Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 02, 2020 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-37468 | |
Entity Registrant Name | AppFolio, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 26-0359894 | |
Entity Address, Address Line One | 50 Castilian Drive | |
Entity Address, City or Town | Santa Barbara, | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 93117 | |
City Area Code | 805 | |
Local Phone Number | 364-6093 | |
Title of 12(b) Security | Class A Common Stock, $0.0001 par value | |
Trading Symbol | APPF | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001433195 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Class A common stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 18,098,284 | |
Class B common stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 16,229,904 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 144,028 | $ 15,813 |
Investment securities—current | 32,689 | 22,876 |
Accounts receivable, net | 9,416 | 7,562 |
Prepaid expenses and other current assets | 15,720 | 15,540 |
Total current assets | 201,853 | 61,791 |
Investment securities—noncurrent | 5,135 | 12,089 |
Property and equipment, net | 26,565 | 14,744 |
Operating lease right-of-use assets | 24,645 | 27,803 |
Capitalized software, net | 33,543 | 30,023 |
Goodwill | 56,147 | 58,425 |
Intangible assets, net | 17,544 | 21,377 |
Deferred taxes | 14,826 | 27,574 |
Other long-term assets | 6,014 | 6,276 |
Total assets | 386,272 | 260,102 |
Current liabilities | ||
Accounts payable | 3,591 | 1,927 |
Accrued employee expenses | 18,379 | 17,758 |
Accrued expenses | 13,546 | 10,833 |
Deferred revenue | 2,457 | 4,586 |
Income tax payable | 13,571 | 0 |
Other current liabilities | 4,607 | 11,139 |
Term loan, net—current portion | 0 | 1,208 |
Total current liabilities | 56,151 | 47,451 |
Operating lease liabilities | 32,755 | 33,312 |
Term loan, net | 0 | 47,375 |
Deferred taxes | 10,130 | 0 |
Other long-term liabilities | 2,720 | 14 |
Total liabilities | 101,756 | 128,152 |
Commitments and contingencies (Note 9) | ||
Stockholders’ equity: | ||
Preferred stock, $0.0001 par value, 25,000 shares authorized and no shares issued and outstanding as of September 30, 2020 and December 31, 2019 | 0 | 0 |
Additional paid-in capital | 159,296 | 161,509 |
Accumulated other comprehensive income | 90 | 33 |
Treasury stock, at cost, 419 and 371 shares of Class A common stock as of September 30, 2020 and December 31, 2019, respectively | (25,756) | (21,562) |
Retained earnings (accumulated deficit) | 150,882 | (8,034) |
Total stockholders’ equity | 284,516 | 131,950 |
Total liabilities and stockholders’ equity | 386,272 | 260,102 |
Class A common stock | ||
Stockholders’ equity: | ||
Common stock | 2 | 2 |
Class B common stock | ||
Stockholders’ equity: | ||
Common stock | $ 2 | $ 2 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Treasury stock (in shares) | 419,000 | 371,000 |
Class A common stock | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 250,000,000 | 250,000,000 |
Common stock, shares issued (in shares) | 18,450,000 | 16,923,000 |
Common stock, shares outstanding (in shares) | 18,031,000 | 16,552,000 |
Class B common stock | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, shares issued (in shares) | 16,282,000 | 17,594,000 |
Common stock, shares outstanding (in shares) | 16,282,000 | 17,594,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
Revenue | $ 84,086 | $ 67,935 | $ 237,624 | $ 188,650 |
Costs and operating expenses: | ||||
Cost of revenue (exclusive of depreciation and amortization) | 32,752 | 25,930 | 89,124 | 75,239 |
Sales and marketing | 14,894 | 12,636 | 43,117 | 37,087 |
Research and product development | 13,454 | 10,602 | 36,794 | 28,422 |
General and administrative | 12,946 | 8,955 | 36,303 | 25,361 |
Depreciation and amortization | 6,680 | 5,678 | 19,751 | 16,169 |
Total costs and operating expenses | 80,726 | 63,801 | 225,089 | 182,278 |
Income from operations | 3,360 | 4,134 | 12,535 | 6,372 |
Other income (expense), net | 187,747 | (11) | 187,759 | (68) |
Interest expense, net | (853) | (400) | (1,909) | (1,324) |
Income before provision for (benefit from) income taxes | 190,254 | 3,723 | 198,385 | 4,980 |
Provision for (benefit from) income taxes | 52,578 | (1,255) | 39,469 | (26,874) |
Net income | $ 137,676 | $ 4,978 | $ 158,916 | $ 31,854 |
Net income per common share: | ||||
Basic (in dollars per share) | $ 4.01 | $ 0.15 | $ 4.64 | $ 0.94 |
Diluted (in dollars per share) | $ 3.86 | $ 0.14 | $ 4.46 | $ 0.90 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 34,296 | 34,047 | 34,241 | 33,991 |
Diluted (in shares) | 35,665 | 35,421 | 35,662 | 35,406 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 137,676 | $ 4,978 | $ 158,916 | $ 31,854 |
Other comprehensive (loss) income: | ||||
Changes in unrealized (losses) gains on investment securities | (41) | 20 | 57 | 216 |
Comprehensive income | $ 137,635 | $ 4,998 | $ 158,973 | $ 32,070 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common StockClass A common stock | Common StockClass B common stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Retained Earnings/(Accumulated Deficit) |
Beginning balance (in shares) at Dec. 31, 2018 | 15,789,000 | 18,109,000 | |||||
Beginning balance at Dec. 31, 2018 | $ 91,846 | $ 2 | $ 2 | $ 157,898 | $ (178) | $ (21,562) | $ (44,316) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of stock options (in shares) | 14,000 | ||||||
Exercise of stock options | 90 | 90 | |||||
Stock-based compensation | 1,831 | 1,831 | |||||
Vesting of restricted stock units, net of shares withheld for taxes (in shares) | 58,000 | ||||||
Vesting of restricted stock units, net of shares withheld for taxes | (2,572) | (2,572) | |||||
Vesting of early exercised shares | 6 | 6 | |||||
Conversion of Class B stock to Class A stock (in shares) | 38,000 | (38,000) | |||||
Conversion of Class B stock to Class A stock | 0 | ||||||
Other comprehensive income (loss) | 129 | 129 | |||||
Net income | 3,725 | 3,725 | |||||
Ending balance (in shares) at Mar. 31, 2019 | 15,899,000 | 18,071,000 | |||||
Ending balance at Mar. 31, 2019 | 95,055 | $ 2 | $ 2 | 157,253 | (49) | (21,562) | (40,591) |
Beginning balance (in shares) at Dec. 31, 2018 | 15,789,000 | 18,109,000 | |||||
Beginning balance at Dec. 31, 2018 | 91,846 | $ 2 | $ 2 | 157,898 | (178) | (21,562) | (44,316) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 31,854 | ||||||
Ending balance (in shares) at Sep. 30, 2019 | 16,373,000 | 17,685,000 | |||||
Ending balance at Sep. 30, 2019 | 125,417 | $ 2 | $ 2 | 159,399 | 38 | (21,562) | (12,462) |
Beginning balance (in shares) at Mar. 31, 2019 | 15,899,000 | 18,071,000 | |||||
Beginning balance at Mar. 31, 2019 | 95,055 | $ 2 | $ 2 | 157,253 | (49) | (21,562) | (40,591) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of stock options (in shares) | 23,000 | ||||||
Exercise of stock options | 109 | 109 | |||||
Stock-based compensation | 2,080 | 2,080 | |||||
Vesting of restricted stock units, net of shares withheld for taxes (in shares) | 42,000 | ||||||
Vesting of restricted stock units, net of shares withheld for taxes | (2,247) | (2,247) | |||||
Conversion of Class B stock to Class A stock (in shares) | 119,000 | (119,000) | |||||
Conversion of Class B stock to Class A stock | 0 | ||||||
Issuance of restricted stock awards (in shares) | 3,000 | ||||||
Issuance of restricted stock awards | 0 | ||||||
Other comprehensive income (loss) | 67 | 67 | |||||
Net income | 23,151 | 23,151 | |||||
Ending balance (in shares) at Jun. 30, 2019 | 16,086,000 | 17,952,000 | |||||
Ending balance at Jun. 30, 2019 | 118,215 | $ 2 | $ 2 | 157,195 | 18 | (21,562) | (17,440) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of stock options (in shares) | 9,000 | ||||||
Exercise of stock options | 60 | 60 | |||||
Stock-based compensation | 2,678 | 2,678 | |||||
Vesting of restricted stock units, net of shares withheld for taxes (in shares) | 11,000 | ||||||
Vesting of restricted stock units, net of shares withheld for taxes | (534) | (534) | |||||
Conversion of Class B stock to Class A stock (in shares) | 267,000 | (267,000) | |||||
Conversion of Class B stock to Class A stock | 0 | ||||||
Issuance of restricted stock awards | 0 | ||||||
Other comprehensive income (loss) | 20 | 20 | |||||
Net income | 4,978 | 4,978 | |||||
Ending balance (in shares) at Sep. 30, 2019 | 16,373,000 | 17,685,000 | |||||
Ending balance at Sep. 30, 2019 | 125,417 | $ 2 | $ 2 | 159,399 | 38 | (21,562) | (12,462) |
Beginning balance (in shares) at Dec. 31, 2019 | 16,552,000 | 17,594,000 | |||||
Beginning balance at Dec. 31, 2019 | 131,950 | $ 2 | $ 2 | 161,509 | 33 | (21,562) | (8,034) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of stock options (in shares) | 17,000 | ||||||
Exercise of stock options | 97 | 97 | |||||
Stock-based compensation | 1,365 | 1,365 | |||||
Vesting of restricted stock units, net of shares withheld for taxes (in shares) | 91,000 | ||||||
Vesting of restricted stock units, net of shares withheld for taxes | (6,458) | (6,458) | |||||
Conversion of Class B stock to Class A stock (in shares) | 58,000 | (58,000) | |||||
Conversion of Class B stock to Class A stock | 0 | ||||||
Other comprehensive income (loss) | $ 132 | 132 | |||||
Repurchase of common stock (in shares) | (48,002) | (48,000) | |||||
Repurchase of common stock | $ (4,194) | (4,194) | |||||
Net income | 1,983 | 1,983 | |||||
Ending balance (in shares) at Mar. 31, 2020 | 16,670,000 | 17,536,000 | |||||
Ending balance at Mar. 31, 2020 | 124,875 | $ 2 | $ 2 | 156,513 | 165 | (25,756) | (6,051) |
Beginning balance (in shares) at Dec. 31, 2019 | 16,552,000 | 17,594,000 | |||||
Beginning balance at Dec. 31, 2019 | $ 131,950 | $ 2 | $ 2 | 161,509 | 33 | (21,562) | (8,034) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of stock options (in shares) | 59,000 | ||||||
Net income | $ 158,916 | ||||||
Ending balance (in shares) at Sep. 30, 2020 | 18,031,000 | 16,282,000 | |||||
Ending balance at Sep. 30, 2020 | 284,516 | $ 2 | $ 2 | 159,296 | 90 | (25,756) | 150,882 |
Beginning balance (in shares) at Mar. 31, 2020 | 16,670,000 | 17,536,000 | |||||
Beginning balance at Mar. 31, 2020 | 124,875 | $ 2 | $ 2 | 156,513 | 165 | (25,756) | (6,051) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of stock options (in shares) | 32,000 | ||||||
Exercise of stock options | 232 | 232 | |||||
Stock-based compensation | 3,406 | 3,406 | |||||
Vesting of restricted stock units, net of shares withheld for taxes (in shares) | 50,000 | ||||||
Vesting of restricted stock units, net of shares withheld for taxes | (3,232) | (3,232) | |||||
Conversion of Class B stock to Class A stock (in shares) | 197,000 | (197,000) | |||||
Conversion of Class B stock to Class A stock | 0 | ||||||
Issuance of restricted stock awards (in shares) | 3,000 | ||||||
Issuance of restricted stock awards | 0 | ||||||
Other comprehensive income (loss) | (34) | (34) | |||||
Net income | 19,257 | 19,257 | |||||
Ending balance (in shares) at Jun. 30, 2020 | 16,952,000 | 17,339,000 | |||||
Ending balance at Jun. 30, 2020 | 144,504 | $ 2 | $ 2 | 156,919 | 131 | (25,756) | 13,206 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of stock options (in shares) | 10,000 | ||||||
Exercise of stock options | 74 | 74 | |||||
Stock-based compensation | 3,572 | 3,572 | |||||
Vesting of restricted stock units, net of shares withheld for taxes (in shares) | 12,000 | ||||||
Vesting of restricted stock units, net of shares withheld for taxes | (1,269) | (1,269) | |||||
Conversion of Class B stock to Class A stock (in shares) | 1,057,000 | (1,057,000) | |||||
Conversion of Class B stock to Class A stock | 0 | ||||||
Other comprehensive income (loss) | (41) | (41) | |||||
Net income | 137,676 | 137,676 | |||||
Ending balance (in shares) at Sep. 30, 2020 | 18,031,000 | 16,282,000 | |||||
Ending balance at Sep. 30, 2020 | $ 284,516 | $ 2 | $ 2 | $ 159,296 | $ 90 | $ (25,756) | $ 150,882 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash from operating activities | ||
Net income | $ 158,916 | $ 31,854 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 19,751 | 16,169 |
Amortization of operating lease right-of-use assets | 2,973 | 3,016 |
Deferred income taxes | 22,878 | (27,032) |
Stock-based compensation | 6,808 | 5,431 |
Gain on sale of business | (187,636) | 0 |
Other | 170 | 136 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (2,229) | (2,778) |
Prepaid expenses and other current assets | (859) | (4,403) |
Other assets | (320) | 1,129 |
Accounts payable | 695 | 270 |
Accrued employee expenses | 1,919 | 486 |
Accrued expenses | 5,931 | (14) |
Deferred revenue | 815 | 1,039 |
Operating lease liabilities | (1,135) | (2,886) |
Other liabilities | 16,539 | 996 |
Net cash provided by operating activities | 45,216 | 23,413 |
Cash from investing activities | ||
Purchases of available-for-sale investments | (29,879) | (10,690) |
Proceeds from sales of available-for-sale investments | 13,942 | 2,750 |
Proceeds from maturities of available-for-sale investments | 13,300 | 11,000 |
Purchases of property, equipment and intangible assets | (16,551) | (4,115) |
Additions to capitalized software | (19,697) | (15,669) |
Cash paid in business acquisition, net of cash acquired | 0 | (54,004) |
Proceeds from sale of business, net of cash divested | 191,427 | 0 |
Net cash provided by (used in) investing activities | 152,542 | (70,728) |
Cash from financing activities | ||
Proceeds from stock option exercises | 402 | 259 |
Tax withholding for net share settlement | (10,959) | (5,541) |
Payment of contingent consideration | (5,977) | 0 |
Proceeds from issuance of debt | 50,752 | 1,697 |
Principal payments on debt | (99,565) | (2,634) |
