Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Jul. 27, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | Marketo, Inc. | |
Entity Central Index Key | 1,490,660 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 45,124,996 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 99,504 | $ 107,218 |
Accounts receivable, net | 61,992 | 50,678 |
Prepaid expenses and other current assets | 8,502 | 9,073 |
Total current assets | 169,998 | 166,969 |
Property and equipment, net | 24,795 | 21,323 |
Goodwill | 29,201 | 29,201 |
Intangible assets, net | 4,978 | 5,455 |
Other assets | 2,960 | 2,130 |
Total assets | 231,932 | 225,078 |
Current liabilities: | ||
Accounts payable | 7,318 | 4,265 |
Accrued expenses and other current liabilities | 25,177 | 25,706 |
Deferred revenue | 102,604 | 91,735 |
Current portion of credit facility | 1,383 | 2,174 |
Total current liabilities | 136,482 | 123,880 |
Credit facility, net of current portion | 478 | |
Deferred revenue, long-term | 156 | 230 |
Other liabilities | 4,602 | 2,722 |
Total liabilities | 141,240 | 127,310 |
Commitments and contingencies (Note 8) | ||
Redeemable non-controlling interests (Note 2 and Note 6) | 9,888 | 4,643 |
Stockholders' equity: | ||
Common stock | 5 | 4 |
Additional paid-in capital | 365,158 | 344,727 |
Accumulated other comprehensive income (loss) | 77 | (274) |
Accumulated deficit | (284,436) | (251,332) |
Total stockholders' equity | 80,804 | 93,125 |
Total liabilities, redeemable non-controlling interests and stockholders' equity | $ 231,932 | $ 225,078 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Revenue: | ||||
Subscription and support | $ 57,682 | $ 43,757 | $ 113,030 | $ 83,857 |
Professional services and other | 8,313 | 6,923 | 15,181 | 12,823 |
Total revenue | 65,995 | 50,680 | 128,211 | 96,680 |
Cost of revenue: | ||||
Subscription and support | 12,178 | 9,770 | 24,488 | 18,844 |
Professional services and other | 9,058 | 8,177 | 18,126 | 15,514 |
Total cost of revenue | 21,236 | 17,947 | 42,614 | 34,358 |
Gross profit: | ||||
Subscription and support | 45,504 | 33,987 | 88,542 | 65,013 |
Professional services and other | (745) | (1,254) | (2,945) | (2,691) |
Total gross profit | 44,759 | 32,733 | 85,597 | 62,322 |
Operating expenses: | ||||
Research and development | 10,178 | 9,168 | 21,179 | 18,863 |
Sales and marketing | 35,096 | 32,055 | 72,209 | 62,087 |
General and administrative | 14,445 | 8,960 | 25,317 | 17,742 |
Total operating expenses | 59,719 | 50,183 | 118,705 | 98,692 |
Loss from operations | (14,960) | (17,450) | (33,108) | (36,370) |
Other income (expense), net | 51 | 97 | (86) | 617 |
Loss before provision for income taxes | (14,909) | (17,353) | (33,194) | (35,753) |
Provision for income taxes | 405 | 100 | 807 | 312 |
Net loss | (15,314) | (17,453) | (34,001) | (36,065) |
Net loss and adjustment attributable to redeemable non-controlling interests (Note 2) | (5,445) | (497) | (5,181) | (43) |
Net loss attributable to Marketo | $ (20,759) | $ (17,950) | $ (39,182) | $ (36,108) |
Net loss per share of common stock, basic and diluted (in dollars per share) | $ (0.46) | $ (0.43) | $ (0.88) | $ (0.86) |
Shares used in computing net loss per share of common stock, basic and diluted (in shares) | 44,694 | 42,163 | 44,343 | 41,889 |
Condensed Consolidated Stateme4
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Condensed Consolidated Statements of Comprehensive Loss | ||||
Net loss | $ (15,314) | $ (17,453) | $ (34,001) | $ (36,065) |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments | 141 | (164) | 415 | (74) |
Total comprehensive loss | (15,173) | (17,617) | (33,586) | (36,139) |
Net loss attributable to redeemable non-controlling interests (excluding adjustment to redeemable non-controlling interests) | 459 | 415 | 897 | 869 |
Other comprehensive (income) loss attributable to redeemable non-controlling interests | (18) | 45 | (64) | 42 |
Comprehensive loss attributable to Marketo | $ (14,732) | $ (17,157) | $ (32,753) | $ (35,228) |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash flows from operating activities: | ||
Net loss attributable to Marketo | $ (39,182) | $ (36,108) |
Net loss and adjustment attributable to redeemable non-controlling interests | 5,181 | 43 |
Net loss | (34,001) | (36,065) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities | ||
Depreciation and amortization | 7,926 | 6,285 |
Stock-based compensation expense | 20,138 | 19,007 |
Deferred income taxes | (136) | 247 |
Provision for allowance for doubtful accounts | 613 | 236 |
Loss on disposal of fixed assets | 9 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (11,577) | (8,478) |
Prepaid expenses and other current assets | 1,531 | (2,019) |
Other assets | 25 | (861) |
Accounts payable | 1,600 | 2,188 |
Accrued expenses and other current liabilities | (1,682) | 2,532 |
Deferred revenue | 10,002 | 18,283 |
Other liabilities | 787 | 77 |
Net cash (used in) provided by operating activities | (4,765) | 1,432 |
Cash flows from investing activities: | ||
Increase in restricted cash | (735) | (215) |
Purchase of property and equipment | (6,770) | (8,324) |
Capitalized software development | (1,149) | (772) |
Net cash used in investing activities | (8,654) | (9,311) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock upon exercise of stock options | 3,488 | 3,018 |
Proceeds from the issuance of common stock issued under the employee stock purchase plan | 2,716 | 2,885 |
Investment from redeemable non-controlling interests | 1,678 | |
Repurchase of unvested common stock from terminated employees | (32) | |
Withholding taxes remitted for the net share settlement of an equity awards | (65) | (74) |
Repayment of debt | (1,270) | (1,346) |
Net cash provided by financing activities | 4,869 | 6,129 |
Effect of foreign exchange rate changes on cash and cash equivalents | 836 | (449) |
Net decrease in cash and cash equivalents | (7,714) | (2,199) |
Cash and cash equivalents - beginning of period | 107,218 | 112,644 |
Cash and cash equivalents - end of period | 99,504 | 110,445 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 42 | 97 |
Cash paid for income taxes | 590 | 116 |
Supplemental disclosure of noncash investing and financing activities: | ||
Vesting of early exercise options | 34 | 82 |
Unpaid and accrued fixed assets | 2,573 | 1,252 |
Property and equipment acquired through tenant improvement allowance | $ 1,146 | $ 211 |
The Company and Summary of Sign
The Company and Summary of Significant Accounting Policies and Estimates | 6 Months Ended |
Jun. 30, 2016 | |
The Company and Summary of Significant Accounting Policies and Estimates | |
The Company and Summary of Significant Accounting Policies and Estimates | 1. The Company and Summary of Significant Accounting Policies and Estimates Business Marketo, Inc. (Marketo or the Company) was incorporated in the state of California on January 20, 2006. The Company was reincorporated in the state of Delaware on December 17, 2009. The Company operates from its headquarters in San Mateo, California and has operating subsidiaries in Ireland, Australia, Israel, Japan and the United Kingdom. Marketo is the provider of a leading cloud-based Engagement Marketing Platform that is purpose-built to enable organizations ranging from small and medium businesses (SMBs) to the world’s largest enterprises to engage in modern relationship marketing. The Company’s platform enables the effective execution, management and analytical measurement of online, social, mobile and offline marketing activities and customer interactions in today’s data-centric, multi-channel business environment. The Company has built a rich set of applications across ten categories that run on the Engagement Marketing Platform, as follows: Marketing Automation, Email Marketing, Mobile Engagement, Social Marketing, Digital Ads, Web Personalization, Marketing Analytics, Predictive Content, Marketing Calendar and Sales Insight. The Company generally offers its services on an annual subscription basis with quarterly or annual payment terms. Basis of Presentation The unaudited condensed consolidated financial statements and accompanying notes of the Company reflect all adjustments (all of which are normal and recurring in nature) that, in the opinion of management, are necessary for a fair presentation of the interim periods presented. The unaudited condensed consolidated financial statements include the accounts of Marketo and its wholly owned and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the entire year ending December 31, 2016. