and great experiences for people. The Now Platform integrates with our customers’ cloud platforms and systems of choice, allowing our customers to deliver workflows across their current and future preferred systems of record and collaboration platforms. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Principles of Consolidation The accompanying consolidated financial statements have been prepared in conformity with U.S. Generally Accepted Accounting Principles (“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 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, standalone selling price (“SSP”) for each distinct performance obligation included in customer contracts with multiple performance obligations, the period of benefit for deferred commissions, valuation of intangible assets, the useful life of property and equipment and identifiable intangible assets, stock-based compensation expense and income taxes. Actual results could differ from those estimates. In January 2022, we completed an assessment of the useful life of our data center equipment and determined we should increase the estimated useful life of data center equipment from three Segments Our chief operating decision maker allocates resources and assesses financial performance based upon discrete financial information at the consolidated level. There are no segment managers who are held accountable by the chief operating decision maker, or anyone else, for operations, operating results and planning for levels or components below the consolidated unit level. Accordingly, we have determined that we operate as a single operating and reportable segment. Foreign Currency Translation and Transactions The functional currencies for our foreign subsidiaries are primarily their respective local currencies. Assets and liabilities of the wholly-owned foreign subsidiaries are translated into U.S. Dollars at exchange rates in effect at each period end. Amounts classified in stockholders’ equity are translated at historical exchange rates. Revenues and expenses are translated at the average exchange rates during the period. The resulting translation adjustments are recorded in accumulated other comprehensive income (loss) as a component of stockholders’ equity. Foreign currency transaction gains and losses are included in other income (expense), net within the consolidated statements of comprehensive income, and have not been material for all periods presented. Revenue Recognition Revenues are recognized when control of services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. Subscription revenues Subscription revenues are primarily comprised of subscription fees that give customers access to the ordered subscription service, related support and updates, if any, to the subscribed service during the subscription term. We recognize subscription revenues ratably over the contract term beginning on the commencement date of each contract, which is the date we make our services available to our customers. Our contracts with customers typically include a fixed amount of consideration and are generally non-cancelable and without any refund-type provisions. We typically invoice our customers annually in advance for our subscription services upon execution of the initial contract or subsequent renewal, and our invoices are typically due within 30 days from the invoice date. Subscription revenues also include revenues from self-hosted offerings in which customers deploy, or we grant customers the option to deploy without significant penalty, our subscription service internally or contract with a third party to host the software. For these contracts, we account for the software element separately from the related support and updates as they are distinct performance obligations. Refer to the discussion below related to contracts with multiple performance obligations for further details. The transaction price is allocated to separate performance obligations on a relative SSP basis. The transaction price allocated to the software element is recognized when transfer of control of the software to the customer is complete. The transaction price allocated to the related support and updates are recognized ratably over the contract term. Professional services and other revenues Our professional services arrangements are primarily on a time-and-materials basis, and we generally invoice our customers monthly in arrears for these professional services based on actual hours and expenses incurred. Some of our professional services arrangements are on a fixed fee. Professional services revenues are recognized as services are delivered. Other revenues mainly consist of fees from customer training delivered on-site or through publicly available classes. Typical payment terms require our customers to pay us within 30 days from the invoice date. Contracts with multiple performance obligations We enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. We evaluate the terms and conditions included within our customer contracts to ensure appropriate revenue recognition, including whether products and services are considered distinct performance obligations that should be accounted for separately versus together. For contracts with multiple performance obligations, the transaction price is allocated to the separate performance obligations on a relative SSP basis. We determine SSP by considering the historical selling price of these performance obligations in similar transactions as well as other factors, including, but not limited to, competitive pricing of similar products, other software vendor pricing, industry publications and current pricing practices. Contract balances Unbilled receivables represent subscription revenues that are recognized upon delivery of the software prior to being invoiced. Unbilled receivables are primarily presented under prepaid expenses and other current assets on our consolidated balance sheets. Deferred revenue consists primarily of payments received related to unsatisfied performance obligations at the end of the period. Once our services are available to customers, we record amounts due in accounts receivable and in deferred revenue. To the extent we bill customers in advance of the billing period commencement date, the accounts receivable and corresponding deferred revenue amounts are netted to zero on our consolidated balance sheets, unless such amounts have been paid as of the balance sheet date. Customer deposits primarily relate to payments received from customers which could be refundable pursuant to the terms of the contract and are presented under accrued expenses and other current liabilities on our consolidated balance sheets. Deferred Commissions Deferred commissions are the incremental selling costs that are associated with acquiring customer contracts and consist primarily of sales commissions paid to our sales organization and referral fees paid to independent third parties. Deferred commissions also include the associated payroll taxes and fringe benefit costs associated with payments to our sales employees to the extent they are incremental. Commissions and referral fees earned upon the execution of initial and expansion contracts are primarily deferred and amortized over a period of benefit that we have determined to be five years. Commissions earned upon the renewal of customer contracts are deferred and amortized over the average renewal term. Additionally, for self-hosted offerings, consistent with the recognition of subscription revenue for self-hosted offerings, a portion of the commission cost is expensed upfront when the self-hosted offering is made available and the remaining portion of the commission cost is expensed over the period of benefit. We determine the period of benefit by taking into consideration our customer contracts, our technology life cycle and other factors. The amortization of deferred commissions is included in sales and marketing expense in our consolidated statements of comprehensive income. There was no impairment loss in relation to the incremental selling costs capitalized for all periods presented. Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We use a fair value hierarchy that is based on three levels of inputs, of which the first two are considered observable and the last unobservable. The three levels of the fair value hierarchy are as follows: Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2—Other inputs that are directly or indirectly observable in the marketplace; and Level 3— Significant unobservable inputs that are supported by little or no market activity. Cash and Cash Equivalents Cash and cash equivalents consist of highly liquid investments with original or remaining maturities of three months or less at the date of purchase. Cash and cash equivalents are stated at fair value. Accounts Receivable, net 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 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. Individual accounts receivable are written off when we become aware of a specific customer’s inability to meet its financial obligation, and all collection efforts are exhausted. Investments Investments consist of commercial paper, corporate notes and bonds, certificates of deposit, U.S. government and agency securities and mortgage-backed and asset-backed securities. We classify investments as available-for-sale at the time of purchase. All investments are recorded at estimated fair value and investments with original maturities of less than one year at time of purchase is classified as short-term. Unrealized gains and losses 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 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 other income (expense), net in the consolidated statements of comprehensive income. 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 $28 million and $12 million, is recorded in prepaid expenses and other current assets on the consolidated balance sheets as of December 31, 2022 and 2021, 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 other income (expense), net in the consolidated statements of comprehensive income. Strategic Investments Strategic investments consist of debt and non-marketable equity investments in privately held companies in which we do not have a controlling interest or significant influence. We have elected to apply the measurement alternative for equity investments that do not have readily determinable fair values, measuring them at cost, less any impairment, plus or minus adjustments resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. An impairment loss is recorded when an event or circumstance indicates a decline in value has occurred. We include these strategic investments in other assets on our consolidated balance sheets. Derivative Financial Instruments We use derivative financial instruments, mainly forward contracts with maturities of 12 months or less, to manage foreign currency risks. These derivative contracts are not designated as hedging instruments and changes in the fair value are recorded in other income (expense), net on the consolidated statements of comprehensive income. Realized gains (losses) from settlement of the derivative assets and liabilities are classified as investing activities in the consolidated statements of cash flows. Property and Equipment, net Property and equipment are stated at cost net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets as follows: Computer equipment and software 3-5 years Furniture and fixtures 3-7 years Leasehold and other improvements shorter of the lease term or estimated useful life Capitalized Software Development Costs Software development costs for software to be sold, leased or otherwise marketed are expensed as incurred until the establishment of technological feasibility, at which time those costs are capitalized until the product is available for general release to customers and amortized over the estimated life of the product. Costs and time incurred between the establishment of technological feasibility and product release have not been material, and all software development costs have been charged to research and development expense in our consolidated statements of comprehensive income. Leases We determine if an arrangement is or contains a lease at inception. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Lease payments consist primarily of the fixed payments under the arrangement, less any lease incentives. We generally use an incremental borrowing rate estimated based on the information available at the lease commencement date to determine the present value of lease payments, unless the implicit rate is readily determinable. Lease expense for lease payments is recognized on a straight-line basis over the lease term. We account for lease and non-lease components as a single lease component for office leases. Lease and non-lease components for all other leases are generally accounted for separately. Additionally, we do not record leases on the balance sheet that, at the lease commencement date, have a lease term of 12 months or less. Operating leases are included in operating lease right-of-use assets, current portion of operating lease liabilities, and operating lease liabilities, less current portion in our consolidated balance sheets. We did not have any financing leases in any of the periods presented. Business Combinations We allocate the acquisition purchase price to the tangible and intangible assets acquired and liabilities assumed, based on their estimated fair values. The excess of the purchase price over the fair value of these assets acquired and liabilities assumed is recorded as goodwill. Allocation of the purchase price requires significant estimates in determining the fair value of acquired assets and assumed liabilities, especially with respect to intangible assets. Critical estimates include, but are not limited to, future expected cash flows, discount rates, the time and expense to recreate the assets and profit margin a market participant would receive. These estimates are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which may not be later than one year from the acquisition date, the Company may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill. Goodwill and Intangible Assets Goodwill is evaluated for impairment at least annually or more frequently if circumstances indicate that goodwill may not be recoverable. A qualitative assessment is performed to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount. If the reporting unit does not pass the qualitative assessment, the carrying amount of the reporting unit, including goodwill, is compared to fair value and goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value. Any excess of the carrying value of the goodwill above its fair value is recognized as an impairment loss. Intangible assets consist of developed technologies and other intangible assets, including patents and contractual agreements. Intangible assets are amortized over the period of estimated benefit using the straight-line method and estimated useful lives ranging from two Impairment of Long-Lived Assets We evaluate long-lived assets, including purchased intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability is measured by comparing the carrying amount to the future undiscounted cash flows we expect the asset to generate. Any excess of the carrying value of the asset above its fair value is recognized as an impairment loss. Advertising Costs Advertising costs, excluding costs related to our annual Knowledge user conference and other user forums, are expensed as incurred and are included in sales and marketing expense. These costs for the years ended December 31, 2022, 2021 and 2020 were $201 million, $198 million and $172 million, respectively. Stock-based Compensation We recognize compensation expense related to stock options and restricted stock units (“RSUs”) with only service conditions on a straight-line basis over the requisite service period. For stock options and RSUs with service, performance and market conditions (performance-based RSUs (“PRSUs”)), expenses are recognized on a graded vesting basis over the requisite service period and for awards with performance conditions, when it is probable that the performance condition will be achieved. The probability of achievement is assessed periodically to determine whether the performance metric continues to be probable. When there is a change in the probability of achievement, any cumulative effect of the change in requisite service period is recognized in the period of the change with the change to be amortized over the respective vesting period. We recognize compensation expense related to shares issued pursuant to the employee stock purchase plan (“ESPP”) on a straight-line basis over the six-month offering period. We recognize compensation expense net of estimated forfeiture activity. Amounts withheld related to the minimum statutory tax withholding requirements paid by us on behalf of our employees are recorded as a liability and a reduction to additional paid-in capital when paid and are included as a reduction of cash flows from financing activities. We estimate the fair value of stock options with only service conditions and shares issued pursuant to the ESPP using the Black-Scholes options pricing model and the fair value of RSU awards (including PRSUs) using the fair value of our common stock on the date of grant. For stock options and PRSUs with service, performance and market conditions, we estimate the fair value of the options granted and the corresponding derived service periods using the Monte Carlo simulation, which requires the use of various assumptions, including the stock price volatility and risk-free interest rate as of the valuation date corresponding to the length of time remaining in the performance period. Concentration of Credit Risk and Significant Customers Financial instruments potentially exposing us to credit risk consist primarily of cash, cash equivalents, derivative contracts, investments and accounts receivable. We hold cash at financial institutions that management believes are high credit quality financial institutions and invest in investment-grade debt securities. Our derivative contracts expose us to credit risk to the extent that the counterparties may be unable to meet the terms of the arrangement. We mitigate this credit risk by transacting with major financial institutions with high credit ratings and entering into master netting arrangements, which permit net settlement of transactions with the same counterparty. We are not required to pledge, and are not entitled to receive, cash collateral related to these derivative instruments. 