Payment of debt issuance costs | 0 | (420) |
Purchase of treasury stock | (4,194) | 0 |
Net cash used in financing activities | (69,541) | (6,639) |
Net increase (decrease) in cash, cash equivalents and restricted cash | 128,217 | (53,954) |
Cash, cash equivalents and restricted cash | ||
Beginning of period | 16,247 | 74,506 |
End of period | 144,464 | 20,552 |
Noncash investing and financing activities | ||
Purchases of property and equipment included in accounts payable and accrued expenses | 1,748 | 1,613 |
Additions of capitalized software included in accrued and accrued employee expenses | 756 | 601 |
Stock-based compensation capitalized for software development | 1,535 | 1,321 |
Purchase consideration for acquisitions included in other current liabilities | 0 | 5,977 |
Total cash, cash equivalents and restricted cash | $ 144,464 | $ 20,552 |
Nature of Business
Nature of Business | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | Nature of Business AppFolio, Inc.'s (the "Company," “we,” "us" or "our") mission is to revolutionize vertical industry businesses by providing great software and services. We offer industry-specific, cloud-based business software solutions, services and data analytics to our customers. Although specific functionality varies by product, our core solutions address common business operations and interactions of our customers' businesses. In addition to our core solutions, we offer a range of optional, but often business-critical, Value+ services. Our Value+ services are built to enhance, automate and streamline processes and support workflows essential to our customers' businesses. Our real estate software solutions represent approximately 90% of our revenue as of September 30, 2020. The significant majority of our customers in the real estate vertical use our property management solutions, which provide our property management customers, including third-party property managers and owner-operators who manage single- and multi-family residences, community associations, commercial properties, and student housing, as well as mixed real estate portfolios, with a system of record to automate essential business processes, a system of engagement to enhance business interactions between our customers and their clients and other stakeholders, and a system of intelligence designed to leverage data to predict and optimize business workflows in order to enable superior customer experiences and increase efficiency across our customers' businesses. We also provide software solutions to real estate investment managers. During the periods covered by this Quarterly Report, we also provided software solutions and services to the legal vertical that enabled law firms to administer their practice and manage their caseloads more efficiently by centralizing case details in a single system of record and system of engagement. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation and Significant Accounting Policies The accompanying unaudited Condensed Consolidated Financial Statements were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, these Condensed Consolidated Financial Statements should be read in conjunction with our audited consolidated financial statements and the related notes included in our Annual Report, which was filed with the SEC on March 2, 2020. The year-end condensed balance sheet was derived from our audited consolidated financial statements. Our unaudited interim Condensed Consolidated Financial Statements include, in the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair statement of our Condensed Consolidated Financial Statements. The operating results for the nine months ended September 30, 2020 are not necessarily indicative of the results expected for the full year ending December 31, 2020. Reclassifications We reclassified certain amounts in our Condensed Consolidated Statements of Cash Flows within the cash from investing activities section in the prior year to conform to the current year's presentation. Changes in Accounting Policies Except as described below under Recently Adopted Accounting Pronouncements , there have been no significant changes in our accounting policies from those disclosed in our annual consolidated financial statements and the related notes included in our Annual Report. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue, expenses, other income, and provision for income taxes during the reporting period. Assets and liabilities which are subject to judgment and use of estimates include the fair value of assets and liabilities assumed in business combinations, fair value of financial instruments, capitalized software costs, period of benefit associated with deferred costs, incremental borrowing rate used to measure operating lease liabilities, the recoverability of goodwill and long-lived assets, income taxes, useful lives associated with property and equipment and intangible assets, contingencies, and valuation and assumptions underlying stock-based compensation and other equity instruments. During early calendar year 2020, the novel coronavirus disease ("COVID-19") spread globally, including to every state in the United States. The global pandemic has created and may continue to create significant uncertainty in a wide variety of industries and markets and has prompted many federal, state, local, and foreign governments to adopt various orders and restrictions in an attempt to control the spread and mitigate the impact of the disease, which may reduce demand for our core solutions and/or Value+ services, impact the productivity of our workforce, reduce our access to capital, and harm our business and results of operations. These potential impacts are only amplified by the length of time they remain in place, as the cumulative effect upon our customers and their businesses may only exacerbate potential harm to our business and results of operations. In light of the unknown duration and severity of COVID-19, we face a greater degree of uncertainty than normal in making the judgments and estimates needed to apply our significant accounting policies. We assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to us and the unknown future impacts of COVID-19 as of September 30, 2020 and through the date of this report. The accounting matters assessed included, but were not limited to, our allowance for credit losses, the carrying value of goodwill and other long-lived assets, performance-based compensation and income taxes. As of the date of our Condensed Consolidated Financial Statements, we are not aware of any specific event or circumstance that would require us to update our estimates or judgments or to revise the carrying value of our assets or liabilities. However, these estimates and judgments may change as new events occur and additional information is obtained, which may result in changes being recognized in our consolidated financial statements in future periods. While we considered the effects of COVID-19 in our estimates and assumptions, due to the level of uncertainty regarding the economic and operational impacts of COVID-19 on our business, there may be other judgments and assumptions that we have not considered. Such judgments and assumptions could result in a meaningful impact on our financial statements in future periods. Actual results could differ from those estimates and any such differences may have a material impact on our financial statements. Net Income per Common Share Net income per common share was the same for shares of our Class A and Class B common stock because they are entitled to the same liquidation and dividend rights and are therefore combined in the table below. The following table presents a reconciliation of the weighted average number of shares of our Class A and Class B common stock used to compute net income per common share (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Weighted average common shares outstanding 34,301 34,050 34,246 33,995 Less: Weighted average unvested restricted shares subject to repurchase 5 3 5 4 Weighted average common shares outstanding; basic 34,296 34,047 34,241 33,991 Plus: Weighted average options, restricted stock units and restricted shares used to compute diluted net income per common share 1,369 1,374 1,421 1,415 Weighted average common shares outstanding; diluted 35,665 35,421 35,662 35,406 For the three and nine months ended September 30, 2020 and 2019, an aggregate of 130,000 and 361,000 shares, respectively, underlying performance-based stock options ("PSOs") and performance-based restricted stock units ("PSUs") were not included in the computations of diluted and anti-dilutive shares as they are considered contingently issuable upon the satisfaction of pre-defined performance measures and their respective performance measures have not been met. Restricted stock units ("RSUs") with an anti-dilutive effect were excluded from the calculation of weighted average number of shares used to compute diluted net income per common share and they were not material for the three and nine months ended September 30, 2020 and 2019. Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"), which amends the current accounting guidance and requires the measurement of all expected losses based on historical experience, current conditions and reasonable and supportable forecasts. This guidance amends the accounting for credit losses for available-for-sale investment securities and purchased financial assets with credit deterioration. We adopted ASU 2016-13 on January 1, 2020. The adoption of this guidance did not have a material impact on our financial condition, results of operations, cash flows or disclosures. In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15"), a series of amendments which align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by these amendments. We adopted ASU 2018-15 on January 1, 2020. The adoption of this guidance did not have a material impact on our financial condition, results of operations, cash flows or disclosures. Recent Accounting Pronouncements Not Yet Adopted In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). This amendment was issued to simplify the accounting for income taxes by removing certain exceptions for recognizing deferred taxes, performing intraperiod allocation, and calculating income taxes in interim periods. Further, ASU 2019-12 adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax basis goodwill and allocating taxes to members of a consolidated group. This guidance also requires an entity to reflect the effect of an enacted change in tax laws or rates in its effective income tax rate in the first interim period that includes the enactment date of the new legislation, aligning the timing of recognition of the effects from enacted tax law changes on the effective income tax rate with the effects on deferred income tax assets and liabilities. Under existing guidance, an entity recognizes the effects of the enacted tax law change on the effective income tax rate in the period that includes the effective date of the tax law. This guidance is effective for interim and annual periods beginning after December 15, 2020 with early adoption permitted. We do not expect the adoption of this guidance to have a material impact on our financial condition, results of operations, cash flows or disclosures. |
Divestitures and Business Combi
Divestitures and Business Combinations | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Divestitures and Business Combinations | Divestitures and Business Combinations Divestiture of MyCase On September 30, 2020, we completed the MyCase Transaction for $193.0 million, consisting of $192.2 million of cash proceeds, plus a $2.2 million employee retention bonus pool funded by the Company, less cash divested of $0.8 million and a preliminary working capital adjustment of $0.6 million. The retention bonus pool is refundable to the Company to the extent that MyCase employees are terminated prior to the retention period, which is one year from the closing date of the MyCase Transaction. A portion of the cash proceeds was used to pay all outstanding borrowings under the Credit Facility. Refer to Note 8, Long-Term Debt, of our Condensed Consolidated Financial Statements for more information about the termination of the Credit Facility. We recognized a pre-tax gain on the sale of $187.6 million on the MyCase Transaction, consisting of cash proceeds of $192.2 million, less net assets divested of $4.6 million. Net assets divested is primarily comprised of capitalized software of $3.9 million, deferred revenue of $2.8 million and goodwill allocated to MyCase of $2.3 million. The gain on the sale is included within Other income (expense), net in our Condensed Consolidated Statements of Operations. Income received in relation to the transition services to be provided by the Company to MyCase will be included within Other income (expense), net in our Condensed Consolidated Statements of Operations. Refer to Note 1, Nature of Business , of our Condensed Consolidated Financial Statements for more information about the MyCase Transaction. Acquisition of Dynasty On January 7, 2019, we acquired 100% of the voting equity interest of Dynasty Marketplace, Inc. ("Dynasty") for $60.2 million, of which $6.0 million (the "Holdback Amount") was retained by the Company to satisfy any necessary adjustments, including without limitation certain indemnification claims. The balance of the Holdback Amount, less any amount retained with respect to any unresolved indemnification claims, was released to the stockholders of Dynasty on January 10, 2020 in accordance with the terms of the purchase agreement. Dynasty is a provider of advanced artificial intelligence