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) have been condensed or omitted under the rules and regulations of the Securities and Exchange Commission (SEC). These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and related notes presented in the Company’s Annual Report on Form 10-K filed with the SEC on March 4, 2016. There have been no material changes in the Company’s significant accounting policies from those that were disclosed in the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2015. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Such management estimates and assumptions include the estimated selling price for the various elements in our customer contracts, the allowance for doubtful accounts, stock-based compensation expense, useful lives of intangible assets, redemption value of redeemable non-controlling interests and the valuation of deferred tax assets and acquired intangible assets. Actual results could differ materially from those estimates, and such differences could be material to the financial statements and affect the results of operations reported in future periods. Pending Merger On May 27, 2016, Marketo entered into an Agreement and Plan of Merger (Merger Agreement) with Milestone Holdco, LLC, a Delaware limited liability company (Parent), and Milestone Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (Merger Sub), providing for the merger of Merger Sub with and into the Company (the Merger), with the Company surviving the Merger as a wholly owned subsidiary of Parent. Parent and Merger Sub were formed by affiliates of Vista Equity Partners Fund VI, L.P., a Delaware limited partnership (Vista). Parent will acquire all outstanding shares of Marketo common stock for a total value of approximately $1.79 billion. Consummation of the Merger is subject to customary closing conditions, including, but not limited to, the: (i) requisite approvals by the Company’s stockholders; (ii) expiration or termination of any waiting periods applicable to the consummation of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act); and (iii) absence of any law or order restraining, enjoining or otherwise prohibiting the Merger . On June 22, 2016, the U.S. Federal Trade Commission notified Marketo that early termination of the waiting period under the HSR Act was granted, effective immediately. On July 28, 2016, Marketo held a special meeting of stockholders (the Special Meeting ) at Marketo’s principal executive offices in San Mateo, CA to vote on the proposals described in the Company’s definitive proxy statement filed with the Securities and Exchange Commission on June 29, 2016 and first mailed to Marketo’s stockholders on June 29, 2016. At the Special Meeting, stockholders approved the proposal to adopt the Merger Agreement. The Company and Vista Funds currently anticipate the closing of the transaction to occur in the third calendar quarter of 2016. The Company has recorded $4.0 milllion of transaction costs related to this transaction in the three and six months ended June 30, 2016. Recent Accounting Pronouncements In April 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. This ASU addresses certain implementation issues that have surfaced since the issuance of ASU 2014-09 in May 2014. The ASU provides guidance in identifying performance obligations and determining the appropriate accounting for licensing arrangements. The amendments in this ASU will be effective for the Company beginning January 1, 2018, and for interim periods therein. The Company is in the process of assessing the impact that adoption of this new standard will have on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606) Principal versus Agent Considerations (Reporting Revenue Gross versus Net). ASU 2016-08 further clarifies principal and agent relationships within ASU 2014-09. The amendment will be effective for the Company beginning January 1, 2018, including interim reporting periods within that reporting year. The Company is evaluating the impact that adoption of this new standard will have on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which is intended to improve the accounting for share-based payment transactions as part of the FASB’s simplification initiative. The ASU changes seven aspects of the accounting for share-based payment award transactions, including: (1) accounting for income taxes; (2) classification of excess tax benefits on the statement of cash flows; (3) forfeitures; (4) minimum statutory tax withholding requirements; (5) classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax-withholding purposes; (6) practical expedient — expected term (nonpublic only); and (7) intrinsic value (nonpublic only). The ASU is effective for fiscal years beginning after December 15, 2016 and interim periods within those years, and early adoption is permitted. The Company has elected not to early adopt. The Company is evaluating the impact of the updated guidance on the Company’s consolidated financial statements and related disclosures and has not selected a transition method. In February 2016, the FASB issued ASU 2016-02, Leases, which, among other things, requires lessees to recognize most leases on-balance sheet. This will increase lessees’ reported assets and liabilities — in some cases very significantly. Lessor accounting remains substantially similar to current U.S. GAAP. ASU 2016-02 supersedes Topic 840, Leases. This ASU is effective for interim and annual periods beginning after December 15, 2018 with early adoption permitted. ASU 2016-02 mandates a modified retrospective transition method for all entities. The Company is evaluating the impact of the updated guidance on the Company’s consolidated financial statements and related disclosures and has not determined if it will early adopt. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. ASU 2014-09 also specifies the accounting for some costs to obtain or fulfill a contract with a customer. In July 2015, the FASB approved a one year deferral of the effective date for the new revenue reporting standard for entities reporting under U.S. GAAP. In accordance with the deferral, this guidance will be effective for the Company, beginning January 1, 2018, and can be applied either retrospectively to each period presented or as a cumulative effect adjustment as of the date of adoption. Early adoption is permitted beginning January 1, 2017. The Company has elected not to early adopt. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its consolidated financial statements. |
Joint Venture
Joint Venture | 6 Months Ended |
Jun. 30, 2016 | |
Joint Venture | |
Joint Venture | 2. Joint Venture In February 2014, the Company entered into an agreement with SunBridge Corporation and Dentsu Digital Inc. (the successor entity to Dentsu eMarketing One K.K.) (collectively, the Investors) to engage in the investment, organization, management and operation of a Japanese subsidiary (Marketo KK) of the Company that is focused on the sale of the Company’s products and services in Japan. The Investors initially contributed approximately $2.0 million (200,000,000 Japanese Yen) in cash in exchange for 35.4% of the outstanding common stock of Marketo KK. Furthermore, under the agreement, the Company and the Investors agreed to subscribe to additional shares by contributing additional funding of approximately $2.0 million (237,480,955 Japanese Yen) and approximately $1.7 million (200,000,000 Japanese Yen), respectively, which occurred in March 2015. As of June 30, 2016, the Company and the Investors owned approximately 60.1% and 39.9% of the outstanding common stock in Marketo KK, respectively. See Note 6 for the activity in the redeemable non-controlling interests balance. Twenty percent of the common stock held by the Investors may be callable by the Company or puttable by the Investors beginning on the seventh anniversary of the initial capital contribution by the Investors. This percentage increases to forty percent and one hundred percent on the eighth and tenth anniversary, respectively. Should the call or put option be exercised, the redemption value would be determined based on a prescribed formula derived from the relative revenues of Marketo KK and the Company and may be settled, at the Company’s discretion, with Company stock (with no limit on the shares that may be issued) or cash. Additionally, the common stock held by the Investors may be callable or puttable following a change of control of the Company. The redeemable non-controlling interests in Marketo KK are classified outside of permanent equity in the Company’s unaudited condensed consolidated balance sheet as of June 30, 2016, primarily due to the put right available to the redeemable non-controlling interest holders in the future which may be settled in cash or common stock of the Company. The balance of the redeemable non-controlling interests is reported at the greater of the initial carrying amount adjusted for the redeemable non-controlling interest’s