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 December 31, 2022 and 2021, there were no customers that represented more than 10% of our accounts receivable balance. There were no customers that individually exceeded 10% of our total revenues in any of the periods presented. 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. The allowance for doubtful accounts and write offs were not material for each of the periods ending December 31, 2022, 2021 and 2020. Income Taxes We use the asset and liability method of accounting for income taxes, in which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be reversed. We recognize the effect on deferred tax assets and liabilities of a change in tax rates within the provision for income taxes as income and expense in the period that includes the enactment date. A valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized. In determining the need for a valuation allowance, we consider future growth, forecasted earnings, future taxable income, the mix of earnings in the jurisdictions in which we operate, historical earnings, taxable income in prior years, if carryback is permitted under the law, carryforward periods and prudent and feasible tax planning strategies. Our tax positions are subject to income tax audits by multiple tax jurisdictions throughout the world. We recognize the tax benefit of an uncertain tax position only if it is more likely than not the position is sustainable upon examination by the taxing authority, based on the technical merits. We measure the tax benefit recognized as the largest amount of benefit which is more likely than not to be realized upon settlement with the taxing authority. We recognize interest accrued and penalties related to unrecognized tax benefits in our tax provision. We calculate the current and deferred income tax provision based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed in subsequent years and record adjustments based on filed income tax returns when identified. The amount of income taxes paid is subject to examination by U.S. federal, state and foreign tax authorities. The estimate of the potential outcome of any uncertain tax issue is subject to management’s assessment of relevant risks, facts and circumstances existing at that time. To the extent the assessment of such tax position changes, we record the change in estimate in the period in which we make the determination. Prior Period Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications did not result in a restatement of prior period financial statements. Recently Adopted Accounting Pronouncements Debt with Conversion Options In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, “Debt–Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging–Contracts in Entity’s Own Equity (Subtopic 815-40)” to simplify the accounting for convertible instruments and contracts on an entity’s own equity. The standard results in our 2022 Notes being accounted for as a single unit of debt and requires the if-converted method to calculate diluted earnings per share calculation. We adopted this standard effective January 1, 2022 using a modified retrospective method, under which the basis of all convertible instruments outstanding at adoption have been adjusted to the amounts that would have been recorded had the new guidance been applied from inception. The previously recorded equity component of the convertible instrument outstanding and amortization of the debt discount and issuance costs classified as equity are reclassified from equity to debt through an adjustment to the opening balance of accumulated deficit as of January 1, 2022, which will result in reduced interest expense in future periods. Adoption of the standard resulted in a decrease to accumulated deficit of $17 million, decrease to additional paid-in capital of $19 million and an increase to debt, current of $2 million. Acquired Contract Assets and Contract Liabilities In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Acquired Contract Assets and Contract Liabilities,” which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured in accordance with Topic 606, Revenue from Contracts with Customers, as if the acquirer had originated the contracts. The new standard is effective for interim and annual periods beginning after December 15, 2022. We adopted this standard in the second quarter beginning April 1, 2022. The adoption had no impact to our consolidated financial statements for the year ended December 31, 2022. |
Investments
Investments | 12 Months Ended |
Dec. 31, 2022 | |
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 consolidated balance sheets (in millions): December 31, 2022 Amortized Gross Gross Estimated Available-for-sale securities: Commercial paper $ 558 $ — $ (2) $ 556 Corporate notes and bonds 3,414 — (52) 3,362 Certificates of deposit 162 — — 162 U.S. government and agency securities 768 — (2) 766 Mortgage-backed and asset-backed securities 98 — (17) 81 Total available-for-sale securities $ 5,000 $ — $ (73) $ 4,927 December 31, 2021 Amortized Gross Gross Estimated Available-for-sale securities: Commercial paper $ 528 $ — $ — $ 528 Corporate notes and bonds 2,418 1 (7) 2,412 Certificates of deposit 28 — — 28 U.S. government and agency securities 140 — — 140 Mortgage-backed and asset-backed securities 100 — (2) 98 Total available-for-sale securities $ 3,214 $ 1 $ (9) $ 3,206 As of December 31, 2022, the contractual maturities of our available-for-sale debt securities, excluding those securities classified within cash and cash equivalents on the consolidated balance sheet and mortgage-backed and asset-backed securities that do not have a single maturity, did not exceed 36 months. The fair values of available-for-sale securities, by remaining contractual maturity, are as follows (in millions): December 31, 2022 Due within 1 year $ 2,810 Due in 1 year through 5 years 2,036 Instruments not due in single maturity 81 Total $ 4,927 As of December 31, 2022 and 2021, the fair value of available-for-sale securities in a continuous unrealized loss position totaled $4,232 million and $2,416 million, respectively, the majority of which has been in a continuous unrealized loss position for greater than 12 months. 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 credit-related impairment losses were not deemed material as of December 31, 2022. Non-Marketable Equity Investments As of December 31, 2022 and 2021, the total amount of non-marketable equity investments in privately held companies included in other assets on our consolidated balance sheets was $252 million and $99 million, respectively. Our non-marketable equity investments are accounted for using the measurement alternative, which measures the investments at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes resulting from the issuance of similar or identical securities in an orderly transaction by the same issuer. Determining whether an observed transaction is similar to a security within our portfolio requires judgment based on the rights and preferences of the securities. Recording upward and downward adjustments to the carrying value of our non-marketable equity investments as a result of observable price changes requires quantitative assessments of the fair value of our non-marketable equity investments using various valuation methodologies and involves the use of estimates. We classify these fair value measurements as Level 3 within the fair value hierarchy. In March 2022, we purchased $100 million of common and preferred shares of Celonis SE, a privately held company that develops and sells process mining software, in exchange for cash. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2022 | |
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 December 31, 2022 (in millions): Level 1 Level 2 Total Cash equivalents: Money market funds $ 738 $ — $ 738 Commercial paper — 36 36 Corporate notes and bonds — 10 10 Certificates of deposit — 2 2 Deposits 124 — 124 U.S. government and agency securities — 8 8 Marketable securities: Commercial paper — 556 556 Corporate notes and bonds — 3,362 3,362 Certificates of deposit — 162 162 U.S. government and agency securities — 766 766 Mortgage-backed and asset-backed securities — 81 81 Total $ 862 $ 4,983 $ 5,845 The following table presents our fair value hierarchy for our assets measured at fair value on a recurring basis as of December 31, 2021 (in millions): Level 1 Level 2 Total Cash equivalents: Money market funds $ 706 $ — $ 706 Commercial paper — 110 110 Corporate notes and bonds — 28 28 Certificates of deposit — 8 8 Deposits 235 — 235 Marketable securities: Commercial paper — 528 528 Corporate notes and bonds — 2,412 2,412 Certificates of deposit — 28 28 U.S. government and agency securities — 140 140 Mortgage-backed and asset-backed securities — 98 98 Total $ 941 $ 3,352 $ 4,293 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), pricing determined using inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs) or using unobservable inputs that are supported by little or no market activity (Level 3 inputs). Our non-marketable equity investments 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 11 for the fair value measurement of our long-term debt, which are also not included in the table above. Our marketable equity investments are classified within Level 1 and are immaterial as of December 31, 2022 and 2021. |
Business Combinations
Business Combinations | 12 Months Ended |
Dec. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Combinations | Business Combinations 2022 Business Combinations During the year ended December 31, 2022, we completed certain acquisitions for total purchase consideration of $92 million primarily to enhance our products with the acquired technology and engineering workforce. The acquisitions were not material to our consolidated financial statements, either individually or in the aggregate. 2021 Business Combinations On June 15, 2021, we acquired Lightstep, Inc., a leading observability solution provider, for $512 million in a cash transaction. The purchase price was allocated based on the estimated fair value of developed technology intangible asset of $85 million (five-year estimated useful life), customer related and brand assets of $11 million , net tangible assets of $8 million, deferred tax liabilities of $6 million and goodwill of $413 million , which is not deductible for income tax purposes. On January 8, 2021, we acquired all outstanding stock of Element AI Inc., a leading enterprise artificial intelligence solution provider, for $228 million in an all-cash transaction. The purchase price was allocated based on the estimated fair value of developed technology intangible asset of $85 million (five-year estimated useful life), net tangible assets of $16 million and goodwill of $81 million , which is partially deductible for income tax purposes. At time of acquisition, we established an unrecognized tax benefit of $43 million on pre-acquisition net operating loss carryforwards and other tax attributes which was subsequently released resulting in establishment of deferred tax asset based on completion of valuation and filing certain tax returns in the third quarter of 2021. Goodwill is primarily attributed to the value expected from synergies resulting from the business combinations. The fair values assigned to tangible and intangible assets acquired, liabilities assumed and income taxes payable and deferred taxes are based on management’s estimates and assumptions. The Company finalized the fair value measurements within one year from the acquisition date. During the year ended December 31, 2021, we also completed certain acquisitions for total purchase consideration of $66 million primarily to enhance our products with the acquired technology and engineering workforce. These acquisitions were not material to our consolidated financial statements, either individually or in the aggregate. 2020 Business Combinations During the year ended December 31, 2020, we completed certain acquisitions for total purchase consideration of $116 million primarily to enhance our products with the acquired technology and engineering workforce. These acquisitions were not material to our consolidated financial statements, either individually or in the aggregate. We have included the financial results of business combinations in the consolidated financial statements from the respective dates of acquisition, which were not material. Pro forma revenue and earnings amounts on a combined basis have not been presented as it is impracticable due to the lack of availability of historical financial statements that comply with GAAP. Aggregate acquisition-related costs associated with business combinations are not material for the years ended December 31, 2022, 2021 and 2020, respectively, and are included in general and administrative expenses in our consolidated statements of comprehensive income as incurred. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill balances consist of the following (in millions): Carrying Amount Balance as of December 31, 2020 $ 241 Goodwill acquired 538 Foreign currency translation adjustments (2) Balance as of December 31, 2021 $ 777 Goodwill acquired 68 Foreign currency translation adjustments (21) Balance as of December 31, 2022 $ 824 Intangible assets consist of the following (in millions): December 31, 2022 December 31, 2021 Developed technology $ 434 $ 415 Patents 72 69 Other 15 14 Intangible assets, gross $ 521 $ 498 Less: accumulated amortization (289) (211) Intangible assets, net $ 232 $ 287 The weighted-average useful life of the acquired developed technology for each of the years ended December 31, 2022 and 2021 was approximately five years. Amortization expense for intangible assets was approximately $81 million, $76 million and $46 million for the years ended December 31, 2022, 2021 and 2020, respectively. The following table presents the estimated future amortization expense related to intangible assets held at December 31, 2022 (in millions): Years Ending December 31, 2023 $ 78 2024 71 2025 51 2026 20 2027 6 Thereafter 6 Total future amortization expense $ 232 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment, net consists of the following (in millions): December 31, 2022 2021 Computer equipment $ 1,606 $ 1,226 Computer software 82 77 Leasehold and other improvements 226 200 Furniture and fixtures 81 74 Construction in progress 53 14 Property and equipment, gross 2,048 1,591 Less: Accumulated depreciation (995) (825) Property and equipment, net $ 1,053 $ 766 Construction in progress consists of costs related to leasehold and other improvements. Depreciation expense was $261 million, $312 million and $225 million for the years ended December 31, 2022, 2021 and 2020, respectively. |
Derivative Contracts
Derivative Contracts | 12 Months Ended |
Dec. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Contracts | Derivative Contracts As of December 31, 2022 and 2021, we had foreign currency forward contracts with total notional values of $1,360 million and $833 million, respectively, which are not designated as hedging instruments. Our foreign currency forward 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. Outstanding foreign currency forward contracts are recorded at gross fair value as prepaid expenses and other current assets as well as accrued expenses and other current liabilities on the consolidated balance sheets. The gross fair value of these foreign currency forward contracts was immaterial as of December 31, 2022 and 2021. The gains (losses) recognized for these foreign currency forward contracts were immaterial for each of the years ended December 31, 2022, 2021 and 2020. |
Deferred Revenue and Performanc
Deferred Revenue and Performance Obligations | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Deferred Revenue and Performance Obligations | Deferred Revenue and Performance Obligations Revenues recognized during the year ended December 31, 2022 from amounts included in deferred revenue as of December 31, 2021 were $3.7 billion. Revenues recognized during the year ended December 31, 2021 from amounts included in deferred revenue as of December 31, 2020 were $2.9 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. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Liabilities, Current [Abstract] | |
Accrued Expenses and Other Current Liabilities | Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following (in millions): December 31, 2022 2021 Accrued payroll $ 490 $ 444 Taxes payable 109 101 Other employee related liabilities 150 121 Other 226 184 Total accrued expenses and other current liabilities $ 975 $ 850 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2022 | |
Convertible Notes Payable [Abstract] | |