solutions for the real estate vertical, which automate leasing communications, replace manual tasks and help customers grow their portfolios. The transaction was accounted for using the acquisition method and, as a result, assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date. Determining the fair value of assets acquired and liabilities assumed requires management to make significant judgments and estimates, including the selection of valuation methodologies and comparable companies, estimates of future revenue and cash flows, discount rates, and the software decay rate and database ramp up rate. The following table summarizes the final purchase price allocation (in thousands), as well as the estimated useful lives of the acquired intangible assets over which they are amortized on a straight-line basis, as this approximates the pattern in which we expect the economic benefits will be consumed: Amount Estimated Useful Life (in years) Total current assets $ 305 Identified intangible assets: Technology 5,730 4.0 Database 4,710 10.0 Customer relationships 1,110 5.0 Backlog 470 1.0 Trademark & trade name 1,390 10.0 Non-compete agreement 7,340 5.0 Total intangible assets subject to amortization 20,750 6.0 Goodwill 42,877 Indefinite Other noncurrent assets 35 Total assets acquired 63,967 Accrued and other liabilities 48 Deferred tax liability, net 3,711 Total liabilities assumed 3,759 Purchase consideration $ 60,208 Goodwill is mainly attributable to synergies expected from the acquisition and assembled workforce and is non-deductible for U.S. federal income tax purposes. We incurred a total of $0.3 million in transaction costs related to the acquisition and expensed all transaction costs incurred during the period in which such service was received. Pro Forma Results The following unaudited pro forma information has been prepared for illustrative purposes only, and assumes that the aforementioned Dynasty acquisition occurred on January 1, 2018, and includes pro forma adjustments related to the amortization of acquired intangible assets, elimination of historical interest and amortization expense, income taxes, compensation arrangements, and the transaction costs incurred. The unaudited pro forma results have been prepared based on estimates and assumptions, which we believe are reasonable; however, they are not necessarily indicative of the consolidated results of operations had the acquisitions occurred at the beginning of the periods presented, or of future results of operations. The unaudited pro forma results are as follows (in thousands): Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Revenue $ 67,935 $ 188,685 Net income 4,978 27,911 |
Investment Securities and Fair
Investment Securities and Fair Value Measurements | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Investment Securities and Fair Value Measurements | Investment Securities and Fair Value Measurements Investment Securities Investment securities classified as available-for-sale consisted of the following as of September 30, 2020 and December 31, 2019 (in thousands): September 30, 2020 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Agency securities $ 3,104 $ 34 $ — $ 3,138 Treasury securities 34,618 68 — 34,686 Total available-for-sale investment securities $ 37,722 $ 102 $ — $ 37,824 December 31, 2019 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Corporate bonds $ 9,597 $ 18 $ (1) $ 9,614 Agency securities 11,101 17 — 11,118 Treasury securities 14,222 12 (1) 14,233 Total available-for-sale investment securities $ 34,920 $ 47 $ (2) $ 34,965 For available-for-sale debt securities in an unrealized loss position, we first assess whether we intend to sell, or whether it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If either of these criteria is met, the security’s amortized cost basis is written down to fair value through income. For securities in an unrealized loss position that do not meet these criteria, we evaluate whether the decline in fair value has resulted from credit loss or other factors. If this assessment indicates a credit loss exists, the credit-related portion of the loss is recorded as an allowance for losses on the security. No allowance for credit losses for available-for-sale investment securities was recorded as of September 30, 2020. As of September 30, 2020 and December 31, 2019, the contractual maturities of our investments did not exceed 36 months. The fair values of available-for-sale investment securities, by remaining contractual maturity, are as follows (in thousands): September 30, 2020 December 31, 2019 Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value Due in one year or less $ 32,658 $ 32,689 $ 22,846 $ 22,876 Due after one year through three years 5,064 5,135 12,074 12,089 Total available-for-sale investment securities $ 37,722 $ 37,824 $ 34,920 $ 34,965 During the nine months ended September 30, 2020 and 2019, we had sales and maturities (which include calls) of investment securities, as follows (in thousands): Nine Months Ended September 30, 2020 Gross Realized Gains Gross Realized Losses Gross Proceeds from Sales Gross Proceeds from Maturities Corporate bonds $ 5 $ — $ 4,006 $ 5,600 Agency securities 25 — 7,878 1,900 Treasury securities 4 — 2,058 5,800 Total $ 34 $ — $ 13,942 $ 13,300 Nine Months Ended September 30, 2019 Gross Realized Gains Gross Realized Losses Gross Proceeds from Sales Gross Proceeds from Maturities Corporate bonds $ — $ (1) $ 2,750 $ 8,350 Agency securities — — — 2,650 Total $ — $ (1) $ 2,750 $ 11,000 Interest income, net of the amortization and accretion of the premium and discount, was $0.1 million for each of the three months ended September 30, 2020 and 2019, and $0.3 million and $0.5 million for the nine months ended September 30, 2020 and 2019, respectively. Fair Value Measurements Recurring Fair Value Measurements Financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following tables summarize our financial assets measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019 by level within the fair value hierarchy (in thousands): September 30, 2020 Level 1 Level 2 Level 3 Total Fair Cash equivalents: Money market funds $ 4,781 $ — $ — $ 4,781 Treasury securities 600 — — 600 Available-for-sale investment securities: Corporate bonds — — — — Agency securities — 3,138 — 3,138 Treasury securities 34,686 — — 34,686 Total $ 40,067 $ 3,138 $ — $ 43,205 December 31, 2019 Level 1 Level 2 Level 3 Total Fair Cash equivalents: Money market funds $ 337 $ — $ — $ 337 Available-for-sale investment securities: Corporate bonds — 9,614 — 9,614 Agency securities — 11,118 — 11,118 Treasury securities 14,233 — — 14,233 Total $ 14,570 $ 20,732 $ — $ 35,302 The carrying amounts of cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities approximate fair value because of the short maturity of these items. The estimated fair value of the $50.0 million term loan issued by Wells Fargo Bank, National Association ("Wells Fargo"), as administrative agent, and the lenders that are parties thereto ("Term Loan") and the $50.0 million revolving credit facility made available to us by Wells Fargo and the lenders that are parties thereto ("Revolving Facility," and, together with the Term Loan, the "Credit Facility"), approximated their carrying values due to the variable interest rates. We considered the fair value of the Term Loan and the Revolving Facility to be Level 2 measurements as these debt instruments were not actively traded. We carried the Term Loan at face value less the unamortized discount. Refer to Note 8, Long-Term Debt, of our Condensed Consolidated Financial Statements for more information about our since-terminated Term Loan and Revolving Facility. There were no changes to our valuation techniques used to measure financial asset and financial liability fair values on a recurring basis during the nine months ended September 30, 2020. The valuation techniques for the financial assets in the tables above are as follows: Cash Equivalents As of September 30, 2020 and December 31, 2019, cash equivalents include cash invested in money market funds and treasury securities with a maturity of three months or less. Fair value is based on market prices for identical assets. Available-for-Sale Investment Securities Our Level 2 securities were priced by a pricing vendor. The pricing vendor utilizes the most recent observable market information in pricing these securities or, if specific prices are not available for these securities, other observable inputs like market transactions involving comparable securities are used. Non-Recurring Fair Value Measurements Certain assets, including goodwill, intangible assets and our note receivable with SecureDocs, Inc., are also subject to measurement at fair value on a non-recurring basis using Level 3 measurement, but only when they are deemed to be impaired. For the nine months ended September 30, 2020 and 2019, no impairments were identified on those assets required to be measured at fair value on a non-recurring basis. |
Internal-Use Software Developme
Internal-Use Software Development Costs | 9 Months Ended |
Sep. 30, 2020 | |
Research and Development [Abstract] | |
Internal-Use Software Development Costs | Internal-Use Software Development Costs Internal-use software development costs as of September 30, 2020 and December 31, 2019 were as follows (in thousands): September 30, December 31, Internal use software development costs, gross $ 90,451 $ 81,475 Less: Accumulated amortization (56,908) (51,452) Internal use software development costs, net $ 33,543 $ 30,023 Capitalized software development costs were $6.9 million and $6.5 million for the three months ended September 30, 2020 and 2019, respectively, and $20.8 million and $17.1 million for the nine months ended September 30, 2020 and 2019, respectively. Amortization expense with respect to capitalized software development costs totaled $4.7 million and $3.6 million for the three months ended September 30, 2020 and 2019, respectively, and $13.3 million and $10.0 million for the nine months ended September 30, 2020 and 2019, respectively. During the three months ended September 30, 2020, $3.9 million in capitalized software development costs were divested in connection with the MyCase Transaction. Future amortization expense with respect to capitalized software development costs as of September 30, 2020 is estimated as follows (in thousands): Years Ending December 31, 2020 $ 4,424 2021 15,834 2022 10,608 2023 2,677 Total amortization expense $ 33,543 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Goodwill | Intangible Assets and Goodwill Intangible assets consisted of the following as of September 30, 2020 and December 31, 2019 (in thousands, except years): September 30, 2020 Gross Carrying Accumulated Net Carrying Weighted Average Useful Life in Years Customer relationships $ 2,840 $ (1,436) $ 1,404 5.0 Database 8,330 (1,578) 6,752 10.0 Technology 6,539 (3,250) 3,289 4.0 Trademarks and trade names 1,890 (633) 1,257 5.0 Partner relationships 680 (680) — 3.0 Non-compete agreements 7,400 (2,594) 4,806 5.0 Domain names 90 (68) 22 5.0 Patents 252 (238) 14 5.0 $ 28,021 $ (10,477) $ 17,544 6.3 December 31, 2019 Gross Carrying Accumulated Net Carrying Weighted Average Useful Life in Years Customer relationships $ 3,070 $ (1,296) $ 1,774 5.0 Database 8,330 (954) 7,376 10.0 Technology 10,541 (6,074) 4,467 5.0 Trademarks and trade names 2,690 (898) 1,792 6.0 Partner relationships 680 (680) — 3.0 Non-compete agreements 7,400 (1,484) 5,916 5.0 Domain names 301 (276) 25 5.0 Patents 252 (225) 27 5.0 Backlog 470 (470) — 1.0 $ 33,734 $ (12,357) $ 21,377 6.2 Amortization expense with respect to intangible assets totaled $1.2 million and $1.3 million for the three months ended September 30, 2020 and 2019, respectively, and $3.7 million and $4.0 million for the nine months ended September 30, 2020 and 2019, respectively. Future amortization expense with respect to intangible assets is estimated as follows (in thousands): Years Ending December 31, 2020 $ 1,186 2021 4,647 2022 4,605 2023 3,060 2024 1,197 Thereafter 2,849 Total amortization expense $ 17,544 Our goodwill balance is solely attributed to acquisitions. As a result of the disposal of goodwill associated with the MyCase Transaction, we performed a goodwill impairment assessment as of September 30, 2020 on our remaining goodwill balance. There have been no impairment charges recorded against goodwill. The change in the carrying amount of goodwill during the nine months ended September 30, 2020 is as follows (in thousands): Goodwill at December 31, 2019 $ 58,425 Goodwill attributed to MyCase divestiture (2,278) Goodwill at September 30, 2020 $ 56,147 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | Leases Operating leases for our corporate offices have remaining lease terms ranging from one Lease-related assets and liabilities were as follows as of September 30, 2020 and December 31, 2019 (in thousands): September 30, December 31, Assets Prepaid expenses and other current assets $ 2,901 $ 3,908 Operating lease right-of-use assets 24,645 27,803 Liabilities Other current liabilities $ 2,021 $ 2,826 Operating lease liabilities 32,755 33,312 Total lease liabilities $ 34,776 $ 36,138 Future minimum lease payments under non-cancellable leases as of September 30, 2020 were as follows (in thousands): Years ending December 31, 2020 (1) $ (1,027) 2021 (1) 2,240 2022 4,085 2023 3,977 2024 3,908 Thereafter 29,590 Total future minimum lease payments 42,773 Less: imputed interest (10,898) Total (2) $ 31,875 (1) Future minimum lease payments are presented net of tenant improvement allowances of $2.3 million. (2) Total future minimum lease payments include the