share of earnings, or its estimated redemption value. Accordingly, at June 30, 2016 the Company adjusted the redeemable non-controlling interests to its expected redemption value, resulting in a $5.9 million reduction to additional paid-in-capital. The following table reconciles net loss and adjustment attributable to redeemable non-controlling interests for periods indicated below (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Net loss attributable to redeemable non-controlling interests (before adjustment to redeemable non-controlling interests) $ $ $ $ Adjustment to redeemable non-controlling interests ) ) ) ) Net loss and adjustment attributable to redeemable non-controlling interests $ ) $ ) $ ) $ ) |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2016 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | 3. Fair Value of Financial Instruments The Company measures certain financial assets at fair value on a recurring basis based on a fair value hierarchy that requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows: · Level 1 — Quoted prices in active markets for identical assets or liabilities. · Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. · Level 3 — Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities. As of June 30, 2016 and December 31, 2015, financial assets measured at fair value on a recurring basis were comprised of money market funds and certificates of deposit included within cash and cash equivalents. The fair value of these financial assets was determined using the following inputs for the periods presented: June 30, 2016 December 31, 2015 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 (in thousands) Money market funds $ $ — $ — $ $ — $ — Certificates of deposit — — — — Total $ $ $ — $ $ $ — |
Balance Sheet Components
Balance Sheet Components | 6 Months Ended |
Jun. 30, 2016 | |
Balance Sheet Components | |
Balance Sheet Components | 4. Balance Sheet Components Cash and Cash Equivalents Cash and cash equivalents consist of the following: June 30, December 31, 2016 2015 (in thousands) Cash $ $ Cash equivalents: Money market funds Certificates of deposit Total cash equivalents Cash and cash equivalents $ $ Accounts Receivable, Net Accounts receivable, net consists of the following: June 30, December 31, 2016 2015 (in thousands) Accounts receivable $ $ Allowance for doubtful accounts ) ) Accounts receivable, net $ $ Property and Equipment, Net Property and equipment, net consists of the following: June 30, December 31, 2016 2015 (in thousands) Computer equipment $ $ Software Office furniture Leasehold improvements Construction in progress Total property and equipment Less accumulated depreciation ) ) Property and equipment, net $ $ Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities are as follows: June 30, December 31, 2016 2015 (in thousands) Accrued bonuses, commissions and wages $ $ Accrued ESPP Accrued vacation Accrued marketing expenses Accrued other Total $ $ |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | 5. Goodwill and Intangible Assets Goodwill and intangible assets consist of the following as of June 30, 2016 and December 31, 2015: June 30, 2016 Weighted Average Remaining Useful Life December 31, 2015 Weighted Average Remaining Useful Life (in thousands) (in years) (in thousands) (in years) Developed technology $ $ Domain names Customer relationships Non-compete agreements Capitalized software development costs Less accumulated amortization ) ) Intangible assets, net Goodwill Goodwill and intangible assets, net $ $ Amortization expense for the periods indicated below is as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Amortization expense $ $ $ $ Based on the carrying amount of intangible assets as of June 30, 2016, the estimated future amortization is as follows (in thousands): Six Months Ending December 31, Years Ending December 31, 2016 2017 2018 2019 2020 Total Developed Technology $ $ $ — $ — $ — $ Domain Names — Customer Relationships — — — — Non-Compete Agreements — — — Capitalized Software Development Costs — — Total $ $ $ $ $ — $ |
Stockholders' Equity and Redeem
Stockholders' Equity and Redeemable Noncontrolling Interests | 6 Months Ended |
Jun. 30, 2016 | |
Stockholders' Equity and Redeemable Non-controlling Interests | |
Stockholders' Equity and Redeemable Non-controlling Interests | 6. Stockholders’ Equity and Redeemable Non-controlling Interests The following table summarizes the activity in stockholders’ equity and redeemable non-controlling interests for the period indicated below (in thousands): Total Stockholders’ Equity Redeemable Non-controlling Interests Balance as of December 31, 2015 $ $ Issuance of common stock upon exercise and early exercise of stock options — Issuance of common stock under employee stock purchase plan — Adjustment to redemption value ) Withholding taxes for the net share settlement of equity awards ) — Vesting of early exercised options — Stock-based compensation expense — Net loss ) ) Foreign currency translation adjustments Balance as of June 30, 2016 $ $ For the six months ended June 30, 2016, the Company incurred $20.1 million of stock-based compensation expense and capitalized stock-based compensation expense of $0.3 million associated with the development of the Company’s internal-use software projects. |
Credit Facility
Credit Facility | 6 Months Ended |
Jun. 30, 2016 | |
Credit Facility | |
Credit Facility | 7. Credit Facility In May 2012, the Company entered into a loan and security agreement with a bank related to an equipment facility providing the Company with an equipment line of up to $4.0 million. In June 2013, the Company entered into a first amendment to the loan and security agreement, which provided an additional line of credit for advances of up to $4.5 million. The interest rate associated with both lines of credit is the greater of 4% or three-quarters of a percentage point above the prime rate, as determined on the applicable funding date. For each equipment advance, the Company paid interest only for approximately nine months. Subsequently, the Company is obligated to make thirty-six equal monthly payments of principal and interest. The loan is secured by a security interest on substantially all of the Company’s assets, including the equipment purchased with the advances, and excludes the Company’s intellectual property. The loan and security agreement contains customary events of default and provides that during the existence of an event of default, interest on the obligations could be increased by 5%. In May 2014, the Company entered into a second amendment to the loan and security agreement to amend various covenants. Under the second amendment the Company is required to maintain compliance with certain financial covenants, which include maintaining a minimum cash balance with the bank and various reporting covenants. As of June 30, 2016, the Company was in compliance with these covenants. As of June 30, 2016 and December 31, 2015, the outstanding loan balance was $1.4 million and $2.7 million, respectively. There were no material changes in the Company’s commitments under the outstanding loan balance, which was disclosed in the Company’s audited consolidated financial statements for the year ended December 31, 2015. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 8. Commitments and Contingencies Commitments Except as set forth below, there were no material changes in the Company’s commitments under contractual obligations, as disclosed in the Company’s audited consolidated financial statements for the year ended December 31, 2015. In March 2016, the Company entered into a definitive lease agreement whereby the Company extended its current lease facilities in San Mateo through 2022 and expanded its office space by 33,779 square feet. The Company’s incremental future minimum lease payments under this extension are approximately $36.7 million, payable over seventy months. In conjunction with the amendment to the San Mateo lease agreement, the Company entered into a letter of credit of approximately $0.7 million with a bank as security for the amended lease agreement. In May 2016, the Company entered into a definitive lease agreement whereby the Company leases approximately 17,227 square feet of office space in Dublin, Ireland. The Company’s future minimum lease payments under this agreement are approximately $2.8 million, payable over the sixty month lease term. As of June 30, 2016, future minimum operating lease payments are as follows (in thousands): Minimum Lease Payment 2016 $ 2017 2018 2019 2020 Thereafter Total $ Contingencies On July 5, 2016, a purported stockholder class action lawsuit captioned Porwal v. Marketo, Inc. et al., Case No. 16CIV00265, was filed in Superior Court of the State of