Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 22, 2018 | |
Entity Information [Line Items] | ||
Entity Registrant Name | PROS HOLDINGS, INC. | |
Entity Central Index Key | 1,392,972 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 37,149,951 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 281,889 | $ 160,505 |
Trade and other receivables, net of allowance of $981 and $760, respectively | 46,170 | 32,484 |
Deferred Costs, Current | 3,413 | 3,137 |
Prepaid and other current assets | 7,123 | 5,930 |
Total current assets | 338,595 | 202,056 |
Property and equipment, net | 14,855 | 14,007 |
Deferred Costs, Noncurrent | 11,481 | 3,194 |
Intangible Assets, Net (Excluding Goodwill) | 21,229 | 26,929 |
Goodwill | 38,373 | 38,458 |
Other long term assets, net | 4,643 | 4,039 |
Total assets | 429,176 | 288,683 |
Current liabilities: | ||
Accounts payable | 5,542 | 2,976 |
Accrued liabilities | 6,313 | 6,733 |
Accrued payroll and other employee benefits | 16,375 | 16,712 |
Deferred Revenue, Current | 100,504 | 75,604 |
Total current liabilities | 128,734 | 102,025 |
Long-term deferred revenue | 14,492 | 19,591 |
Convertible Debt, Noncurrent | 222,124 | 213,203 |
Other Liabilities, Noncurrent | 815 | 843 |
Total liabilities | 366,165 | 335,662 |
Commitments and contingencies (Note 11) | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value, 5,000,000 shares authorized; none issued | 0 | 0 |
Common stock, $0.001 par value, 75,000,000 shares authorized; 41,556,620 and 36,356,760 shares issued, respectively; 37,139,035 and 31,939,175 shares outstanding, respectively | 42 | 36 |
Additional paid-in capital | 360,021 | 207,924 |
Treasury stock, 4,417,585 common shares, at cost | (13,938) | (13,938) |
Retained Earnings (Accumulated Deficit) | (279,948) | (238,185) |
Accumulated Other Comprehensive Income (Loss), Net of Tax | (3,166) | (2,816) |
Total stockholders' equity | 63,011 | (46,979) |
Total liabilities and stockholders' equity | $ 429,176 | $ 288,683 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Allowance for bad debts | $ 981,000 | $ 760,000 |
Preferred stock - par value | $ 0.001 | $ 0.001 |
Preferred stock - shares authorized | 5,000,000 | 5,000,000 |
Preferred stock - shares issued | 0 | 0 |
Common stock - par value | $ 0.001 | $ 0.001 |
Common stock - shares authorized | 75,000,000 | 75,000,000 |
Common stock - shares issued | 41,556,620 | 36,356,760 |
Common stock - shares outstanding | 37,139,035 | 31,939,175 |
Treasury stock - shares | 4,417,585 | 4,417,585 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenue: | ||||
Subscription | $ 23,888 | $ 15,809 | $ 66,876 | $ 41,457 |
Maintenance and support | 16,238 | 17,124 | 49,037 | 52,332 |
Total subscription, maintenance and support revenue | 40,126 | 32,933 | 115,913 | 93,789 |
License | 1,093 | 603 | 2,854 | 3,883 |
Services | 7,856 | 8,401 | 25,644 | 24,800 |
Total revenue | 49,075 | 41,937 | 144,411 | 122,472 |
Cost of revenue: | ||||
Cost of subscription | 9,053 | 7,868 | 26,308 | 19,605 |
Cost of maintenance and support | 2,852 | 2,859 | 8,762 | 8,886 |
Cost of subscription, maintenance and support | 11,905 | 10,727 | 35,070 | 28,491 |
Cost of license | 63 | 73 | 200 | 210 |
Cost of services | 7,508 | 6,924 | 22,451 | 21,718 |
Cost of Revenue | 19,476 | 17,724 | 57,721 | 50,419 |
Gross profit | 29,599 | 24,213 | 86,690 | 72,053 |
Operating Expenses | ||||
Selling and Marketing Expense | 17,513 | 16,980 | 53,671 | 50,625 |
General and Administrative Expense | 10,179 | 10,324 | 31,013 | 30,514 |
Research and development | 13,773 | 14,046 | 41,517 | 42,429 |
Business Combination, Acquisition Related Costs | 0 | 613 | 95 | 613 |
Income from operations | (11,866) | (17,750) | (39,606) | (52,128) |
Other income (expense): | ||||
Convertible debt interest and amortization | (4,266) | (4,094) | (12,671) | (9,078) |
Other Nonoperating Income (Expense) | 521 | 347 | 967 | 315 |
Loss before income tax provision | (15,611) | (21,497) | (51,310) | (60,891) |
Income tax provision (benefit) | 175 | (271) | 176 | 55 |
Net income (loss) | $ (15,786) | $ (21,226) | $ (51,486) | $ (60,946) |
Earnings Per Share, Basic | $ (0.44) | $ (0.67) | $ (1.53) | $ (1.93) |
Net earnings (loss) per share: | ||||
Earnings Per Share, Basic and Diluted | $ (0.44) | $ (0.67) | $ (1.53) | $ (1.93) |
Weighted average number of shares: | ||||
Weighted Average Number of Shares Outstanding, Basic and Diluted | 35,676 | 31,867 | 33,568 | 31,527 |
Weighted Average Number of Shares Outstanding, Basic | 35,676 | 31,867 | 33,568 | 31,527 |
Other comprehensive income, net of tax: | ||||
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax | $ (88) | $ 329 | $ (350) | $ 1,705 |
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Net of Tax | 0 | 6 | 0 | (4) |
Other comprehensive income | (88) | 335 | (350) | 1,701 |
Comprehensive income (loss) | $ (15,874) | $ (20,891) | $ (51,836) | $ (59,245) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Operating activities: | ||
Net income (loss) | $ (51,486) | $ (60,946) |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation, Depletion and Amortization | 9,785 | 7,047 |
Amortization of Financing Costs and Discounts | 8,958 | 6,363 |
Share-based compensation | 16,355 | 17,665 |
Deferred Income Tax Expense (Benefit) | (252) | (453) |
Provision for doubtful accounts | 215 | 0 |
Loss on Disposition of Assets | 37 | 0 |
Changes in operating assets and liabilities: | ||
Accounts and unbilled receivables | (13,898) | (141) |
Increase (Decrease) in Deferred Costs | (1,517) | 0 |
Prepaid expenses and other assets | (1,884) | (6,301) |
Accounts payable | 2,569 | 1,734 |
Accrued liabilities | (533) | (473) |
Accrued payroll and other employee benefits | (342) | (5,722) |
Deferred revenue | 22,508 | 11,379 |
Net cash provided by (used in) operating activities | (9,485) | (29,848) |
Investing activities: | ||
Purchases of property and equipment | (1,406) | (1,235) |
Payments to Acquire Businesses, Net of Cash Acquired | 0 | 34,130 |
Internal-use software development costs capitalized | (3,686) | (1,996) |
Payments to Acquire Intangible Assets | 0 | 75 |
Proceeds from Maturities, Prepayments and Calls of Available-for-sale Securities | 0 | 15,992 |
Net cash provided by (used in) investing activities | (5,092) | (21,444) |
Financing activities: | ||
Exercise of stock options | 1,142 | 6,347 |
Proceeds from Stock Plans | 1,720 | 1,535 |
Tax withholding related to net share settlement of restricted stock units | (9,153) | (7,243) |
Proceeds from Issuance of Common Stock, Net | 141,954 | 0 |
Repayments of Notes Payable | (54) | (155) |
Proceeds from Convertible Debt | 0 | 93,500 |
Net cash provided by (used in) financing activities | 135,609 | 91,161 |
Effect of Exchange Rate on Cash and Cash Equivalents | 352 | (549) |
Net change in cash and cash equivalents | 121,384 | 39,320 |
Cash and cash equivalents: | ||
Beginning of period | 160,505 | 118,039 |
End of period | 281,889 | 157,359 |
Revolving Credit Facility [Member] | ||
Financing activities: | ||
Payments of Debt Issuance Costs | 0 | (150) |
Convertible Debt [Member] | ||
Financing activities: | ||
Payments of Debt Issuance Costs | $ 0 | $ (2,673) |
Organization and Nature of Oper
Organization and Nature of Operations | 9 Months Ended |
Sep. 30, 2018 | |
Organization and Nature of Operations [Abstract] | |
Organization and nature of operations | Organization and Nature of Operations PROS Holdings, Inc., a Delaware corporation, through its operating subsidiaries (collectively, the "Company" or "PROS"), provides end-to-end Artificial Intelligence ("AI")-powered solutions that enable fast, frictionless and personalized buying experiences for businesses to compete in today’s digital economy. PROS solutions provide actionable intelligence that enable dynamic buying experiences for both business-to-business ("B2B") and business-to-consumer ("B2C") companies across industry verticals. The Company's end-to-end solutions drive pricing optimization, sales effectiveness and revenue management by enabling companies to create data-driven, personalized buying experiences. Companies can use PROS solutions to assess the market environment in real time to deliver customized prices and offers. PROS solutions enable buyers to move fluidly across PROS customers’ direct sales, online, mobile and partner channels and have personalized experiences however those customers choose to buy. The Company's data science and AI are designed to reduce time and complexity and add actionable intelligence to help PROS customers outperform in their markets. The Company provides standardized configurations of its software based on the industries it serves and offers professional services to configure these solutions to meet the specific needs of each customer. |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Notes) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | 2. Summary of Significant Accounting Policies The accompanying unaudited condensed consolidated financial statements reflect the application of significant accounting policies as described below and elsewhere in these notes to the condensed consolidated financial statements. Basis of presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") for interim financial reporting and applicable quarterly reporting regulations of the Securities and Exchange Commission ("SEC"). In management's opinion, the accompanying interim unaudited condensed consolidated financial statements include all adjustments necessary for a fair statement of the financial position of the Company as of September 30, 2018 , the results of operations for the three and nine months ended September 30, 2018 and 2017 , and cash flows for the nine months ended September 30, 2018 and 2017 . Certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with GAAP have been omitted from these interim unaudited condensed consolidated financial statements pursuant to the rules and regulations of the SEC. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017 ("Annual Report") filed with the SEC. The condensed consolidated balance sheet as of December 31, 2017 was derived from the Company's audited consolidated financial statements but does not include all disclosures required under GAAP. Changes in accounting policies The Company has consistently applied these accounting policies to all periods presented in these consolidated financial statements, except for the Company's adoption of certain accounting standards described in more detail under " Recently adopted accounting pronouncements " in this Note 2 below. Basis of consolidation The unaudited condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and a subsidiary where the Company exercises control. All intercompany transactions and balances have been eliminated in consolidation. The functional currency of PROS France SAS ("PROS France") is the euro. The financial statements of this subsidiary are translated into U.S. dollars using period-end rates of exchange for assets and liabilities, historical rates of exchange for equity, and average rates of exchange for the period for revenue and expenses. Translation gains (losses) are recorded in accumulated other comprehensive loss as a component of stockholders' equity. Dollar amounts The dollar amounts presented in the tabular data within these footnote disclosures are stated in thousands of dollars, except per share amounts, or as noted within the context of each footnote disclosure. Use of estimates The Company makes estimates and assumptions in the preparation of its unaudited condensed consolidated financial statements, and its estimates and assumptions may affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. The complexity and judgment required in the Company's estimation process, as well as issues related to the assumptions, risks and uncertainties inherent in the application of the percentage-of-completion method of accounting, affect the amounts of revenue, expenses, unbilled receivables and deferred revenue. Estimates are also used for, but not limited to, receivables, allowance for doubtful accounts, useful lives of assets, depreciation and amortization, income taxes and deferred tax asset valuation, valuation of stock options, other current liabilities and accrued liabilities. Numerous internal and external factors can affect estimates. The critical accounting policies related to estimates and judgments are discussed in the Annual Report under management's discussion and analysis of financial condition and results of operations and are also discussed under Item 2 "Management's discussion and analysis of financial condition and results of operations ". Revenue recognition The Company derives its revenues primarily from subscription services, professional services, perpetual licensing of its software products and associated software maintenance and support services. The Company determines revenue recognition through the following steps: • Identification of the contract, or contracts, with a customer; • Identification of the performance obligations in the customer contract(s); • Determination of the transaction price; • Allocation of the transaction price to each performance obligation in the customer contract(s); and • Recognition of revenue when, or as, the Company satisfies a performance obligation. Subscription services revenue Subscription services revenue primarily consists of fees that give customers access to one or more of the Company's cloud applications with routine customer support. Subscription services revenue is generally recognized ratably over the contractual term of the arrangement beginning on the date that the Company's service is made available to the customer. The Company's subscription contracts do not provide customers with the right to take possession of the software supporting the applications and, as a result, are accounted for as service contracts. The Company's subscription contracts are generally two to five years in length, billed annually in advance, and are non-cancelable. Maintenance and support revenue Maintenance and support revenue includes post-implementation customer support and the right to unspecified software updates and enhancements. The Company recognizes revenue from maintenance arrangements ratably over the period in which the services are provided. The Company's maintenance and support contracts are generally one to three years in length, billed annually in advance, and non-cancelable. License revenue Licenses for on-premise software provide the customer with a right to use the software as it exists when made available to the customer. License revenue from distinct on-premises licenses is recognized at the point in time when the software is made available to the customer. For customer contracts that contain license and professional services that are not considered distinct, the license and professional services are determined to be a single performance obligation and recognized over time based upon the Company's efforts to satisfy the performance obligation. Professional services revenue Professional services revenue primarily consists of fees for deployment and configuration services, as well as training. Professional services revenues are generally recognized as the services are rendered for time and material contracts, or on a proportional performance basis for fixed price contracts. The majority of the Company's professional services contracts are on a time and materials basis. Training revenues are recognized as the services are rendered. Significant judgments are required in determining whether professional services that are contained in customer subscription services contracts are considered distinct, including whether the professional services are capable of being distinct and whether they are separately identifiable in the customer contract. Professional services that are deemed to be distinct are accounted for as a separate performance obligation and revenue is recognized as the services are performed. If determined that the professional services are not considered distinct, the professional services and the subscription services are determined to be a single performance obligation and revenue is recognized over the contractual term of the subscription beginning on the date that subscription services are made available to the customer. Customer Contracts with Multiple Performance Obligations A portion of the Company's customer contracts contain multiple performance obligations. Significant judgment is required in determining whether multiple performance obligations contained in customer contracts are capable of being distinct and whether they are separately identifiable in customer contracts. If the obligations are determined to be distinct, each separate performance obligation is recognized when, or as, the Company satisfies the performance obligation. If the obligations are not determined to be distinct, they are recognized as a single combined performance obligation. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. Business combinations The Company records tangible and intangible assets acquired and liabilities assumed in business combinations under the acquisition method of accounting. Amounts paid for each acquisition are allocated to the assets acquired and liabilities assumed based on their fair values at the date of acquisition. Significant management judgments and assumptions are required in determining the fair value of acquired assets and liabilities, particularly acquired intangible assets. The valuation of purchased intangible assets is based upon estimates of the future performance and cash flows from the acquired business. Each asset is measured at fair value from the perspective of a market participant. The Company uses its best estimates and assumptions to accurately assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. The Company's estimates are inherently uncertain and subject to refinement. During the measurement period, which may be up to 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. Uncertain tax positions and tax-related valuation allowances are initially established in connection with a business combination as of the acquisition date. During the measurement period, the Company reevaluates these estimates and assumptions quarterly and records any adjustments to the Company's preliminary estimates to goodwill. Any subsequent adjustments are recorded to the Company’s condensed consolidated statements of operations upon the earlier of the conclusion of the measurement period and final determination of the fair value of assets acquired or liabilities assumed. Internal-use software Costs incurred to develop internal-use software during the development stage are capitalized, stated at cost, and amortized using the straight-line method over the estimated useful lives of the assets. Development stage costs generally include salaries and personnel costs and third-party contractor expenses associated with internal-use software configuration, coding, installation and testing. For the three months ended September 30, 2018 and 2017 , the Company capitalized $1.2 million and $0.7 million , respectively, of internal-use software development costs related to cloud-based offerings, and for the nine months ended September 30, 2018 and 2017 , the Company capitalized $3.7 million and $2.2 million , respectively, of internal-use software development costs related to cloud-based offerings. Capitalized internal-use software development costs related to cloud-based offerings are amortized using the straight-line method over the useful life of the asset. For the three and nine months ended September 30, 2018 , the Company amortized $0.3 million and $0.7 million , respectively, of capitalized internal-use software development costs, and for the three and nine months ended September 30, 2017 , the Company amortized an immaterial amount of capitalized internal-use software development costs. Capitalized software for internal use is included in property and equipment, net in the unaudited condensed consolidated balance sheets. Amortization of capitalized internal-use software development costs, once it commences, is included in cost of subscription and cost of services revenues in the accompanying unaudited condensed consolidated statements of comprehensive income (loss). Impairment of long-lived assets Long-lived assets are reviewed for impairment whenever an event or change in circumstances indicates that the carrying amount of an asset or group of assets may not be recoverable. The impairment review includes comparison of future cash flows expected to be generated by the asset or group of assets with the associated assets' carrying value. If the carrying value of the asset or group of assets exceeds its expected future cash flows (undiscounted and without interest charges), an impairment loss is recognized to the extent that the carrying amount of the asset exceeds its fair value. The Company recorded no impairment charges during the three and nine months ended September 30, 2018 and 2017 . Noncash share-based compensation The Company measures all share-based payments to its employees based on the grant date fair value of the awards and recognizes expenses in the Company's unaudited consolidated statement of comprehensive income (loss) on a straight-line basis over the periods during which the recipient is required to perform services (generally over the vesting period of the awards). To date, the Company has granted stock options, Restricted Stock Units ("RSUs"), stock settled Stock Appreciation Rights ("SARs") and Market Stock Units ("MSUs"). RSUs include (i) time-based awards and (ii) market-based awards in which the number of shares that vest are based upon attainment of target average per share closing price over a requisite trading period. MSUs are performance-based awards in which the number of shares that vest are based upon the Company's relative stockholder return. The following table presents the number of shares or units outstanding for each award type as of September 30, 2018 and December 31, 2017 , respectively, (in thousands): Award type September 30, 2018 December 31, 2017 Stock options — 135 Restricted stock units (time-based) 1,988 2,133 Restricted stock units (market-based) 230 345 Stock appreciation rights 287 356 Market stock units 404 387 Stock options, time-based RSUs and SARs vest ratably between one and four years. Market-based RSUs vest if the average trailing closing price of the Company's common stock meets certain minimum performance hurdles for at least 105 calendar days prior to September 9, 2020, with 25% vesting at $27 , an additional 25% vesting at $33 , and the remaining 50% vesting at $41 . The actual number of MSUs that will be eligible to vest is based on the total stockholder return of the Company relative to the total stockholder return of the Russell 2000 Index ("Index") over their respective performance periods, as defined by each award's plan documents. The Company did not grant any stock options or SARs during the three and nine months ended September 30, 2018 or 2017 . The fair value of the time-based RSUs is based on the closing price of the Company's stock on the date of grant. The Company estimates the fair value and the derived service period of the market-based RSUs on the date of grant using a 'Monte Carlo' simulation model. The model requires the use of a number of assumptions including the expected volatility of the Company's stock, its risk-free interest rate and expected dividends. The Company's expected volatility at the date of grant was based on the historical volatility of the Company over the performance period. The fair value of the market-based RSUs is expensed over the derived service period for each separate vesting tranche. The derived service period for the vesting tranches of the market-based RSUs ranges between 1.01 and 1.98 years. The Company estimates the fair value of MSUs on the date of grant using a 'Monte Carlo' simulation model. The determination of fair value of the MSUs is affected by the Company's stock price and a number of assumptions including the expected volatilities of the Company's stock and the Index, its risk-free interest rate and expected dividends. The Company's expected volatility at the date of grant was based on the historical volatilities of the Company and the Index over the performance period. The weighted average assumptions used to value the MSUs granted during the three and nine months ended September 30, 2018 were as follows: September 30, 2018 Volatility 43.67% Risk-free interest rate 2.12% Expected option life in years 2.97 Dividend yield — Earnings per share The Company computes basic earnings (loss) per share by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding. Diluted earnings (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares and dilutive potential common shares then outstanding. Diluted earnings per share reflect the assumed conversion of all dilutive securities, using the treasury stock method. Dilutive potential common shares consist of shares issuable upon the exercise of stock options, shares of unvested restricted stock units, and settlement of stock appreciation rights. When the Company incurs a net loss, the effect of the Company's outstanding stock options, stock appreciation rights and restricted stock units are not included in the calculation of diluted earnings (loss) per share as the effect would be anti-dilutive. Accordingly, basic and diluted net loss per share are identical. Cost method investment Investments in equity securities of privately held companies without readily determinable fair value, where the Company does not exercise significant influence over the investee, are recorded using the cost method of accounting, carrying the investment at historical cost. If there are no identified events or changes in circumstances that might have an adverse effect on the cost method investments, the Company does not estimate the investments' fair value. For all investments, if a decline in the fair value of an investment below the carrying value is determined to be other-than-temporary, such investment is written down to its estimated fair value with a charge to current earnings. At both September 30, 2018 and December 31, 2017 , the Company held $2.0 million of equity securities in a privately held company. This investment is accounted for under the cost method and the Company measures it at fair value on a nonrecurring basis when it is deemed to be other-than-temporarily impaired. The Company estimates fair value of its cost method investment considering available information such as pricing in recent rounds of financing, current cash positions, earnings and cash flow forecasts, recent operational performance and any other readily available market data, which represents level 3 in the fair value hierarchy as defined by Accounting Standard Codification ("ASC") 820, " Fair Value Measurement and Disclosure " ("ASC 820"). As of September 30, 2018 , the Company determined there were no other-than-temporary impairments on its cost method investment. Fair value measurement The Company's financial assets that are included in cash and cash equivalents and that are measured at fair value on a recurring basis consisted of $131.3 million and $131.4 million at September 30, 2018 and December 31, 2017 , respectively, and were invested in treasury money market funds. The fair value of the treasury money market funds is determined based on quoted market prices, which represents level 1 in the fair value hierarchy as defined by ASC 820. Trade and other receivables Trade and other receivables are primarily comprised of trade receivables, net of allowance for doubtful accounts, contract assets and unbilled receivables. The Company records trade accounts receivable for its unconditional rights to consideration arising from the Company's performance under contracts with customers. The Company's standard billing terms are that payment is due upon receipt of invoice, payable generally within thirty to sixty days. The carrying value of such receivables, net of the allowance for doubtful accounts, represents their estimated net realizable value. The Company estimates its allowance for doubtful accounts for specific trade receivable balances based on historical collection trends, the age of outstanding trade receivables, existing economic conditions, and any financial security associated with the receivables. Contract assets represent conditional rights to consideration that have been recognized as revenue in advance of billing the customer. Unbilled receivables represent unconditional rights to consideration arising from contingent revenue, that have been recognized as revenue in advance of billing the customer. Deferred costs Sales commissions earned by the Company's sales representatives are considered incremental and recoverable costs of obtaining a customer contract. Sales commissions are deferred and amortized on a straight-line basis over the period of benefit which the Company has determined to be five to eight years. The Company determined the period of benefit by taking into consideration its customer contracts, expected renewals as the Company currently does not pay an incremental sales commission, the Company's technology and other factors. The Company also defers amounts earned by employees other than sales representatives who earn incentive payments under compensation plans that are also tied to the value of customer contracts acquired. Deferred costs were $14.9 million and $6.3 million as of September 30, 2018 and December 31, 2017 , respectively. Amortization expense for the deferred costs was $0.8 million for both the three months ended September 30, 2018 and 2017 , and $2.1 million and $1.8 million for the nine months ended September 30, 2018 and 2017 , respectively. Deferred implementation costs The Company capitalizes certain contract fulfillment costs, including personnel and other costs (such as hosting, employee salaries, benefits and payroll taxes), that are associated with arrangements where professional services are not distinct from other undelivered obligations in its customer contracts. The Company analyzes implementation costs and capitalizes those costs that are directly related to customer contracts, that are expected to be recoverable, and that enhance the resources which will be used to satisfy the undelivered performance obligations in those contracts. Deferred implementation costs are amortized ratably over the remaining contract term once the revenue recognition criteria for the respective performance obligation has been met and revenue recognition commences. Deferred implementation costs were $3.5 million and $2.2 million as of September 30, 2018 and December 31, 2017 , respectively. Amortization expense for the deferred implementation costs was $0.1 million for both the three months ended September 30, 2018 and 2017 , and $0.4 million and $0.2 million for the nine months ended September 30, 2018 and 2017 , respectively. Deferred implementation costs are included in prepaid and other current assets and other long-term assets in the condensed consolidated balance sheets. Amortization of deferred implementation costs is included in cost of subscription and cost of services revenues in the accompanying unaudited condensed consolidated statements of comprehensive income (loss). Deferred revenue Deferred revenue primarily consists of customer invoicing in advance of revenues being recognized. The Company generally invoices