Debt | Debt The following table summarizes the carrying value of our outstanding debt (in millions), net of unamortized debt discount and issuance costs of $14 million and $18 million at December 31, 2022 and 2021, respectively: December 31, 2022 December 31, 2021 2030 Notes 2022 Notes 2030 Notes 2022 Notes Current, net $ — $ — $ — $ 92 Long-term, net 1,486 — 1,484 — Total debt $ 1,486 $ — $ 1,484 $ 92 We consider the fair value of the 2030 Notes at December 31, 2022, and the 2022 Notes and 2030 Notes at December 31, 2021 to be a Level 2 measurement. The estimated fair value of the 2030 Notes at December 31, 2022, and the 2022 Notes and 2030 Notes at December 31, 2021 is based on the closing trading price per $100 of the 2030 Notes and 2022 Notes as follows (in millions): December 31, 2022 December 31, 2021 2022 Notes $ — $ 440 2030 Notes $ 1,144 $ 1,400 2030 Notes In August 2020, we issued 1.40% fixed rate ten-year notes with an aggregate principal amount of $1.5 billion due on September 1, 2030 (the “2030 Notes”). The 2030 Notes were issued at 99.63% of principal and we incurred approximately $13 million for debt issuance costs. The effective interest rate for the 2030 Notes was 1.53%, including coupon interest, amortization of debt issuance costs and amortization of the debt discount. Interest is payable semi-annually in arrears on March 1 and September 1 of each year, beginning on March 1, 2021, and the entire outstanding principal amount is due at maturity on September 1, 2030. The 2030 Notes are unsecured obligations and the indentures governing the 2030 Notes contain customary events of default and covenants that, among others and subject to exceptions, restrict the Company’s ability to incur or guarantee debt secured by liens on specified assets or enter into sale and lease-back transactions with respect to specified properties. 2022 Notes In May and June 2017, we issued an aggregate of $782.5 million of 0% convertible senior notes (the “2022 Notes”), which were due June 1, 2022 unless earlier converted or repurchased in accordance with their terms. The 2022 Notes did not bear interest, and we could not redeem the 2022 Notes prior to maturity. The 2022 Notes were unsecured obligations and did 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. As described in Note 2, we adopted the new accounting standard for debt with conversion options effective January 1, 2022 using a modified retrospective method, under which financial results reported in prior periods were not adjusted. Prior to the adoption of the new standard, in accounting for the issuance of the 2022 Notes and the related transaction costs, we valued and bifurcated the conversion option from the host debt instrument, referred to as debt discount, and recorded the conversion option of $160 million in equity at issuance. The resulting debt discount and transaction costs allocated to the liability component were amortized to interest expense using the effective interest method over the term of the 2022 Notes. Upon adoption of the new accounting standard on January 1, 2022, we recombined the liability and equity components of the 2022 Notes, including the related issuance costs, assuming the instrument was accounted for as a single liability from inception to the date of adoption. Issuance costs were presented as a deduction from the outstanding principal balance of the 2022 Notes and amortized to interest expense using the effective interest method over the term of the 2022 Notes. Convertible Date Initial Conversion Price per Share Initial Conversion Rate per $1,000 Par Value Initial Number of Shares (in millions) 2022 Notes February 1, 2022 $ 134.75 7.42 shares 6 Conversion of the 2022 Notes. On or after February 1, 2022 (the “Convertible Date”), a holder was able to convert all or any portion of its 2022 Notes at any time prior to the close of business on the second scheduled trading day immediately preceding maturity, and such conversions were settled on the maturity date. Prior to the Convertible Date, holders of the 2022 Notes could convert their 2022 Notes at their option if, during any calendar quarter the last reported sale price of our common stock for at least 20 trading days 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”). The Conversion Condition for the 2022 Notes was met for all the quarters ended June 30, 2018 through December 31, 2021, except for the quarter ended December 31, 2018. Therefore, our 2022 Notes became convertible at the holders’ option beginning on July 1, 2018 through January 31, 2022, 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 year ended December 31, 2022, we paid cash to settle $94 million in principal of the 2022 Notes, which was comprised of early conversions of $6 million and the remaining principal of $88 million for the final settlement on June 1, 2022, the maturity date of our 2022 Notes. As a result of the settlements, we also recorded a net reduction to additional paid-in capital of $212 million offset by $212 million benefit from the 2022 Note Hedge (as defined below). Repurchase of 2022 Notes On August 11, 2020, we repurchased $497 million in aggregate principal amount of the 2022 Notes (the “2022 Notes Repurchase”) funded in part by the $1.1 billion proceeds received from the partial unwind of the 2022 Note Hedge (as defined below). The 2022 Notes Repurchase was accounted for as a debt extinguishment in which $493 million and $1.1 billion were allocated to the liability and equity components of the 2022 Notes, respectively. The cash consideration allocated to the liability component was based on the estimated fair value of the liability component utilizing a discount rate assuming a similar liability per the Company’s credit rating with the same maturity, but without the conversion option, as of the repurchase date. The cash consideration allocated to the equity component was based on the aggregate cash consideration less the estimated fair value of the liability component. The loss on extinguishment of $39 million recorded as other income (expense), net, represents the difference between the allocated cash consideration and the carrying value of the liability component, which includes the proportionate amounts of unamortized debt discount and unamortized debt issuance costs in the amount of $43 million. 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 (in millions) 2022 Note Hedge $ 128 6 — The 2022 Note Hedge covered shares of our common stock at a strike price per share that corresponded to the initial conversion price of the 2022 Notes, subject to adjustment, and were exercisable upon conversion of the 2022 Notes. The 2022 Note Hedge expired upon the maturity of the 2022 Notes and since the quarter ended June 30, 2022, the 2022 Note Hedge is no longer outstanding. The 2022 Note Hedge was 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 was a separate transaction and was not part of the terms of the 2022 Notes. Holders of the 2022 Notes did not have any rights with respect to the 2022 Note Hedge. The 2022 Note Hedge did not impact earnings per share, as it was entered into to offset any dilution from the 2022 Notes. On August 11, 2020, in connection with the 2022 Notes Repurchase, we entered into partial unwind agreements (the “Note Hedge Unwind”) to reduce the number of options corresponding to the principal amount of the 2022 Notes Repurchase. We received $1.1 billion for the Note Hedge Unwind and the aggregate number of shares underlying the call options under the 2022 Note Hedge was reduced by 3.7 million shares. Consistent with early conversions of the 2022 Notes, proceeds received by the Company from the Note Hedge Unwind were used to settle a portion of the 2022 Notes Repurchase. Warrants Proceeds Initial Shares Strike Price First Expiration Date Shares as of (in millions) (in millions) (in millions) 2022 Warrants $ 54 6 $ 203.40 September 1, 2022 — 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, exceeded 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 were separate transactions and were not remeasured through earnings each reporting period. The 2022 Warrants were not part of the 2022 Notes or 2022 Note Hedge. In connection with the 2022 Notes Repurchase and early note conversions, we entered into partial unwind agreements to reduce the number of warrants outstanding under the 2022 Warrants by delivering an aggregate of 0.5 million shares of our common stock during the year ended December 31, 2021. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 12 Months Ended |
Dec. 31, 2022 | |
Statement of Comprehensive Income [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The following table shows the components of accumulated other comprehensive income (loss), net of tax, in the stockholders’ equity section of our consolidated balance sheets (in millions): December 31, 2022 2021 Foreign currency translation adjustment $ (25) $ 46 Net unrealized loss on investments (77) (12) Accumulated other comprehensive income (loss) $ (102) $ 34 |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders' Equity Common Stock We are authorized to issue a total of 600 million shares of common stock as of December 31, 2022. Holders of our common stock are not entitled to receive dividends unless declared by our board of directors. As of December 31, 2022, we had 202.9 million shares of common stock outstanding and had reserved shares of common stock for future issuance as follows (in thousands): December 31, 2022 Stock plans: Options outstanding 1,237 RSUs (1) 5,737 Shares of common stock available for future grants: 2021 Equity Incentive Plan (2) 5,312 Amended and Restated 2012 Employee Stock Purchase Plan (2) 8,996 2022 New-Hire Equity Incentive Plan (2) 1,045 Total shares of common stock reserved for future issuance 22,327 (1) Represents the number of shares issuable upon settlement of outstanding RSUs and PRSUs, as discussed in Note 14. (2) Refer to Note 14 for a description of these plans. During the years ended December 31, 2022 and 2021, we issued a total of 2.7 million shares and 3.2 million shares, respectively, from stock option exercises, vesting of RSUs, net of employee payroll taxes and purchases from ESPP. In addition, as described in Note 11, during the years ended December 31, 2022 and 2021, we issued 0.6 million and 0.5 million shares of our common stock upon the settlement of the remaining portion and partial unwind of the 2022 Warrants, respectively. Preferred Stock Our board of directors has the authority, without further action by stockholders, to issue up to 10 million shares of preferred stock in one or more series. Our board of directors may designate the rights, preferences, privileges and restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preference and number of shares constituting any series or the designation of any series. The issuance of preferred stock could have the effect of restricting dividends on our common stock, diluting the voting power of our common stock, impairing the liquidation rights of our common stock or delaying or preventing a change in control. At December 31, 2022 and 2021, no shares of preferred stock were outstanding. |
Equity Awards
Equity Awards | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Equity Awards | Equity Awards We currently have three equity incentive plans: 2012 Equity Incentive Plan (the “2012 Plan”), 2021 Equity Incentive Plan (the “2021 Plan”) and 2022 New-Hire Equity Incentive Plan (the “2022 Plan”). The 2012 Plan was terminated in connection with the approval of the 2021 Plan on June 7, 2021 but continues to govern the terms of outstanding equity awards that were granted prior to the termination of the 2012 Plan. As of June 7, 2021, we no longer grant equity awards pursuant to the 2012 Plan. On November 7, 2022, the 2022 Plan was approved for newly hired employees prospectively. The 2021 Plan and the 2012 Plan provide 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”). The 2022 Plan permits the grant of any of the foregoing awards with the exception of incentive stock options. In addition, the 2022 Plan, the 2021 Plan and the 2012 Plan provide 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. Prior to June 7, 2021, the 2012 Plan share reserve was increased to the extent outstanding stock options under the 2005 Plan expire or terminate unexercised. Our Amended and Restated 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. Prior to June 7, 2021, the number of shares of common stock reserved for issuance automatically increased on January 1 of each year, 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. As of June 7, 2021, the automatic increase provision was removed. Therefore, for the remaining term of the 2012 ESPP, the share reserve will not be increased without shareholder approval. 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 the 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 was as follows: Number of Weighted- Weighted- Aggregate (in thousands) (in years) (in millions) Outstanding at December 31, 2021 1,305 $ 551.39 Granted 23 $ 591.66 Exercised (85) $ 32.30 $ 40 Canceled (6) $ 66.58 Outstanding at December 31, 2022 1,237 $ 590.36 8.3 $ 43 Vested and expected to vest as of December 31, 2022 1,075 $ 578.24 8.3 $ 43 Vested and exercisable as of December 31, 2022 142 $ 165.31 5.2 $ 32 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 intrinsic value for stock options exercised for the years ended December 31, 2022, 2021 and 2020, was $40 million, $140 million and $199 million, respectively. The total fair value of shares vested was $11 million, $10 million and $7 million for the years ended December 31, 2022, 2021 and 2020, respectively. The weighted-average grant-date fair values of stock options granted was $273.63 and $248.85 per share for the years ended December 31, 2022 and 2021, respectively. No stock options were granted during the year ended December 31, 2020. During the year ended December 31, 2021, a one-time long-term performance-based option award was granted to the Chief Executive Officer (“2021 CEO Performance Award") and to certain executives (collectively “2021 Performance Awards”) under the 2021 Plan at a total grant date fair value of $232 million. The 2021 Performance Awards will vest in eight equal tranches based on service and achievement of both performance and market conditions, subject to continued employment and specifically for the 2021 CEO Performance Award, as CEO or Executive Chairman of the Company, through each vesting date. The performance and market condition for a particular tranche may be achieved at different points in time and in any order but will become eligible to vest only when all service, performance and market conditions for the respective tranche are met but no earlier than two years. The performance and market condition must be achieved by September 30, 2026 (the "Performance Period"). The stock price metric will be achieved when both the 180-Day volume weighted-average price ("VWAP") and the 30-Day VWAP equal or exceed the respective tranche stock price metric on any day during the Performance Period. The performance metric is achieved when the trailing four quarter cumulative GAAP subscription revenues equal or exceed the respective tranche performance target. Shares acquired upon exercise of the options cannot be sold, transferred or disposed until after the end of the Performance Period and the 2021 Performance Awards will expire ten years from the respective date of grant. The fair value of the 2021 Performance Awards and the corresponding derived service periods were estimated using the Monte Carlo simulation. Stock-based compensation expense is recognized on a graded vesting basis over the requisite service period for each respective tranche, but not shorter than the two As of December 31, 2022, total unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested stock options was approximately $84 million. The weighted-average remaining vesting period of unvested stock options at December 31, 2022 was two years. RSUs A summary of RSU activity was as follows: Number of Weighted-Average Grant-Date Fair Value Per Share (in thousands) Outstanding at December 31, 2021 5,808 $ 416.00 Granted 3,719 $ 541.24 Vested (3,075) $ 389.27 Forfeited (715) $ 469.06 Outstanding at December 31, 2022 5,737 $ 505.79 Expected to vest as of December 31, 2022 4,983 RSUs outstanding as of December 31, 2022 were comprised of 5.3 million RSUs with only service conditions and 0.4 million RSUs with both service conditions and performance conditions, including certain RSUs with additional market conditions. The total intrinsic value of the RSUs vested was $1.5 billion, $2.1 billion and $1.8 billion for the years ended December 31, 2022, 2021 and 2020, respectively. As of December 31, 2022, the aggregate intrinsic value of RSUs outstanding was $2.2 billion and RSUs expected to vest was $1.9 billion. The weighted-average grant-date fair value of RSUs granted was $541.24, $577.26 and $367.52 per share for the years ended December 31, 2022, 2021 and 2020, respectively. For the years ended December 31, 2022 and 2021, PRSUs with service, performance and market 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 200% of the target number of shares depending on achievement relative to the performance metrics and, for certain PRSUs, depend on our total shareholder return relative to that of the S&P 500 index over the applicable measurement period. The eligible shares subject to PRSUs granted during the year ended December 31, 2022 will vest in February of the following year and semi-annually for the remaining two years contingent on each holder’s continuous status as a service provider on the applicable vesting dates. The number of PRSUs granted included 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 $121 million, $124 million, and $70 million of stock-based compensation expense, net of actual and estimated forfeitures, associated with PRSUs on a graded vesting basis during the year ended December 31, 2022, 2021 and 2020, respectively. As of December 31, 2022, total unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested RSUs was approximately $2.2 billion and the weighted-average remaining vesting period was approximately three years. Valuation Assumption s The following assumptions were used in the Black-Scholes options pricing model and the Monte Carlo simulation model, to estimate our stock-based compensation on the date of grant for ESPP, stock options and PRSUs, respectively, as applicable. Year Ended December 31, 2022 2021 2020 Risk Free Interest Rate ESPP 0.06% - 2.96% 0.06% - 0.11% 0.11% - 2.04% Stock Options 2.04% 1.20% - 1.45% * PRSU 1.76% 0.19% - 0.20% ** Expected Term (in years) ESPP 0.5 0.5 0.5 Stock Options 10 7.5 - 10 * Expected Volatility ESPP 35% - 59% 35% - 60% 30% - 60% Stock Options 40 % 38% - 41% * PRSU 42 % 41% - 42% ** * There were no stock option grants in 2020. ** There were no grants with market conditions for the respective fiscal year. Expected volatility . The expected volatility is based on the historical volatility of our common stock for a period similar to our expected term. Expected term . We determine the expected term based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior. We estimate the expected term for ESPP using the purchase period. Risk-free interest rate . The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the stock-based award. |
Net Income Per Share