California, County of San Mateo against Marketo, its directors, Vista, Parent, and Merger Sub. The lawsuit alleges, generally, that Marketo’s directors breached their fiduciary duties to Marketo stockholders by seeking to sell Marketo through an allegedly defective process, for an unfair price, and on unfair terms, and that the other defendants aided and abetted those purported breaches. The lawsuit also alleges that defendants have failed to disclose all material facts concerning the proposed Merger to stockholders. The lawsuit seeks, among other things, equitable relief that would enjoin the consummation of the proposed Merger, damages, rescission of the proposed Merger to the extent it is consummated, and attorneys’ fees and costs. On July 12, 2016, a purported stockholder class action lawsuit captioned Rosati v. Marketo, Inc. et al., Case No. 3:16-cv-3907, was filed in the United States District for the Court Northern District of California against Marketo and its directors. The lawsuit alleges, generally, that Marketo and its directors violated Section 14(a) and Rule 14a-9 promulgated thereunder by the SEC pursuant to Section 14 under the Securities Exchange Act of 1934, as amended. The lawsuit also alleges that defendants have failed to disclose all material facts concerning the proposed Merger to stockholders. The lawsuit also alleges that Marketo’s directors breached their fiduciary duties to Marketo stockholders by conducting an inadequate sales process and agreeing to a transaction that provides Marketo’s stockholders with inadequate consideration. On July 21, 2016, the plaintiff filed a request for a Temporary Restraining Order seeking to enjoin the shareholder vote. On July 26, 2016, the Court denied plaintiff’s request. The lawsuit seeks, among other things, equitable relief that would enjoin the consummation of the proposed Merger, damages, rescission of the proposed Merger to the extent it is consummated, and attorneys’ fees and costs. The Company does not currently believe a loss from the above lawsuits are probable or estimable. |
Stockholders' Equity and Stock
Stockholders' Equity and Stock Based Compensation | 6 Months Ended |
Jun. 30, 2016 | |
Stockholders' Equity and Stock Based Compensation | |
Stockholders' Equity and Stock Based Compensation | 9. Stockholders’ Equity and Stock-Based Compensation Common Stock Authorized and Outstanding As of June 30, 2016, the Company was authorized to issue 1,000,000,000 common shares with a par value of $0.0001 per share and 20,000,000 convertible preferred shares with a par value of $0.0001 per share. As of June 30, 2016, the Company had approximately 45.0 million shares of common stock issued and outstanding. Summary of Stock Option Activity A summary of the Company’s stock option activity under all stock option plans and related information for six months ended June 30, 2016 is as follows: Number of Stock Options Outstanding Weighted- Average Exercise Price Weighted- Average Remaining Contractual Life Aggregate Intrinsic Value (in thousands) (Years) (in thousands) Balance as of December 31, 2015 $ $ Granted Exercised ) Cancelled/forfeited ) Balance as of June 30, 2016 Exercisable as of June 30, 2016 Vested and expected to vest as of June 30, 2016 $ $ The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the Company’s closing price of $34.82 as of June 30, 2016 for options that were in-the-money as of that date. Option awards generally vest over a four-year period, with 25% vesting one year from date of grant and monthly thereafter. Stock options granted under the Company’s 2006 Plan provided option holders with an early exercise provision, where in the event of termination any exercised and unvested shares are subject to repurchase by the Company at the original purchase price. This right of repurchase lapses as the option vests. Options exercisable as of June 30, 2016 include options that are exercisable prior to vesting. The weighted average grant date fair value of options granted and the total intrinsic value of options exercised are as follows (in thousands, except weighted average grant date fair value): Six Months Ended June 30, 2016 2015 Weighted average grant date fair value of options granted $ $ Total intrinsic value of options exercised (in thousands) $ $ The total estimated grant date fair value of options vested during the six months ended June 30, 2016 was approximately $4.7 million. Determining Fair Value of Stock Options The fair value of each option grant is estimated on the date of grant using the Black-Scholes option valuation model. The following assumptions were used to estimate the fair value of options granted to employees: Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Expected term (in years) 6 6 6 6 Risk-free interest rate 1.52% - 1.55% 1.70% 1.52% - 1.55% 1.70% Expected volatility 47.99%- 53.83% 44.80% 47.99%- 53.83% 44.80% Expected dividend rate 0% 0% 0% 0% Restricted Stock Units A summary of the Company’s Restricted Stock Units (RSUs) activity and related information for the six months ended June 30, 2016 is as follows: Number of RSUs Weighted Average Grant Date Fair Value (in thousands) Balance as of December 31, 2015 $ RSUs Granted RSUs Vested ) RSUs Cancelled/Forfeited ) Balance as of June 30, 2016 $ RSUs are generally subject to a time-based vesting condition that ranges from 3 to 4 years. The weighted average grant date fair value of RSUs granted and the total intrinsic value of RSUs that vested during the periods presented were as follows (in thousands, except weighted average grant date fair value): Six Months Ended June 30, 2016 2015 Weighted average grant date fair value of RSUs granted $ $ Total intrinsic value of vested RSUs (in thousands) $ $ Market Stock Units During the first quarter of 2015 and 2016 the Company granted market stock units (MSUs) to its executive officers under the Company’s 2013 Equity Incentive Plan. Each MSU award granted contains three separate tranches. The actual number of MSUs eligible to vest in each tranche is based on the performance of the Company’s stock price relative to the performance of the NASDAQ Composite Index over the vesting period of each tranche, which ranges from one to three years. MSU participants have the ability to receive up to 100% of the target number of shares in tranche 1 and 2 and up to 150% of the target number of shares in tranche 3. A summary of the Company’s MSU activity and related information for the six months ended June 30, 2016 is as follows: Number of Shares Underlying MSUs Weighted Average Grant Date Fair Value (in thousands) Balance as of December 31, 2015 $ MSUs Granted MSUs Vested ) MSUs Cancelled/Forfeited ) Balance as of June 30, 2016 $ The fair value of each MSU award is determined by multiplying the fair value per share by the underlying number of shares. The fair value per share was determined on the grant date using the Monte Carlo valuation methodology. The fair value per share for each MSU award granted during the six months ended June 30, 2016 by tranche were as follows: Grant Date MSUs Granted Tranche 1 Tranche 2 Tranche 3 MSU FV February 17, 2016 $ $ $ $ February 18, 2016 March 7, 2016 The Company amortizes the fair value of each MSU award using the graded-vesting method, adjusted for estimated forfeitures. Stock-based compensation expense associated with participants who fulfill their requisite service period is not reversed even if the performance conditions are not met. However, stock-based compensation expense is reversed for participants who forfeit their MSU awards prior to fulfilling their requisite service period. The fair value of the MSUs granted during the three and six months ended June 30, 2016 and 2015 were estimated using the following weighted-average assumptions: Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Expected term (in years) N/A N/A 3 3 Risk-free interest rate N/A N/A 0.86% - 1.05% 0.99% Expected volatility N/A N/A 45% 39% Expected dividend rate N/A N/A 0% 0% The weighted average grant date fair value of MSUs granted and the total intrinsic value of MSUs that vested during the periods presented were as follows (in thousands, except weighted average grant date fair value): Six Months Ended June 30, 2016 2015 Weighted average grant date fair value of MSUs granted $ $ Total intrinsic value of vested MSUs (in thousands) $ $ — Employee Stock Purchase Plan The assumptions used to value employee stock purchase rights under the Black-Scholes model during the six months ended June 30, 2016 and 2015 were as follows: Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Expected term (in months) 6 6 6 6 Risk-free interest rate 0.42% 0.07% 0.42% 0.07% Expected volatility 41% 39% 41% 39% Expected dividend rate 0% 0% 0% 0% During the first six months ended