current portion of lease liabilities recorded in Prepaid expenses and other current assets of $2.9 million on our Condensed Consolidated Balance Sheets, which relates to certain of our leases for which the lease incentives to be received exceed the minimum lease payments to be paid over the next 12 months. |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Credit Agreement On December 24, 2018, we entered into Amendment Number Two to the Credit Agreement (the "Second Amendment") with Wells Fargo, as administrative agent, and the lenders that were parties thereto (as amended, the "Credit Agreement"). Under the terms of the Second Amendment, the lenders issued the Term Loan to us and increased the amount available under the Revolving Facility to $50.0 million. The maturity date of the Term Loan and Revolving Facility was December 24, 2023. In addition, pursuant to the Second Amendment, we were permitted to make certain restricted junior payments, including, without limitation, repurchases of our common stock, and to enter into acquisitions with no value limitation, so long as we maintained specified liquidity requirements and leverage ratios. The Second Amendment also modified certain financial covenants by, among other things, requiring us to maintain (i) an EBITDA-to-interest-expense ratio of not less than 3.0 to 1.0, and (ii) a funded-indebtedness-to-EBITDA ratio of not more than 3.5 to 1.0 (the "Required Leverage Ratio") (decreasing by 0.25 per year until the Required Leverage Ratio is 2.5 to 1.0); provided, however, that we were not required to maintain the foregoing ratios if our liquidity (defined as the sum of the remaining borrowing capacity under the Credit Agreement and available cash) had equaled or exceeded the greater of $20.0 million and 20% of the sum of the outstanding principal amount of the Term Loan and commitments under the Revolving Facility. If we entered into an acquisition with a purchase price greater than or equal to $20.0 million, then the Required Leverage Ratio would be increased by 0.5 for the 12-month period immediately following the consummation of such acquisition. The Credit Agreement contained customary affirmative, negative and financial covenants. The affirmative covenants required us to, among other things, disclose financial and other information to the lenders, maintain our business and properties, and maintain adequate insurance. The negative covenants restricted us from, among other things, incurring additional indebtedness, prepaying certain types of indebtedness, encumbering or disposing of our assets, making fundamental changes to our corporate structure, and making certain dividends and distributions. Under the terms of the Second Amendment, borrowings under the Credit Agreement would bear interest at a fluctuating rate per annum equal to, at our option, (i) LIBOR or (ii) an alternate base rate, in each case plus the applicable interest rate margin. Borrowings would fluctuate between LIBOR plus 1.5% per annum and LIBOR plus 2.0% per annum (or between the alternate base rate plus 0.5% per annum and the alternate base rate plus 1.0% per annum), based upon our Required Leverage Ratio. Fees payable on the unused portion of the Revolving Facility were 0.25% per annum, unless the average usage of the Revolving Facility was equal to or less than $30.0 million for the applicable period, in which case the fees on the unused portion of the Revolving Facility would have been 0.375% per annum. In connection with the MyCase Transaction, and as required by the terms of the Credit Agreement, the Credit Agreement was terminated and all obligations outstanding under the Term Loan and Revolving Facility thereunder, including all guarantees and security interests granted with respect to such obligations, were satisfied in full with proceeds from the MyCase Transaction and extinguished. Immediately prior to the repayment of amounts owed under, and termination of, the Credit Agreement, there were approximately $48.1 million in term loans outstanding and $49.1 million in revolving borrowings outstanding. Refer to Note 1, Nature of Business , and Note 3, Divestitures and Business Combinations , of our Condensed Consolidated Financial Statements for more information about the MyCase Transaction. Debt Financing Costs As a result of the Second Amendment, we incurred $0.4 million in financing fees that were capitalized and amortized over the remaining life of the related debt, $0.2 million of which was related to the Term Loan and $0.2 million of which was related to the Revolving Facility. Pursuant to GAAP, the Second Amendment is accounted for as a debt modification. As a result, the unamortized deferred debt financing costs related to the Revolving Facility prior to the Second Amendment were added to the $0.2 million of deferred debt financing costs related to the Second Amendment and amortized over the remaining life of the Revolving Facility. Debt financing costs were deferred and amortized using the straight-line method, which approximated the effective interest method, for costs related to the Term Loan, and the straight-line method for costs related to the Revolving Facility, over the term of the debt arrangement; such amortization is included in interest expense in our Condensed Consolidated Statements of Operations. Amortization of deferred debt financing costs was not material for the three and nine months ended September 30, 2020 or 2019. As of September 30, 2020 the remaining unamortized deferred debt financing costs of $0.4 million were expensed to Interest expense, net in our Condensed Consolidated Statements of Operations, in connection with the termination of the Credit Agreement. At December 31, 2019, the remaining unamortized deferred debt financing costs were $0.4 million, of which $0.2 million was offset against debt. As of December 31, 2019, $0.3 million of the remaining unamortized deferred debt financing costs were recorded in prepaid expenses and other current assets and other long-term assets on our Condensed Consolidated Balance Sheets, as they pertained to the Revolving Facility. The following is a summary of our long-term debt as of September 30, 2020 and December 31, 2019 (in thousands): September 30, December 31, Principal amounts due under Term Loan $ — $ 48,750 Unamortized debt financing costs — (167) Long-term debt, net of unamortized debt financing costs $ — $ 48,583 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Liability to Landlord Insurance We have a wholly owned subsidiary, Terra Mar Insurance Company, Inc., which was established to provide our customers with the option to purchase legal liability to landlord insurance. If our customers choose to use this insurance service, they are issued an insurance policy underwritten by our third-party service provider. The policy has a limit of $100,000 per incident for each insured residence. We have entered into a reinsurance agreement with our third-party service provider and, as a result, we assume a 100% quota share of the legal liability to landlord insurance provided to our customers through our third-party service provider. We accrue for reported claims, and include an estimate of losses incurred but not reported by our property manager customers, in cost of revenue because we bear the risk related to all such claims. Our liability for reported claims and incurred but not reported claims as of September 30, 2020 and December 31, 2019 was $1.4 million and $1.8 million, respectively, and is included in other current liabilities on our Condensed Consolidated Balance Sheets. Included in prepaid expenses and other current assets as of September 30, 2020 and December 31, 2019 are $1.7 million and $1.3 million, respectively, of deposits held with a third party related to requirements to maintain collateral for this insurance service. Legal Proceedings In December 2018, we received a Civil Investigative Demand from the Federal Trade Commission ("FTC") requesting certain information relating to our compliance with the Fair Credit Reporting Act (the “FCRA”) in connection with our tenant screening Value+ service (the "FTC Investigation"). On April 30, 2020, the FTC staff informed us of its belief that there is a reasonable basis for asserting claims against us for our alleged failure to comply with certain sections of the FCRA that could result in monetary penalty and/or injunctive relief. We disagree with the stated belief of the FTC and have vigorously defended our position. Notwithstanding our disagreement with the FTC's position, and primarily in an effort to avoid protracted litigation and potential distraction to our business, we have entered into settlement negotiations with the FTC in an effort to resolve all claims and allegations arising out of or relating to the FTC Investigation. Although the final outcome of the FTC Investigation is subject to ongoing settlement discussions and therefore remains uncertain, we have determined that a loss is probable and that a reasonable estimate of the loss is approximately $4.3 million. Accordingly, we have recognized an accrual of $4.3 million during the nine months ended September 30, 2020 within accrued expenses on our Condensed Consolidated Balance Sheet. While this amount represents our best judgment of the probable loss based on information currently available to us, it is subject to significant judgments and estimates and numerous factors beyond our control, including without limitation the FTC's position with respect to the ongoing settlement negotiations. In the event that the FTC Investigation results in a settlement payment by us, or a judgment against us, in an amount significantly in excess of our accrual, the resulting liability could have a material adverse effect upon our financial condition, results of operations and liquidity. In July 2019, we received a Request for Information from the Civil Rights Division (Housing and Civil Enforcement Section) of the U.S. Department of Justice ("DOJ") requesting certain information relating to our compliance with the Servicemembers Civil Relief Act (the "SCRA") in connection with our tenant screening Value+ service. On November 6, 2020, the DOJ issued a no action letter, declining to take any action against us and closing its investigation. In addition, from time to time, we are involved in various other investigatory inquiries, legal proceedings and other disputes arising from or related to matters incident to the ordinary course of our business activities, including actions with respect to intellectual property, employment, regulatory and contractual issues. Although the results of such investigatory inquiries, legal proceedings and other disputes cannot be predicted with certainty, we believe that we are not currently a party to any matters which, if determined adversely to us, would, individually or taken together, have a material adverse effect on our business, operating results, financial condition or cash flows. However, regardless of the merit of any matters raised or the ultimate outcome, investigatory inquiries, legal proceedings and other disputes may generally have an adverse impact on us as a result of defense and settlement costs, diversion of management resources, and other factors. Indemnification In the ordinary course of business, we may provide indemnification of varying scope and terms to customers, vendors, investors, directors and officers with respect to certain matters, including, but not limited to, losses arising out of our breach of applicable agreements, services to be provided by us, or intellectual property infringement claims made by third parties. These indemnification provisions may survive termination of the underlying agreement and the maximum potential amount of future payments we could be required to make may not be subject to maximum loss clauses and may therefore be indeterminable. We have never paid a material claim, nor have any legal claims been brought against us in connection with these indemnification arrangements. As of September 30, 2020 and December 31, 2019, we had not accrued a liability for these indemnification obligations because we determined that the likelihood of incurring any payment obligation in connection with these indemnification arrangements is not probable or reasonably possible, and the amount or range of amounts of any such liability is not reasonably estimable. |
Share Repurchase Program