Net Income Per Share | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | Net Income Per Share Basic net income per share attributable to common stockholders is computed by dividing net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing net income 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 and the 2022 Warrants. Stock awards with performance or market conditions are included in dilutive shares to the extent all conditions are 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, 2022 Notes and 2022 Warrants are excluded from the computation of diluted net income per share in periods in which the effect would be antidilutive. The following tables present the calculation of basic and diluted net income per share attributable to common stockholders (in millions, except for number of shares reflected in thousands and per share data): Year Ended December 31, 2022 2021 2020 Numerator: Net income $ 325 $ 230 $ 119 Denominator: Weighted-average shares outstanding - basic 201,430 198,094 193,096 Weighted-average effect of potentially dilutive securities: Common stock options 117 293 547 RSUs 1,555 3,429 4,421 2022 Notes — 535 842 2022 Notes settlements 280 116 1,931 2022 Warrants — 649 920 Settlement of 2022 Warrants 153 51 721 Weighted-average shares outstanding - diluted 203,535 203,167 202,478 Net income per share - basic $ 1.61 $ 1.16 $ 0.61 Net income per share - diluted $ 1.60 $ 1.13 $ 0.59 Potentially dilutive securities that are not included in the calculation of diluted net income per share because doing so would be antidilutive are as follows (in thousands): Year Ended December 31, 2022 2021 2020 Common stock options 1,084 998 — RSUs 3,265 381 347 ESPP obligations 309 209 224 Total potentially dilutive securities 4,658 1,588 571 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The components of income before income taxes by U.S. and foreign jurisdictions were as follows (in millions): Year Ended December 31, 2022 2021 2020 United States $ 173 $ 152 $ 13 Foreign 226 97 137 Total $ 399 $ 249 $ 150 The provision for income taxes consists of the following (in millions): Year Ended December 31, 2022 2021 2020 Current provision: Federal $ — $ — $ — State 13 1 — Foreign 46 52 53 59 53 53 Deferred provision: Federal (1) (3) (5) State (1) (3) (1) Foreign 17 (28) (16) 15 (34) (22) Provision for income taxes $ 74 $ 19 $ 31 The effective income tax rate differs from the federal statutory income tax rate applied to the income before income taxes due to the following (in millions): Year Ended December 31, 2022 2021 2020 Tax computed at U.S. federal statutory rate $ 84 $ 53 $ 31 State taxes, net of federal benefit 10 — — U.S. tax on foreign earnings 96 — — Tax rate differential for international subsidiaries 18 6 8 Stock-based compensation 7 (160) (157) Executive compensation 22 23 25 Tax credits (70) (76) (64) Other 7 4 4 Valuation allowance (100) 169 184 Provision for income taxes $ 74 $ 19 $ 31 Significant components of our deferred tax assets are shown below (in millions). A valuation allowance has been recognized to offset our deferred tax assets, as necessary, by the amount of any tax benefits that, based on evidence, are not expected to be realized. December 31, 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 605 $ 1,061 Credit carryforwards 388 318 Lease liability 178 152 Capitalized research and development 262 — Depreciation and amortization 553 587 Other 159 126 Total deferred tax assets 2,145 2,244 Less valuation allowance (1,228) (1,326) 917 918 Deferred tax liabilities: Right of use asset (162) (141) Other (129) (94) Net deferred tax assets $ 626 $ 683 The unremitted earnings of our foreign subsidiaries are not considered indefinitely reinvested, except in certain designated jurisdictions in which the resident entity is a service provider that is not expected to generate substantial amounts of cash in excess of what may be reinvested by the local entity. We have not provided for state income or withholding taxes on the undistributed earnings of foreign subsidiaries, which are considered indefinitely invested outside of the U.S. The amount of unrecognized deferred tax liability on these undistributed earnings is not material as of December 31, 2022. As of December 31, 2022, we had U.S. federal net operating loss and federal tax credit carryforwards of approximately $2.0 billion and $313 million, respectively. The federal tax credits will begin to expire in 2024 if not utilized. In addition, as of December 31, 2022, we had state net operating loss and state tax credit carryforwards of approximately $1.5 billion and $229 million, respectively. The state net operating loss will begin to expire in 2023 if not utilized; however, the tax-effected amount due to expire in 2023 is immaterial. State tax credits and a portion of the federal net operating loss carryforwards can be carried forward indefinitely. Utilization of our net operating loss and credit carryforwards may be subject to annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration of the net operating loss and tax credit carryforwards before utilization. We maintain a full valuation allowance against our U.S. deferred tax assets as of December 31, 2022. We regularly assess the need for a valuation allowance against our deferred tax assets. In making that assessment, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. Due to cumulative losses in the U.S. during the prior three years, including tax deductible stock compensation, and based on all available positive and negative evidence, we have determined that it is more likely than not that our U.S. deferred tax assets will not be realized as of December 31, 2022. However, given our current earnings and anticipated future earnings, we believe that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow us to reach a conclusion that the U.S. valuation allowance will no longer be needed. Release of the valuation allowance would result in the recognition of material U.S. federal and state deferred tax assets and a corresponding decrease to income tax expense for the period the release is recorded. The exact timing and amount of the valuation allowance release are subject to change on the basis of the level of sustained U.S. profitability that the Company is able to actually achieve, as well as the amount of tax deductible stock compensation dependent upon our publicly traded share price, foreign currency movements and macroeconomic conditions, among other factors. The $98 million decrease in the 2022 valuation allowance was primarily attributable to a decrease in deferred tax assets related to the utilization of net operating losses. The $197 million increase in the 2021 valuation allowance was primarily attributable to an increase in deferred tax assets related to net operating losses and R&D tax credits partially offset by a valuation allowance release related to Lightstep, Inc. acquired deferred tax liabilities. The $210 million increase in the 2020 valuation allowance was primarily attributable to an increase in deferred tax assets related to net operating losses. A reconciliation of the beginning and ending balance of total unrecognized tax benefits is as follows (in millions): Year Ended December 31, 2022 2021 2020 Balance, beginning period $ 124 $ 81 $ 37 Tax positions taken in prior period: Gross increases — 5 6 Gross decreases (1) — (1) Tax positions taken in current period: Gross increases 38 38 39 Lapse of statute of limitations — — — Settlements (2) — — Balance, end of period $ 159 $ 124 $ 81 As of December 31, 2022, we had gross unrecognized tax benefits of approximately $159 million, of which $31 million would impact the effective tax rate, if recognized. We recognize accrued interest and penalties related to unrecognized tax benefits as income tax expense. Accrued interest and penalties included in our liability related to unrecognized tax benefits were $5 million and $4 million at December 31, 2022 and 2021, respectively. The amount of unrecognized tax benefits could be reduced upon expiration of the applicable statutes of limitations. The potential reduction in unrecognized tax benefits during the next 12 months is not expected to be material. Interest and penalties accrued on these uncertain tax positions are recognized as income tax expense and will be released upon the expiration of the statutes of limitations. These amounts are also not material for any periods presented. We are subject to taxation in the United States and foreign jurisdictions. As of December 31, 2022, our tax years 2004 to 2021 remain subject to examination in most jurisdictions. There are differing interpretations of tax laws and regulations, and as a result, disputes may arise with tax authorities involving issues of the timing and amount of deductions and allocations of income among various tax jurisdictions. We periodically evaluate our exposures associated with our tax filing positions. We believe that adequate amounts have been reserved for any adjustments that may ultimately result from these examinations, and we do not anticipate a significant impact to our gross unrecognized tax benefits within the next 12 months related to these years. Although the timing of the resolution, settlement and closure of any audit is highly uncertain, it is reasonably possible that the balance of gross unrecognized tax benefits could significantly change in the next 12 months. However, given the number of years that remain subject to examination, we are unable to estimate the full range of possible adjustments to the balance of gross unrecognized tax benefits. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
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 was $112 million, $100 million and $83 million, excluding short-term lease costs, variable lease costs and sublease income each of which were immaterial, for each of the years ended December 31, 2022, 2021 and 2020, respectively. Total cash paid for amounts included in the measurement of operating lease liabilities was $75 million for each of the years ended December 31, 2022 and 2021. Operating lease liabilities arising from obtaining operating right-of-use assets was $192 million and $223 million for the years ended December 31, 2022 and 2021, respectively, which is largely related to additional office facilities located in Santa Clara, California in line with the original commitment. As of December 31, 2022, the weighted-average remaining lease term is approximately ten years and the weighted-average discount rate is 3.5%. Maturities of operating lease liabilities as of December 31, 2022 are presented in the table below (in millions): Years Ending December 31, 2023 $ 115 2024 100 2025 100 2026 81 2027 71 Thereafter 428 Total operating lease payments 895 Less: imputed interest (149) Present value of operating lease liabilities $ 746 In addition to the amounts above, as of December 31, 2022, we have operating leases, primarily for offices, that have not yet commenced with undiscounted cash flows of $103 million. These operating leases are expected to commence in 2023 with lease terms of ten Othe r Contractual Commitments Other contractual commitments consist of data center and IT operations and sales and marketing activities related to our daily business operations. Future minimum payments under our non-cancelable purchase commitments as of December 31, 2022 are presented in the table below (in millions): Purchase Obligations (1) Years Ending December 31, 2023 $ 289 2024 219 2025 98 2026 69 2027 542 Thereafter 54 Total $ 1,271 (1) Not included in the table above are certain purchase commitments related to our future annual Knowledge user conferences and other customer or sales conferences to be held in 2023 and future years. If we had canceled these contractual commitments as of December 31, 2022, we would have been obligated to pay cancellation penalties of approximately $56 million in aggregate. In addition, during 2022, we entered into a non-cancelable $500 million agreement with Microsoft to purchase cloud services over five years, as we accelerate Azure adoption for mutual customers. The unutilized consumption is included within the table above. In addition to the amounts above, the repayment of our 2030 Notes with an aggregate principal amount of $1.5 billion is due on September 1, 2030. Refer to Note 11 for further information regarding our 2030 Notes. Further, $31 million of unrecognized tax benefits have been recorded as liabilities as of December 31, 2022. 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. Indemnification Provisions Our agreements include provisions indemnifying customers against intellectual property and other third-party claims. In addition, we have entered into indemnification agreements with our directors, executive officers and certain other officers that will require us, among other things, to indemnify them against certain liabilities that may arise as a result of their affiliation with us. We have not incurred any costs as a result of such indemnification obligations and have not recorded any liabilities related to such obligations in the consolidated financial statements. |
Information about Geographic Ar
Information about Geographic Areas and Products | 12 Months Ended |
Dec. 31, 2022 | |
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 millions): Year Ended December 31, 2022 2021 2020 North America (1) $ 4,723 $ 3,752 $ 2,960 EMEA (2) 1,778 1,551 1,132 Asia Pacific and other 744 593 427 Total revenues $ 7,245 $ 5,896 $ 4,519 Property and equipment, net by geographic area were as follows (in millions): December 31, 2022 2021 Property and equipment, net: North America (3) $ 664 $ 484 EMEA (2) 221 176 Asia Pacific and other 168 106 Total property and equipment, net $ 1,053 $ 766 (1) Revenues attributed to the United States were 94% of North America revenues for each of the years ended December 31, 2022, 2021 and 2020. (2) Europe, the Middle East and Africa (“EMEA”) (3) Property and equipment, net attributed to the United States were approximately 85% and 84% of property and equipment, net attributable to North America as of December 31, 2022 and 2021, respectively. Subscription revenues consist of the following (in millions): Year Ended December 31, 2022 2021 2020 Digital workflow products $ 6,077 $ 4,882 $ 3,749 ITOM products 814 691 537 Total subscription revenues $ 6,891 $ 5,573 $ 4,286 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements have been prepared in conformity with U.S. Generally Accepted Accounting Principles (“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 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, standalone selling price (“SSP”) for each distinct performance obligation included in customer contracts with multiple performance obligations, the period of benefit for deferred commissions, valuation of intangible assets, the useful life of property and equipment and identifiable intangible assets, stock-based compensation expense and income taxes. Actual results could differ from those estimates. In January 2022, we completed an assessment of the useful life of our data center equipment and determined we should increase the estimated useful life of data center equipment from three |
Segments | Segments Our chief operating decision maker allocates resources and assesses financial performance based upon discrete financial information at the consolidated level. There are no segment managers who are held accountable by the chief operating decision maker, or anyone else, for operations, operating results and planning for levels or components below the consolidated unit level. Accordingly, we have determined that we operate as a single operating and reportable segment. |
Foreign Currency Translation and Transactions | Foreign Currency Translation and Transactions The functional currencies for our foreign subsidiaries are primarily their respective local currencies. Assets and liabilities of the wholly-owned foreign subsidiaries are translated into U.S. Dollars at exchange rates in effect at each period end. Amounts classified in stockholders’ equity are translated at historical exchange rates. Revenues and expenses are translated at the average exchange rates during the period. The resulting translation adjustments are recorded in accumulated other comprehensive income (loss) as a component of stockholders’ equity. Foreign currency transaction gains and losses are included in other income (expense), net within the consolidated statements of comprehensive income, and have not been material for all periods presented. |