June 30, 2016, the Company issued approximately 0.2 million shares of common stock under the Company’s Employee Stock Purchase Plan (ESPP) with an average purchase price of $12.65 per share. Stock Compensation Expense The stock-based compensation expense included in operating results was allocated as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Cost of subscription and support revenue $ $ $ $ Cost of professional services and other revenue Research and development Sales and marketing General and administrative Total stock-based compensation expense $ $ $ $ For the six months ended June 30, 2016, the Company incurred expenses of $3.4 million for options, $14.6 million for RSUs, $1.5 million for MSUs and $0.9 million for ESPP shares. Additionally, the Company capitalized stock-based compensation expense of $0.3 million associated with the Company’s internal-use software projects. As of June 30, 2016, total unrecognized compensation cost related to unvested awards not yet recognized under all equity compensation plans, adjusted for estimated forfeitures, was as follows: June 30, 2016 Unrecognized Expense Average Expected Recognition Period (in thousands) (in years) Stock options $ Restricted stock units and market stock units Employee stock purchase plan Total unrecognized stock-based compensation expense $ |
Net Loss per Share
Net Loss per Share | 6 Months Ended |
Jun. 30, 2016 | |
Net Loss per Share | |
Net Loss per Share | 10. Net Loss per Share Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, less the weighted-average unvested common stock subject to repurchase or forfeiture as they are not deemed to be issued for accounting purposes. Diluted net loss per share is computed by giving effect to all potential shares of common stock, including stock options, RSUs, MSUs and ESPP shares, to the extent they are dilutive. The following table sets forth the computation of the Company’s basic and diluted net loss per share of common stock under the two-class method attributable to common stockholders: Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 (in thousands, except per share amounts) Numerator: Net loss attributable to Marketo $ ) $ ) $ ) $ ) Denominator: Weighted-average common shares outstanding Less: Weighted-average unvested common shares subject to repurchase or forfeiture and shares held in escrow ) ) ) ) Weighted-average shares used in computing net loss per share of common stock, basic and diluted Net loss per share of common stock, basic and diluted $ ) $ ) $ ) $ ) The Company applied the two-class method to calculate its basic and diluted net loss per share of common stock, as its common stock subject to repurchase and common stock held in escrow are participating securities. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common shareholders. However, the two-class method does not impact the net loss per share of common stock as the Company was in a loss position for each of the periods presented and preferred shareholders, holders of common stock subject to repurchase and common stock held in escrow do not have to participate in losses. Additionally, since the Company was in a loss position for each of the periods presented, diluted net loss per share is the same as basic net loss per share for each period, as the inclusion of all potential common shares outstanding would have been anti-dilutive. Potentially dilutive securities that were excluded from the diluted per share calculation because they would have been anti-dilutive were as follows: As of June 30, 2016 2015 (in thousands) Stock options to purchase common stock Employee stock purchase plan Common stock held in escrow — Common stock subject to repurchase Restricted stock units and market stock units |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2016 | |
Income Taxes | |
Income Taxes | 11. Income Taxes The provision for income taxes was $0.4 million and $0.1 million for the three months ended June 30, 2016 and 2015, respectively and $0.8 million and $0.3 million for the six months ended June 30, 2016 and 2015, respectively. The provision for income taxes consisted primarily of foreign and state income taxes. For the three and six months ended June 30, 2016 and 2015, the provision for income taxes differed from the statutory amount primarily due to unbenefited federal, state, and certain foreign losses with minor offsets for certain state and foreign taxes currently payable. The Company realized no benefit for current year losses due to maintaining a full valuation allowance against the U.S. and certain foreign net deferred tax assets. The realization of tax benefits of deferred tax assets is dependent upon future levels of taxable income, of an appropriate character, in the periods the items are expected to be deductible or taxable. Based on the available objective evidence, the Company does not believe it is more likely than not that the U.S. federal and state and certain foreign net deferred tax assets will be realizable. Accordingly, the Company has provided a full valuation allowance against the domestic net deferred tax assets and certain foreign jurisdictions with net deferred tax assets as of June 30, 2016 and December 31, 2015. The Company intends to maintain the remaining valuation allowance until sufficient positive evidence exists to support a reversal of, or decrease in, the valuation allowance. During the six months ended June 30, 2016, there have been no material changes to the total amount of unrecognized tax benefits. |
Segment Information and Informa
Segment Information and Information about Geographic Areas | 6 Months Ended |
Jun. 30, 2016 | |
Segment Information and Information about Geographic Areas | |
Segment Information and Information about Geographic Areas | 12. Segment Information and Information about Geographic Areas The accounting principles guiding disclosures about segments of an enterprise and related information establishes standards for the reporting by business enterprises of information about operating segments, products and services, geographic areas, and major customers. The method of determining which information is reported is based on the way that management organizes the operating segments within the Company for making operational decisions and assessments of financial performance. The Company’s chief operating decision maker (CODM) is considered to be the Company’s Chief Executive Officer (CEO). The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance. As such, the Company is determined to be operating in one business segment. All of the Company’s principal operations and decision-making functions are located in the United States. Revenue Revenue by geography is based on the shipping address of the customer. The following table presents the Company’s revenue by geographic region for the periods presented: Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 (in thousands) (in thousands) United States $ $ $ $ EMEA Other Total $ $ $ $ No single customer accounted for more than 10% of the Company’s total revenue during the three and six months ended June 30, 2016 and 2015, respectively. No single customer accounted for more than 10% of accounts receivable as of June 30, 2016 and December 31, 2015. Long-lived Assets The following table sets forth the Company’s long-lived assets by geographic areas as of the periods presented: June 30, December 31, 2016 2015 (in thousands) United States $ $ EMEA Other Total $ $ |
The Company and Summary of Si18
The Company and Summary of Significant Accounting Policies and Estimates (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
The Company and Summary of Significant Accounting Policies and Estimates | |
Basis of Presentation | Basis of Presentation The unaudited condensed consolidated financial statements and accompanying notes of the Company reflect all adjustments (all of which are normal and recurring in nature) that, in the opinion of management, are necessary for a fair presentation of the interim periods presented. The unaudited condensed consolidated financial statements include the accounts of Marketo and its wholly owned and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the entire year ending December 31, 2016. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) have been condensed or omitted under the rules and regulations of the Securities and Exchange Commission (SEC). These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and related notes presented in the Company’s Annual Report on Form 10-K filed with the SEC on March 4, 2016. There have been no material changes in the Company’s significant accounting policies from those that were disclosed in the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2015. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Such management estimates and assumptions include the estimated selling price for the various elements in our customer contracts, the allowance for doubtful accounts, stock-based compensation expense, useful lives of intangible assets, redemption value of redeemable non-controlling interests and the valuation of deferred tax assets and acquired intangible assets. Actual results could differ materially from those estimates, and such differences could be material to the financial statements and affect the results of operations reported in future periods. |