Share Repurchase Program | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Share Repurchase Program | Share Repurchase Program On February 20, 2019, our Board of Directors authorized a $100.0 million share repurchase program (the "Share Repurchase Program") relating to our outstanding shares of Class A common stock. Under the Share Repurchase Program, share repurchases may be made from time to time, as directed by a committee consisting of three directors, in open market purchases or privately negotiated transactions at a repurchase price that the members of the committee unanimously believe is below intrinsic value conservatively determined. The Share Repurchase Program does not obligate us to repurchase any specific dollar amount or number of shares, there is no expiration date for the Share Repurchase Program, and it may be modified, suspended or terminated at any time and for any reason. During the three months ended March 31, 2020, we repurchased a total of 48,002 shares of our Class A common stock through open market repurchases, and recorded a $4.2 million reduction to stockholders' equity, which includes broker commissions. We have not made any repurchases under the Share Repurchase Program subsequent to the three months ended March 31, 2020. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Stock Options A summary of activity in connection with our stock options for the nine months ended September 30, 2020, is as follows (number of shares in thousands): Number of Weighted Weighted Options outstanding as of December 31, 2019 1,342 $ 11.84 5.9 Options granted — — Options exercised (59) 6.87 Options cancelled/forfeited (55) 23.76 Options outstanding as of September 30, 2020 1,228 $ 11.53 5.1 During the nine months ended September 30, 2020, 77,000 PSOs vested based on the achievement of 95% of the pre-established free cash flow performance target for the year ended December 31, 2019, and 40,000 PSOs vested based on the achievement of 115% of the pre-established gross margin target for the year ended December 31, 2019. Our stock-based compensation expense for stock options for the three and nine months ended September 30, 2020 and 2019 was not material. As of September 30, 2020, the total estimated remaining stock-based compensation expense for unvested stock options was not material. The fair value of stock options is estimated on their date of grant using the Black-Scholes option-pricing model. No stock options were granted during the nine months ended September 30, 2020 or 2019. Restricted Stock Units A summary of activity in connection with our RSUs for the nine months ended September 30, 2020, is as follows (number of shares in thousands): Number of Shares Weighted Average Grant Date Fair Value per Share Unvested as of December 31, 2019 646 $ 52.42 Granted 164 109.29 Vested (247) 34.75 Forfeited (57) 69.16 Unvested as of September 30, 2020 506 $ 77.63 During the nine months ended September 30, 2020, we granted 150,000 RSUs that are subject to time-based vesting in equal annual installments over four years, and 14,000 PSUs that are subject to vesting based on the achievement of pre-established consolidated net revenue growth targets for the years ending December 31, 2020, 2021 and 2022, assuming continued employment throughout the performance period. The number of PSUs granted, as included in the above table, assumes achievement of the performance metric at 100% of the performance target. The actual number of shares to be issued at the end of the performance period will range from 0% to 100% of the initial target awards. Achievement of the performance metric between 100% and 150% of the performance target will result in a performance-based cash bonus payment between 100% and 165% of the initial target awards. During the nine months ended September 30, 2020, 84,000 PSUs vested and 4,000 PSUs were cancelled based on the achievement of 95% of the pre-established free cash flow performance target for the year ended December 31, 2019. Included in the unvested RSUs as of September 30, 2020 are 34,000 and 82,000 PSUs granted in 2019 and 2018, respectively. Of these PSUs, 48,000 are subject to vesting based on the achievement of a pre-established consolidated net revenue growth target for the year ending December 31, 2020, 43,000 are subject to vesting based on the achievement of a pre-established consolidated net revenue growth target for the year ending December 31, 2021, and 25,000 are subject to vesting based on the achievement of a pre-established consolidated net revenue growth target for the year ending December 31, 2022. The number of PSUs granted assumes achievement of the performance metric at 100% of the performance target. The actual number of shares to be issued at the end of the performance period will range from 0% to 100% of the initial target awards. Achievement of the performance metric between 100% and 150% of the performance target will result in a performance-based cash bonus payment between 100% and 165% of the initial target awards. We recognize expense for the PSUs based on the grant date fair value of the PSUs that we determine are probable of vesting. Adjustments to compensation expense are made each period based on changes in our estimate of the number of PSUs that are probable of vesting. Our stock-based compensation expense for the RSUs and PSUs for the three months ended September 30, 2020 and 2019 was $3.4 million and $2.5 million, respectively, and $7.8 million and $6.1 million for the nine months ended September 30, 2020 and 2019, respectively. As of September 30, 2020, the total estimated remaining stock-based compensation expense for the RSUs and PSUs was $25.2 million, which is expected to be recognized over a weighted average period of 2.3 years. Restricted Stock Awards A summary of activity in connection with our restricted stock awards for the nine months ended September 30, 2020 is as follows (number of shares in thousands): Number of Weighted Average Unvested as of December 31, 2019 5 $ 105.88 Granted 3 160.34 Vested (3) 111.38 Forfeited — — Unvested as of September 30, 2020 5 $ 139.72 We have the right to repurchase any unvested restricted stock awards subject to certain conditions. Restricted stock awards vest over a one-year period. We recognized stock-based compensation expense for restricted stock awards of $0.2 million and $0.1 million for the three months ended September 30, 2020 and 2019, respectively, and $0.5 million and $0.2 million for the nine months ended September 30, 2020 and 2019, respectively. As of September 30, 2020, the total estimated remaining stock-based compensation expense for unvested restricted stock awards with a repurchase right was $0.4 million, which is expected to be recognized over a weighted average period of 0.7 years. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We calculate our benefit from income taxes on a quarterly basis by applying an estimated annual effective tax rate to income from operations and by calculating the tax effect of discrete items recognized during the quarter. For the three and nine months ended September 30, 2020, we recorded income tax expense of $52.6 million and $39.5 million, respectively. The tax provision for the three months ended September 30, 2020 ÷ includes a discrete tax expense of $47.9 million relating to the MyCase Transaction which includes $48.9 million of current tax expense on the expected gain on the sale of MyCase, less a $1.0 million benefit on the reversal of deferred tax liabilities relating to MyCase. For tax purposes, the Company plans to file an election to treat the transaction as a sale of assets. As such, the tax impact takes into consideration the tax basis of the assets on the date of sale and the availability of net operating losses and research and development tax credits. The effective tax rate as compared to the U.S. federal statutory rate of 21% differs primarily due to the significance of the benefits associated with stock-based compensation expense and research and development tax credits in relation to the forecasted pre-tax results for the year. For the three and nine months ended September 30, 2019, we recorded income tax benefit of $1.3 million and $26.9 million, respectively. During the second quarter of 2019, we evaluated all available positive and negative evidence, including our sustained profitability in 2018 and 2019, the impact of recent acquisitions and future projections of profitability. As a result, we determined that all of our deferred tax assets were more likely than not to be realized and reversed the valuation allowance against those deferred tax assets accordingly. There were no material changes to our unrecognized tax benefits during the nine months ended September 30, 2020 and we do not expect to have any significant changes to unrecognized tax benefits through the end of the fiscal year. |
Revenue and Other Information
Revenue and Other Information | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Revenue and Other Information | Revenue and Other Information The following table presents our revenue categories for the three and nine months ended September 30, 2020 and 2019 (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Core solutions $ 27,117 $ 22,503 $ 78,080 $ 64,934 Value+ services 53,392 41,645 149,122 114,399 Other 3,577 3,787 10,422 9,317 Total revenue $ 84,086 $ 67,935 $ 237,624 $ 188,650 During the nine months ended September 30, 2020 and 2019, we recognized $4.3 million and $3.2 million of revenue, respectively, which were included in the deferred revenue balances as of December 31, 2019 and 2018, respectively. Our revenue is generated primarily from customers in the United States. All of our property and equipment is located in the United States. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Basis of Presentation and Significant Accounting PoliciesThe accompanying unaudited Condensed Consolidated Financial Statements were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, these Condensed Consolidated Financial Statements should be read in conjunction with our audited consolidated financial statements and the related notes included in our Annual Report, which was filed with the SEC on March 2, 2020. The year-end condensed balance sheet was derived from our audited consolidated financial statements. Our unaudited interim Condensed Consolidated Financial Statements include, in the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair statement of our Condensed Consolidated Financial Statements. |
Reclassifications | Reclassifications We reclassified certain amounts in our Condensed Consolidated Statements of Cash Flows within the cash from investing activities section in the prior year to conform to the current year's presentation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue, expenses, other income, and provision for income taxes during the reporting period. Assets and liabilities which are subject to judgment and use of estimates include the fair value of assets and liabilities assumed in business combinations, fair value of financial instruments, capitalized software costs, period of benefit associated with deferred costs, incremental borrowing rate used to measure operating lease liabilities, the recoverability of goodwill and long-lived assets, income taxes, useful lives associated with property and equipment and intangible assets, contingencies, and valuation and assumptions underlying stock-based compensation and other equity instruments. During early calendar year 2020, the novel coronavirus disease ("COVID-19") spread globally, including to every state in the United States. The global pandemic has created and may continue to create significant uncertainty in a wide variety of industries and markets and has prompted many federal, state, local, and foreign governments to adopt various orders and restrictions in an attempt to control the spread and mitigate the impact of the disease, which may reduce demand for our core solutions and/or Value+ services, impact the productivity of our workforce, reduce our access to capital, and harm our business and results of operations. These potential impacts are only amplified by the length of time they remain in place, as the cumulative effect upon our customers and their businesses may only exacerbate potential harm to our business and results of operations. In light of the unknown duration and severity of COVID-19, we face a greater degree of uncertainty than normal in making the judgments and estimates needed to apply our significant accounting policies. We assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to us and the unknown future impacts of COVID-19 as of September 30, 2020 and through the date of this report. The accounting matters assessed included, but were not limited to, our allowance for credit losses, the carrying value of goodwill and other long-lived assets, performance-based compensation and income taxes. As of the date of our Condensed Consolidated Financial Statements, we are not aware of any specific event or circumstance that would require us to update our estimates or judgments or to revise the carrying value of our assets or liabilities. However, these estimates and judgments may change as new events occur and additional information is obtained, which may result in changes being recognized in our consolidated financial statements in future periods. While we considered the effects of COVID-19 in our estimates and assumptions, due to the level of uncertainty regarding the economic and operational impacts of COVID-19 on our business, there may be other judgments and assumptions that we have not considered. Such judgments and assumptions could result in a meaningful impact on our financial statements in future periods. Actual results could differ from those estimates and any such differences may have a material impact on our financial statements. |
Net Income per Common Share | Net Income per Common ShareNet income per common share was the same for shares of our Class A and Class B common stock because they are entitled to the same liquidation and dividend rights and are therefore combined in the table below. |
Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"), which amends the current accounting guidance and requires the measurement of all expected losses based on historical experience, current conditions and reasonable and supportable forecasts. This guidance amends the accounting for credit losses for available-for-sale investment securities and purchased financial assets with credit deterioration. We adopted ASU 2016-13 on January 1, 2020. The adoption of this guidance did not have a material impact on our financial condition, results of operations, cash flows or disclosures. In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15"), a series of amendments which align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by these amendments. We adopted ASU 2018-15 on January 1, 2020. The adoption of this guidance did not have a material impact on our financial condition, results of operations, cash flows or disclosures. Recent Accounting Pronouncements Not Yet Adopted In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). This amendment was issued to simplify the accounting for income taxes by removing certain exceptions for recognizing deferred taxes, performing intraperiod allocation, and calculating income taxes in interim periods. Further, ASU 2019-12 adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax basis goodwill and allocating taxes to members of a consolidated group. This guidance also requires an entity to reflect the effect of an enacted change in tax laws or rates in its effective income tax rate in the first interim period that includes the enactment date of the new legislation, aligning the timing of recognition of the effects from enacted tax law changes on the effective income tax rate with the effects on deferred income tax assets and liabilities. Under existing guidance, an entity recognizes the effects of the enacted tax law change on the effective income tax rate in the period that includes the effective date of the tax law. This guidance is effective for interim and annual periods beginning after December 15, 2020 with early adoption permitted. We do not expect the adoption of this guidance to have a material impact on our financial condition, results of operations, cash flows or disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Weighted Average Number of Shares | The following table presents a reconciliation of the weighted average number of shares of our Class A and Class B common stock used to compute net income per common share (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Weighted average common shares outstanding 34,301 34,050 34,246 33,995 Less: Weighted average unvested restricted shares subject to repurchase 5 3 5 4 Weighted average common shares outstanding; basic 34,296 34,047 34,241 33,991 Plus: Weighted average options, restricted stock units and restricted shares used to compute diluted net income per common share 1,369 1,374 1,421 1,415 Weighted average common shares outstanding; diluted 35,665 35,421 35,662 35,406 |
Divestitures and Business Com_2
Divestitures and Business Combinations (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Schedule of Purchase Price Allocation | The following table summarizes the final purchase price allocation (in thousands), as well as the estimated useful lives of the acquired intangible assets over which they are amortized on a straight-line basis, as this approximates the pattern in which we expect the economic benefits will be consumed: Amount Estimated Useful Life (in years) Total current assets $ 305 Identified intangible assets: Technology 5,730 4.0 Database 4,710 10.0 Customer relationships 1,110 5.0 Backlog 470 1.0 Trademark & trade name 1,390 10.0 Non-compete agreement 7,340 5.0 Total intangible assets subject to amortization 20,750 6.0 Goodwill 42,877 Indefinite Other noncurrent assets 35 Total assets acquired 63,967 Accrued and other liabilities 48 Deferred tax liability, net 3,711 Total liabilities assumed 3,759 Purchase consideration $ 60,208 |
Schedule of Pro Forma Information | The unaudited pro forma results are as follows (in thousands): Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Revenue $ 67,935 $ 188,685 Net income 4,978 27,911 |
Investment Securities and Fai_2
Investment Securities and Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Available-for-sale Securities | Investment securities classified as available-for-sale consisted of the following as of September 30, 2020 and December 31, 2019 (in thousands): September 30, 2020 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Agency securities $ 3,104 $ 34 $ — $ 3,138 Treasury securities 34,618 68 — 34,686 Total available-for-sale investment securities $ 37,722 $ 102 $ — $ 37,824 December 31, 2019 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Corporate bonds $ 9,597 $ 18 $ (1) $ 9,614 Agency securities 11,101 17 — 11,118 Treasury securities 14,222 12 (1) 14,233 Total available-for-sale investment securities $ 34,920 $ 47 $ (2) $ 34,965 |
Available-for-sale Investments, by Remaining Contract Maturity | The fair values of available-for-sale investment securities, by remaining contractual maturity, are as follows (in thousands): September 30, 2020 December 31, 2019 Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value Due in one year or less $ 32,658 $ 32,689 $ 22,846 $ 22,876 Due after one year through three years 5,064 5,135 12,074 12,089 Total available-for-sale investment securities $ 37,722 $ 37,824 $ 34,920 $ 34,965 |
Schedule of Sales, Calls, and Maturities | During the nine months ended September 30, 2020 and 2019, we had sales and maturities (which include calls) of investment securities, as follows (in thousands): Nine Months Ended September 30, 2020 Gross Realized Gains Gross Realized Losses Gross Proceeds from Sales Gross Proceeds from Maturities Corporate bonds $ 5 $ — $ 4,006 $ 5,600 Agency securities 25 — 7,878 1,900 Treasury securities 4 — 2,058 5,800 Total $ 34 $ — $ 13,942 $ 13,300 Nine Months Ended September 30, 2019 Gross Realized Gains Gross Realized Losses Gross Proceeds from Sales Gross Proceeds from Maturities Corporate bonds $ — $ (1) $ 2,750 $ 8,350 Agency securities — — — 2,650 Total $ — $ (1) $ 2,750 $ 11,000 |
Fair Value, Assets Measured on Recurring Basis | The following tables summarize our financial assets measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019 by level within the fair value hierarchy (in thousands): September 30, 2020 Level 1 Level 2 Level 3 Total Fair Cash equivalents: Money market funds $ 4,781 $ — $ — $ 4,781 Treasury securities 600 — — 600 Available-for-sale investment securities: Corporate bonds — — — — Agency securities — 3,138 — 3,138 Treasury securities 34,686 — — 34,686 Total $ 40,067 $ 3,138 $ — $ 43,205 December 31, 2019 Level 1 Level 2 Level 3 Total Fair Cash equivalents: Money market funds $ 337 $ — $ — $ 337 Available-for-sale investment securities: Corporate bonds — 9,614 — 9,614 Agency securities — 11,118 — 11,118 Treasury securities 14,233 — — 14,233 Total $ 14,570 $ 20,732 $ — $ 35,302 |
Internal-Use Software Develop_2
Internal-Use Software Development Costs (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Research and Development [Abstract] | |
Schedule of Capitalized Computer Software | Internal-use software development costs as of September 30, 2020 and December 31, 2019 were as follows (in thousands): September 30, December 31, Internal use software development costs, gross $ 90,451 $ 81,475 Less: Accumulated amortization (56,908) (51,452) Internal use software development costs, net $ 33,543 $ 30,023 |
Schedule of Capitalized Computer Software Future Amortization Expense | Future amortization expense with respect to capitalized software development costs as of September 30, 2020 is estimated as follows (in thousands): Years Ending December 31, 2020 $ 4,424 2021 15,834 2022 10,608 2023 2,677 Total amortization expense $ 33,543 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | Intangible assets consisted of the following as of September 30, 2020 and December 31, 2019 (in thousands, except years): September 30, 2020 Gross Carrying Accumulated Net Carrying Weighted Average Useful Life in Years Customer relationships $ 2,840 $ (1,436) $ 1,404 5.0 Database 8,330 (1,578) 6,752 10.0 Technology 6,539 (3,250) 3,289 4.0 Trademarks and trade names 1,890 (633) 1,257 5.0 Partner relationships 680 (680) — 3.0 Non-compete agreements 7,400 (2,594) 4,806 5.0 Domain names 90 (68) 22 5.0 Patents 252 (238) 14 5.0 $ 28,021 $ (10,477) $ 17,544 6.3 December 31, 2019 Gross Carrying Accumulated Net Carrying Weighted Average Useful Life in Years Customer relationships $ 3,070 $ (1,296) $ 1,774 5.0 Database 8,330 (954) 7,376 10.0 Technology 10,541 (6,074) 4,467 5.0 Trademarks and trade names 2,690 (898) 1,792 6.0 Partner relationships 680 (680) — 3.0 Non-compete agreements 7,400 (1,484) 5,916 5.0 Domain names 301 (276) 25 5.0 Patents 252 (225) 27 5.0 Backlog 470 (470) — 1.0 $ 33,734 $ (12,357) $ 21,377 6.2 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Future amortization expense with respect to intangible assets is estimated as follows (in thousands): Years Ending December 31, 2020 $ 1,186 2021 4,647 2022 4,605 2023 3,060 2024 1,197 Thereafter 2,849 Total amortization expense $ 17,544 |
Schedule of Goodwill | The change in the carrying amount of goodwill during the nine months ended September 30, 2020 is as follows (in thousands): Goodwill at December 31, 2019 $ 58,425 Goodwill attributed to MyCase divestiture (2,278) Goodwill at September 30, 2020 $ 56,147 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Schedule of Components of Lease Expense | Lease-related assets and liabilities were as follows as of September 30, 2020 and December 31, 2019 (in thousands): September 30, December 31, Assets Prepaid expenses and other current assets $ 2,901 $ 3,908 Operating lease right-of-use assets 24,645 27,803 Liabilities Other current liabilities $ 2,021 $ 2,826 Operating lease liabilities 32,755 33,312 Total lease liabilities $ 34,776 $ 36,138 |
Schedule of Minimum Lease Payments Under Leases | Future minimum lease payments under non-cancellable leases as of September 30, 2020 were as follows (in thousands): Years ending December 31, 2020 (1) $ (1,027) 2021 (1) 2,240 2022 4,085 2023 3,977 2024 3,908 Thereafter 29,590 Total future minimum lease payments 42,773 Less: imputed interest (10,898) Total (2) $ 31,875 (1) Future minimum lease payments are presented net of tenant improvement allowances of $2.3 million. (2) Total future minimum lease payments include the current portion of lease liabilities recorded in Prepaid expenses and other current assets of $2.9 million on our Condensed Consolidated Balance Sheets, which relates to certain of our leases for which the lease incentives to be received exceed the minimum lease payments to be paid over the next 12 months. |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Summary of Long-term Debt | The following is a summary of our long-term debt as of September 30, 2020 and December 31, 2019 (in thousands): September 30, December 31, Principal amounts due under Term Loan $ — $ 48,750 Unamortized debt financing costs — (167) Long-term debt, net of unamortized debt financing costs $ — $ 48,583 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Stock Option Activity | A summary of activity in connection with our stock options for the nine months ended September 30, 2020, is as follows (number of shares in thousands): Number of Weighted Weighted Options outstanding as of December 31, 2019 1,342 $ 11.84 5.9 Options granted — — Options exercised (59) 6.87 Options cancelled/forfeited (55) 23.76 Options outstanding as of September 30, 2020 1,228 $ 11.53 5.1 |
Schedule of Restricted Stock Units Activity | A summary of activity in connection with our RSUs for the nine months ended September 30, 2020, is as follows (number of shares in thousands): Number of Shares Weighted Average Grant Date Fair Value per Share Unvested as of December 31, 2019 646 $ 52.42 Granted 164 109.29 Vested (247) 34.75 Forfeited (57) 69.16 Unvested as of September 30, 2020 506 $ 77.63 |
Schedule of Restricted Stock Awards Activity | A summary of activity in connection with our restricted stock awards for the nine months ended September 30, 2020 is as follows (number of shares in thousands): Number of Weighted Average Unvested as of December 31, 2019 5 $ 105.88 Granted 3 160.34 Vested (3) 111.38 Forfeited — — Unvested as of September 30, 2020 5 $ 139.72 |
Revenue and Other Information (
Revenue and Other Information (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Product Information by Revenue Categories | The following table presents our revenue categories for the three and nine months ended September 30, 2020 and 2019 (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Core solutions $ 27,117 $ 22,503 $ 78,080 $ 64,934 Value+ services 53,392 41,645 149,122 114,399 Other 3,577 3,787 10,422 9,317 Total revenue $ 84,086 $ 67,935 $ 237,624 $ 188,650 |
Nature of Business (Details)
Nature of Business (Details) $ in Millions | Sep. 30, 2020USD ($) | Sep. 30, 2020USD ($) |
Discontinued Operations, Disposed of by Sale | MyCase | ||
Concentration Risk [Line Items] | ||
Ownership percentage in disposed subsidiary | 100.00% | 100.00% |
Consideration for disposal of subsidiary | $ 193 | $ 193 |
Gain on sale of subsidiary | $ 187.6 | |
Product Concentration Risk | Revenue from Contract with Customer Benchmark | Real Estate Software Solutions | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 90.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Net Income per Share Schedule of Weighted Average Number of Shares (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Weighted average common shares outstanding (in shares) | 34,301 | 34,050 | 34,246 | 33,995 |
Less: Weighted average unvested restricted shares subject to repurchase (in shares) | 5 | 3 | 5 | 4 |
Weighted average common shares outstanding; basic (in shares) | 34,296 | 34,047 | 34,241 | 33,991 |
Plus: Weighted average options, restricted stock units and restricted shares used to compute diluted net income per common share (in shares) | 1,369 | 1,374 | 1,421 | 1,415 |
Weighted average common shares outstanding; diluted (in shares) | 35,665 | 35,421 | 35,662 | 35,406 |
PSUs and PSOs | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Shares excluded from net loss per share computation (in shares) | 130 | 361 | 130 | 361 |
Divestitures and Business Com_3
Divestitures and Business Combinations - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Jan. 07, 2019 |