Revenue Recognition and Deferred Commissions | Revenue Recognition Revenues are recognized when control of services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. Subscription revenues Subscription revenues are primarily comprised of subscription fees that give customers access to the ordered subscription service, related support and updates, if any, to the subscribed service during the subscription term. We recognize subscription revenues ratably over the contract term beginning on the commencement date of each contract, which is the date we make our services available to our customers. Our contracts with customers typically include a fixed amount of consideration and are generally non-cancelable and without any refund-type provisions. We typically invoice our customers annually in advance for our subscription services upon execution of the initial contract or subsequent renewal, and our invoices are typically due within 30 days from the invoice date. Subscription revenues also include revenues from self-hosted offerings in which customers deploy, or we grant customers the option to deploy without significant penalty, our subscription service internally or contract with a third party to host the software. For these contracts, we account for the software element separately from the related support and updates as they are distinct performance obligations. Refer to the discussion below related to contracts with multiple performance obligations for further details. The transaction price is allocated to separate performance obligations on a relative SSP basis. The transaction price allocated to the software element is recognized when transfer of control of the software to the customer is complete. The transaction price allocated to the related support and updates are recognized ratably over the contract term. Professional services and other revenues Our professional services arrangements are primarily on a time-and-materials basis, and we generally invoice our customers monthly in arrears for these professional services based on actual hours and expenses incurred. Some of our professional services arrangements are on a fixed fee. Professional services revenues are recognized as services are delivered. Other revenues mainly consist of fees from customer training delivered on-site or through publicly available classes. Typical payment terms require our customers to pay us within 30 days from the invoice date. Contracts with multiple performance obligations We enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. We evaluate the terms and conditions included within our customer contracts to ensure appropriate revenue recognition, including whether products and services are considered distinct performance obligations that should be accounted for separately versus together. For contracts with multiple performance obligations, the transaction price is allocated to the separate performance obligations on a relative SSP basis. We determine SSP by considering the historical selling price of these performance obligations in similar transactions as well as other factors, including, but not limited to, competitive pricing of similar products, other software vendor pricing, industry publications and current pricing practices. Contract balances Unbilled receivables represent subscription revenues that are recognized upon delivery of the software prior to being invoiced. Unbilled receivables are primarily presented under prepaid expenses and other current assets on our consolidated balance sheets. Deferred revenue consists primarily of payments received related to unsatisfied performance obligations at the end of the period. Once our services are available to customers, we record amounts due in accounts receivable and in deferred revenue. To the extent we bill customers in advance of the billing period commencement date, the accounts receivable and corresponding deferred revenue amounts are netted to zero on our consolidated balance sheets, unless such amounts have been paid as of the balance sheet date. Customer deposits primarily relate to payments received from customers which could be refundable pursuant to the terms of the contract and are presented under accrued expenses and other current liabilities on our consolidated balance sheets. Deferred Commissions Deferred commissions are the incremental selling costs that are associated with acquiring customer contracts and consist primarily of sales commissions paid to our sales organization and referral fees paid to independent third parties. Deferred commissions also include the associated payroll taxes and fringe benefit costs associated with payments to our sales employees to the extent they are incremental. Commissions and referral fees earned upon the execution of initial and expansion contracts are primarily deferred and amortized over a period of benefit that we have determined to be five years. Commissions earned upon the renewal of customer contracts are deferred and amortized over the average renewal term. Additionally, for self-hosted offerings, consistent with the recognition of subscription revenue for self-hosted offerings, a portion of the commission cost is expensed upfront when the self-hosted offering is made available and the remaining portion of the commission cost is expensed over the period of benefit. We determine the period of benefit by taking into consideration our customer contracts, our technology life cycle and other factors. The amortization of deferred commissions is included in sales and marketing expense in our consolidated statements of comprehensive income. There was no impairment loss in relation to the incremental selling costs capitalized for all periods presented. |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We use a fair value hierarchy that is based on three levels of inputs, of which the first two are considered observable and the last unobservable. The three levels of the fair value hierarchy are as follows: Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2—Other inputs that are directly or indirectly observable in the marketplace; and Level 3— Significant unobservable inputs that are supported by little or no market activity. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of highly liquid investments with original or remaining maturities of three months or less at the date of purchase. Cash and cash equivalents are stated at fair value. |
Accounts Receivable, net | Accounts Receivable, net 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 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. Individual accounts receivable are written off when we become aware of a specific customer’s inability to meet its financial obligation, and all collection efforts are exhausted. |
Investments | Investments Investments consist of commercial paper, corporate notes and bonds, certificates of deposit, U.S. government and agency securities and mortgage-backed and asset-backed securities. We classify investments as available-for-sale at the time of purchase. All investments are recorded at estimated fair value and investments with original maturities of less than one year at time of purchase is classified as short-term. Unrealized gains and losses 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 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 other income (expense), net in the consolidated statements of comprehensive income. 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 $28 million and $12 million, is recorded in prepaid expenses and other current assets on the consolidated balance sheets as of December 31, 2022 and 2021, respectively. |
Strategic Investments | Strategic Investments Strategic investments consist of debt and non-marketable equity investments in privately held companies in which we do not have a controlling interest or significant influence. We have elected to apply the measurement alternative for equity investments that do not have readily determinable fair values, measuring them at cost, less any impairment, plus or minus adjustments resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. An impairment loss is recorded when an event or circumstance indicates a decline in value has occurred. We include these strategic investments in other assets on our consolidated balance sheets. |
Derivatives Financial Instruments | Derivative Financial Instruments We use derivative financial instruments, mainly forward contracts with maturities of 12 months or less, to manage foreign currency risks. These derivative contracts are not designated as hedging instruments and changes in the fair value are recorded in other income (expense), net on the consolidated statements of comprehensive income. Realized gains (losses) from settlement of the derivative assets and liabilities are classified as investing activities in the consolidated statements of cash flows. |
Property and Equipment, net | Property and Equipment, net Property and equipment are stated at cost net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets as follows: Computer equipment and software 3-5 years Furniture and fixtures 3-7 years Leasehold and other improvements shorter of the lease term or estimated useful life |
Capitalized Software Development Costs | Capitalized Software Development Costs Software development costs for software to be sold, leased or otherwise marketed are expensed as incurred until the establishment of technological feasibility, at which time those costs are capitalized until the product is available for general release to customers and amortized over the estimated life of the product. Costs and time incurred between the establishment of technological feasibility and product release have not been material, and all software development costs have been charged to research and development expense in our consolidated statements of comprehensive income. |
Leases | Leases We determine if an arrangement is or contains a lease at inception. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Lease payments consist primarily of the fixed payments under the arrangement, less any lease incentives. We generally use an incremental borrowing rate estimated based on the information available at the lease commencement date to determine the present value of lease payments, unless the implicit rate is readily determinable. Lease expense for lease payments is recognized on a straight-line basis over the lease term. We account for lease and non-lease components as a single lease component for office leases. Lease and non-lease components for all other leases are generally accounted for separately. Additionally, we do not record leases on the balance sheet that, at the lease commencement date, have a lease term of 12 months or less. Operating leases are included in operating lease right-of-use assets, current portion of operating lease liabilities, and operating lease liabilities, less current portion in our consolidated balance sheets. We did not have any financing leases in any of the periods presented. |
Business Combinations | Business Combinations We allocate the acquisition purchase price to the tangible and intangible assets acquired and liabilities assumed, based on their estimated fair values. The excess of the purchase price over the fair value of these assets acquired and liabilities assumed is recorded as goodwill. Allocation of the purchase price requires significant estimates in determining the fair value of acquired assets and assumed liabilities, especially with respect to intangible assets. Critical estimates include, but are not limited to, future expected cash flows, discount rates, the time and expense to recreate the assets and profit margin a market participant would receive. These estimates are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which may not be later than one year from the acquisition date, the Company may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill. |
Goodwill, Intangible Assets and Impairment of Long Lived Assets | Goodwill and Intangible Assets Goodwill is evaluated for impairment at least annually or more frequently if circumstances indicate that goodwill may not be recoverable. A qualitative assessment is performed to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount. If the reporting unit does not pass the qualitative assessment, the carrying amount of the reporting unit, including goodwill, is compared to fair value and goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value. Any excess of the carrying value of the goodwill above its fair value is recognized as an impairment loss. Intangible assets consist of developed technologies and other intangible assets, including patents and contractual agreements. Intangible assets are amortized over the period of estimated benefit using the straight-line method and estimated useful lives ranging from two Impairment of Long-Lived Assets |
Advertising Costs | Advertising CostsAdvertising costs, excluding costs related to our annual Knowledge user conference and other user forums, are expensed as incurred and are included in sales and marketing expense. |
Stock-based Compensation | Stock-based Compensation We recognize compensation expense related to stock options and restricted stock units (“RSUs”) with only service conditions on a straight-line basis over the requisite service period. For stock options and RSUs with service, performance and market conditions (performance-based RSUs (“PRSUs”)), expenses are recognized on a graded vesting basis over the requisite service period and for awards with performance conditions, when it is probable that the performance condition will be achieved. The probability of achievement is assessed periodically to determine whether the performance metric continues to be probable. When there is a change in the probability of achievement, any cumulative effect of the change in requisite service period is recognized in the period of the change with the change to be amortized over the respective vesting period. We recognize compensation expense related to shares issued pursuant to the employee stock purchase plan (“ESPP”) on a straight-line basis over the six-month offering period. We recognize compensation expense net of estimated forfeiture activity. Amounts withheld related to the minimum statutory tax withholding requirements paid by us on behalf of our employees are recorded as a liability and a reduction to additional paid-in capital when paid and are included as a reduction of cash flows from financing activities. |
Concentration of Credit Risk and Significant Customers | Concentration of Credit Risk and Significant Customers Financial instruments potentially exposing us to credit risk consist primarily of cash, cash equivalents, derivative contracts, investments and accounts receivable. We hold cash at financial institutions that management believes are high credit quality financial institutions and invest in investment-grade debt securities. Our derivative contracts expose us to credit risk to the extent that the counterparties may be unable to meet the terms of the arrangement. We mitigate this credit risk by transacting with major financial institutions with high credit ratings and entering into master netting arrangements, which permit net settlement of transactions with the same counterparty. We are not required to pledge, and are not entitled to receive, cash collateral related to these derivative instruments. |
Income Taxes | Income Taxes We use the asset and liability method of accounting for income taxes, in which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be reversed. We recognize the effect on deferred tax assets and liabilities of a change in tax rates within the provision for income taxes as income and expense in the period that includes the enactment date. A valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized. In determining the need for a valuation allowance, we consider future growth, forecasted earnings, future taxable income, the mix of earnings in the jurisdictions in which we operate, historical earnings, taxable income in prior years, if carryback is permitted under the law, carryforward periods and prudent and feasible tax planning strategies. Our tax positions are subject to income tax audits by multiple tax jurisdictions throughout the world. We recognize the tax benefit of an uncertain tax position only if it is more likely than not the position is sustainable upon examination by the taxing authority, based on the technical merits. We measure the tax benefit recognized as the largest amount of benefit which is more likely than not to be realized upon settlement with the taxing authority. We recognize interest accrued and penalties related to unrecognized tax benefits in our tax provision. We calculate the current and deferred income tax provision based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed in subsequent years and record adjustments based on filed income tax returns when identified. The amount of income taxes paid is subject to examination by U.S. federal, state and foreign tax authorities. The estimate of the potential outcome of any uncertain tax issue is subject to management’s assessment of relevant risks, facts and circumstances existing at that time. To the extent the assessment of such tax position changes, we record the change in estimate in the period in which we make the determination. |
Prior Period Reclassifications | Prior Period ReclassificationsCertain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications did not result in a restatement of prior period financial statements. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements Debt with Conversion Options In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, “Debt–Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging–Contracts in Entity’s Own Equity (Subtopic 815-40)” to simplify the accounting for convertible instruments and contracts on an entity’s own equity. The standard results in our 2022 Notes being accounted for as a single unit of debt and requires the if-converted method to calculate diluted earnings per share calculation. We adopted this standard effective January 1, 2022 using a modified retrospective method, under which the basis of all convertible instruments outstanding at adoption have been adjusted to the amounts that would have been recorded had the new guidance been applied from inception. The previously recorded equity component of the convertible instrument outstanding and amortization of the debt discount and issuance costs classified as equity are reclassified from equity to debt through an adjustment to the opening balance of accumulated deficit as of January 1, 2022, which will result in reduced interest expense in future periods. Adoption of the standard resulted in a decrease to accumulated deficit of $17 million, decrease to additional paid-in capital of $19 million and an increase to debt, current of $2 million. Acquired Contract Assets and Contract Liabilities In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Acquired Contract Assets and Contract Liabilities,” which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured in accordance with Topic 606, Revenue from Contracts with Customers, as if the acquirer had originated the contracts. The new standard is effective for interim and annual periods beginning after December 15, 2022. We adopted this standard in the second quarter beginning April 1, 2022. The adoption had no impact to our consolidated financial statements for the year ended December 31, 2022. |