Pending Merger | Pending Merger On May 27, 2016, Marketo entered into an Agreement and Plan of Merger (Merger Agreement) with Milestone Holdco, LLC, a Delaware limited liability company (Parent), and Milestone Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (Merger Sub), providing for the merger of Merger Sub with and into the Company (the Merger), with the Company surviving the Merger as a wholly owned subsidiary of Parent. Parent and Merger Sub were formed by affiliates of Vista Equity Partners Fund VI, L.P., a Delaware limited partnership (Vista). Parent will acquire all outstanding shares of Marketo common stock for a total value of approximately $1.79 billion. Consummation of the Merger is subject to customary closing conditions, including, but not limited to, the: (i) requisite approvals by the Company’s stockholders; (ii) expiration or termination of any waiting periods applicable to the consummation of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act); and (iii) absence of any law or order restraining, enjoining or otherwise prohibiting the Merger . On June 22, 2016, the U.S. Federal Trade Commission notified Marketo that early termination of the waiting period under the HSR Act was granted, effective immediately. On July 28, 2016, Marketo held a special meeting of stockholders (the Special Meeting ) at Marketo’s principal executive offices in San Mateo, CA to vote on the proposals described in the Company’s definitive proxy statement filed with the Securities and Exchange Commission on June 29, 2016 and first mailed to Marketo’s stockholders on June 29, 2016. At the Special Meeting, stockholders approved the proposal to adopt the Merger Agreement. The Company and Vista Funds currently anticipate the closing of the transaction to occur in the third calendar quarter of 2016. The Company has recorded $4.0 milllion of transaction costs related to this transaction in the three and six months ended June 30, 2016. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In April 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. This ASU addresses certain implementation issues that have surfaced since the issuance of ASU 2014-09 in May 2014. The ASU provides guidance in identifying performance obligations and determining the appropriate accounting for licensing arrangements. The amendments in this ASU will be effective for the Company beginning January 1, 2018, and for interim periods therein. The Company is in the process of assessing the impact that adoption of this new standard will have on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606) Principal versus Agent Considerations (Reporting Revenue Gross versus Net). ASU 2016-08 further clarifies principal and agent relationships within ASU 2014-09. The amendment will be effective for the Company beginning January 1, 2018, including interim reporting periods within that reporting year. The Company is evaluating the impact that adoption of this new standard will have on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which is intended to improve the accounting for share-based payment transactions as part of the FASB’s simplification initiative. The ASU changes seven aspects of the accounting for share-based payment award transactions, including: (1) accounting for income taxes; (2) classification of excess tax benefits on the statement of cash flows; (3) forfeitures; (4) minimum statutory tax withholding requirements; (5) classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax-withholding purposes; (6) practical expedient — expected term (nonpublic only); and (7) intrinsic value (nonpublic only). The ASU is effective for fiscal years beginning after December 15, 2016 and interim periods within those years, and early adoption is permitted. The Company has elected not to early adopt. The Company is evaluating the impact of the updated guidance on the Company’s consolidated financial statements and related disclosures and has not selected a transition method. In February 2016, the FASB issued ASU 2016-02, Leases, which, among other things, requires lessees to recognize most leases on-balance sheet. This will increase lessees’ reported assets and liabilities — in some cases very significantly. Lessor accounting remains substantially similar to current U.S. GAAP. ASU 2016-02 supersedes Topic 840, Leases. This ASU is effective for interim and annual periods beginning after December 15, 2018 with early adoption permitted. ASU 2016-02 mandates a modified retrospective transition method for all entities. The Company is evaluating the impact of the updated guidance on the Company’s consolidated financial statements and related disclosures and has not determined if it will early adopt. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. ASU 2014-09 also specifies the accounting for some costs to obtain or fulfill a contract with a customer. In July 2015, the FASB approved a one year deferral of the effective date for the new revenue reporting standard for entities reporting under U.S. GAAP. In accordance with the deferral, this guidance will be effective for the Company, beginning January 1, 2018, and can be applied either retrospectively to each period presented or as a cumulative effect adjustment as of the date of adoption. Early adoption is permitted beginning January 1, 2017. The Company has elected not to early adopt. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its consolidated financial statements. |
Joint Venture (Tables)
Joint Venture (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Joint Venture | |
Schedule reconciling net loss and adjustment attributable to redeemable non-controlling interests | The following table reconciles net loss and adjustment attributable to redeemable non-controlling interests for periods indicated below (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Net loss attributable to redeemable non-controlling interests (before adjustment to redeemable non-controlling interests) $ $ $ $ Adjustment to redeemable non-controlling interests ) ) ) ) Net loss and adjustment attributable to redeemable non-controlling interests $ ) $ ) $ ) $ ) |
Fair Value of Financial Instr20
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Fair Value of Financial Instruments | |
Schedule of financial assets measured at fair value on a recurring basis | June 30, 2016 December 31, 2015 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 (in thousands) Money market funds $ $ — $ — $ $ — $ — Certificates of deposit — — — — Total $ $ $ — $ $ $ — |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Balance Sheet Components | |
Schedule of cash and cash equivalents | June 30, December 31, 2016 2015 (in thousands) Cash $ $ Cash equivalents: Money market funds Certificates of deposit Total cash equivalents Cash and cash equivalents $ $ |
Schedule of accounts receivable, net | June 30, December 31, 2016 2015 (in thousands) Accounts receivable $ $ Allowance for doubtful accounts ) ) Accounts receivable, net $ $ |
Schedule of property and equipment, net | June 30, December 31, 2016 2015 (in thousands) Computer equipment $ $ Software Office furniture Leasehold improvements Construction in progress Total property and equipment Less accumulated depreciation ) ) Property and equipment, net $ $ |
Schedule of accrued expenses and other current liabilities | June 30, December 31, 2016 2015 (in thousands) Accrued bonuses, commissions and wages $ $ Accrued ESPP Accrued vacation Accrued marketing expenses Accrued other Total $ $ |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets | |
Schedule of goodwill and intangible assets | June 30, 2016 Weighted Average Remaining Useful Life December 31, 2015 Weighted Average Remaining Useful Life (in thousands) (in years) (in thousands) (in years) Developed technology $ $ Domain names Customer relationships Non-compete agreements Capitalized software development costs Less accumulated amortization ) ) Intangible assets, net Goodwill Goodwill and intangible assets, net $ $ |
Schedule of amortization expense | Amortization expense for the periods indicated below is as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Amortization expense $ $ $ $ |