its customers annually in advance for subscription services and maintenance and support services. Deferred revenue that is anticipated to be recognized during the next twelve-month period is recorded as current deferred revenue and the remaining portion is recorded as long-term. Credit facility As of September 30, 2018 , the Company had no outstanding borrowings under its $50.0 million secured Credit Agreement ("Revolver") with the lenders party thereto and Wells Fargo Bank, National Association as agent for the lenders party thereto. The Company included $0.1 million of unamortized debt issuance costs related to the Revolver in prepaid and other current assets and other long-term assets in the condensed consolidated balance sheets. For the three and nine months ended September 30, 2018 and 2017 , the Company recorded an immaterial amount of amortization of debt issuance cost which is included in other income (expense), net in the unaudited condensed consolidated statements of comprehensive income (loss). Income taxes The Company recorded an income tax provision of $0.2 million and a tax benefit of $0.3 million for the three months ended September 30, 2018 and 2017 , respectively, and a tax provision of $0.2 million and $0.1 million for the nine months ended September 30, 2018 and 2017 , respectively, primarily related to foreign income taxes and withholding taxes offset by additional release of the valuation allowance. The effective tax rate for the three months ended September 30, 2018 and 2017 was (1)% and 1% , respectively, and for the nine months ended September 30, 2018 and 2017 was 0% . The income tax rates vary from the federal and state statutory rates primarily due to the valuation allowances on the Company’s deferred tax assets and foreign and state taxes not based on income. During the nine months ended September 30, 2018 , the Company finalized the deferred tax liabilities assumed upon the acquisition of PROS Travel Commerce, Inc. (formerly Vayant Travel Technologies, Inc.) ("Vayant") resulting in an additional release of valuation allowance recorded in the period. The Company estimates its annual effective tax rate at the end of each quarterly period. Jurisdictions with a projected loss for the year where no tax benefit can be recognized due to the valuation allowances on the Company’s deferred tax assets are excluded from the estimated annual effective tax rate. The impact of such an exclusion could result in a higher or lower effective tax rate during a particular quarter depending on the mix and timing of actual earnings versus annual projections. Recently adopted accounting pronouncements Topic 606 In May 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-09, " Revenue from Contracts with Customers (Topic 606) " ("Topic 606"). Topic 606 replaces the prior revenue recognition requirements in ASC 605, "Revenue Recognition" ("Topic 605" or "Prior Guidance") with a comprehensive revenue measurement and recognition standard, and expanded disclosure requirements. The new standard also provides guidance on the recognition of costs related to obtaining customer contracts. Topic 606 took effect in the first quarter of 2018, including interim periods within that reporting period. The Company adopted Topic 606 and applied Topic 606 to those contracts which were not complete as of January 1, 2018 using the modified retrospective method by recognizing the cumulative effect of initially applying the new standard as an adjustment to the opening balance of accumulated deficit, while prior period amounts are not adjusted and continue to be reported in accordance with the Company's historic accounting under the Prior Guidance. The most significant impact of Topic 606 relates to the Company's accounting for arrangements that include term-based software licenses bundled with maintenance and support, the deferral of incremental costs of obtaining a contract with a customer, including the period of amortization of such costs, and additional disclosures. Under the Prior Guidance, revenue attributable to term-based software licenses was recognized ratably over the term of the arrangement when vendor-specific objective evidence ("VSOE") did not exist for the undelivered maintenance and support element because it was not sold separately. Topic 606 does not require VSOE for undelivered elements to separate revenue for the delivered software licenses. Accordingly, under the new standard, the Company is required to recognize as revenue a portion of the arrangement fee upon delivery of the software license. The adjustment to the opening balance sheet of the accumulated deficit for all revenue related items was a decrease of approximately $2.7 million . Topic 606 also requires the Company to capitalize and amortize the costs to obtain a contract over the expected period of customer benefit. The Company previously capitalized and amortized only direct and incremental commission costs over the term of the related contract. The expected period of customer benefit determined under Topic 606 is longer than the typical two to five year term of the Company's contracts as required under the Prior Guidance. As a result of applying Topic 606, the Company recorded a decrease to the opening balance sheet of the accumulated deficit for costs to obtain a contract of approximately $7.0 million . Topic 230 In August 2016, the FASB issued ASU 2016-15, " Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments " which is intended to reduce the diversity in practice on classification of certain transactions in the statement of cash flows. The Company adopted this standard on January 1, 2018 and the adoption had no impact on its condensed consolidated financial statements and related disclosures. In November 2016, the FASB issued ASU 2016-18, " Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force " which is intended to define the presentation and related disclosures of restricted cash balances. The Company adopted this standard on January 1, 2018 and the adoption had no impact on its condensed consolidated financial statements and related disclosures. Recently issued accounting pronouncements not yet adopted In February 2016, the FASB issued ASU 2016-02, " Leases (Topic 842) " ("Topic 842") which requires the lessee to recognize most leases on the balance sheet thereby resulting in the recognition of lease assets and liabilities for those leases currently classified as operating leases. Lessor accounting remains largely unchanged from current guidance, however, Topic 842 provides improvements that are intended to align lessor accounting with the lessee model and with updated revenue recognition guidance. This standard is effective for interim and annual reporting periods beginning after December 15, 2018. The Company is currently assessing the impact of Topic 842 on its condensed consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, " Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment " ("Topic 350"), which eliminates step two from the goodwill impairment test. Under the amendments in this standard, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The standard is effective for interim and annual reporting periods beginning after December 15, 2019; earlier adoption is permitted for goodwill impairment tests performed after January 1, 2017. The Company is currently assessing the impact of Topic 350 on its condensed consolidated financial statements. With the exception of the new standards discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the nine months ended September 30, 2018 , as compared to the recent accounting pronouncements described in the Company's Annual Report, that are of significance or potential significance to the Company. |
Deferred Revenue and Performanc
Deferred Revenue and Performance Obligation (Notes) | 9 Months Ended |
Sep. 30, 2018 | |
Deferred Revenue and Performance Obligation [Abstract] | |
Deferred revenue and performance obligation [Text Block] | Deferred Revenue and Performance Obligations Deferred Revenue For the three months ended September 30, 2018 and 2017 , the Company recognized approximately $32.4 million and $27.9 million , respectively, and for the nine months ended September 30, 2018 and 2017 , the Company recognized approximately $64.4 million and $57.4 million , respectively, in each case of revenue that was included in the deferred revenue balances at the beginning of the respective periods and primarily related to subscription services, maintenance and services. Performance Obligations As of September 30, 2018 , the Company expects to recognize approximately $309.4 million of revenue from remaining performance obligations. The Company expects to recognize revenue on approximately $149.8 million of these performance obligations over the next 12 months, with the balance recognized thereafter. |
Disaggregation of Revenue (Note
Disaggregation of Revenue (Notes) | 9 Months Ended |
Sep. 30, 2018 | |
Disaggregation of Revenue [Abstract] | |
Disaggregation of Revenue [Text Block] | Disaggregation of Revenue Revenue by Geography The geographic information in the table below is presented for the three and nine months ended September 30, 2018 and 2017 . The Company categorizes geographic revenues based on the location of the customer's headquarters. Because the Company's contracts are predominately denominated in U.S. dollars, it has limited exposure to foreign currency exchange risk as discussed under " Foreign Currency Exchange Risk " of Part I, Item 3 below. Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Revenue Percent Revenue Percent Revenue Percent Revenue Revenue United States of America $ 16,610 34 % $ 15,829 38 % $ 50,538 35 % $ 46,858 38 % Europe 15,019 31 % 12,574 30 % 45,110 31 % 35,056 29 % The rest of the world 17,446 35 % 13,534 32 % 48,763 34 % 40,558 33 % Total revenue $ 49,075 100 % $ 41,937 100 % $ 144,411 100 % $ 122,472 100 % |
Impact on Financial Statement o
Impact on Financial Statement of Changes in Accounting Policies (Notes) | 9 Months Ended |
Sep. 30, 2018 | |
Impact of Adoption of New Revenue Standard [Abstract] | |
New Accounting Pronouncements and Changes in Accounting Principles [Text Block] | 5. Impact on Financial Statements of Changes in Accounting Policies The Company applied Topic 606 using the modified retrospective method by recognizing the cumulative effect of initially applying Topic 606 as an adjustment to the opening balance sheet at January 1, 2018. Therefore, the comparative information has not been adjusted and continues to be reported under Topic 605. The differences between balances under Topic 606 and Topic 605 are detailed below: September 30, 2018 (in thousands) As Reported Adjustments Balances Under Topic 605 Balance Sheets Trade and other receivables, net of allowance $ 46,170 $ (352 ) $ 45,818 Deferred costs, current 3,413 (192 ) 3,221 Long-term deferred costs 11,481 (7,859 ) 3,622 Deferred revenue, current 100,504 1,292 101,796 Long-term deferred revenue 14,492 1,677 16,169 Accumulated deficit $ (279,948 ) $ (11,372 ) $ (291,320 ) Three Months Ended September 30, 2018 (in thousands, except per share amounts) As Reported Adjustments Balances Under Topic 605 Income Statements Total revenue $ 49,075 $ (500 ) $ 48,575 Total cost of revenue 19,476 216 19,692 Selling and marketing 17,513 379 17,892 General and administrative 10,179 (80 ) 10,099 Research and development 13,773 (59 ) 13,714 Net loss (15,786 ) (956 ) (16,742 ) Basic and diluted loss per share $ (0.44 ) $ (0.03 ) $ (0.47 ) Nine Months Ended September 30, 2018 (in thousands, except per share amounts) As Reported Adjustments Balances Under Topic 605 Income Statements Total revenue $ 144,411 $ (684 ) $ 143,727 Total cost of revenue 57,721 328 58,049 Selling and marketing 53,671 1,028 54,699 General and administrative 31,013 (239 ) 30,774 Research and development 41,517 (176 ) 41,341 Net loss (51,486 ) (1,625 ) (53,111 ) Basic and diluted loss per share $ (1.53 ) $ (0.05 ) $ (1.58 ) |
Business Combination (Notes)
Business Combination (Notes) | 9 Months Ended |
Sep. 30, 2018 | |
Business Acquisition [Line Items] | |
Business Combination Disclosure [Text Block] | Business Combination On August 3, 2017, the Company acquired Vayant, a privately held company based in Sofia, Bulgaria, for total cash consideration, net of cash acquired, of approximately $34.1 million . Vayant is a cloud software company that provides advanced shopping, merchandising and inspirational travel solutions. For the three and nine months ended September 30, 2018 , the Company has included $2.3 million and $7.0 million , respectively, of revenue and $1.6 million and $3.8 million , respectively, of net loss related to Vayant in its consolidated income statement. During the three and nine months ended September 30, 2018 , the Company incurred acquisition-related costs of zero and $0.1 million , respectively consisting primarily of integration costs and retention of key employees. During the three and nine months ended September 30, 2017 , the Company incurred acquisition-related costs of $0.6 million primarily related to advisory and legal fees, accounting and professional fees, and retention of key employees. All of the assets acquired and the liabilities assumed in the transaction have been recognized at their acquisition date fair values at August 3, 2017. The final allocation of the total purchase price for Vayant is as follows (in thousands): Cash $ 1,822 Other current assets 1,235 Noncurrent assets 86 Intangibles 18,600 Goodwill 17,052 Accounts payable and accrued liabilities (1,668 ) Deferred revenue (600 ) Deferred tax liability (526 ) Noncurrent liabilities (49 ) Net assets acquired $ 35,952 The following are the identifiable intangible assets acquired (in thousands) with respect to the Vayant acquisition, and their respective useful lives: Useful Life Amount (years) Developed technology $ 11,600 7 Customer relationships 7,000 5 Total $ 18,600 In performing the purchase price allocation, the Company considered, among other factors, its anticipated future use of the acquired assets, historical financial performance, and estimated cash flows from Vayant's products and services. The allocation resulted in acquired intangible assets of $18.6 million . The acquired intangible assets consisted of developed technology and customer relationships and were valued using the income approach in which the after-tax cash flows are discounted to present value. The cash flows are based on estimates used to price the transaction, and the discount rates applied were benchmarked with reference to the implied rate of return from the transaction model as well as the weighted average cost of capital. Additionally, the Company assumed certain liabilities in the acquisition, including deferred revenue with a fair value of $0.6 million as determined using a cost-plus profit approach. The Company made a preliminary determination that $0.5 million of net deferred tax liabilities were assumed on the acquisition date. During the nine months ended September 30, 2018 , the Company made a final determination upon filing of the pre-acquisition period tax return that $0.8 million of net deferred tax liabilities were assumed on the acquisition date. The measurement period adjustment of $0.3 million to the deferred tax liabilities recorded during the nine months ended September 30, 2018 resulted in an increase to the goodwill and a benefit to the income tax provision. The excess of the purchase price over the estimated amounts of net assets as of the effective date of the acquisition was allocated to goodwill. The factors contributing to the recognition of the amount of goodwill were based on several strategic and synergistic benefits that were expected to be realized from the Vayant acquisition. These benefits include the expectation that the combined company’s complementary products will strengthen the Company's modern commerce solutions for the travel industry. The Company believes the combined company will benefit from a broader global presence and, with the Company’s direct sales force and larger channel coverage, significant cross-selling opportunities. None of the goodwill is expected to be currently deductible for tax purposes. In accordance with applicable accounting standards, goodwill will not be amortized but instead will be tested for impairment at least annually, or more frequently if certain indicators are present. In the event that the management of the combined company determines that the value of goodwill has become impaired, the combined company will incur an accounting charge for the amount of the impairment during the fiscal quarter in which the determination is made. Pro Forma Financial Information The unaudited financial information in the table below summarizes the combined results of operations of the Company and Vayant, on a pro forma basis, for the three and nine months ended September 30, 2017 as though the Company had acquired Vayant on January 1, 2016. The pro forma information for all periods presented also includes the effect of business combination accounting resulting from the acquisition, including amortization charges from acquired intangible assets. Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except earnings per share) 2017 2017 Total revenue $ 42,738 $ 127,522 Net loss (23,150 ) (64,496 ) Earnings per share - basic and diluted $ (0.73 ) $ (2.05 ) |