Net Income (Loss) Per Share | Basic net income per share attributable to common stockholders is computed by dividing net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing net income 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 and the 2022 Warrants. Stock awards with performance or market conditions are included in dilutive shares to the extent all conditions are 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, 2022 Notes and 2022 Warrants are excluded from the computation of diluted net income per share in periods in which the effect would be antidilutive. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Property and Equipment Useful Life | Property and equipment are stated at cost net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets as follows: Computer equipment and software 3-5 years Furniture and fixtures 3-7 years Leasehold and other improvements shorter of the lease term or estimated useful life Property and equipment, net consists of the following (in millions): December 31, 2022 2021 Computer equipment $ 1,606 $ 1,226 Computer software 82 77 Leasehold and other improvements 226 200 Furniture and fixtures 81 74 Construction in progress 53 14 Property and equipment, gross 2,048 1,591 Less: Accumulated depreciation (995) (825) Property and equipment, net $ 1,053 $ 766 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Securities, Available-for-Sale [Abstract] | |
Summary of Investments | The following is a summary of our available-for-sale debt securities recorded within short-term and long-term investments on the consolidated balance sheets (in millions): December 31, 2022 Amortized Gross Gross Estimated Available-for-sale securities: Commercial paper $ 558 $ — $ (2) $ 556 Corporate notes and bonds 3,414 — (52) 3,362 Certificates of deposit 162 — — 162 U.S. government and agency securities 768 — (2) 766 Mortgage-backed and asset-backed securities 98 — (17) 81 Total available-for-sale securities $ 5,000 $ — $ (73) $ 4,927 December 31, 2021 Amortized Gross Gross Estimated Available-for-sale securities: Commercial paper $ 528 $ — $ — $ 528 Corporate notes and bonds 2,418 1 (7) 2,412 Certificates of deposit 28 — — 28 U.S. government and agency securities 140 — — 140 Mortgage-backed and asset-backed securities 100 — (2) 98 Total available-for-sale securities $ 3,214 $ 1 $ (9) $ 3,206 |
Investments Classified by Contractual Maturity Date | The fair values of available-for-sale securities, by remaining contractual maturity, are as follows (in millions): December 31, 2022 Due within 1 year $ 2,810 Due in 1 year through 5 years 2,036 Instruments not due in single maturity 81 Total $ 4,927 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities 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 December 31, 2022 (in millions): Level 1 Level 2 Total Cash equivalents: Money market funds $ 738 $ — $ 738 Commercial paper — 36 36 Corporate notes and bonds — 10 10 Certificates of deposit — 2 2 Deposits 124 — 124 U.S. government and agency securities — 8 8 Marketable securities: Commercial paper — 556 556 Corporate notes and bonds — 3,362 3,362 Certificates of deposit — 162 162 U.S. government and agency securities — 766 766 Mortgage-backed and asset-backed securities — 81 81 Total $ 862 $ 4,983 $ 5,845 The following table presents our fair value hierarchy for our assets measured at fair value on a recurring basis as of December 31, 2021 (in millions): Level 1 Level 2 Total Cash equivalents: Money market funds $ 706 $ — $ 706 Commercial paper — 110 110 Corporate notes and bonds — 28 28 Certificates of deposit — 8 8 Deposits 235 — 235 Marketable securities: Commercial paper — 528 528 Corporate notes and bonds — 2,412 2,412 Certificates of deposit — 28 28 U.S. government and agency securities — 140 140 Mortgage-backed and asset-backed securities — 98 98 Total $ 941 $ 3,352 $ 4,293 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Goodwill balances consist of the following (in millions): Carrying Amount Balance as of December 31, 2020 $ 241 Goodwill acquired 538 Foreign currency translation adjustments (2) Balance as of December 31, 2021 $ 777 Goodwill acquired 68 Foreign currency translation adjustments (21) Balance as of December 31, 2022 $ 824 |
Schedule of Intangible Assets | Intangible assets consist of the following (in millions): December 31, 2022 December 31, 2021 Developed technology $ 434 $ 415 Patents 72 69 Other 15 14 Intangible assets, gross $ 521 $ 498 Less: accumulated amortization (289) (211) Intangible assets, net $ 232 $ 287 |
Expected Future Amortization Expense Related to Intangible Assets | The following table presents the estimated future amortization expense related to intangible assets held at December 31, 2022 (in millions): Years Ending December 31, 2023 $ 78 2024 71 2025 51 2026 20 2027 6 Thereafter 6 Total future amortization expense $ 232 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment, Net | Property and equipment are stated at cost net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets as follows: Computer equipment and software 3-5 years Furniture and fixtures 3-7 years Leasehold and other improvements shorter of the lease term or estimated useful life Property and equipment, net consists of the following (in millions): December 31, 2022 2021 Computer equipment $ 1,606 $ 1,226 Computer software 82 77 Leasehold and other improvements 226 200 Furniture and fixtures 81 74 Construction in progress 53 14 Property and equipment, gross 2,048 1,591 Less: Accumulated depreciation (995) (825) Property and equipment, net $ 1,053 $ 766 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Liabilities, Current [Abstract] | |
Summary of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consist of the following (in millions): December 31, 2022 2021 Accrued payroll $ 490 $ 444 Taxes payable 109 101 Other employee related liabilities 150 121 Other 226 184 Total accrued expenses and other current liabilities $ 975 $ 850 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Convertible Notes Payable [Abstract] | |
Convertible Debt | The following table summarizes the carrying value of our outstanding debt (in millions), net of unamortized debt discount and issuance costs of $14 million and $18 million at December 31, 2022 and 2021, respectively: December 31, 2022 December 31, 2021 2030 Notes 2022 Notes 2030 Notes 2022 Notes Current, net $ — $ — $ — $ 92 Long-term, net 1,486 — 1,484 — Total debt $ 1,486 $ — $ 1,484 $ 92 Convertible Date Initial Conversion Price per Share Initial Conversion Rate per $1,000 Par Value Initial Number of Shares (in millions) 2022 Notes February 1, 2022 $ 134.75 7.42 shares 6 |
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments | The estimated fair value of the 2030 Notes at December 31, 2022, and the 2022 Notes and 2030 Notes at December 31, 2021 is based on the closing trading price per $100 of the 2030 Notes and 2022 Notes as follows (in millions): December 31, 2022 December 31, 2021 2022 Notes $ — $ 440 2030 Notes $ 1,144 $ 1,400 |
Schedule of Note Hedge Transactions | Purchase Initial Shares Shares as of (in millions) 2022 Note Hedge $ 128 6 — |
Schedule of Warrants | Proceeds Initial Shares Strike Price First Expiration Date Shares as of (in millions) (in millions) (in millions) 2022 Warrants $ 54 6 $ 203.40 September 1, 2022 — |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Statement of Comprehensive Income [Abstract] | |
Schedule of Accumulated Other Comprehensive Loss | The following table shows the components of accumulated other comprehensive income (loss), net of tax, in the stockholders’ equity section of our consolidated balance sheets (in millions): December 31, 2022 2021 Foreign currency translation adjustment $ (25) $ 46 Net unrealized loss on investments (77) (12) Accumulated other comprehensive income (loss) $ (102) $ 34 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
Common Stock Outstanding and Reserved Shares of Common Stock for Future Issuance | As of December 31, 2022, we had 202.9 million shares of common stock outstanding and had reserved shares of common stock for future issuance as follows (in thousands): December 31, 2022 Stock plans: Options outstanding 1,237 RSUs (1) 5,737 Shares of common stock available for future grants: 2021 Equity Incentive Plan (2) 5,312 Amended and Restated 2012 Employee Stock Purchase Plan (2) 8,996 2022 New-Hire Equity Incentive Plan (2) 1,045 Total shares of common stock reserved for future issuance 22,327 (1) Represents the number of shares issuable upon settlement of outstanding RSUs and PRSUs, as discussed in Note 14. (2) Refer to Note 14 for a description of these plans. |
Equity Awards (Tables)
Equity Awards (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Information About Outstanding And Vested Stock Options | A summary of stock option activity was as follows: Number of Weighted- Weighted- Aggregate (in thousands) (in years) (in millions) Outstanding at December 31, 2021 1,305 $ 551.39 Granted 23 $ 591.66 Exercised (85) $ 32.30 $ 40 Canceled (6) $ 66.58 Outstanding at December 31, 2022 1,237 $ 590.36 8.3 $ 43 Vested and expected to vest as of December 31, 2022 1,075 $ 578.24 8.3 $ 43 Vested and exercisable as of December 31, 2022 142 $ 165.31 5.2 $ 32 |
Restricted Stock Unit Table | A summary of RSU activity was as follows: Number of Weighted-Average Grant-Date Fair Value Per Share (in thousands) Outstanding at December 31, 2021 5,808 $ 416.00 Granted 3,719 $ 541.24 Vested (3,075) $ 389.27 Forfeited (715) $ 469.06 Outstanding at December 31, 2022 5,737 $ 505.79 Expected to vest as of December 31, 2022 4,983 |
Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions | The following assumptions were used in the Black-Scholes options pricing model and the Monte Carlo simulation model, to estimate our stock-based compensation on the date of grant for ESPP, stock options and PRSUs, respectively, as applicable. Year Ended December 31, 2022 2021 2020 Risk Free Interest Rate ESPP 0.06% - 2.96% 0.06% - 0.11% 0.11% - 2.04% Stock Options 2.04% 1.20% - 1.45% * PRSU 1.76% 0.19% - 0.20% ** Expected Term (in years) ESPP 0.5 0.5 0.5 Stock Options 10 7.5 - 10 * Expected Volatility ESPP 35% - 59% 35% - 60% 30% - 60% Stock Options 40 % 38% - 41% * PRSU 42 % 41% - 42% ** * There were no stock option grants in 2020. ** There were no grants with market conditions for the respective fiscal year. |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Calculation of Basic and Diluted Net Income Per Share | The following tables present the calculation of basic and diluted net income per share attributable to common stockholders (in millions, except for number of shares reflected in thousands and per share data): Year Ended December 31, 2022 2021 2020 Numerator: Net income $ 325 $ 230 $ 119 Denominator: Weighted-average shares outstanding - basic 201,430 198,094 193,096 Weighted-average effect of potentially dilutive securities: Common stock options 117 293 547 RSUs 1,555 3,429 4,421 2022 Notes — 535 842 2022 Notes settlements 280 116 1,931 2022 Warrants — 649 920 Settlement of 2022 Warrants 153 51 721 Weighted-average shares outstanding - diluted 203,535 203,167 202,478 Net income per share - basic $ 1.61 $ 1.16 $ 0.61 Net income per share - diluted $ 1.60 $ 1.13 $ 0.59 |
Summary of Potentially Dilutive Securities | Potentially dilutive securities that are not included in the calculation of diluted net income per share because doing so would be antidilutive are as follows (in thousands): Year Ended December 31, 2022 2021 2020 Common stock options 1,084 998 — RSUs 3,265 381 347 ESPP obligations 309 209 224 Total potentially dilutive securities 4,658 1,588 571 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Components of Loss From Continuing Operations Before Income Taxes | The components of income before income taxes by U.S. and foreign jurisdictions were as follows (in millions): Year Ended December 31, 2022 2021 2020 United States $ 173 $ 152 $ 13 Foreign 226 97 137 Total $ 399 $ 249 $ 150 |
Components of Provision for Income Taxes | The provision for income taxes consists of the following (in millions): Year Ended December 31, 2022 2021 2020 Current provision: Federal $ — $ — $ — State 13 1 — Foreign 46 52 53 59 53 53 Deferred provision: Federal (1) (3) (5) State (1) (3) (1) Foreign 17 (28) (16) 15 (34) (22) Provision for income taxes $ 74 $ 19 $ 31 |
Reconciliation of Federal Income Tax Rate | The effective income tax rate differs from the federal statutory income tax rate applied to the income before income taxes due to the following (in millions): Year Ended December 31, 2022 2021 2020 Tax computed at U.S. federal statutory rate $ 84 $ 53 $ 31 State taxes, net of federal benefit 10 — — U.S. tax on foreign earnings 96 — — Tax rate differential for international subsidiaries 18 6 8 Stock-based compensation 7 (160) (157) Executive compensation 22 23 25 Tax credits (70) (76) (64) Other 7 4 4 Valuation allowance (100) 169 184 Provision for income taxes $ 74 $ 19 $ 31 |
Reconciliation of Deferred Tax Assets and Liabilities | Significant components of our deferred tax assets are shown below (in millions). A valuation allowance has been recognized to offset our deferred tax assets, as necessary, by the amount of any tax benefits that, based on evidence, are not expected to be realized. December 31, 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 605 $ 1,061 Credit carryforwards 388 318 Lease liability 178 152 Capitalized research and development 262 — Depreciation and amortization 553 587 Other 159 126 Total deferred tax assets 2,145 2,244 Less valuation allowance (1,228) (1,326) 917 918 Deferred tax liabilities: Right of use asset (162) (141) Other (129) (94) Net deferred tax assets $ 626 $ 683 |
Reconciliation of Beginning and Ending Balance of Total Unrecognized Tax Benefits | A reconciliation of the beginning and ending balance of total unrecognized tax benefits is as follows (in millions): Year Ended December 31, 2022 2021 2020 Balance, beginning period $ 124 $ 81 $ 37 Tax positions taken in prior period: Gross increases — 5 6 Gross decreases (1) — (1) Tax positions taken in current period: Gross increases 38 38 39 Lapse of statute of limitations — — — Settlements (2) — — Balance, end of period $ 159 $ 124 $ 81 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Operating Lease Liabilities | Maturities of operating lease liabilities as of December 31, 2022 are presented in the table below (in millions): Years Ending December 31, 2023 $ 115 2024 100 2025 100 2026 81 2027 71 Thereafter 428 Total operating lease payments 895 Less: imputed interest (149) Present value of operating lease liabilities $ 746 |
Schedule of Non-Cancelable Purchase Commitments | Future minimum payments under our non-cancelable purchase commitments as of December 31, 2022 are presented in the table below (in millions): Purchase Obligations (1) Years Ending December 31, 2023 $ 289 2024 219 2025 98 2026 69 2027 542 Thereafter 54 Total $ 1,271 (1) Not included in the table above are certain purchase commitments related to our future annual Knowledge user conferences and other customer or sales conferences to be held in 2023 and future years. If we had canceled these contractual commitments as of December 31, 2022, we would have been obligated to pay cancellation penalties of approximately $56 million in aggregate. In addition, during 2022, we entered into a non-cancelable $500 million agreement with Microsoft to purchase cloud services over five years, as we accelerate Azure adoption for mutual customers. The unutilized consumption is included within the table above. |
Information about Geographic _2
Information about Geographic Areas and Products (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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 millions): Year Ended December 31, 2022 2021 2020 North America (1) $ 4,723 $ 3,752 $ 2,960 EMEA (2) 1,778 1,551 1,132 Asia Pacific and other 744 593 427 Total revenues $ 7,245 $ 5,896 $ 4,519 |
Schedule of Long Lived Assets by Geographic Area | Property and equipment, net by geographic area were as follows (in millions): December 31, 2022 2021 Property and equipment, net: North America (3) $ 664 $ 484 EMEA (2) 221 176 Asia Pacific and other 168 106 Total property and equipment, net $ 1,053 $ 766 (1) Revenues attributed to the United States were 94% of North America revenues for each of the years ended December 31, 2022, 2021 and 2020. (2) Europe, the Middle East and Africa (“EMEA”) |
Schedule of Subscription Revenue by Products | Subscription revenues consist of the following (in millions): Year Ended December 31, 2022 2021 2020 Digital workflow products $ 6,077 $ 4,882 $ 3,749 ITOM products 814 691 537 Total subscription revenues $ 6,891 $ 5,573 $ 4,286 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Use of Estimates (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 12 Months Ended | ||
Jan. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Change in Accounting Estimate [Line Items] | ||||
Depreciation | $ 261 | $ 312 | $ 225 | |
Net income | $ 325 | $ 230 | $ 119 | |
Net income per share - basic (in USD per share) | $ 1.61 | $ 1.16 | $ 0.61 | |
Net income per share - diluted (in USD per share) | $ 1.60 | $ 1.13 | $ 0.59 | |
Data center equipment | Service life | ||||
Change in Accounting Estimate [Line Items] | ||||
Property and equipment, useful life (in years) | 4 years | 3 years | ||
Depreciation | $ 81 | |||
Net income | $ 76 | |||
Net income per share - basic (in USD per share) | $ 0.38 | |||
Net income per share - diluted (in USD per share) | $ 0.37 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Segments (Details) | 12 Months Ended |
Dec. 31, 2022 operating_segments | |
Accounting Policies [Abstract] | |
Number of operating and reportable segment | 1 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||
Capitalized contract cost, amortization period | 5 years | ||
Impairment loss | $ 0 | $ 0 | $ 0 |
Total subscription revenues | |||
Disaggregation of Revenue [Line Items] | |||
Contract payment terms | 30 days | ||
Professional services and other | |||
Disaggregation of Revenue [Line Items] | |||
Contract payment terms | 30 days |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Investments (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Accounting Policies [Abstract] | ||
Accrued interest, net of allowance for credit losses | $ 28 | $ 12 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Property and Equipment (Detail) | 12 Months Ended |
Dec. 31, 2022 | |
Minimum | Computer equipment and software | |
Property and Equipment [Line Items] | |
Property and equipment, useful life (in years) | 3 years |
Minimum | Furniture and fixtures | |
Property and Equipment [Line Items] | |
Property and equipment, useful life (in years) | 3 years |
Maximum | Computer equipment and software | |
Property and Equipment [Line Items] | |
Property and equipment, useful life (in years) | 5 years |
Maximum | Furniture and fixtures | |
Property and Equipment [Line Items] | |