Schedule of estimated future amortization based on the carrying amount of intangible assets | Based on the carrying amount of intangible assets as of June 30, 2016, the estimated future amortization is as follows (in thousands): Six Months Ending December 31, Years Ending December 31, 2016 2017 2018 2019 2020 Total Developed Technology $ $ $ — $ — $ — $ Domain Names — Customer Relationships — — — — Non-Compete Agreements — — — Capitalized Software Development Costs — — Total $ $ $ $ $ — $ |
Stockholders Equity and Redeema
Stockholders Equity and Redeemable Noncontrolling Interests (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Stockholders' Equity and Redeemable Non-controlling Interests | |
Summary of activity in stockholders' equity and redeemable non-controlling interests | The following table summarizes the activity in stockholders’ equity and redeemable non-controlling interests for the period indicated below (in thousands): Total Stockholders’ Equity Redeemable Non-controlling Interests Balance as of December 31, 2015 $ $ Issuance of common stock upon exercise and early exercise of stock options — Issuance of common stock under employee stock purchase plan — Adjustment to redemption value ) Withholding taxes for the net share settlement of equity awards ) — Vesting of early exercised options — Stock-based compensation expense — Net loss ) ) Foreign currency translation adjustments Balance as of June 30, 2016 $ $ |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies. | |
Schedule of future minimum operating lease payments | As of June 30, 2016, future minimum operating lease payments are as follows (in thousands): Minimum Lease Payment 2016 $ 2017 2018 2019 2020 Thereafter Total $ |
Stockholders' Equity and Stoc25
Stockholders' Equity and Stock Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Stockholders' Equity and Stock Based Compensation | |
Summary of stock option activity | Number of Stock Options Outstanding Weighted- Average Exercise Price Weighted- Average Remaining Contractual Life Aggregate Intrinsic Value (in thousands) (Years) (in thousands) Balance as of December 31, 2015 $ $ Granted Exercised ) Cancelled/forfeited ) Balance as of June 30, 2016 Exercisable as of June 30, 2016 Vested and expected to vest as of June 30, 2016 $ $ |
Schedule of weighted average grant date fair value of options granted and the total intrinsic value of options exercised | The weighted average grant date fair value of options granted and the total intrinsic value of options exercised are as follows (in thousands, except weighted average grant date fair value): Six Months Ended June 30, 2016 2015 Weighted average grant date fair value of options granted $ $ Total intrinsic value of options exercised (in thousands) $ $ |
Schedule of assumptions used for estimation of fair value of options granted to employees | Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Expected term (in years) 6 6 6 6 Risk-free interest rate 1.52% - 1.55% 1.70% 1.52% - 1.55% 1.70% Expected volatility 47.99%- 53.83% 44.80% 47.99%- 53.83% 44.80% Expected dividend rate 0% 0% 0% 0% |
Summary of Restricted Stock Units (RSUs) activity | Number of RSUs Weighted Average Grant Date Fair Value (in thousands) Balance as of December 31, 2015 $ RSUs Granted RSUs Vested ) RSUs Cancelled/Forfeited ) Balance as of June 30, 2016 $ |
Schedule of weighted average grant date fair value of RSU and the total intrinsic value of RSU vested | The weighted average grant date fair value of RSUs granted and the total intrinsic value of RSUs that vested during the periods presented were as follows (in thousands, except weighted average grant date fair value): Six Months Ended June 30, 2016 2015 Weighted average grant date fair value of RSUs granted $ $ Total intrinsic value of vested RSUs (in thousands) $ $ |
Schedule of market performance based compensation restricted stock units (MSU) award activity | Number of Shares Underlying MSUs Weighted Average Grant Date Fair Value (in thousands) Balance as of December 31, 2015 $ MSUs Granted MSUs Vested ) MSUs Cancelled/Forfeited ) Balance as of June 30, 2016 $ |
Schedule of MSU fair value per share by grant date | The fair value per share for each MSU award granted during the six months ended June 30, 2016 by tranche were as follows: Grant Date MSUs Granted Tranche 1 Tranche 2 Tranche 3 MSU FV February 17, 2016 $ $ $ $ February 18, 2016 March 7, 2016 |
Schedule of weighted average assumptions used to estimate fair value of market performance based compensation restricted stock units (MSU) awards | Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Expected term (in years) N/A N/A 3 3 Risk-free interest rate N/A N/A 0.86% - 1.05% 0.99% Expected volatility N/A N/A 45% 39% Expected dividend rate N/A N/A 0% 0% |
Schedule of weighted average grant date fair value of MSUs granted and the total intrinsic value of MSUs that vested | The weighted average grant date fair value of MSUs granted and the total intrinsic value of MSUs that vested during the periods presented were as follows (in thousands, except weighted average grant date fair value): Six Months Ended June 30, 2016 2015 Weighted average grant date fair value of MSUs granted $ $ Total intrinsic value of vested MSUs (in thousands) $ $ — |
Schedule of assumptions used to value employee stock purchase rights under the Black-Scholes model | Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Expected term (in months) 6 6 6 6 Risk-free interest rate 0.42% 0.07% 0.42% 0.07% Expected volatility 41% 39% 41% 39% Expected dividend rate 0% 0% 0% 0% |
Schedule of stock-based compensation expense included in operating results | The stock-based compensation expense included in operating results was allocated as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Cost of subscription and support revenue $ $ $ $ Cost of professional services and other revenue Research and development Sales and marketing General and administrative Total stock-based compensation expense $ $ $ $ |
Schedule of total unrecognized compensation cost related to unvested awards not yet recognized under all equity compensation plans, adjusted for estimate forfeitures | June 30, 2016 Unrecognized Expense Average Expected Recognition Period (in thousands) (in years) Stock options $ Restricted stock units and market stock units Employee stock purchase plan Total unrecognized stock-based compensation expense $ |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Net Loss per Share | |
Schedule of computation of basic and diluted net loss per share of common stock | Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 (in thousands, except per share amounts) Numerator: Net loss attributable to Marketo $ ) $ ) $ ) $ ) Denominator: Weighted-average common shares outstanding Less: Weighted-average unvested common shares subject to repurchase or forfeiture and shares held in escrow ) ) ) ) Weighted-average shares used in computing net loss per share of common stock, basic and diluted Net loss per share of common stock, basic and diluted $ ) $ ) $ ) $ ) |
Schedule of potentially dilutive securities excluded from the diluted per share calculation | As of June 30, 2016 2015 (in thousands) Stock options to purchase common stock Employee stock purchase plan Common stock held in escrow — Common stock subject to repurchase Restricted stock units and market stock units |
Segment Information and Infor27
Segment Information and Information about Geographic Areas (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Segment Information and Information about Geographic Areas | |
Schedule of revenue by geographic region | Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 (in thousands) (in thousands) United States $ $ $ $ EMEA Other Total $ $ $ $ |
Schedule of long-lived assets by geographic areas | June 30, December 31, 2016 2015 (in thousands) United States $ $ EMEA Other Total $ $ |
The Company and Summary of Si28
The Company and Summary of Significant Accounting Policies and Estimates (Details) | May 27, 2016USD ($) | Jun. 30, 2016USD ($)category | Jun. 30, 2016USD ($)category |
Number of Categories | category | 10 | 10 | |
Merger Agreement | Marketo | Milestone Holdco LLC | |||
Pending Merger | |||
Total consideration | $ 1,790,000,000 | ||
Transaction costs | $ 4,000,000 | $ 4,000,000 |
Joint Venture (Details)
Joint Venture (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||
Mar. 31, 2015JPY (¥) | Mar. 31, 2015USD ($) | Feb. 28, 2014JPY (¥) | Feb. 28, 2014USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | |
Joint Venture | ||||||||
Amount contributed by investors to acquire equity interests | $ 1,678,000 | |||||||
Adjustment to redeemable non-controlling interest | $ (6,078,000) | |||||||
Redeemable non-controlling interests | ||||||||