Earnings per Share (Note)
Earnings per Share (Note) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per Share The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2018 and 2017 : Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except per share data) 2018 2017 2018 2017 Numerator: Net loss $ (15,786 ) $ (21,226 ) $ (51,486 ) $ (60,946 ) Denominator: Weighted average shares (basic) 35,676 31,867 33,568 31,527 Dilutive effect of potential common shares — — — — Weighted average shares (diluted) 35,676 31,867 33,568 31,527 Basic loss per share $ (0.44 ) $ (0.67 ) $ (1.53 ) $ (1.93 ) Diluted loss per share $ (0.44 ) $ (0.67 ) $ (1.53 ) $ (1.93 ) Dilutive potential common shares consist of shares issuable upon the exercise of stock options, settlement of SARs, and the vesting of RSUs and MSUs. Potential common shares determined to be antidilutive and excluded from diluted weighted average shares outstanding were approximately 2.2 million and 2.0 million for the three months ended September 30, 2018 and 2017 , respectively, and 2.1 million and 2.2 million for the nine months ended September 30, 2018 and 2017 , respectively. Since the Company has the intention and ability to settle the principal amount of its Notes (as defined in Note 9 below) in cash, the treasury stock method is expected to be used for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. The conversion spread will have a dilutive impact on diluted net income per share of common stock when the average market price of common stock for a given period exceeds the conversion price of $33.79 and $48.63 per share, for the 2019 Notes (as defined in Note 9 below) and 2047 Notes (as defined in Note 9 below), respectively. |
Noncash Share-based Compensatio
Noncash Share-based Compensation (Note) | 9 Months Ended |
Sep. 30, 2018 | |
Noncash Share-based Compensation [Abstract] | |
Noncash Share-based Compensation | Noncash Share-based Compensation During the three months ended September 30, 2018 , the Company granted 18,904 RSUs with a weighted average grant-date fair value of $39.41 per share. The Company granted no MSUs, options or SARs during this period. During the nine months ended September 30, 2018 , the Company granted 803,896 RSUs with a weighted average grant-date fair value of $27.47 per share. The Company also granted 116,899 MSUs with a weighted average grant-date fair value of $38.18 to certain executive employees during the nine months ended September 30, 2018 . These MSUs vest on January 10, 2021 and the actual number of MSUs that will be eligible to vest is based on the total stockholder return of the Company relative to the total stockholder return of the Index over the performance period, as defined by each award's plan documents or individual award agreements. The Company did not grant any stock options or SARs during the nine months ended September 30, 2018 . Share-based compensation expense is allocated to expense categories on the unaudited condensed consolidated statements of comprehensive income (loss). The following table summarizes share-based compensation expense included in the Company's unaudited condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2018 and 2017 : Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Share-based compensation: Cost of revenue $ 445 $ 479 $ 1,325 $ 1,569 Operating expenses: Selling and marketing 779 909 3,347 3,313 General and administrative 2,635 2,864 8,202 8,546 Research and development 1,098 1,319 3,481 4,237 Total included in operating expenses 4,512 5,092 15,030 16,096 Total share-based compensation expense $ 4,957 $ 5,571 $ 16,355 $ 17,665 The Company's 2017 Equity Incentive Plan ("2017 Stock Plan") was approved by stockholders in May 2017 and reserved an aggregate amount of 2,500,000 shares for issuance. As of September 30, 2018 , 1,358,775 shares remain available for issuance under the 2017 Stock Plan. At September 30, 2018 , the Company had an estimated $37.9 million of total unrecognized compensation costs related to share-based compensation arrangements. These costs will be recognized over a weighted average period of 2.5 years. The Company's Employee Stock Purchase Plan ("ESPP") provides for eligible employees to purchase shares on an after-tax basis in an amount between 1% and 10% of their annual pay: (i) on June 30 of each year at a 15% discount of the fair market value of the Company's common stock on January 1 or June 30, whichever is lower, and (ii) on December 31 of each year at a 15% discount of the fair market value of the Company's common stock on July 1 or December 31, whichever is lower. An employee may not purchase more than $5,000 in either of the six-month measurement periods described above or more than $10,000 annually. During the three and nine months ended September 30, 2018 , the Company issued 38,431 and 75,546 shares, respectively, under the ESPP. As of September 30, 2018 , 215,555 shares remain authorized and available for issuance under the ESPP. As of September 30, 2018 , the Company held approximately $0.5 million on behalf of employees for future purchases under the ESPP, and this amount was recorded in accrued payroll and other employee benefits in the Company's unaudited condensed consolidated balance sheet. |
Convertible debt (Notes)
Convertible debt (Notes) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Long-term Debt [Text Block] | Convertible Senior Notes The Company issued $143.8 million principal amount of convertible senior notes in December 2014 (the "2019 Notes") and $106.3 million principal amount of convertible senior notes in June 2017 (the "2047 Notes" and collectively with the 2019 Notes, the "Notes"). The interest rates for the Notes are fixed at 2.0% per annum. Interest is payable semi-annually in arrears on June 1 and December 1 of each year, commencing on June 1, 2015 for the 2019 Notes, and on December 1, 2017 for the 2047 Notes. The 2019 Notes mature on December 1, 2019, unless redeemed or converted in accordance with their terms prior to such date. The 2047 Notes mature on June 1, 2047, unless repurchased, redeemed or converted in accordance with their terms prior to such date. Each $1,000 of principal of the 2019 Notes will initially be convertible into 29.5972 shares of the Company’s common stock, which is equivalent to an initial conversion price of approximately $33.79 per share. Each $1,000 of principal amount at maturity of the 2047 Notes had an issue price of $880 , and will initially be convertible into 20.5624 shares of the Company’s common stock, which is equivalent to an initial conversion price of approximately $48.63 per share. The initial conversion price for each of the Notes is subject to adjustment upon the occurrence of certain specified events. An amount equal to the difference between the issue price and the principal amount at maturity will accrete to the 2047 Notes in accordance with the schedule set forth in the 2047 Notes. The issue price plus such accreted amount of the 2047 Notes is referred to herein as the “accreted principal amount.” On June 1, 2022, the accreted principal amount will accrete to 100% of the principal amount at maturity. The Notes are each general unsecured obligations and rank senior in right of payment to all of the Company's indebtedness that is expressly subordinated in right of payment to the Notes, rank equally in right of payment with all of the Company's existing and future liabilities that are not so subordinated, are effectively junior to any of the Company's secured indebtedness to the extent of the value of the assets securing such indebtedness and are structurally subordinated to all indebtedness and other liabilities (including trade payables but excluding intercompany obligations owed to the Company or its subsidiaries). From September 1, 2019 through the end of the second scheduled trading day immediately prior to maturity, holders may convert all or any portion of their 2019 Notes regardless of the contingent conversion conditions described herein. Upon conversion, the Company will pay or deliver cash, shares of its common stock or a combination of cash and shares of its common stock, at its election, as described in the indenture governing the 2019 Notes. On or before June 1, 2021, and subject to the satisfaction of certain conditions, the Company is entitled to elect to redeem all or any portion of the 2047 Notes at a redemption price equal to 100% of the accreted principal amount of the 2047 Notes, plus accrued and unpaid interest to, but excluding, the redemption date, if the daily volume weighted average price of the Company’s common stock is greater than or equal to 130% of the conversion price for at least 20 trading days during any 30 consecutive trading day period. After June 1, 2021, the Company will be entitled to elect to redeem all or any portion of the 2047 Notes (without regard to the price of the Company’s common stock) at a redemption price equal to the then current accreted principal amount of the 2047 Notes, plus accrued and unpaid interest to, but excluding, the redemption date. Holders may convert their 2019 Notes at their option at any time prior to the close of business on the business day immediately preceding September 1, 2019 only under the following circumstances: • during any calendar quarter commencing after the calendar quarter ending on March 31, 2015, if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a 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; • during the five consecutive business day period immediately following any five consecutive trading day period in which the trading price per $1,000 principal amount of 2019 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company's common stock and the conversion rate on each such trading day; or • upon the occurrence of specified corporate events. Holders may convert their 2047 Notes at their option on any day prior to the close of business on the business day immediately preceding March 1, 2047 under the following circumstances: • during any calendar quarter commencing after the calendar quarter ending September 30, 2017, if the last reported sale price of the Company's common stock for 20 or more trading days (whether or not consecutive) in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds 130% of the applicable conversion price in effect on each such trading day; • during the five consecutive business day period immediately following any five consecutive trading day period (the "Measurement Period") in which the trading price per 2047 Note for each day of that Measurement Period was less than 98% of the product of the last reported sale price of the Company's common stock and the conversion rate on each such day; or • upon the occurrence of specified corporate events. The 2047 Notes will also be convertible, regardless of the foregoing circumstances, at any time from, and including, March 1, 2047 until the close of business on the second scheduled trading day immediately preceding the applicable maturity date. Each holder of the 2047 Notes has the right to require the Company to repurchase for cash all or any portion of such holder's 2047 Notes on June 1, 2022 at a price per $1,000 principal amount of the 2047 Notes equal to the accreted principal amount at maturity plus accrued and unpaid interest to, but excluding, the repurchase date. If a fundamental change (as defined in the relevant indenture governing the applicable series of Notes) occurs prior to the maturity date, holders of each of the 2019 Notes and 2047 Notes may require the Company to repurchase all or a portion of their notes for cash at a repurchase price equal to 100% of the principal amount at maturity of the Notes, plus any accrued and unpaid interest to, but excluding, the repurchase date. If such a fundamental change occurs prior to June 1, 2022, holders of the 2047 Notes may also require the Company to repurchase all or a portion of their notes for cash at a repurchase price equal to the then current accreted principal amount of the Notes, plus any accrued and unpaid interest to, but excluding, the repurchase date. In addition, if specific corporate events occur prior to the applicable maturity date, the Company will be required to increase the conversion rate for holders who elect to convert their notes in certain circumstances. Holders who convert their 2047 Notes in connection with a Make-Whole Fundamental Change (as defined in the indenture governing the 2047 Notes) or in connection with a redemption of such 2047 Notes on or prior to June 1, 2021 will, under certain circumstances, be entitled to a make-whole premium in the form of an increase in the conversion rate determined by reference to a make-whole table set forth in such indenture. As of September 30, 2018 , the 2019 Notes and the 2047 Notes are not yet convertible. In accordance with accounting guidance on embedded conversion features, the Company valued and bifurcated the conversion options associated with each of the 2019 Notes and 2047 Notes from the respective host debt instrument, which is referred to as debt discount and recorded the conversion option of each of the Notes in stockholders’ equity. The equity component for each Note is not remeasured as long as such Note continues to meet the conditions for equity classification. In accounting for the transaction costs for each of the notes issuance, the Company allocated the costs incurred to the liability and equity components in proportion to the allocation of the proceeds from issuance to the liability and equity components. Issuance costs attributable to the liability component, totaling $4.3 million for the 2019 Notes and $2.7 million for the 2047 Notes, are being amortized to expense over the expected life of each notes using the effective interest method. Issuance costs attributable to the equity component related to the conversion option, totaling $1.2 million for the 2019 Notes and $0.3 million for the 2047 Notes, were netted with the equity component in stockholders' equity. The Notes consist of the following (in thousands): September 30, 2018 December 31, 2017 Liability component: Principal $ 250,000 $ 250,000 Less: debt discount and