Discontinued Operations, Disposed of by Sale | MyCase | ||
Business Acquisition [Line Items] | ||
Consideration for disposal of subsidiary | $ 193 | |
Proceeds from divestiture of subsidiary | 192.2 | |
Employee retention bonus pool | 2.2 | |
Cash divested | 0.8 | |
Working capital adjustment | $ 0.6 | |
Retention period | 1 year | |
Gain on sale of subsidiary | $ 187.6 | |
Assets divested | 4.6 | |
Capitalized software divested | 3.9 | |
Deferred revenue divested | 2.8 | |
Goodwill divested | $ 2.3 | |
Dynasty | ||
Business Acquisition [Line Items] | ||
Percentage of voting equity interest | 100.00% | |
Consideration transferred | $ 60.2 | |
Amount held for adjustments | 6 | |
Transaction costs | $ 0.3 |
Divestitures and Business Com_4
Divestitures and Business Combinations - Purchase Price Allocation (Details) - USD ($) $ in Thousands | Jan. 07, 2019 | Sep. 30, 2020 | Dec. 31, 2019 |
Business Acquisition [Line Items] | |||
Goodwill | $ 56,147 | $ 58,425 | |
Dynasty | |||
Business Acquisition [Line Items] | |||
Total current assets | $ 305 | ||
Total intangible assets subject to amortization | 20,750 | ||
Goodwill | 42,877 | ||
Other noncurrent assets | 35 | ||
Total assets acquired | $ 63,967 | ||
Estimated Useful Life (in years) | 6 years | ||
Accrued and other liabilities | $ 48 | ||
Deferred tax liability, net | 3,711 | ||
Total liabilities assumed | 3,759 | ||
Purchase consideration | 60,208 | ||
Dynasty | Technology | |||
Business Acquisition [Line Items] | |||
Total intangible assets subject to amortization | $ 5,730 | ||
Estimated Useful Life (in years) | 4 years | ||
Dynasty | Database | |||
Business Acquisition [Line Items] | |||
Total intangible assets subject to amortization | $ 4,710 | ||
Estimated Useful Life (in years) | 10 years | ||
Dynasty | Customer relationships | |||
Business Acquisition [Line Items] | |||
Total intangible assets subject to amortization | $ 1,110 | ||
Estimated Useful Life (in years) | 5 years | ||
Dynasty | Backlog | |||
Business Acquisition [Line Items] | |||
Total intangible assets subject to amortization | $ 470 | ||
Estimated Useful Life (in years) | 1 year | ||
Dynasty | Trademark & trade name | |||
Business Acquisition [Line Items] | |||
Total intangible assets subject to amortization | $ 1,390 | ||
Estimated Useful Life (in years) | 10 years | ||
Dynasty | Non-compete agreement | |||
Business Acquisition [Line Items] | |||
Total intangible assets subject to amortization | $ 7,340 | ||
Estimated Useful Life (in years) | 5 years |
Divestitures and Business Com_5
Divestitures and Business Combinations - Pro Forma Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Business Combinations [Abstract] | ||
Revenue | $ 67,935 | $ 188,685 |
Net income | $ 4,978 | $ 27,911 |
Investment Securities and Fai_3
Investment Securities and Fair Value Measurements - Schedule of Available-for-sale Securities (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Debt Securities, Available-for-sale [Line Items] | ||
Total available-for-sale investment securities | $ 37,722 | $ 34,920 |
Gross Unrealized Gains | 102 | 47 |
Gross Unrealized Losses | 0 | (2) |
Estimated Fair Value | $ 37,824 | $ 34,965 |
Maximum contractual maturity period | 36 months | 36 months |
Corporate bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total available-for-sale investment securities | $ 9,597 | |
Gross Unrealized Gains | 18 | |
Gross Unrealized Losses | (1) | |
Estimated Fair Value | 9,614 | |
Agency securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total available-for-sale investment securities | $ 3,104 | 11,101 |
Gross Unrealized Gains | 34 | 17 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | 3,138 | 11,118 |
Treasury securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total available-for-sale investment securities | 34,618 | 14,222 |
Gross Unrealized Gains | 68 | 12 |
Gross Unrealized Losses | 0 | (1) |
Estimated Fair Value | $ 34,686 | $ 14,233 |
Investment Securities and Fai_4
Investment Securities and Fair Value Measurements - Available-for-sale Investments, by Remaining Contract Maturity (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Amortized Cost | ||
Due in one year or less | $ 32,658 | $ 22,846 |
Due after one year through three years | 5,064 | 12,074 |
Total available-for-sale investment securities | 37,722 | 34,920 |
Estimated Fair Value | ||
Due in one year or less | 32,689 | 22,876 |
Due after one year through three years | 5,135 | 12,089 |
Total available-for-sale investment securities | $ 37,824 | $ 34,965 |
Investment Securities and Fai_5
Investment Securities and Fair Value Measurements - Schedule of Sales, Calls and Maturities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Debt Securities, Available-for-sale [Line Items] | ||||
Gross Realized Gains | $ 34 | $ 0 | ||
Gross Realized Losses | 0 | (1) | ||
Gross Proceeds from Sales | 13,942 | 2,750 | ||
Gross Proceeds from Maturities | 13,300 | 11,000 | ||
Interest income, net of amortization and accretion of premium and discount | $ 100 | $ 100 | 300 | 500 |
Corporate bonds | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Gross Realized Gains | 5 | 0 | ||
Gross Realized Losses | 0 | (1) | ||
Gross Proceeds from Sales | 4,006 | 2,750 | ||
Gross Proceeds from Maturities | 5,600 | 8,350 | ||
Agency securities | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Gross Realized Gains | 25 | 0 | ||
Gross Realized Losses | 0 | 0 | ||
Gross Proceeds from Sales | 7,878 | 0 | ||
Gross Proceeds from Maturities | 1,900 | $ 2,650 | ||
Treasury securities | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Gross Realized Gains | 4 | |||
Gross Realized Losses | 0 | |||
Gross Proceeds from Sales | 2,058 | |||
Gross Proceeds from Maturities | $ 5,800 |
Investment Securities and Fai_6
Investment Securities and Fair Value Measurements - Fair Value, Assets Measured on Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities | $ 37,824 | $ 34,965 |
Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities | 9,614 | |
Agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities | 3,138 | 11,118 |
Treasury securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities | 34,686 | 14,233 |
Fair value, recurring measurements | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities | 14,233 | |
Total | 43,205 | 35,302 |
Fair value, recurring measurements | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities | 0 | 9,614 |
Fair value, recurring measurements | Agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities | 3,138 | 11,118 |
Fair value, recurring measurements | Treasury securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 600 | |
Available-for-sale investment securities | 34,686 | |
Fair value, recurring measurements | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 4,781 | 337 |
Fair value, recurring measurements | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities | 14,233 | |
Total | 40,067 | 14,570 |
Fair value, recurring measurements | Level 1 | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities | 0 | 0 |
Fair value, recurring measurements | Level 1 | Agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities | 0 | 0 |
Fair value, recurring measurements | Level 1 | Treasury securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 600 | |
Available-for-sale investment securities | 34,686 | |
Fair value, recurring measurements | Level 1 | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 4,781 | 337 |
Fair value, recurring measurements | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities | 0 | |
Total | 3,138 | 20,732 |
Fair value, recurring measurements | Level 2 | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities | 0 | 9,614 |
Fair value, recurring measurements | Level 2 | Agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities | 3,138 | 11,118 |
Fair value, recurring measurements | Level 2 | Treasury securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | |
Available-for-sale investment securities | 0 | |
Fair value, recurring measurements | Level 2 | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Fair value, recurring measurements | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities | 0 | |
Total | 0 | 0 |
Fair value, recurring measurements | Level 3 | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities | 0 | 0 |
Fair value, recurring measurements | Level 3 | Agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale investment securities | 0 | 0 |
Fair value, recurring measurements | Level 3 | Treasury securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | |
Available-for-sale investment securities | 0 | |
Fair value, recurring measurements | Level 3 | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | $ 0 |
Term Loan | Estimate of Fair Value Measurement | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Line of credit, amount outstanding | 50,000 | |
Revolving Credit Facility | Credit Facility | Estimate of Fair Value Measurement | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Line of credit, amount outstanding | $ 50,000 |
Internal-Use Software Develop_3
Internal-Use Software Development Costs - Capitalized Computer Software (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Research and Development [Abstract] | ||
Internal use software development costs, gross | $ 90,451 | $ 81,475 |
Less: Accumulated amortization | (56,908) | (51,452) |
Internal use software development costs, net | $ 33,543 | $ 30,023 |
Internal-Use Software Develop_4
Internal-Use Software Development Costs - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Capitalized software development costs | $ 6.9 | $ 6.5 | $ 20.8 | $ 17.1 |
Amortization expense | 4.7 | $ 3.6 | 13.3 | $ 10 |
Discontinued Operations, Disposed of by Sale | MyCase | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Capitalized software divested | $ 3.9 | $ 3.9 |
Internal-Use Software Develop_5
Internal-Use Software Development Costs - Capitalized Computer Software Future Amortization Expense (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Years Ending December 31, | ||
2020 | $ 4,424 | |
2021 | 15,834 | |
2022 | 10,608 | |
2023 | 2,677 | |
Internal use software development costs, net | $ 33,543 | $ 30,023 |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill - Schedule of Finite-Lived Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Value | $ 28,021 | $ 28,021 | $ 33,734 | ||
Accumulated Amortization | (10,477) | (10,477) | (12,357) | ||
Net Carrying Value | 17,544 | 17,544 | $ 21,377 | ||
Amortization expense | 1,200 | $ 1,300 | $ 3,700 | $ 4,000 | |
Weighted Average Useful Life in Years | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted Average Useful Life in Years | 6 years 3 months 18 days | 6 years 2 months 12 days | |||
Customer relationships | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Value | 2,840 | $ 2,840 | $ 3,070 | ||
Accumulated Amortization | (1,436) | (1,436) | (1,296) | ||
Net Carrying Value | 1,404 | $ 1,404 | $ 1,774 | ||
Customer relationships | Weighted Average Useful Life in Years | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted Average Useful Life in Years | 5 years | 5 years | |||
Database | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Value | 8,330 | $ 8,330 | $ 8,330 | ||
Accumulated Amortization | (1,578) | (1,578) | (954) | ||
Net Carrying Value | 6,752 | $ 6,752 | $ 7,376 | ||
Database | Weighted Average Useful Life in Years | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted Average Useful Life in Years | 10 years | 10 years | |||
Technology | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Value | 6,539 | $ 6,539 | $ 10,541 | ||
Accumulated Amortization | (3,250) | (3,250) | (6,074) | ||
Net Carrying Value | 3,289 | $ 3,289 | $ 4,467 | ||
Technology | Weighted Average Useful Life in Years | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted Average Useful Life in Years | 4 years | 5 years | |||
Trademarks and trade names | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Value | 1,890 | $ 1,890 | $ 2,690 | ||
Accumulated Amortization | (633) | (633) | (898) | ||
Net Carrying Value | 1,257 | $ 1,257 | $ 1,792 | ||
Trademarks and trade names | Weighted Average Useful Life in Years | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted Average Useful Life in Years | 5 years | 6 years | |||
Partner relationships | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Value | 680 | $ 680 | $ 680 | ||
Accumulated Amortization | (680) | (680) | (680) | ||
Net Carrying Value | 0 | $ 0 | $ 0 | ||
Partner relationships | Weighted Average Useful Life in Years | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted Average Useful Life in Years | 3 years | 3 years | |||
Non-compete agreements | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Value | 7,400 | $ 7,400 | $ 7,400 | ||
Accumulated Amortization | (2,594) | (2,594) | (1,484) | ||
Net Carrying Value | 4,806 | $ 4,806 | $ 5,916 | ||
Non-compete agreements | Weighted Average Useful Life in Years | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted Average Useful Life in Years | 5 years | 5 years | |||
Domain names | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Value | 90 | $ 90 | $ 301 | ||
Accumulated Amortization | (68) | (68) | (276) | ||
Net Carrying Value | 22 | $ 22 | $ 25 | ||
Domain names | Weighted Average Useful Life in Years | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted Average Useful Life in Years | 5 years | 5 years | |||
Patents | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Value | 252 | $ 252 | $ 252 | ||
Accumulated Amortization | (238) | (238) | (225) | ||
Net Carrying Value | $ 14 | $ 14 | $ 27 | ||
Patents | Weighted Average Useful Life in Years | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted Average Useful Life in Years | 5 years | 5 years | |||