Property and equipment, useful life (in years) | 7 years |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Goodwill and Intangible Assets (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Minimum | |
Property and Equipment [Line Items] | |
Useful Life | 2 years |
Maximum | |
Property and Equipment [Line Items] | |
Useful Life | 12 years |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Advertising Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Accounting Policies [Abstract] | |||
Advertising costs | $ 201 | $ 198 | $ 172 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Stock-based Compensation (Details) | 12 Months Ended |
Dec. 31, 2022 | |
2012 Employee Stock Purchase Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award offering period | 6 months |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Recently Adopted Accounting Pronouncement and Recently Issued Accounting Pronouncements Pending Adoption (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Jan. 01, 2022 | Dec. 31, 2021 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Decrease in accumulated deficit | $ (338) | $ 4 | |
Accounting Standards Update 2020-06 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Decrease in accumulated deficit | $ 17 | ||
Decrease in additional paid in capital | 19 | ||
Increase to debt, current | $ 2 |
Investments - Summary of Invest
Investments - Summary of Investments (Detail) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 5,000 | $ 3,214 |
Gross Unrealized Gains | 0 | 1 |
Gross Unrealized Losses | (73) | (9) |
Estimated Fair Value | 4,927 | 3,206 |
Commercial paper | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 558 | 528 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (2) | 0 |
Estimated Fair Value | 556 | 528 |
Corporate notes and bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 3,414 | 2,418 |
Gross Unrealized Gains | 0 | 1 |
Gross Unrealized Losses | (52) | (7) |
Estimated Fair Value | 3,362 | 2,412 |
Certificates of deposit | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 162 | 28 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | 162 | 28 |
U.S. government and agency securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 768 | 140 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (2) | 0 |
Estimated Fair Value | 766 | 140 |
Mortgage-backed and asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 98 | 100 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (17) | (2) |
Estimated Fair Value | $ 81 | $ 98 |
Investments - Narrative (Detail
Investments - Narrative (Detail) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Debt Securities, Available-for-sale [Line Items] | |||
Contractual maturities term (maximum) | 36 months | ||
Unrealized loss | $ 4,232 | $ 2,416 | |
Debt and equity investments in privately-held companies included in other assets | $ 252 | $ 99 | |
Celonis SE | |||
Debt Securities, Available-for-sale [Line Items] | |||
Non-marketable equity investment | $ 100 |
Investments - Maturities of Ava
Investments - Maturities of Available-for-Sale Investments (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Debt Securities, Available-for-Sale [Abstract] | ||
Due within 1 year | $ 2,810 | |
Due in 1 year through 5 years | 2,036 | |
Instruments not due in single maturity | 81 | |
Total | $ 4,927 | $ 3,206 |
Fair Value Measurements (Detail
Fair Value Measurements (Detail) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | $ 5,845 | $ 4,293 |
Cash equivalents | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 738 | 706 |
Cash equivalents | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 36 | 110 |
Cash equivalents | Corporate notes and bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 10 | |
Cash equivalents | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 2 | 8 |
Cash equivalents | Deposits | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 124 | |
Cash equivalents | U.S. government and agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 8 | 235 |
Marketable securities | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 556 | 528 |
Marketable securities | Corporate notes and bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 28 | |
Marketable securities | 3,362 | 2,412 |
Marketable securities | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 162 | 28 |
Marketable securities | U.S. government and agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 766 | 140 |
Marketable securities | Mortgage-backed and asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 81 | 98 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | 862 | 941 |
Level 1 | Cash equivalents | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 738 | 706 |
Level 1 | Cash equivalents | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Level 1 | Cash equivalents | Corporate notes and bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | |
Level 1 | Cash equivalents | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Level 1 | Cash equivalents | Deposits | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 124 | |
Level 1 | Cash equivalents | U.S. government and agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 235 |
Level 1 | Marketable securities | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | 0 |
Level 1 | Marketable securities | Corporate notes and bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | |
Marketable securities | 0 | 0 |
Level 1 | Marketable securities | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | 0 |
Level 1 | Marketable securities | U.S. government and agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | 0 |
Level 1 | Marketable securities | Mortgage-backed and asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | 4,983 | 3,352 |
Level 2 | Cash equivalents | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Level 2 | Cash equivalents | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 36 | 110 |
Level 2 | Cash equivalents | Corporate notes and bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 10 | |
Level 2 | Cash equivalents | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 2 | 8 |
Level 2 | Cash equivalents | Deposits | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | |
Level 2 | Cash equivalents | U.S. government and agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 8 | 0 |
Level 2 | Marketable securities | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 556 | 528 |
Level 2 | Marketable securities | Corporate notes and bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 28 | |
Marketable securities | 3,362 | 2,412 |
Level 2 | Marketable securities | Certificates of deposit | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 162 | 28 |
Level 2 | Marketable securities | U.S. government and agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 766 | 140 |
Level 2 | Marketable securities | Mortgage-backed and asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | $ 81 | $ 98 |
Business Combinations - Narrati
Business Combinations - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |||||
Jun. 15, 2021 | Jan. 08, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Business Acquisition [Line Items] | ||||||
Goodwill | $ 824 | $ 777 | $ 241 | |||
Total unrecognized tax benefit | $ 159 | $ 124 | 81 | $ 37 | ||
Developed technology | ||||||
Business Acquisition [Line Items] | ||||||
Weighted average useful life (in years) | 5 years | 5 years | ||||
Series of Individually Immaterial Business Acquisitions | ||||||
Business Acquisition [Line Items] | ||||||
Payments to acquire businesses | $ 92 | $ 66 | $ 116 | |||
LightStep Inc. | ||||||
Business Acquisition [Line Items] | ||||||
Payments to acquire businesses | $ 512 | |||||
Deferred tax liabilities | 6 | |||||
Goodwill | 413 | |||||
Net tangible assets | 8 | |||||
LightStep Inc. | Developed technology | ||||||
Business Acquisition [Line Items] | ||||||
Finite-Lived intangibles | $ 85 | |||||
Weighted average useful life (in years) | 5 years | |||||
LightStep Inc. | Customer related and brand assets | ||||||
Business Acquisition [Line Items] | ||||||
Finite-Lived intangibles | $ 11 | |||||
Element AI Inc. | ||||||
Business Acquisition [Line Items] | ||||||
Goodwill | $ 81 | |||||
Net tangible assets | 16 | |||||
Total unrecognized tax benefit | 43 | |||||
Element AI Inc. | Developed technology | ||||||
Business Acquisition [Line Items] | ||||||
Payments to acquire businesses | 228 | |||||
Finite-Lived intangibles | $ 85 | |||||
Weighted average useful life (in years) | 5 years |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Schedule of Goodwill (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | $ 777 | $ 241 |
Goodwill acquired | 68 | 538 |
Foreign currency translation adjustments | (21) | (2) |
Goodwill, ending balance | $ 824 | $ 777 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 521 | $ 498 |
Less: accumulated amortization | (289) | (211) |
Intangible assets, net | 232 | 287 |
Developed technology | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 434 | 415 |
Patents | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 72 | 69 |
Intangible assets, net | 232 | 287 |
Other | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 15 | $ 14 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | $ 81 | $ 76 | $ 46 |
Developed technology | |||
Finite-Lived Intangible Assets [Line Items] | |||
Weighted average useful life (in years) | 5 years | 5 years |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Schedule of Estimated Future Amortization of Intangible Assets (Details) $ in Millions | Dec. 31, 2022 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2023 | $ 78 |
2024 | 71 |
2025 | 51 |
2026 | 20 |
2027 | 6 |
Thereafter | 6 |
Total future amortization expense | $ 232 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment, Net (Detail) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Property and Equipment [Line Items] | ||
Property and equipment, gross | $ 2,048 | $ 1,591 |
Less: Accumulated depreciation | (995) | (825) |
Property and equipment, net | 1,053 | 766 |
Computer equipment | ||
Property and Equipment [Line Items] | ||
Property and equipment, gross | 1,606 | 1,226 |
Computer software | ||
Property and Equipment [Line Items] | ||
Property and equipment, gross | 82 | 77 |
Leasehold and other improvements | ||
Property and Equipment [Line Items] | ||
Property and equipment, gross | 226 | 200 |
Furniture and fixtures | ||
Property and Equipment [Line Items] | ||
Property and equipment, gross | 81 | 74 |
Construction in progress | ||
Property and Equipment [Line Items] | ||
Property and equipment, gross | $ 53 | $ 14 |
Property and Equipment - Narrat
Property and Equipment - Narrative (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation | $ 261 | $ 312 | $ 225 |
Derivative Contracts (Details)
Derivative Contracts (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Not Designated as Hedging Instrument | Foreign exchange contract | ||
Derivative [Line Items] | ||
Derivative notional amount | $ 1,360 | $ 833 |
Deferred Revenue and Performa_2
Deferred Revenue and Performance Obligations (Details) - USD ($) $ in Billions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Deferred revenue recognized | $ 3.7 | $ 2.9 |
Remaining non-cancelable performance obligations | $ 14 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Performance obligations expected to be satisfied (percent) | 49% | |
Remaining performance obligation, expected timing of satisfaction, period | 12 months | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Performance obligations expected to be satisfied (percent) | 51% | |
Remaining performance obligation, expected timing of satisfaction, period | 12 months | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | Minimum | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Remaining performance obligation, expected timing of satisfaction, period | 13 months | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | Maximum | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Remaining performance obligation, expected timing of satisfaction, period | 36 months |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Detail) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Accrued Liabilities, Current [Abstract] | ||
Accrued payroll | $ 490 | $ 444 |
Taxes payable | 109 | 101 |
Other employee related liabilities | 150 | 121 |
Other | 226 | 184 |
Total accrued expenses and other current liabilities | $ 975 | $ 850 |
Debt - Schedule of Notes Payabl
Debt - Schedule of Notes Payable (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Debt Instrument [Line Items] | ||
Current, net | $ 0 | $ 92 |
2030 Notes | ||
Debt Instrument [Line Items] | ||
Unamortized debt discount and issuance costs, long-term | 14 | 18 |
Current, net | 0 | 0 |
Long-term, net | 1,486 | 1,484 |
Total debt | 1,486 | 1,484 |
2022 Notes | ||
Debt Instrument [Line Items] | ||
Current, net | 0 | 92 |
Long-term, net | 0 | 0 |
Total debt | $ 0 | $ 92 |
Debt - Narrative (Details)
Debt - Narrative (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Aug. 11, 2020 USD ($) shares | Aug. 31, 2020 USD ($) | Jun. 30, 2022 shares | Dec. 31, 2022 USD ($) tranche shares | Dec. 31, 2021 USD ($) shares | Dec. 31, 2020 USD ($) shares | Jun. 30, 2017 USD ($) | |
Debt Conversion [Line Items] | |||||||
Estimated fair value of the note based on the closing trading price | $ 100 | $ 100 | |||||
Benefit from exercise of Note Hedge | 233,000,000 | 224,000,000 | $ 1,379,000,000 | ||||
Net proceeds from unwind of 2022 Note Hedge | 0 | 0 | 1,106,000,000 | ||||
Loss on extinguishment of debt | $ 0 | $ (3,000,000) | $ (47,000,000) | ||||
Shares as of December 31, 2021 (in shares) | shares | 0 | ||||||
Common Stock | |||||||
Debt Conversion [Line Items] | |||||||
Settlement of warrants (in shares) | shares | 600,000 | 603,000 | 536,000 | 2,285,000 | |||
2022 Warrants | |||||||
Debt Conversion [Line Items] | |||||||
Number of shares to be issued upon exercise of the Warrants (in shares) | shares | 600,000 | 500,000 | |||||
Shares as of December 31, 2021 (in shares) | shares | 0 | ||||||
Stock Price Trigger Measurement | |||||||
Debt Conversion [Line Items] | |||||||
Number of days out of 30 that common stock price exceeded conversion price, days | tranche | 20 | ||||||
Number of consecutive trading days in a period | tranche | 30 | ||||||
Threshold percentage of stock price trigger (percent) | 130% | ||||||
2030 Notes | |||||||
Debt Conversion [Line Items] | |||||||
Contractual interest rate, notes (in percent) | 1.40% | ||||||
Debt term | 10 years | ||||||
Notes, par value | $ 1,500,000,000 | $ 1,500,000,000 | |||||
Percentage of principle issued | 0.9963 | ||||||
Debt issuance costs | $ 13,000,000 | ||||||
Effective interest rate of the liability component (in percent) | 1.53% | ||||||
2022 Notes | |||||||
Debt Conversion [Line Items] | |||||||
Contractual interest rate, notes (in percent) | 0% | ||||||
Notes, par value | $ 782,500,000 | ||||||
Net amount recorded in equity | 160,000,000 | ||||||
Settlement of principal | 94,000,000 | ||||||
Debt conversion, original debt, amount | 6,000,000 | ||||||
Extinguishment of debt, amount | 88,000,000 | ||||||
Benefit from exercise of Note Hedge | 212,000,000 | ||||||
Conversion option settlement, fair value adjustments | $ 212,000,000 | ||||||
Repurchased face amount | $ 497,000,000 | ||||||
Net proceeds from unwind of 2022 Note Hedge | 1,100,000,000 | ||||||
Extinguishment of debt, amount, equity component | 493,000,000 | ||||||
Extinguishment of debt, amount, debt component | 1,100,000,000 | ||||||
Loss on extinguishment of debt | (39,000,000) | ||||||
Unamortized debt discount and unamortized debt issuance costs | $ 43,000,000 | ||||||
Reduction of aggregate number of call options (in shares) | shares | 3,700,000 |
Debt - Schedule of Fair Value (
Debt - Schedule of Fair Value (Details) - Level 2 - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
2022 Notes | ||
Debt Instrument [Line Items] | ||
Fair value | $ 0 | $ 440 |
2030 Notes | ||
Debt Instrument [Line Items] | ||
Fair value | $ 1,144 | $ 1,400 |
Debt - Schedule of Conversion (
Debt - Schedule of Conversion (Details) - 2022 Notes shares in Millions | 2 Months Ended |
Jun. 30, 2017 shares $ / shares | |
Debt Instrument [Line Items] | |
Initial Conversion Price per Share (in USD per share) | $ / shares | $ 134.75 |
Initial Conversion Rate per $1,000 Par Value (in USD per share) | 0.00742 |
Initial Number of Shares (in shares) | shares | 6 |
Debt - Schedule of Note Hedges
Debt - Schedule of Note Hedges (Details) - 2022 Note Hedge shares in Millions, $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) shares | |
Debt Instrument [Line Items] | |
Purchase | $ | $ 128 |
Shares (in shares) | 6 |
Shares as of December 31, 2021 (in shares) | 0 |
Debt - Schedule of Warrants (De
Debt - Schedule of Warrants (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Jun. 30, 2022 | |
Debt Instrument [Line Items] | ||
Class of warrant or right outstanding | 0 | |
2022 Warrants | ||
Debt Instrument [Line Items] | ||
Proceeds | $ 54 | |
Shares (in shares) | 6,000,000 | |
Strike Price (in USD per share) | $ 203.40 | |
Class of warrant or right outstanding | 0 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated other comprehensive income (loss) | $ 5,032 | $ 3,695 | $ 2,834 | $ 2,127 |
Foreign currency translation adjustment | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated other comprehensive income (loss) | (25) | 46 | ||
Net unrealized loss on investments | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated other comprehensive income (loss) | (77) | (12) | ||
Accumulated other comprehensive income (loss) | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated other comprehensive income (loss) | $ (102) | $ 34 | $ 94 | $ 25 |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Detail) - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||
Shares of common stock, authorized (in shares) | 600,000,000 | |
Shares of common stock, issued and sold (in shares) | 202,882,000 | 199,608,000 |
Stock issued during period, shares, new issues (in shares) | 2,700,000 | 3,200,000 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
2022 Warrants | ||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||
Number of shares to be issued upon exercise of the Warrants (in shares) | 600,000 | 500,000 |
Stockholders' Equity - Outstand