issuance cost, net of amortization (27,876 ) (36,797 ) Net carrying amount $ 222,124 $ 213,203 Equity component (1) $ 37,560 $ 37,560 (1) Recorded within additional paid-in capital in the consolidated balance sheet. As of September 30, 2018 , it included $28.7 million and $8.8 million related to the 2019 Notes and the 2047 Notes, respectively, net of $1.2 million and $0.3 million issuance cost in equity, respectively. The following table sets forth total interest expense recognized related to the Notes (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 2.0% coupon $ 1,250 $ 1,250 $ 3,750 $ 2,741 Amortization of debt issuance costs 357 340 1,058 782 Amortization of debt discount 2,659 2,504 7,863 5,555 Total $ 4,266 $ 4,094 $ 12,671 $ 9,078 As of September 30, 2018 and December 31, 2017 , the fair value of the principal amount of the Notes was $268.3 million and $246.6 million , respectively. The estimated fair value was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including the Company's stock price and interest rates, which represents level 2 in the fair value hierarchy. As of September 30, 2018 , the remaining life of the 2019 Notes and the 2047 Notes is approximately 14 months and 44 months, respectively. Note Hedge and Warrant Transactions Concurrently with the offering of the 2019 Notes, the Company entered into separate convertible note hedge (the "Note Hedge") and warrant (the "Warrant") transactions. Taken together, the purchase of the Note Hedge and the sale of the Warrant are intended to offset any actual dilution from the conversion of the 2019 Notes and to effectively increase the overall conversion price of the 2019 Notes from $33.79 to $45.48 per share. The total cost of the Note Hedge transaction was $29.4 million . The Company received $17.1 million in cash proceeds from the sale of the Warrant. Pursuant to the Warrant, if the average market value per share of the Company's common stock for the reporting period, as measured under the Warrant, exceeds the strike price of the Warrant, the Warrant will have a dilutive effect on the Company's earnings per share. Holders of the 2019 Notes and Note Hedge will not have any rights with respect to the Warrant, as the Note Hedge is not part of the 2019 Notes or the Warrant. The Warrant is not part of the 2019 Notes or Note Hedge. Both the Note Hedge and Warrant have been accounted for as part of additional paid-in capital. |
Equity (Notes)
Equity (Notes) | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Stockholders' Equity Note Disclosure [Text Block] | Equity Offering In August 2018, the Company completed a follow-on public offering of 3,800,000 shares of the Company's common stock at an offering price of $34 per share (the "Secondary Offering"). Additionally, as part of the Secondary Offering the underwriters exercised, in full, their over-allotment option to purchase an additional 570,000 shares of the Company's common stock at the offering price of $34 per share. The aggregate gross proceeds from the Secondary Offering, including the exercise of the over-allotment, were $148.6 million , and net proceeds received after underwriting fees and offering expenses were approximately $142.0 million . |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation In the ordinary course of business, the Company regularly becomes involved in contract and other negotiations and, in more limited circumstances, becomes involved in legal proceedings, claims and litigation. The outcomes of these matters are inherently unpredictable. The Company is not currently involved in any outstanding litigation that it believes, individually or in the aggregate, will have a material adverse effect on its business, financial condition, results of operations or cash flows. Purchase commitments In the ordinary course of business, the Company enters in various purchase commitments for goods and services. In June 2017, the Company entered in a noncancelable agreement with a computing infrastructure vendor that expires on June 30, 2020. The purchase commitment as of September 30, 2018 was $12.6 million for the remaining period under the three-year agreement. Contractual obligations In September 2018, the Company entered into an agreement of limited partnership related to a venture fund, pursuant to which the Company committed to make a capital contribution of $2.3 million within the next five years. Lease commitments The Company leases office space and office equipment under noncancelable operating leases that expire at various dates. As of September 30, 2018 , the future minimum lease commitments related to lease agreements were as follows: Year Ending December 31, Amount Remaining 2018 $ 991 2019 3,553 2020 1,666 2021 957 2022 678 2023 and thereafter 43 Total minimum lease payments $ 7,888 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") for interim financial reporting and applicable quarterly reporting regulations of the Securities and Exchange Commission ("SEC"). In management's opinion, the accompanying interim unaudited condensed consolidated financial statements include all adjustments necessary for a fair statement of the financial position of the Company as of September 30, 2018 , the results of operations for the three and nine months ended September 30, 2018 and 2017 , and cash flows for the nine months ended September 30, 2018 and 2017 . Certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with GAAP have been omitted from these interim unaudited condensed consolidated financial statements pursuant to the rules and regulations of the SEC. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017 ("Annual Report") filed with the SEC. The condensed consolidated balance sheet as of December 31, 2017 was derived from the Company's audited consolidated financial statements but does not include all disclosures required under GAAP. |
Accounting Changes [Text Block] | Changes in accounting policies The Company has consistently applied these accounting policies to all periods presented in these consolidated financial statements, except for the Company's adoption of certain accounting standards described in more detail under " Recently adopted accounting pronouncements " in this Note 2 below. |
Basis of consolidation | Basis of consolidation The unaudited condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and a subsidiary where the Company exercises control. All intercompany transactions and balances have been eliminated in consolidation. The functional currency of PROS France SAS ("PROS France") is the euro. The financial statements of this subsidiary are translated into U.S. dollars using period-end rates of exchange for assets and liabilities, historical rates of exchange for equity, and average rates of exchange for the period for revenue and expenses. Translation gains (losses) are recorded in accumulated other comprehensive loss as a component of stockholders' equity. |
Dollar amounts | Dollar amounts The dollar amounts presented in the tabular data within these footnote disclosures are stated in thousands of dollars, except per share amounts, or as noted within the context of each footnote disclosure. |
Use of estimates | Use of estimates The Company makes estimates and assumptions in the preparation of its unaudited condensed consolidated financial statements, and its estimates and assumptions may affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. The complexity and judgment required in the Company's estimation process, as well as issues related to the assumptions, risks and uncertainties inherent in the application of the percentage-of-completion method of accounting, affect the amounts of revenue, expenses, unbilled receivables and deferred revenue. Estimates are also used for, but not limited to, receivables, allowance for doubtful accounts, useful lives of assets, depreciation and amortization, income taxes and deferred tax asset valuation, valuation of stock options, other current liabilities and accrued liabilities. Numerous internal and external factors can affect estimates. The critical accounting policies related to estimates and judgments are discussed in the Annual Report under management's discussion and analysis of financial condition and results of operations and are also discussed under Item 2 "Management's discussion and analysis of financial condition and results of operations ". |
Revenue recognition | Revenue recognition The Company derives its revenues primarily from subscription services, professional services, perpetual licensing of its software products and associated software maintenance and support services. The Company determines revenue recognition through the following steps: • Identification of the contract, or contracts, with a customer; • Identification of the performance obligations in the customer contract(s); • Determination of the transaction price; • Allocation of the transaction price to each performance obligation in the customer contract(s); and • Recognition of revenue when, or as, the Company satisfies a performance obligation. Subscription services revenue Subscription services revenue primarily consists of fees that give customers access to one or more of the Company's cloud applications with routine customer support. Subscription services revenue is generally recognized ratably over the contractual term of the arrangement beginning on the date that the Company's service is made available to the customer. The Company's subscription contracts do not provide customers with the right to take possession of the software supporting the applications and, as a result, are accounted for as service contracts. The Company's subscription contracts are generally two to five years in length, billed annually in advance, and are non-cancelable. Maintenance and support revenue Maintenance and support revenue includes post-implementation customer support and the right to unspecified software updates and enhancements. The Company recognizes revenue from maintenance arrangements ratably over the period in which the services are provided. The Company's maintenance and support contracts are generally one to three years in length, billed annually in advance, and non-cancelable. License revenue Licenses for on-premise software provide the customer with a right to use the software as it exists when made available to the customer. License revenue from distinct on-premises licenses is recognized at the point in time when the software is made available to the customer. For customer contracts that contain license and professional services that are not considered distinct, the license and professional services are determined to be a single performance obligation and recognized over time based upon the Company's efforts to satisfy the performance obligation. Professional services revenue Professional services revenue primarily consists of fees for deployment and configuration services, as well as training. Professional services revenues are generally recognized as the services are rendered for time and material contracts, or on a proportional performance basis for fixed price contracts. The majority of the Company's professional services contracts are on a time and materials basis. Training revenues are recognized as the services are rendered. Significant judgments are required in determining whether professional services that are contained in customer subscription services contracts are considered distinct, including whether the professional services are capable of being distinct and whether they are separately identifiable in the customer contract. Professional services that are deemed to be distinct are accounted for as a separate performance obligation and revenue is recognized as the services are performed. If determined that the professional services are not considered distinct, the professional services and the subscription services are determined to be a single performance obligation and revenue is recognized over the contractual term of the subscription beginning on the date that subscription services are made available to the customer. Customer Contracts with Multiple Performance Obligations A portion of the Company's customer contracts contain multiple performance obligations. Significant judgment is required in determining whether multiple performance obligations contained in customer contracts are capable of being distinct and whether they are separately identifiable in customer contracts. If the obligations are determined to be distinct, each separate performance obligation is recognized when, or as, the Company satisfies the performance obligation. If the obligations are not determined to be distinct, they are recognized as a single combined performance obligation. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. |
Business Combinations Policy [Policy Text Block] | Business combinations The Company records tangible and intangible assets acquired and liabilities assumed in business combinations under the acquisition method of accounting. Amounts paid for each acquisition are allocated to the assets acquired and liabilities assumed based on their fair values at the date of acquisition. Significant management judgments and assumptions are required in determining the fair value of acquired assets and liabilities, particularly acquired intangible assets. The valuation of purchased intangible assets is based upon estimates of the future performance and cash flows from the acquired business. Each asset is measured at fair value from the perspective of a market participant. The Company uses its best estimates and assumptions to accurately assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. The Company's estimates are inherently uncertain and subject to refinement. During the measurement period, which may be up to 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. Uncertain tax positions and tax-related valuation allowances are initially established in connection with a business combination as of the acquisition date. During the measurement period, the Company reevaluates these estimates and assumptions quarterly and records any adjustments to the Company's preliminary estimates to goodwill. Any subsequent adjustments are recorded to the Company’s condensed consolidated statements of operations upon the earlier of the conclusion of the measurement period and final determination of the fair value of assets acquired or liabilities assumed. |
Internal-use software | Internal-use software Costs incurred to develop internal-use software during the development stage are capitalized, stated at cost, and amortized using the straight-line method over the estimated useful lives of the assets. Development stage costs generally include salaries and personnel costs and third-party contractor expenses associated with internal-use software configuration, coding, installation and testing. For the three months ended September 30, 2018 and 2017 , the Company capitalized $1.2 million and $0.7 million , respectively, of internal-use software development costs related to cloud-based offerings, and for the nine months ended September 30, 2018 and 2017 , the Company capitalized $3.7 million and $2.2 million , respectively, of internal-use software development costs related to cloud-based offerings. Capitalized internal-use software development costs related to cloud-based offerings are amortized using the straight-line method over the useful life of the asset. For the three and nine months ended September 30, 2018 , the Company amortized $0.3 million and $0.7 million , respectively, of capitalized internal-use software development costs, and for the three and nine months ended September 30, 2017 , the Company amortized an immaterial amount of capitalized internal-use software development costs. Capitalized software for internal use is included in property and equipment, net in the unaudited condensed consolidated balance sheets. Amortization of capitalized internal-use software development costs, once it commences, is included in cost of subscription and cost of services revenues in the accompanying unaudited condensed consolidated statements of comprehensive income (loss). |
Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block] | Impairment of long-lived assets Long-lived assets are reviewed for impairment whenever an event or change in circumstances indicates that the carrying amount of an asset or group of assets may not be recoverable. The impairment review includes comparison of future cash flows expected to be generated by the asset or group of assets with the associated assets' carrying value. If the carrying value of the asset or group of assets exceeds its expected future cash flows (undiscounted and without interest charges), an impairment loss is recognized to the extent that the carrying amount of the asset exceeds its fair value. The Company recorded no impairment charges during the three and nine months ended September 30, 2018 and 2017 . |
Noncash share-based compensation | Noncash share-based compensation The Company measures all share-based payments to its employees based on the grant date fair value of the awards and recognizes expenses in the Company's unaudited consolidated statement of comprehensive income (loss) on a straight-line basis over the periods during which the recipient is required to perform services (generally over the vesting period of the awards). To date, the Company has granted stock options, Restricted Stock Units ("RSUs"), stock settled Stock Appreciation Rights ("SARs") and Market Stock Units ("MSUs"). RSUs include (i) time-based awards and (ii) market-based awards in which the number of shares that vest are based upon attainment of target average per share closing price over a requisite trading period. MSUs are performance-based awards in which the number of shares that vest are based upon the Company's relative stockholder return. The following table presents the number of shares or units outstanding for each award type as of September 30, 2018 and December 31, 2017 , respectively, (in thousands): Award type September 30, 2018 December 31, 2017 Stock options — 135 Restricted stock units (time-based) 1,988 2,133 Restricted stock units (market-based) 230 345 Stock appreciation rights 287 356 Market stock units 404 387 Stock options, time-based RSUs and SARs vest ratably between one and four years. Market-based RSUs vest if the average trailing closing price of the Company's common stock meets certain minimum performance hurdles for at least 105 calendar days prior to September 9, 2020, with 25% vesting at $27 , an additional 25% vesting at $33 , and the remaining 50% vesting at $41 . The actual number of MSUs that will be eligible to vest is based on the total stockholder return of the Company relative to the total stockholder return of the Russell 2000 Index ("Index") over their respective performance periods, as defined by each award's plan documents. The Company did not grant any stock options or SARs during the three and nine months ended September 30, 2018 or 2017 . The fair value of the time-based RSUs is based on the closing price of the Company's stock on the date of grant. The Company estimates the fair value and the derived service period of the market-based RSUs on the date of grant using a 'Monte Carlo' simulation model. The model requires the use of a number of assumptions including the expected volatility of the Company's stock, its risk-free interest rate and expected dividends. The Company's expected volatility at the date of grant was based on the historical volatility of the Company over the performance period. The fair value of the market-based RSUs is expensed over the derived service period for each separate vesting tranche. The derived service period for the vesting tranches of the market-based RSUs ranges between 1.01 and 1.98 years. The Company estimates the fair value of MSUs on the date of grant using a 'Monte Carlo' simulation model. The determination of fair value of the MSUs is affected by the Company's stock price and a number of assumptions including the expected volatilities of the Company's stock and the Index, its risk-free interest rate and expected dividends. The Company's expected volatility at the date of grant was based on the historical volatilities of the Company and the Index over the performance period. The weighted average assumptions used to value the MSUs granted during the three and nine months ended September 30, 2018 were as follows: September 30, 2018 Volatility 43.67% Risk-free interest rate 2.12% Expected option life in years 2.97 Dividend yield — |
Earnings per share | Earnings per share The Company computes basic earnings (loss) per share by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding. Diluted earnings (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares and dilutive potential common shares then outstanding. Diluted earnings per share reflect the assumed conversion of all dilutive securities, using the treasury stock method. Dilutive potential common shares consist of shares issuable upon the exercise of stock options, shares of unvested restricted stock units, and settlement of stock appreciation rights. When the Company incurs a net loss, the effect of the Company's outstanding stock options, stock appreciation rights and restricted stock units are not included in the calculation of diluted earnings (loss) per share as the effect would be anti-dilutive. Accordingly, basic and diluted net loss per share are identical. |
Cost Method Investments, Policy [Policy Text Block] | Cost method investment Investments in equity securities of privately held companies without readily determinable fair value, where the Company does not exercise significant influence over the investee, are recorded using the cost method of accounting, carrying the investment at historical cost. If there are no identified events or changes in circumstances that might have an adverse effect on the cost method investments, the Company does not estimate the investments' fair value. For all investments, if a decline in the fair value of an investment below the carrying value is determined to be other-than-temporary, such investment is written down to its estimated fair value with a charge to current earnings. At both September 30, 2018 and December 31, 2017 , the Company held $2.0 million of equity securities in a privately held company. This investment is accounted for under the cost method and the Company measures it at fair value on a nonrecurring basis when it is deemed to be other-than-temporarily impaired. The Company estimates fair value of its cost method investment considering available information such as pricing in recent rounds of financing, current cash positions, earnings and cash flow forecasts, recent operational performance and any other readily available market data, which represents level 3 in the fair value hierarchy as defined by Accounting Standard Codification ("ASC") 820, " Fair Value Measurement and Disclosure " ("ASC 820"). As of September 30, 2018 , the Company determined there were no other-than-temporary impairments on its cost method investment. |
Fair value measurement | Fair value measurement The Company's financial assets that are included in cash and cash equivalents and that are measured at fair value on a recurring basis consisted of $131.3 million and $131.4 million at September 30, 2018 and December 31, 2017 , respectively, and were invested in treasury money market funds. The fair value of the treasury money market funds is determined based on quoted market prices, which represents level 1 in the fair value hierarchy as defined by ASC 820. |
Trade and Other Accounts Receivable, Unbilled Receivables, Policy [Policy Text Block] | Trade and other receivables Trade and other receivables are primarily comprised of trade receivables, net of allowance for doubtful accounts, contract assets and unbilled receivables. The Company records trade accounts receivable for its unconditional rights to consideration arising from the Company's performance under contracts with customers. The Company's standard billing terms are that payment is due upon receipt of invoice, payable generally within thirty to sixty days. The carrying value of such receivables, net of the allowance for doubtful accounts, represents their estimated net realizable value. The Company estimates its allowance for doubtful accounts for specific trade receivable balances based on historical collection trends, the age of outstanding trade receivables, existing economic conditions, and any financial security associated with the receivables. Contract assets represent conditional rights to consideration that have been recognized as revenue in advance of billing the customer. Unbilled receivables represent unconditional rights to consideration arising from contingent revenue, that have been recognized as revenue in advance of billing the customer. |
Revenue Recognition, Customer Acquisitions [Policy Text Block] | Deferred costs Sales commissions earned by the Company's sales representatives are considered incremental and recoverable costs of obtaining a customer contract. Sales commissions are deferred and amortized on a straight-line basis over the period of benefit which the Company has determined to be five to eight years. The Company determined the period of benefit by taking into consideration its customer contracts, expected renewals as the Company currently does not pay an incremental sales commission, the Company's technology and other factors. The Company also defers amounts earned by employees other than sales representatives who earn incentive payments under compensation plans that are also tied to the value of customer contracts acquired. Deferred costs were $14.9 million and $6.3 million as of September 30, 2018 and December 31, 2017 , respectively. Amortization expense for the deferred costs was $0.8 million for both the three months ended September 30, 2018 and 2017 , and $2.1 million and $1.8 million for the nine months ended September 30, 2018 and 2017 , respectively. |
Deferred Charges, Policy [Policy Text Block] | Deferred implementation costs The Company capitalizes certain contract fulfillment costs, including personnel and other costs (such as hosting, employee salaries, benefits and payroll taxes), that are associated with arrangements where professional services are not distinct from other undelivered obligations in its customer contracts. The Company analyzes implementation costs and capitalizes those costs that are directly related to customer contracts, that are expected to be recoverable, and that enhance the resources which will be used to satisfy the undelivered performance obligations in those contracts. Deferred implementation costs are amortized ratably over the remaining contract term once the revenue recognition criteria for the respective performance obligation has been met and revenue recognition commences. Deferred implementation costs were $3.5 million and $2.2 million as of September 30, 2018 and December 31, 2017 , respectively. Amortization expense for the deferred implementation costs was $0.1 million for both the three months ended September 30, 2018 and 2017 , and $0.4 million and $0.2 million for the nine months ended September 30, 2018 and 2017 , respectively. Deferred implementation costs are included in prepaid and other current assets and other long-term assets in the condensed consolidated balance sheets. Amortization of deferred implementation costs is included in cost of subscription and cost of services revenues in the accompanying unaudited condensed consolidated statements of comprehensive income (loss). |
Revenue Recognition, Deferred Revenue [Policy Text Block] | Deferred revenue Deferred revenue primarily consists of customer invoicing in advance of revenues being recognized. The Company generally invoices its customers annually in advance for subscription services and maintenance and support services. Deferred revenue that is anticipated to be recognized during the next twelve-month period is recorded as current deferred revenue and the remaining portion is recorded as long-term. |
Credit Facility | Credit facility As of September 30, 2018 , the Company had no outstanding borrowings under its $50.0 million secured Credit Agreement ("Revolver") with the lenders party thereto and Wells Fargo Bank, National Association as agent for the lenders party thereto. The Company included $0.1 million of unamortized debt issuance costs related to the Revolver in prepaid and other current assets and other long-term assets in the condensed consolidated balance sheets. For the three and nine months ended September 30, 2018 and 2017 , the Company recorded an immaterial amount of amortization of debt issuance cost which is included in other income (expense), net in the unaudited condensed consolidated statements of comprehensive income (loss). |
Income taxes | Income taxes The Company recorded an income tax provision of $0.2 million and a tax benefit of $0.3 million for the three months ended September 30, 2018 and 2017 , respectively, and a tax provision of $0.2 million and $0.1 million for the nine months ended September 30, 2018 and 2017 , respectively, primarily related to foreign income taxes and withholding taxes offset by additional release of the valuation allowance. The effective tax rate for the three months ended September 30, 2018 and 2017 was (1)% and 1% , respectively, and for the nine months ended September 30, 2018 and 2017 was 0% . The income tax rates vary from the federal and state statutory rates primarily due to the valuation allowances on the Company’s deferred tax assets and foreign and state taxes not based on income. During the nine months ended September 30, 2018 , the Company finalized the deferred tax liabilities assumed upon the acquisition of PROS Travel Commerce, Inc. (formerly Vayant Travel Technologies, Inc.) ("Vayant") resulting in an additional release of valuation allowance recorded in the period. The Company estimates its annual effective tax rate at the end of each quarterly period. Jurisdictions with a projected loss for the year where no tax benefit can be recognized due to the valuation allowances on the Company’s deferred tax assets are excluded from the estimated annual effective tax rate. The impact of such an exclusion could result in a higher or lower effective tax rate during a particular quarter depending on the mix and timing of actual earnings versus annual projections. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recently adopted accounting pronouncements Topic 606 In May 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-09, " Revenue from Contracts with Customers (Topic 606) " ("Topic 606"). Topic 606 replaces the prior revenue recognition requirements in ASC 605, "Revenue Recognition" ("Topic 605" or "Prior Guidance") with a comprehensive revenue measurement and recognition standard, and expanded disclosure requirements. The new standard also provides guidance on the recognition of costs related to obtaining customer contracts. Topic 606 took effect in the first quarter of 2018, including interim periods within that reporting period. The Company adopted Topic 606 and applied Topic 606 to those contracts which were not complete as of January 1, 2018 using the modified retrospective method by recognizing the cumulative effect of initially applying the new standard as an adjustment to the opening balance of accumulated deficit, while prior period amounts are not adjusted and continue to be reported in accordance with the Company's historic accounting under the Prior Guidance. The most significant impact of Topic 606 relates to the Company's accounting for arrangements that include term-based software licenses bundled with maintenance and support, the deferral of incremental costs of obtaining a contract with a customer, including the period of amortization of such costs, and additional disclosures. Under the Prior Guidance, revenue attributable to term-based software licenses was recognized ratably over the term of the arrangement when vendor-specific objective evidence ("VSOE") did not exist for the undelivered maintenance and support element because it was not sold separately. Topic 606 does not require VSOE for undelivered elements to separate revenue for the delivered software licenses. Accordingly, under the new standard, the Company is required to recognize as revenue a portion of the arrangement fee upon delivery of the software license. The adjustment to the opening balance sheet of the accumulated deficit for all revenue related items was a decrease of approximately $2.7 million . Topic 606 also requires the Company to capitalize and amortize the costs to obtain a contract over the expected period of customer benefit. The Company previously capitalized and amortized only direct and incremental commission costs over the term of the related contract. The expected period of customer benefit determined under Topic 606 is longer than the typical two to five year term of the Company's contracts as required under the Prior Guidance. As a result of applying Topic 606, the Company recorded a decrease to the opening balance sheet of the accumulated deficit for costs to obtain a contract of approximately $7.0 million . Topic 230 In August 2016, the FASB issued ASU 2016-15, " Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments " which is intended to reduce the diversity in practice on classification of certain transactions in the statement of cash flows. The Company adopted this standard on January 1, 2018 and the adoption had no impact on its condensed consolidated financial statements and related disclosures. In November 2016, the FASB issued ASU 2016-18, " Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force " which is intended to define the presentation and related disclosures of restricted cash balances. The Company adopted this standard on January 1, 2018 and the adoption had no impact on its condensed consolidated financial statements and related disclosures. Recently issued accounting pronouncements not yet adopted In February 2016, the FASB issued ASU 2016-02, " Leases (Topic 842) " ("Topic 842") which requires the lessee to recognize most leases on the balance sheet thereby resulting in the recognition of lease assets and liabilities for those leases currently classified as operating leases. Lessor accounting remains largely unchanged from current guidance, however, Topic 842 provides improvements that are intended to align lessor accounting with the lessee model and with updated revenue recognition guidance. This standard is effective for interim and annual reporting periods beginning after December 15, 2018. The Company is currently assessing the impact of Topic 842 on its condensed consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, " Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment " ("Topic 350"), which eliminates step two from the goodwill impairment test. Under the amendments in this standard, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The standard is effective for interim and annual reporting periods beginning after December 15, 2019; earlier adoption is permitted for goodwill impairment tests performed after January 1, 2017. The Company is currently assessing the impact of Topic 350 on its condensed consolidated financial statements. With the exception of the new standards discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the nine months ended September 30, 2018 , as compared to the recent accounting pronouncements described in the Company's Annual Report, that are of significance or potential significance to the Company. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Awards outstanding [Table Text Block] | The following table presents the number of shares or units outstanding for each award type as of September 30, 2018 and December 31, 2017 , respectively, (in thousands): Award type September 30, 2018 December 31, 2017 Stock options — 135 Restricted stock units (time-based) 1,988 2,133 Restricted stock units (market-based) 230 345 Stock appreciation rights 287 356 Market stock units 404 387 |
Market Stock Units Valuation Assumptions [Table Text Block] | The weighted average assumptions used to value the MSUs granted during the three and nine months ended September 30, 2018 were as follows: September 30, 2018 Volatility 43.67% Risk-free interest rate 2.12% Expected option life in years 2.97 Dividend yield — |
Disaggregation of Revenue (Tabl
Disaggregation of Revenue (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue by Geography [Abstract] | |
Schedule of Disaggregation Of Revenue [Table Text Block] | The geographic information in the table below is presented for the three and nine months ended September 30, 2018 and 2017 . The Company categorizes geographic revenues based on the location of the customer's headquarters. Because the Company's contracts are predominately denominated in U.S. dollars, it has limited exposure to foreign currency exchange risk as discussed under " Foreign Currency Exchange Risk " of Part I, Item 3 below. Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Revenue Percent Revenue Percent Revenue Percent Revenue Revenue United States of America $ 16,610 34 % $ 15,829 38 % $ 50,538 35 % $ 46,858 38 % Europe 15,019 31 % 12,574 30 % 45,110 31 % 35,056 29 % The rest of the world 17,446 35 % 13,534 32 % 48,763 34 % 40,558 33 % Total revenue $ 49,075 100 % $ 41,937 100 % $ 144,411 100 % $ 122,472 100 % |
Impact on Financial Statement_2
Impact on Financial Statement of Changes in Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Impact of Adoption of New Revenue Standard [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block] | The Company applied Topic 606 using the modified retrospective method by recognizing the cumulative effect of initially applying Topic 606 as an adjustment to the opening balance sheet at January 1, 2018. Therefore, the comparative information has not been adjusted and continues to be reported under Topic 605. The differences between balances under Topic 606 and Topic 605 are detailed below: September 30, 2018 (in thousands) As Reported Adjustments Balances Under Topic 605 Balance Sheets Trade and other receivables, net of allowance $ 46,170 $ (352 ) $ 45,818 Deferred costs, current 3,413 (192 ) 3,221 Long-term deferred costs 11,481 (7,859 ) 3,622 Deferred revenue, current 100,504 1,292 101,796 Long-term deferred revenue 14,492 1,677 16,169 Accumulated deficit $ (279,948 ) $ (11,372 ) $ (291,320 ) Three Months Ended September 30, 2018 (in thousands, except per share amounts) As Reported Adjustments Balances Under Topic 605 Income Statements Total revenue $ 49,075 $ (500 ) $ 48,575 Total cost of revenue 19,476 216 19,692 Selling and marketing 17,513 379 17,892 General and administrative 10,179 (80 ) 10,099 Research and development 13,773 (59 ) 13,714 Net loss (15,786 ) (956 ) (16,742 ) Basic and diluted loss per share $ (0.44 ) $ (0.03 ) $ (0.47 ) Nine Months Ended September 30, 2018 (in thousands, except per share amounts) As Reported Adjustments Balances Under Topic 605 Income Statements Total revenue $ 144,411 $ (684 ) $ 143,727 Total cost of revenue 57,721 328 58,049 Selling and marketing 53,671 1,028 54,699 General and administrative 31,013 (239 ) 30,774 Research and development 41,517 (176 ) 41,341 Net loss (51,486 ) (1,625 ) (53,111 ) Basic and diluted loss per share $ (1.53 ) $ (0.05 ) $ (1.58 ) |
Business Combination (Tables)
Business Combination (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Business Acquisition [Line Items] | |
Business Combination, Schedule of purchase price allocation [Table Text Block] | The final allocation of the total purchase price for Vayant is as follows (in thousands): Cash $ 1,822 Other current assets 1,235 Noncurrent assets 86 Intangibles 18,600 Goodwill 17,052 Accounts payable and accrued liabilities (1,668 ) Deferred revenue (600 ) Deferred tax liability (526 ) Noncurrent liabilities (49 ) Net assets acquired $ 35,952 |
Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block] | The following are the identifiable intangible assets acquired (in thousands) with respect to the Vayant acquisition, and their respective useful lives: Useful Life Amount (years) Developed technology $ 11,600 7 Customer relationships 7,000 5 Total $ 18,600 |
Business Acquisition, Pro Forma Information [Table Text Block] | The unaudited financial information in the table below summarizes the combined results of operations of the Company and Vayant, on a pro forma basis, for the three and nine months ended September 30, 2017 as though the Company had acquired Vayant on January 1, 2016. The pro forma information for all periods presented also includes the effect of business combination accounting resulting from the acquisition, including amortization charges from acquired intangible assets. Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except earnings per share) 2017 2017 Total revenue $ 42,738 $ 127,522 Net loss (23,150 ) (64,496 ) Earnings per share - basic and diluted $ (0.73 ) $ (2.05 ) |
Earnings per Share (Table)
Earnings per Share (Table) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2018 and 2017 : Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except per share data) 2018 2017 2018 2017 Numerator: Net loss $ (15,786 ) $ (21,226 ) $ (51,486 ) $ (60,946 ) Denominator: Weighted average shares (basic) 35,676 31,867 33,568 31,527 Dilutive effect of potential common shares — — — — Weighted average shares (diluted) 35,676 31,867 33,568 31,527 Basic loss per share $ (0.44 ) $ (0.67 ) $ (1.53 ) $ (1.93 ) Diluted loss per share $ (0.44 ) $ (0.67 ) $ (1.53 ) $ (1.93 ) |
Noncash Share-based Compensat_2
Noncash Share-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Noncash Share-based Compensation [Abstract] | |
Schedule of Share-based Compensation Expense | The following table summarizes share-based compensation expense included in the Company's unaudited condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2018 and 2017 : Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Share-based compensation: Cost of revenue $ 445 $ 479 $ 1,325 $ 1,569 Operating expenses: Selling and marketing 779 909 3,347 3,313 General and administrative 2,635 2,864 8,202 8,546 Research and development 1,098 1,319 3,481 4,237 Total included in operating expenses 4,512 5,092 15,030 16,096 Total share-based compensation expense $ 4,957 $ 5,571 $ 16,355 $ 17,665 |
Convertible debt (Tables)
Convertible debt (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Convertible Debt [Table Text Block] | The Notes consist of the following (in thousands): September 30, 2018 December 31, 2017 Liability component: Principal $ 250,000 $ 250,000 Less: debt discount and issuance cost, net of amortization (27,876 ) (36,797 ) Net carrying amount $ 222,124 $ 213,203 Equity component (1) $ 37,560 $ 37,560 (1) Recorded within additional paid-in capital in the consolidated balance sheet. As of September 30, 2018 , it included $28.7 million and $8.8 million related to the 2019 Notes and the 2047 Notes, respectively, net of $1.2 million and $0.3 million issuance cost in equity, respectively. The following table sets forth total interest expense recognized related to the Notes (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 2.0% coupon $ 1,250 $ 1,250 $ 3,750 $ 2,741 Amortization of debt issuance costs 357 340 1,058 782 Amortization of debt discount 2,659 2,504 7,863 5,555 Total $ 4,266 $ 4,094 $ 12,671 $ 9,078 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Future minimum lease commitments [Line Items] | |
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | As of September 30, 2018 , the future minimum lease commitments related to lease agreements were as follows: Year Ending December 31, Amount Remaining 2018 $ 991 2019 3,553 2020 1,666 2021 957 2022 678 2023 and thereafter 43 Total minimum lease payments $ 7,888 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | |
Summary of Significant Accounting Policies [Line Items] | ||||||
Internal-use software development costs capitalized | $ 3,686,000 | $ 1,996,000 | ||||
Tangible Asset Impairment Charges | 0 | |||||
Treasury money market funds, at fair value | $ 131,300,000 | 131,300,000 | $ 131,400,000 | |||
Cost Method Investments, Fair Value Disclosure | 2,000,000 | 2,000,000 | ||||
Deferred Costs | 14,900,000 | 14,900,000 | 6,300,000 | |||
Amortization of Deferred Charges | 800,000 | 2,100,000 | 1,800,000 | |||
Capitalized Contract Cost, Net | 3,500,000 | 3,500,000 | $ 2,200,000 | |||
Capitalized Contract Cost, Amortization | 100,000 | 400,000 | 200,000 | |||
Line of Credit Facility, Amount Outstanding | 0 | 0 | ||||
Line of Credit Facility, Maximum Borrowing Capacity | 50,000,000 | 50,000,000 | ||||
Unamortized Debt Issuance Expense | 149,000 | 149,000 | ||||
Income Tax Expense (Benefit) | $ 175,000 | $ (271,000) | $ 176,000 | 55,000 | ||
Effective income tax rate | (1.00%) | 1.00% | 0.00% | |||
Cloud-based product offerings [Member] | ||||||
Summary of Significant Accounting Policies [Line Items] | ||||||
Internal-use software development costs capitalized | $ 1,226,000 | $ 748,000 | $ 3,748,000 | $ 2,170,000 | ||
Capitalized Computer Software, Amortization | $ 300,000 | $ 680,000 | ||||
Minimum [Member] | ||||||
Summary of Significant Accounting Policies [Line Items] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 1 year | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Requisite Service Period | 1 year 4 days | |||||
Maximum [Member] | ||||||
Summary of Significant Accounting Policies [Line Items] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 4 years | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Requisite Service Period | 1 year 11 months 23 days | |||||
Share-based Compensation Award, Tranche One [Member] | ||||||
Summary of Significant Accounting Policies [Line Items] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Percentage of Awards vesting upon Price Target | 25.00% | 25.00% | ||||
Share Price Target | $ 27 | $ 27 | ||||
Share-based Compensation Award, Tranche Two [Member] | ||||||
Summary of Significant Accounting Policies [Line Items] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Percentage of Awards vesting upon Price Target | 25.00% | 25.00% | ||||
Share Price Target | $ 33 | $ 33 | ||||
Share-based Compensation Award, Tranche Three [Member] | ||||||
Summary of Significant Accounting Policies [Line Items] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Percentage of Awards vesting upon Price Target | 50.00% | 50.00% | ||||
Share Price Target | $ 41 | $ 41 | ||||
Accounting Standards Update 2014-09 [Member] | ||||||
Summary of Significant Accounting Policies [Line Items] | ||||||
New Accounting Pronouncement, Cumulative Effect of Change on Equity, Impact of Revenue | $ 2,700,000 | |||||
New Accounting Pronouncement, Cumulative Effect of Change on Equity, Impact of Cost to Obtain Contract | $ 7,000,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies Awards Outstanding (Details) - shares shares in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Stock options | ||
Awards outstanding [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 0 | 135 |
Restricted Stock Units (RSUs) [Member] | ||
Awards outstanding [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number | 1,988 | 2,133 |