Backlog | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Value | $ 470 | ||||
Accumulated Amortization | (470) | ||||
Net Carrying Value | $ 0 | ||||
Backlog | Weighted Average Useful Life in Years | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted Average Useful Life in Years | 1 year |
Intangible Assets and Goodwil_3
Intangible Assets and Goodwill - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2020 | $ 1,186 | |
2021 | 4,647 | |
2022 | 4,605 | |
2023 | 3,060 | |
2024 | 1,197 | |
Thereafter | 2,849 | |
Net Carrying Value | $ 17,544 | $ 21,377 |
Intangible Assets and Goodwil_4
Intangible Assets and Goodwill - Schedule of Goodwill (Details) | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill, impairment charge | $ 0 |
Goodwill [Roll Forward] | |
Beginning balance | 58,425,000 |
Goodwill attributed to MyCase divestiture | (2,278,000) |
Ending balance | $ 56,147,000 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Lessee, Lease, Description [Line Items] | ||||
Lease renewal term | 10 years | 10 years | ||
Total lease cost associated with operating leases | $ 1.3 | $ 1.3 | $ 4.1 | $ 3.7 |
Minimum | ||||
Lessee, Lease, Description [Line Items] | ||||
Lease term | 1 year | 1 year | ||
Maximum | ||||
Lessee, Lease, Description [Line Items] | ||||
Lease term | 12 years | 12 years |
Leases - Schedule of Components
Leases - Schedule of Components of Lease Expense (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Prepaid expenses and other current assets | $ 2,901 | $ 3,908 |
Operating lease right-of-use assets | 24,645 | 27,803 |
Other current liabilities | 2,021 | 2,826 |
Operating lease liabilities | 32,755 | 33,312 |
Total lease liabilities | $ 34,776 | $ 36,138 |
Leases - Schedule of Minimum Le
Leases - Schedule of Minimum Lease Payments Under Leases (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Years ending December 31, | ||
2020 | $ (1,027,000) | |
2021 | 2,240,000 | |
2022 | 4,085,000 | |
2023 | 3,977,000 | |
2024 | 3,908,000 | |
Thereafter | 29,590,000 | |
Total future minimum lease payments | 42,773,000 | |
Less: imputed interest | (10,898,000) | |
Total | 31,875,000 | |
Lessee, Lease, Description [Line Items] | ||
Tenant improvement allowance | 2,300 | |
Operating lease, current | 2,021 | $ 2,826 |
Prepaid Expenses and Other Current Assets | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease, current | $ 2,900 |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) | Dec. 24, 2018USD ($) | Sep. 30, 2020USD ($) | Sep. 29, 2020USD ($) | Dec. 31, 2019USD ($) |
Debt Instrument [Line Items] | ||||
Capitalized deferred financing costs | $ 400,000 | $ 400,000 | ||
Other Assets | ||||
Debt Instrument [Line Items] | ||||
Capitalized deferred financing costs | 300,000 | |||
Credit Facility | ||||
Debt Instrument [Line Items] | ||||
EBITDA to interest expense ratio | 3 | |||
Funded indebtedness to EBITDA ratio | 3.5 | |||
Annual decrease in required leverage ratio | 0.25 | |||
Required leverage ratio | 2.5 | |||
Floor plus 20% of the sum of the combined outstanding principal amounts | $ 20,000,000 | |||
Acquisition purchase price floor for 0.5 increase in required leverage ratio for 12 month period following the close date | $ 20,000,000 | |||
Credit Facility | Minimum | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Variable rate, basis spread percent | 1.50% | |||
Credit Facility | Minimum | Federal Funds Rate | ||||
Debt Instrument [Line Items] | ||||
Variable rate, basis spread percent | 0.50% | |||
Credit Facility | Maximum | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Variable rate, basis spread percent | 2.00% | |||
Credit Facility | Maximum | Federal Funds Rate | ||||
Debt Instrument [Line Items] | ||||
Variable rate, basis spread percent | 1.00% | |||
Credit Facility | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 50,000,000 | |||
Commitment fee percentage | 0.25% | |||
Commitment fee | $ 30,000,000 | |||
Unused portion of the Revolving Facility, percentage | 0.375% | |||
Loans outstanding | $ 49,100,000 | |||
Capitalized deferred financing costs | $ 200,000 | |||
Credit Facility | Term Loan | ||||
Debt Instrument [Line Items] | ||||
Loans outstanding | $ 0 | $ 48,100,000 | 48,750,000 | |
Capitalized deferred financing costs | $ 200,000 | $ 200,000 |
Long-Term Debt - Summary of Lon
Long-Term Debt - Summary of Long-term Debt (Details) - Term Loan - Credit Facility - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 29, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | |||
Principal amounts due under Term Loan | $ 0 | $ 48,100 | $ 48,750 |
Unamortized debt financing costs | 0 | (167) | |
Long-term debt, net of unamortized debt financing costs | $ 0 | $ 48,583 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Loss Contingencies [Line Items] | ||
Per incident policy limit | $ 100,000 | |
Quota share of tenant liability insurance provided, percent | 100.00% | |
Estimate of loss | $ 4,300,000 | |
Legal accrual | 4,300,000 | |
Other current liabilities | ||
Loss Contingencies [Line Items] | ||
Liability for reported claims and claims incurred but not reported | 1,400,000 | $ 1,800,000 |
Other current assets | ||
Loss Contingencies [Line Items] | ||
Deposits held with a third party related to insurance services collateral | $ 1,700,000 | $ 1,300,000 |
Share Repurchase Program (Detai
Share Repurchase Program (Details) | Feb. 20, 2019USD ($)director | Mar. 31, 2020USD ($)shares |
Equity [Abstract] | ||
Share repurchase program, authorized amount | $ 100,000,000 | |
Number of Directors to authorize repurchases | director | 3 | |
Repurchased shares (in shares) | shares | 48,002 | |
Reduction to stockholders' equity | $ 4,194,000 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Activity (Details) - $ / shares | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Number of Shares | ||||
Options outstanding, beginning balance (in shares) | 1,342,000 | 1,342,000 | ||
Options granted (in shares) | 0 | 0 | ||
Options exercised (in shares) | (59,000) | |||
Options cancelled/forfeited (in shares) | (55,000) | |||
Options outstanding, ending balance (in shares) | 1,228,000 | 1,342,000 | ||
Weighted Average Exercise Price per Share | ||||
Options outstanding, weighted average exercise price, beginning balance (in dollars per share) | $ 11.84 | $ 11.84 | ||
Options granted, weighted average exercise price (in dollars per share) | 0 | |||
Options exercised, weighted average exercise price (in dollars per share) | 6.87 | |||
Options cancelled/forfeited, weighted average exercise price (in dollars per share) | 23.76 | |||
Options outstanding, weighted average exercise price, ending balance (in dollars per share) | $ 11.53 | $ 11.84 | ||
Weighted average remaining contractual life, in years | 5 years 10 months 24 days | 5 years 1 month 6 days | ||
PSOs | 2017 Performance Metric, Targeted Free Cash Flow Performance Metric | ||||
Weighted Average Exercise Price per Share | ||||
Share-based compensation options vested (in shares) | 77,000 | 40,000 | ||
Percent of achievement of award target performance metric | 95.00% | 115.00% |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Units Activity (Details) - RSUs and PSUs shares in Thousands | 9 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Number of Shares | |
Unvested, beginning balance (in shares) | shares | 646 |
Granted (in shares) | shares | 164 |
Vested (in shares) | shares | (247) |
Forfeited (in shares) | shares | (57) |
Unvested, ending balance (in shares) | shares | 506 |
Weighted- Average Grant Date Fair Value per Share | |
Unvested, beginning balance (in dollars per share) | $ / shares | $ 52.42 |
Granted (in dollars per share) | $ / shares | 109.29 |
Vested (in dollars per share) | $ / shares | 34.75 |
Forfeited (in dollars per share) | $ / shares | 69.16 |
Unvested, ending balance (in dollars per share) | $ / shares | $ 77.63 |
Stock-Based Compensation - Re_2
Stock-Based Compensation - Restricted Stock Units (Details) - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
RSUs and PSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares granted in period (in shares) | 164 | ||||
Share-based compensation options vested in period (in shares) | 247 | ||||
Stock-based compensation expense | $ 3.4 | $ 2.5 | $ 7.8 | $ 6.1 | |
Remaining stock-based compensation expense for unvested shares, not yet recognized | $ 25.2 | $ 25.2 | |||
Stock-based compensation expense, weighted average recognition period | 2 years 3 months 18 days | ||||
Restricted Stock Units (RSUs) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares granted in period (in shares) | 150 | ||||
Vesting period | 4 years | ||||
PSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares granted in period (in shares) | 14 | ||||
Percent of targeted performance metric | 100.00% | 100.00% | |||
Share-based compensation options vested in period (in shares) | 84 | ||||
Percent of achievement of award target performance metric | 95.00% | ||||
PSUs | Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percent of targeted performance metric | 0.00% | 0.00% | |||
PSUs | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percent of targeted performance metric | 100.00% | 100.00% | |||
PSUs | Vesting Tranche One | Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percent of targeted performance metric | 100.00% | 100.00% | |||
Performance based cash bonus payment percent | 100.00% | ||||
PSUs | Vesting Tranche One | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percent of targeted performance metric | 150.00% | 150.00% | |||
Performance based cash bonus payment percent | 165.00% | ||||
PSUs | 2016 Performance Metric | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares granted in period (in shares) | 4 | ||||
PSUs Granted in 2019 | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares granted in period (in shares) | 34 | ||||
PSUs Granted in 2018 | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares granted in period (in shares) | 82 | ||||
Performance Stock Units Granted in 2019 and 2018 | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percent of targeted performance metric | 100.00% | 100.00% | |||
Performance Stock Units Granted in 2019 and 2018 | Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percent of targeted performance metric | 0.00% | 0.00% | |||
Percent of cash bonus payments on initial targets, percent | 100.00% | ||||
Performance Stock Units Granted in 2019 and 2018 | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percent of targeted performance metric | 100.00% | 100.00% | |||
Percent of cash bonus payments on initial targets, percent | 165.00% | ||||
Performance Stock Units Granted in 2019 and 2018 | Vesting Tranche One | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation options vested in period (in shares) | 48 | ||||
Performance Stock Units Granted in 2019 and 2018 | Vesting Tranche One | Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percent of targeted performance metric | 100.00% | 100.00% | |||
Performance Stock Units Granted in 2019 and 2018 | Vesting Tranche One | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percent of targeted performance metric | 150.00% | 150.00% | |||
Performance Stock Units Granted in 2019 and 2018 | Vesting Tranche Two | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation options vested in period (in shares) | 43 | ||||
Performance Stock Units Granted in 2019 and 2018 | Vesting Tranche Three | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation options vested in period (in shares) | 25 |
Stock-Based Compensation - Re_3
Stock-Based Compensation - Restricted Stock Awards (Details) - Restricted Stock Awards - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Number of Shares | ||||
Unvested, beginning balance (in shares) | 5 | |||
Granted (in shares) | 3 | |||
Vested (in shares) | (3) | |||
Forfeited (in shares) | 0 | |||
Unvested, ending balance (in shares) | 5 | 5 | ||
Weighted Average Grant Date Fair Value per Share | ||||
Unvested, beginning balance (in dollars per share) | $ 105.88 | |||
Granted (in dollars per share) | 160.34 | |||
Vested (in dollars per share) | 111.38 | |||
Forfeited (in dollars per share) | 0 | |||
Unvested, ending balance (in dollars per share) | $ 139.72 | $ 139.72 | ||
Vesting period | 1 year | |||
Stock-based compensation expense | $ 0.2 | $ 0.1 | $ 0.5 | $ 0.2 |
Remaining stock-based compensation expense for unvested shares, not yet recognized | $ 0.4 | $ 0.4 | ||
Stock-based compensation expense, weighted average recognition period | 8 months 12 days |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Income tax expense (benefit) | $ 52,578 | $ (1,255) | $ 39,469 | $ (26,874) |
Discontinued Operations, Disposed of by Sale | MyCase | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Discrete tax expense | 47,900 | |||
Tax associated with gain on sale | 48,900 | |||
Reversal of deferred tax liabilities | $ 1,000 |
Revenue and Other Information_2
Revenue and Other Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 84,086 | $ 67,935 | $ 237,624 | $ 188,650 |
Revenue recognized in deferred revenue | 4,300 | 3,200 | ||
Core solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 27,117 | 22,503 | 78,080 | 64,934 |
Value plus services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 53,392 | 41,645 | 149,122 | 114,399 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 3,577 | $ 3,787 | $ 10,422 | $ 9,317 |
Uncategorized Items - appf-2020
Label | Element | Value |
Restricted Cash and Cash Equivalents | us-gaap_RestrictedCashAndCashEquivalents | $ 436,000 |
Restricted Cash and Cash Equivalents | us-gaap_RestrictedCashAndCashEquivalents | $ 431,000 |