Stockholders' Equity - Outstanding and Reserved Shares of Common Stock for Future Issuance (Detail) - shares | Dec. 31, 2022 | Dec. 31, 2021 |
Class of Stock [Line Items] | ||
Options outstanding (in shares) | 1,237,000 | 1,305,000 |
Total reserved shares of common stock for future issuance (in shares) | 22,327,000 | |
2012 Equity Incentive Plan | ||
Class of Stock [Line Items] | ||
Total reserved shares of common stock for future issuance (in shares) | 5,312,000 | |
2012 Employee Stock Purchase Plan | ||
Class of Stock [Line Items] | ||
Total reserved shares of common stock for future issuance (in shares) | 8,996,000 | |
2022 New-Hire Equity Incentive Plan | ||
Class of Stock [Line Items] | ||
Total reserved shares of common stock for future issuance (in shares) | 1,045,000 | |
Common stock options | ||
Class of Stock [Line Items] | ||
Options outstanding (in shares) | 1,237,000 | |
RSUs | ||
Class of Stock [Line Items] | ||
RSUs (in shares) | 5,737,000 | 5,808,000 |
Equity Awards - Narrative (Deta
Equity Awards - Narrative (Detail) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2022 USD ($) shares | Dec. 31, 2022 USD ($) tranche $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | Dec. 31, 2020 USD ($) $ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of equity incentive plans | tranche | 3 | |||
Total intrinsic value of options exercised | $ 40,000,000 | $ 140,000,000 | $ 199,000,000 | |
Fair value of stock options vested | $ 11,000,000 | $ 10,000,000 | 7,000,000 | |
Weighted-average grant date fair value of options granted (in USD per share) | $ / shares | $ 273.63 | $ 248.85 | ||
Total unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested stock options | $ 84,000,000 | $ 84,000,000 | ||
Dividend yield (in percent) | 0% | |||
Common stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted-average remaining vesting period | 2 years | |||
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 | 5,300,000 | 5,300,000 | ||
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 | 400,000 | 400,000 | ||
RSUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted-average remaining vesting period | 3 years | |||
Number of shares outstanding (in shares) | shares | 5,737,000 | 5,737,000 | 5,808,000 | |
Aggregate intrinsic value, vested | $ 1,500,000,000 | $ 2,100,000,000 | $ 1,800,000,000 | |
Aggregate intrinsic value, outstanding | $ 2,200,000,000 | 2,200,000,000 | ||
Aggregated intrinsic value, expected to vest | 1,900,000,000 | $ 1,900,000,000 | ||
Weighted-average grant date fair value, granted (in USD per share) | $ / shares | $ 541.24 | $ 577.26 | $ 367.52 | |
Unrecognized compensation expense expected to be recognized | $ 2,200,000,000 | $ 2,200,000,000 | ||
Performance shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Performance target (in percent) | 100% | |||
Vesting period (in years) | 2 years | |||
Allocated share-based compensation expense | $ 121,000,000 | $ 124,000,000 | $ 70,000,000 | |
2012 Employee Stock Purchase Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Common stock purchase price, percentage | 85% | |||
Award offering period | 6 months | |||
Number of shares of common stock outstanding, increase, percentage | 1% | |||
2005 Stock Plan and 2012 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock options granted to new employees vest, percentage per annum | 25% | |||
Requisite service period to vest employment continuation period | 3 years | |||
2021 Performance Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Service period (in years) | 2 years | |||
2021 Performance Awards | Common stock options | Chief Executive Officer | Tranche one | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting percentage | 12.50% | |||
2021 Performance Awards | Common stock options | Chief Executive Officer | Tranche two | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting percentage | 12.50% | |||
2021 Performance Awards | Common stock options | Chief Executive Officer | Tranche three | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting percentage | 12.50% | |||
2021 Performance Awards | Common stock options | Chief Executive Officer | Tranche four | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting percentage | 12.50% | |||
2021 Performance Awards | Common stock options | Chief Executive Officer | Tranche five | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting percentage | 12.50% | |||
2021 Performance Awards | Common stock options | Chief Executive Officer | Tranche six | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting percentage | 12.50% | |||
2021 Performance Awards | Common stock options | Chief Executive Officer | Tranche seven | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting percentage | 12.50% | |||
2021 Performance Awards | Common stock options | Chief Executive Officer | Tranche eight | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting percentage | 12.50% | |||
2021 Performance Awards | ESPP obligations | Chief Executive Officer | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares granted, value, share-based payment arrangement, before forfeiture | $ 232,000,000 | |||
Number of vesting tranches | 8 | |||
2021 Performance Awards | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Performance target (in percent) | 0% | 0% | ||
2021 Performance Awards | Minimum | ESPP obligations | Chief Executive Officer | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Description of service or performance condition required to be met for earning right to award under share-based payment arrangement. Includes, but is not limited to, combination of market, performance or service condition | 2 years | |||
2021 Performance Awards | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Performance target (in percent) | 200% | 200% |
Equity Awards - Summary of Stoc
Equity Awards - Summary of Stock Option Activity (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Number of Shares | |||
Number of shares, outstanding, beginning balance (in shares) | 1,305 | ||
Number of shares granted (in shares) | 23 | ||
Number of shares, exercised (in shares) | (85) | ||
Number of shares, canceled (in shares) | (6) | ||
Number of shares, outstanding, ending balance (in shares) | 1,237 | 1,305 | |
Number of shares, vested and expected to vest (in shares) | 1,075 | ||
Number of shares, vested and exercisable (in shares) | 142 | ||
Weighted- Average Exercise Price Per Share | |||
Weighted-average exercise price, outstanding, beginning balance (in USD per share) | $ 551.39 | ||
Weighted-average exercise price, granted (in USD per share) | 591.66 | ||
Weighted-average exercise price, exercised (in USD per share) | 32.30 | ||
Weighted-average exercise price, canceled (in USD per share) | 66.58 | ||
Weighted-average exercise price, outstanding, ending balance (in USD per share) | 590.36 | $ 551.39 | |
Weighted-average exercise price, vested and expected to vest (in USD per share) | 578.24 | ||
Weighted-average exercise price, vested and exercisable (in USD per share) | $ 165.31 | ||
Weighted-average remaining contractual life (in years) | 8 years 3 months 18 days | ||
Weighted-average remaining contractual term, vested and expected to vest (in years) | 8 years 3 months 18 days | ||
Weighted-average remaining contractual term, vested and exercisable (in years) | 5 years 2 months 12 days | ||
Total intrinsic value of options exercised | $ 40 | $ 140 | $ 199 |
Aggregate intrinsic value, outstanding | 43 | ||
Aggregate intrinsic value, vested and expected to vest | 43 | ||
Aggregate intrinsic value, vested and exercisable | $ 32 |
Equity Awards - Restricted Stoc
Equity Awards - Restricted Stock Unit Table (Details) - RSUs - $ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Number of Shares | |||
Number of shares outstanding, beginning balance (in shares) | 5,808,000 | ||
Number of shares, granted (in shares) | 3,719,000 | ||
Number of shares, vested (in shares) | (3,075,000) | ||
Number of shares, forfeited (in shares) | (715,000) | ||
Number of shares outstanding, ending balance (in shares) | 5,737,000 | 5,808,000 | |
Number of shares, expected to vest (in shares) | 4,983,000 | ||
Weighted-Average Grant Date Fair Value | |||
Weighted-average grant date fair value, outstanding, beginning balance (in USD per share) | $ 416 | ||
Weighted-average grant date fair value, granted (in USD per share) | 541.24 | $ 577.26 | $ 367.52 |
Weighted-average grant date fair value, vested (in USD per share) | 389.27 | ||
Weighted-average grant date fair value, repurchased (in USD per share) | 469.06 | ||
Weighted-average grant date fair value, outstanding, ending balance (in USD per share) | $ 505.79 | $ 416 |
Equity Awards - Schedule of Fai
Equity Awards - Schedule of Fair Value Assumptions (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
ESPP obligations | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk-free interest rate. minimum | 0.06% | 0.06% | 0.11% |
Risk-free interest rate, maximum | 2.96% | 0.11% | 2.04% |
Expected term (in years) | 6 months | 6 months | 6 months |
Expected volatility, minimum | 35% | 35% | 30% |
Expected volatility, maximum | 59% | 60% | 60% |
Common stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk-free interest rate. minimum | 2.04% | 1.20% | |
Risk-free interest rate, maximum | 1.45% | ||
Expected volatility, minimum | 38% | ||
Expected volatility, maximum | 40% | 41% | |
Common stock options | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (in years) | 10 years | 7 years 6 months | |
Common stock options | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (in years) | 10 years | ||
PRSU | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk-free interest rate. minimum | 1.76% | 0.19% | |
Risk-free interest rate, maximum | 0.20% | ||
Expected volatility, minimum | 42% | 41% | |
Expected volatility, maximum | 42% |
Net Income Per Share - Calculat
Net Income Per Share - Calculation of Basic and Diluted Net Income Per Share Attributable to Common Stockholders (Detail) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Numerator: | |||
Net income | $ 325 | $ 230 | $ 119 |
Denominator: | |||
Weighted-average shares outstanding - basic (in shares) | 201,430,000 | 198,094,000 | 193,096,000 |
Weighted-average shares outstanding - diluted (in shares) | 203,535,000 | 203,167,000 | 202,478,000 |
Net income per share - basic (in USD per share) | $ 1.61 | $ 1.16 | $ 0.61 |
Net income per share - diluted (in USD per share) | $ 1.60 | $ 1.13 | $ 0.59 |
Common stock options | |||
Denominator: | |||
Potentially dilutive securities (in shares) | 117,000 | 293,000 | 547,000 |
RSUs | |||
Denominator: | |||
Potentially dilutive securities (in shares) | 1,555,000 | 3,429,000 | 4,421,000 |
2022 Notes | 2022 Notes | |||
Denominator: | |||
Notes (in shares) | 0 | 535,000 | 842,000 |
Notes settlements (in shares) | 280,000 | 116,000 | 1,931,000 |
2022 Warrants | Warrants | |||
Denominator: | |||
Warrants (in shares) | 0 | 649,000 | 920,000 |
Partial settlement of warrants (in shares) | 153,000 | 51,000 | 721,000 |
Net Income Per Share - Summary
Net Income Per Share - Summary of Potentially Dilutive Securities (Detail) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total potentially dilutive securities (in shares) | 4,658 | 1,588 | 571 |
Common stock options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total potentially dilutive securities (in shares) | 1,084 | 998 | 0 |
RSUs | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total potentially dilutive securities (in shares) | 3,265 | 381 | 347 |
ESPP obligations | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total potentially dilutive securities (in shares) | 309 | 209 | 224 |
Income Taxes - Components of Lo
Income Taxes - Components of Loss From Continuing Operations Before Income Taxes (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
United States | $ 173 | $ 152 | $ 13 |
Foreign | 226 | 97 | 137 |
Income before income taxes | $ 399 | $ 249 | $ 150 |
Income Taxes - Components of Pr
Income Taxes - Components of Provision for Income Taxes (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Current provision: | |||
Federal | $ 0 | $ 0 | $ 0 |
State | 13 | 1 | 0 |
Foreign | 46 | 52 | 53 |
Total current provision | 59 | 53 | 53 |
Deferred provision: | |||
Federal | (1) | (3) | (5) |
State | (1) | (3) | (1) |
Foreign | 17 | (28) | (16) |
Total deferred provision | 15 | (34) | (22) |
Provision for income taxes | $ 74 | $ 19 | $ 31 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Federal Income Tax Rate (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
Tax computed at U.S. federal statutory rate | $ 84 | $ 53 | $ 31 |
State taxes, net of federal benefit | 10 | 0 | 0 |
U.S. tax on foreign earnings | 96 | 0 | 0 |
Tax rate differential for international subsidiaries | 18 | 6 | 8 |
Stock-based compensation | 7 | (160) | (157) |
Executive compensation | 22 | 23 | 25 |
Tax credits | (70) | (76) | (64) |
Valuation allowance | (100) | 169 | 184 |
Other | 7 | 4 | 4 |
Provision for income taxes | $ 74 | $ 19 | $ 31 |
Income Taxes - Reconciliation_2
Income Taxes - Reconciliation of Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 605 | $ 1,061 |
Credit carryforwards | 388 | 318 |
Lease liability | 178 | 152 |
Capitalized research and development | 262 | 0 |
Depreciation and amortization | 553 | 587 |
Other | 159 | 126 |
Total deferred tax assets | 2,145 | 2,244 |
Less valuation allowance | (1,228) | (1,326) |
Deferred tax assets net | 917 | 918 |
Deferred tax liabilities: | ||
Right of use asset | (162) | (141) |
Other | (129) | (94) |
Net deferred tax assets | $ 626 | $ 683 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Detail) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Taxes [Line Items] | ||||
Operating loss carryforward | $ 2,000 | |||
Tax credit carryforwards | 388 | $ 318 | ||
Tax credit carryforwards | 1,500 | |||
Valuation allowance (decrease) increase | 98 | 197 | $ 210 | |
Total unrecognized tax benefit | 159 | 124 | $ 81 | $ 37 |
Unrecognized tax benefits that would impact effective tax rate | 31 | |||
Unrecognized tax benefits, income tax interest and penalties accrued | 5 | $ 4 | ||
Federal | ||||
Income Taxes [Line Items] | ||||
Tax credit carryforwards | 313 | |||
State | ||||
Income Taxes [Line Items] | ||||
Tax credit carryforwards | $ 229 |
Income Taxes - Reconciliation_3
Income Taxes - Reconciliation of Beginning and Ending Balance of Total Unrecognized Tax Benefits (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Reconciliation of beginning and ending balance of total unrecognized tax benefits | |||
Balance, beginning period | $ 124 | $ 81 | $ 37 |
Gross increases - tax positions in prior year | 0 | 5 | 6 |
Gross decreases - tax positions in prior period | (1) | 0 | (1) |
Gross increases - tax positions in current period | 38 | 38 | 39 |
Lapse of statute of limitations | 0 | 0 | 0 |
Settlements | (2) | 0 | 0 |
Balance, end of period | $ 159 | $ 124 | $ 81 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Detail) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Aug. 31, 2020 | |
Operating Leased Assets [Line Items] | ||||
Operating lease costs | $ 112 | $ 100 | $ 83 | |
Operating lease liabilities, payments | 75 | |||
Right-of-use assets obtained in exchange for operating lease liabilities | $ 192 | $ 223 | ||
Weighted-average remaining lease term | 10 years | |||
Weighted-average discount rate | 3.50% | |||
Undiscounted cash flows | $ 103 | |||
Unrecognized tax benefits | 31 | |||
2030 Notes | ||||
Operating Leased Assets [Line Items] | ||||
Principal | $ 1,500 | $ 1,500 | ||
Minimum | ||||
Operating Leased Assets [Line Items] | ||||
Operating lease terms | 10 years | |||
Maximum | ||||
Operating Leased Assets [Line Items] | ||||
Operating lease terms | 12 years |
Commitments and Contingencies_2
Commitments and Contingencies - Annual Future Minimum Payments Under Operating Leases / Facility Exit Obligation (Detail) $ in Millions | Dec. 31, 2022 USD ($) |
Operating Leased Assets [Line Items] | |
2023 | $ 115 |
2024 | 100 |
2025 | 100 |
2026 | 81 |
2027 | 71 |
Thereafter | 428 |
Total operating lease payments | 895 |
Less: imputed interest | (149) |
Present value of operating lease liabilities | 746 |
Purchase Obligations | |
2023 | 289 |
2024 | 219 |
2025 | 98 |
2026 | 69 |
2027 | 542 |
Thereafter | 54 |
Total | 1,271 |
Potential cancellation penalty | 56 |
Capacity | |
Purchase Obligations | |
Total | $ 500 |
Information about Geographic _3
Information about Geographic Areas and Products - Revenues by Geographic Area (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Segment Reporting Information [Line Items] | |||
Total revenues | $ 7,245 | $ 5,896 | $ 4,519 |
North America | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 4,723 | 3,752 | 2,960 |
EMEA | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 1,778 | 1,551 | 1,132 |
Asia Pacific and other | |||
Segment Reporting Information [Line Items] | |||
Total revenues | $ 744 | $ 593 | $ 427 |
Information about Geographic _4
Information about Geographic Areas and Products - Property and Equipment, Net by Geographic Area (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Segment Reporting Information [Line Items] | |||
Property and equipment, net | $ 1,053 | $ 766 | |
Percentage of U.S. revenues in North America | 94% | 94% | 94% |
Percentage of U.S. net property and equipment in North America | 85% | 84% | |
North America | |||
Segment Reporting Information [Line Items] | |||
Property and equipment, net | $ 664 | $ 484 | |
EMEA | |||
Segment Reporting Information [Line Items] | |||
Property and equipment, net | 221 | 176 | |
Asia Pacific and other | |||
Segment Reporting Information [Line Items] | |||
Property and equipment, net | $ 168 | $ 106 |
Information about Geographic _5
Information about Geographic Areas and Products - Subscription Revenues (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Segment Reporting Information [Line Items] | |||
Subscription revenues | $ 7,245 | $ 5,896 | $ 4,519 |
Digital workflow products | |||
Segment Reporting Information [Line Items] | |||
Subscription revenues | 6,077 | 4,882 | 3,749 |
ITOM products | |||
Segment Reporting Information [Line Items] | |||
Subscription revenues | 814 | 691 | 537 |
Total subscription revenues | |||
Segment Reporting Information [Line Items] | |||
Subscription revenues | $ 6,891 | $ 5,573 | $ 4,286 |