Restricted stock unit - market-based [Member] | ||
Awards outstanding [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number | 230 | 345 |
Stock appreciation rights | ||
Awards outstanding [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number | 287 | 356 |
Market Share Units (MSUs) [Member] | ||
Awards outstanding [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number | 404 | 387 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies Fair Value Calculation Assumptions (Details) - Market Share Units (MSUs) [Member] | 9 Months Ended |
Sep. 30, 2018 | |
Valuation Assumptions for Stock Awards [Line Items] | |
Volatility | 43.67% |
Risk-free interest rate | 2.12% |
Expected life, in years | 2 years 11 months 20 days |
Dividend yield | 0.00% |
Deferred Revenue and Performa_2
Deferred Revenue and Performance Obligation (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Deferred Revenue and Performance Obligation [Abstract] | ||||
Deferred Revenue, Revenue Recognized | $ 32.4 | $ 27.9 | $ 64.4 | $ 57.4 |
Revenue, Remaining Performance Obligation | 309.4 | 309.4 | ||
Revenue Remaining Performance Obligation, to be recognized within 12 months | $ 149.8 | $ 149.8 |
Disaggregation of Revenue Reven
Disaggregation of Revenue Revenue by Geography (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues | $ 49,075 | $ 41,937 | $ 144,411 | $ 122,472 |
Percentage of total revenue | 100.00% | 100.00% | 100.00% | 100.00% |
UNITED STATES | ||||
Revenues | $ 16,610 | $ 15,829 | $ 50,538 | $ 46,858 |
Percentage of total revenue | 34.00% | 38.00% | 35.00% | 38.00% |
Europe [Member] | ||||
Revenues | $ 15,019 | $ 12,574 | $ 45,110 | $ 35,056 |
Percentage of total revenue | 31.00% | 30.00% | 31.00% | 29.00% |
The rest of the world [Member] | ||||
Revenues | $ 17,446 | $ 13,534 | $ 48,763 | $ 40,558 |
Percentage of total revenue | 35.00% | 32.00% | 34.00% | 33.00% |
Impact on Financial Statement_3
Impact on Financial Statement of Changes in Accounting Policies (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Account and Unbilled Receivables, Net | $ 46,170 | $ 46,170 | $ 32,484 | ||
Deferred Costs, Current | 3,413 | 3,413 | 3,137 | ||
Deferred Costs, Noncurrent | 11,481 | 11,481 | 3,194 | ||
Deferred Revenue, Current | 100,504 | 100,504 | 75,604 | ||
Long-term deferred revenue | 14,492 | 14,492 | 19,591 | ||
Retained Earnings (Accumulated Deficit) | (279,948) | (279,948) | $ (238,185) | ||
Revenues | 49,075 | $ 41,937 | 144,411 | $ 122,472 | |
Cost of Revenue | 19,476 | 17,724 | 57,721 | 50,419 | |
Selling and Marketing Expense | 17,513 | 16,980 | 53,671 | 50,625 | |
General and Administrative Expense | 10,179 | 10,324 | 31,013 | 30,514 | |
Research and development | 13,773 | 14,046 | 41,517 | 42,429 | |
Net income (loss) | $ (15,786) | $ (21,226) | $ (51,486) | $ (60,946) | |
Earnings Per Share, Basic and Diluted | $ (0.44) | $ (0.67) | $ (1.53) | $ (1.93) | |
New Revenue Standard Adjustment [Member] | |||||
Account and Unbilled Receivables, Net | $ (352) | $ (352) | |||
Deferred Costs, Current | (192) | (192) | |||
Deferred Costs, Noncurrent | (7,859) | (7,859) | |||
Deferred Revenue, Current | 1,292 | 1,292 | |||
Long-term deferred revenue | 1,677 | 1,677 | |||
Retained Earnings (Accumulated Deficit) | (11,372) | (11,372) | |||
Revenues | (500) | (684) | |||
Cost of Revenue | 216 | 328 | |||
Selling and Marketing Expense | 379 | 1,028 | |||
General and Administrative Expense | (80) | (239) | |||
Research and development | (59) | (176) | |||
Net income (loss) | $ (956) | $ (1,625) | |||
Earnings Per Share, Basic and Diluted | $ (0.03) | $ (0.05) | |||
Balances Under Topic 605 [Member] | |||||
Account and Unbilled Receivables, Net | $ 45,818 | $ 45,818 | |||
Deferred Costs, Current | 3,221 | 3,221 | |||
Deferred Costs, Noncurrent | 3,622 | 3,622 | |||
Deferred Revenue, Current | 101,796 | 101,796 | |||
Long-term deferred revenue | 16,169 | 16,169 | |||
Retained Earnings (Accumulated Deficit) | (291,320) | (291,320) | |||
Revenues | 48,575 | 143,727 | |||
Cost of Revenue | 19,692 | 58,049 | |||
Selling and Marketing Expense | 17,892 | 54,699 | |||
General and Administrative Expense | 10,099 | 30,774 | |||
Research and development | 13,714 | 41,341 | |||
Net income (loss) | $ (16,742) | $ (53,111) | |||
Earnings Per Share, Basic and Diluted | $ (0.47) | $ (1.58) |
Business Combination (Details)
Business Combination (Details) - USD ($) $ in Thousands | Aug. 03, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 |
Business Combination [Abstract] | |||||
Payments to Acquire Businesses, Net of Cash Acquired | $ 34,100 | $ 0 | $ 34,130 | ||
Business Combination, Acquisition Related Costs | $ 0 | $ 613 | 95 | $ 613 | |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill | 18,600 | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Deferred Revenue | 600 | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Liabilities Noncurrent | $ 526 | 778 | 778 | ||
Business Combination, Measurement Period Adjustment | 252 | ||||
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual | 2,300 | 7,000 | |||
Business Combination, Pro Forma Information, Earnings or Loss of Acquiree since Acquisition Date, Actual | $ 1,600 | $ 3,800 |
Business Combination Business C
Business Combination Business Combination Pro Forma (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017 | Sep. 30, 2017 | |
Business Combinations [Abstract] | ||
Business Acquisition, Pro Forma Revenue | $ 42,738 | $ 127,522 |
Business Acquisition, Pro Forma Net Income (Loss) | $ (23,150) | $ (64,496) |
Business Acquisition, Pro Forma Earnings Per Share, Basic | $ (0.73) | $ (2.05) |
Business Combination Business_2
Business Combination Business Combination, Schedule Of Recognized Identified Assets Acquired And Liabilities Assumed (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | Aug. 03, 2017 |
Business Combinations [Abstract] | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Cash and Equivalents | $ 1,822 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Other | 1,235 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Other Noncurrent Assets | 86 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill | 18,600 | ||
Goodwill | $ 38,373 | $ 38,458 | 17,052 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Other | (1,668) | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Deferred Revenue | (600) | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Liabilities Noncurrent | $ (778) | (526) | |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Other | (49) | ||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | $ 35,952 |
Business Combination Business_3
Business Combination Business Combination, Schedule of Finite-Lived Intangible Assets Acquired (Details) $ in Thousands | Aug. 03, 2017USD ($) |
Business Acquisition [Line Items] | |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill | $ 18,600 |
Developed Technology Rights [Member] | |
Business Acquisition [Line Items] | |
Finite-lived Intangible Assets Acquired | $ 11,600 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 7 years |
Customer Relationships [Member] | |
Business Acquisition [Line Items] | |
Finite-lived Intangible Assets Acquired | $ 7,000 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 5 years |
Earnings per Share (Details)
Earnings per Share (Details) - $ / shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive potential common shares excluded from computation of earnings per share | 2.2 | 2 | 2.1 | 2.2 |
Notes due 2019 [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Debt Instrument, Convertible, Stock Price Trigger | $ 33.79 | |||
Notes due 2047 [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Debt Instrument, Convertible, Stock Price Trigger | $ 48.63 |
Earnings per Share Basis and Di
Earnings per Share Basis and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Numerator | ||||
Net income (loss) | $ (15,786) | $ (21,226) | $ (51,486) | $ (60,946) |
Denominator | ||||
Weighted average shares (basic) | 35,676,000 | 31,867,000 | 33,568,000 | 31,527,000 |
Dilutive effect of potential common shares | 0 | 0 | 0 | 0 |
Weighted average shares (diluted) | 35,676,000 | 31,867,000 | 33,568,000 | 31,527,000 |
Basic Earnings Per Share | $ (0.44) | $ (0.67) | $ (1.53) | $ (1.93) |
Diluted earnings per share | $ (0.44) | $ (0.67) | $ (1.53) | $ (1.93) |
Noncash Share-based Compensat_3
Noncash Share-based Compensation (Details) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018USD ($)$ / sharesshares | Sep. 30, 2018USD ($)$ / sharesshares | |
Noncash Share-based Compensation (Narrative) [Line Items] | ||
Unrecognized compensation cost related to share-based compensation | $ | $ 37,916,000 | $ 37,916,000 |
Weighted average period to recognize cost, in years | 2 years 6 months 15 days | |
Share-based compensation arrangement by share-based payment, Minimum Employee Subscription rate | 1.00% | 1.00% |
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Employee Subscription Rate | 10.00% | 10.00% |
Share-based Compensation Arrangement by Share-based Payment Award, Discount from Market Price, Offering Date | 15.00% | |
Maximum Amount Contributable by employees under ESPP- Half yearly | $ | $ 5,000 | |
Maximum Amount Contributable By Employees Under ESPP- Annually | $ | $ 10,000 | |
Stock Issued During Period, Shares, Employee Stock Purchase Plans | 38,431 | 75,546 |
ESPP contributions by Employees | $ | $ 539,000 | |
RSUs | ||
Noncash Share-based Compensation (Narrative) [Line Items] | ||
Awards, other than options, granted in period | 18,904 | 803,896 |
Weighted average grant date fair value, per share, of awards granted in period | $ / shares | $ 39.41 | $ 27.47 |
MSUs | ||
Noncash Share-based Compensation (Narrative) [Line Items] | ||
Awards, other than options, granted in period | 116,899 | |
Weighted average grant date fair value, per share, of awards granted in period | $ / shares | $ 38.18 | |
Employee Stock [Member] | ||
Noncash Share-based Compensation (Narrative) [Line Items] | ||
Shares available for future grants | 215,555 | 215,555 |
2017 Equity Incentive Plan [Member] [Member] | ||
Noncash Share-based Compensation (Narrative) [Line Items] | ||
Shares reserved for issuance under Plan | 2,500,000 | 2,500,000 |
Shares available for future grants | 1,358,775 | 1,358,775 |
Share-based Compensation Award, Tranche One [Member] | ||
Noncash Share-based Compensation (Narrative) [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Percentage of Awards vesting upon Price Target | 25.00% | 25.00% |
Share Price Target | $ / shares | $ 27 | $ 27 |
Share-based Compensation Award, Tranche Two [Member] | ||
Noncash Share-based Compensation (Narrative) [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Percentage of Awards vesting upon Price Target | 25.00% | 25.00% |
Share Price Target | $ / shares | $ 33 | $ 33 |
Share-based Compensation Award, Tranche Three [Member] | ||
Noncash Share-based Compensation (Narrative) [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Percentage of Awards vesting upon Price Target | 50.00% | 50.00% |
Share Price Target | $ / shares | $ 41 | $ 41 |
Noncash Share-based Compensat_4
Noncash Share-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | $ 4,957 | $ 5,571 | $ 16,355 | $ 17,665 |
Cost of Sales [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | 445 | 479 | 1,325 | 1,569 |
Selling and Marketing Expense [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | 779 | 909 | 3,347 | 3,313 |
General and Administrative Expense [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | 2,635 | 2,864 | 8,202 | 8,546 |
Research and development | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | 1,098 | 1,319 | 3,481 | 4,237 |
Operating Expense [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | $ 4,512 | $ 5,092 | $ 15,030 | $ 16,096 |
Convertible debt (Details)
Convertible debt (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)$ / shares | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Debt Instrument [Line Items] | |||||
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate | 2.00% | 2.00% | |||
Debt Instrument, Face Amount | $ 250,000,000 | $ 250,000,000 | $ 250,000,000 | ||
Debt Instrument, Unamortized Discount (Premium) and Debt Issuance Costs, Net | 27,876,000 | 27,876,000 | 36,797,000 | ||
Convertible Debt, Noncurrent | 222,124,000 | 222,124,000 | 213,203,000 | ||
Debt Instrument, Convertible, Carrying Amount of Equity Component | 37,560,000 | 37,560,000 | 37,560,000 | ||
Debt Instrument, Periodic Payment, Interest | 1,250,000 | $ 1,250,000 | 3,750,000 | $ 2,741,000 | |
Amortization of Financing Costs | 357,000 | 340,000 | 1,058,000 | 782,000 | |
Amortization of Debt Discount (Premium) | 2,659,000 | 2,504,000 | 7,863,000 | 5,555,000 | |
Interest Expense, Debt | 4,266,000 | $ 4,094,000 | 12,671,000 | $ 9,078,000 | |
Debt Instrument, Fair Value Disclosure | 268,251,000 | 268,251,000 | $ 246,648,000 | ||
Notes due 2047 [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt Issuance Cost | 2,700,000 | 2,700,000 | |||
Convertible debt, issuance cost, equity component | $ 300,000 | ||||
Debt Instrument, Convertible, Conversion Ratio | 20.5624 | ||||
Debt Instrument, Convertible, Stock Price Trigger | $ / shares | $ 48.63 | ||||
Debt instrument, Convertible, Initial issue price per $1,000 of principal | 880 | $ 880 | |||
Debt Instrument, Face Amount | 106,250,000 | 106,250,000 | |||
Debt Instrument, Convertible, Carrying Amount of Equity Component | 8,846,000 | $ 8,846,000 | |||
Debt Instrument, Convertible, Remaining Discount Amortization Period | 44 months | ||||
Notes due 2019 [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt Issuance Cost | 4,300,000 | $ 4,300,000 | |||
Convertible debt, issuance cost, equity component | $ 1,200,000 | ||||
Debt Instrument, Convertible, Conversion Ratio | 29.5972 | ||||
Debt Instrument, Convertible, Stock Price Trigger | $ / shares | $ 33.79 | ||||
Debt Instrument, Face Amount | 143,750,000 | $ 143,750,000 | |||
Debt Instrument, Convertible, Carrying Amount of Equity Component | $ 28,714,000 | $ 28,714,000 | |||
Debt Instrument, Convertible, Remaining Discount Amortization Period | 14 months | ||||
Purchase of convertible bond hedge | $ (29,411,000) | ||||
Investment Warrants, Exercise Price | $ / shares | $ 45.48 | ||||
Proceeds from Issuance of Warrants | $ 17,106,000 |
Equity (Details)
Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Secondary Offering [Abstract] | ||
Secondary Offering Shares | 3,800,000 | |
Secondary offering, price per share | $ 34 | |
Proceeds from Issuance of Common Stock, Gross | $ 148,600 | |
Overallotment shares sold | 570,000 | |
Proceeds from Issuance of Common Stock, Net | $ 141,954 | $ 0 |
Commitments and Contingencies F
Commitments and Contingencies Future minimum lease payments (Details) $ in Thousands | Sep. 30, 2018USD ($) |
Operating Leased Assets [Line Items] | |
Operating Leases, Future Minimum Payments Due, Remainder of Fiscal Year | $ 991 |
Operating Leases, Future Minimum Payments, Due in Two Years | 3,553 |
Operating Leases, Future Minimum Payments, Due in Three Years | 1,666 |
Operating Leases, Future Minimum Payments, Due in Four Years | 957 |
Operating Leases, Future Minimum Payments, Due in Five Years | 678 |
Operating Leases, Future Minimum Payments, Due Thereafter | 43 |
Operating Leases, Future Minimum Payments Due | $ 7,888 |
Commitments and Contingencies P
Commitments and Contingencies Purchase commitments (Details) $ in Thousands | Sep. 30, 2018USD ($) |
Long-term Purchase Commitment [Line Items] | |
Purchase Obligation | $ 12,600 |
Commitments and Contingencies C
Commitments and Contingencies Contractual obligation (Details) $ in Millions | Sep. 30, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Contractual Obligation | $ 2.3 |