Net loss attributable to redeemable non-controlling interests (before adjustment to redeemable non-controlling interests) | $ 459,000 | $ 415,000 | 897,000 | 869,000 | ||||
Adjustment to redeemable non-controlling interests | (5,904,000) | (912,000) | (6,078,000) | (912,000) | ||||
Net loss and adjustment attributable to redeemable non-controlling interests | $ (5,445,000) | $ (497,000) | (5,181,000) | $ (43,000) | ||||
Marketo KK | ||||||||
Joint Venture | ||||||||
Adjustment to redeemable non-controlling interest | $ 5,900,000 | |||||||
Marketo KK | Vesting milestones | ||||||||
Joint Venture | ||||||||
Contributions to subscribe to additional shares | ¥ 237,480,955 | $ 2,000,000 | ||||||
Equity interests held by company (as a percent) | 60.10% | 60.10% | ||||||
Investors | ||||||||
Joint Venture | ||||||||
Amount contributed by investors to acquire equity interests | ¥ 200,000,000 | $ 2,000,000 | ||||||
Percentage of equity interest held by investors | 35.40% | 35.40% | ||||||
Percentage of the common stock callable or puttable beginning on the seventh anniversary | 20.00% | |||||||
Percentage of the common stock callable or puttable beginning on the eighth anniversary | 40.00% | |||||||
Percentage of the common stock callable or puttable beginning on the tenth anniversary | 100.00% | |||||||
Investors | Vesting milestones | ||||||||
Joint Venture | ||||||||
Percentage of equity interest held by investors | 39.90% | 39.90% | ||||||
Contributions to subscribe to additional shares | ¥ 200,000,000 | $ 1,700,000 |
Fair Value of Financial Instr30
Fair Value of Financial Instruments (Details) - Recurring basis - USD ($) $ in Thousands | Jun. 30, 2016 | Jun. 30, 2015 |
Level 1 | ||
Fair Value of Financial Instruments | ||
Total fair value of financial assets | $ 80,769 | $ 93,108 |
Level 1 | Money market funds | ||
Fair Value of Financial Instruments | ||
Total fair value of financial assets | 80,769 | 93,108 |
Level 2 | ||
Fair Value of Financial Instruments | ||
Total fair value of financial assets | 25 | 25 |
Level 2 | Certificates of deposit | ||
Fair Value of Financial Instruments | ||
Total fair value of financial assets | $ 25 | $ 25 |
Balance Sheet Components (Detai
Balance Sheet Components (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Jun. 30, 2015 | Dec. 31, 2014 |
Property and equipment, net | |||||
Total property and equipment | $ 53,213 | $ 44,537 | |||
Less accumulated depreciation | (28,418) | (23,214) | |||
Cash and cash equivalents | 99,504 | $ 99,504 | 107,218 | $ 110,445 | $ 112,644 |
Property and equipment, net | 24,795 | 21,323 | |||
Cash and cash equivalents | |||||
Cash | 18,710 | 14,085 | |||
Cash equivalents: | |||||
Money market funds | 80,769 | 93,108 | |||
Certificates of deposit | 25 | 25 | |||
Total cash equivalents | 80,794 | 93,133 | |||
Accounts Receivable | |||||
Accounts receivable | 62,952 | 51,235 | |||
Allowance for doubtful accounts | (960) | (557) | |||
Accounts receivable, net | 61,992 | 50,678 | |||
Computer equipment | |||||
Property and equipment, net | |||||
Total property and equipment | 33,526 | 28,159 | |||
Software | |||||
Property and equipment, net | |||||
Total property and equipment | 3,525 | 3,498 | |||
Office furniture | |||||
Property and equipment, net | |||||
Total property and equipment | 3,518 | 2,952 | |||
Leasehold improvements | |||||
Property and equipment, net | |||||
Total property and equipment | 8,754 | 7,120 | |||
Construction in progress | |||||
Property and equipment, net | |||||
Total property and equipment | $ 3,890 | $ 2,808 |
Balance Sheet Components - Accr
Balance Sheet Components - Accrued Expenses (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Balance Sheet Components | ||
Accrued bonuses, commissions and wages | $ 9,631 | $ 12,343 |
Accrued ESPP | 2,254 | 2,387 |
Accrued vacation | 4,713 | 3,739 |
Accrued marketing expenses | 1,203 | 1,289 |
Accrued other | 7,376 | 5,948 |
Total accrued expenses and other current liabilities | $ 25,177 | $ 25,706 |
Goodwill and Intangible Asset33
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Goodwill and Intangible Assets | |||||
Intangible assets, gross | $ 14,510 | $ 14,510 | $ 13,160 | ||
Less accumulated amortization | (9,532) | (9,532) | (7,705) | ||
Intangible assets, net | 4,978 | 4,978 | 5,455 | ||
Goodwill | 29,201 | 29,201 | 29,201 | ||
Goodwill and intangible assets, net | 34,179 | 34,179 | 34,656 | ||
Amortization expense | 870 | $ 892 | 1,826 | $ 1,628 | |
Estimated future amortization | |||||
Six Months Ending December 31, 2016 | 1,918 | 1,918 | |||
2,017 | 2,676 | 2,676 | |||
2,018 | 355 | 355 | |||
2,019 | 29 | 29 | |||
Intangible assets, net | 4,978 | 4,978 | 5,455 | ||
Developed technology | |||||
Goodwill and Intangible Assets | |||||
Intangible assets, gross | 6,050 | 6,050 | $ 6,050 | ||
Intangible assets, net | 2,161 | $ 2,161 | |||
Weighted Average Remaining Useful Life | 1 year 4 months 24 days | 1 year 10 months 24 days | |||
Estimated future amortization | |||||
Six Months Ending December 31, 2016 | 754 | $ 754 | |||
2,017 | 1,407 | 1,407 | |||
Intangible assets, net | 2,161 | 2,161 | |||
Domain names | |||||
Goodwill and Intangible Assets | |||||
Intangible assets, gross | 950 | 950 | $ 950 | ||
Intangible assets, net | 317 | $ 317 | |||
Weighted Average Remaining Useful Life | 2 years 6 months | 2 years 9 months 18 days | |||
Estimated future amortization | |||||
Six Months Ending December 31, 2016 | 88 | $ 88 | |||
2,017 | 100 | 100 | |||
2,018 | 100 | 100 | |||
2,019 | 29 | 29 | |||
Intangible assets, net | 317 | 317 | |||
Customer relationships | |||||
Goodwill and Intangible Assets | |||||
Intangible assets, gross | 1,600 | 1,600 | $ 1,600 | ||
Intangible assets, net | 107 | $ 107 | |||
Weighted Average Remaining Useful Life | 6 months | 9 months 18 days | |||
Estimated future amortization | |||||
Six Months Ending December 31, 2016 | 107 | $ 107 | |||
Intangible assets, net | 107 | 107 | |||
Non-compete agreements | |||||
Goodwill and Intangible Assets | |||||
Intangible assets, gross | 580 | 580 | $ 580 | ||
Intangible assets, net | 219 | $ 219 | |||
Weighted Average Remaining Useful Life | 1 year 6 months | 2 years | |||
Estimated future amortization | |||||
Six Months Ending December 31, 2016 | 75 | $ 75 | |||
2,017 | 144 | 144 | |||
Intangible assets, net | 219 | 219 | |||
Capitalized software development costs | |||||
Goodwill and Intangible Assets | |||||
Intangible assets, gross | 5,330 | 5,330 | $ 3,980 | ||
Intangible assets, net | 2,174 | $ 2,174 | |||
Weighted Average Remaining Useful Life | 1 year 4 months 24 days | 1 year 2 months 12 days | |||
Estimated future amortization | |||||
Six Months Ending December 31, 2016 | 894 | $ 894 | |||
2,017 | 1,025 | 1,025 | |||
2,018 | 255 | 255 | |||
Intangible assets, net | $ 2,174 | $ 2,174 |
Stockholders' Equity and Rede34
Stockholders' Equity and Redeemable Noncontrolling Interests (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Total Stockholders' Equity | ||
Balance at beginning of period | $ 93,125 | |
Issuance of common stock upon exercise and early exercise of stock options | 3,456 | |
Issuance of common stock under employee stock purchase plan | 2,716 | |
Adjustment to redemption value | (6,078) | |
Withholding taxes for the net share settlement of an equity award | (62) | |
Vesting of early exercised options | 34 | $ 82 |
Stock-based compensation expense | 20,366 | |
Net loss | (33,104) | |
Foreign currency translation adjustments | 351 | |
Balance at end of period | 80,804 | |
Redeemable Non-controlling Interests | ||
Balance at beginning of period | 4,643 | |
Adjustment to redemption value, non-controlling interests | 6,078 | |
Net loss, non-controlling interests | (897) | |
Foreign currency translation adjustments, non-controlling interests | 64 | |
Balance at end of period | 9,888 | |
Capitalized stock-based compensation associated with internal-use software projects | $ 300 |
Credit Facility (Details)
Credit Facility (Details) $ in Millions | 1 Months Ended | |||
May 31, 2012USD ($)item | Jun. 30, 2016USD ($) | Dec. 31, 2015USD ($) | Jun. 30, 2013USD ($) | |
Equipment facility | ||||
Credit facility | ||||
Outstanding loan | $ 1.4 | $ 2.7 | ||
Original Line of Credit | ||||
Credit facility | ||||
Line of credit, Maximum | $ 4 | |||
Minimum interest rate (as a percent) | 4.00% | |||
Percentage points above prime rate considered for determining interest rate | 0.75% | |||
Interest only payment period | 9 months | |||
Number of equal monthly principal and interest payments | item | 36 | |||
Percentage of increase in interest rate basis of existence of an event as per loan and security agreement | 5.00% | |||
New line of credit | ||||
Credit facility | ||||
Line of credit, Maximum | $ 4.5 |
Commitments and Contingencies36
Commitments and Contingencies (Details) | 1 Months Ended | ||
May 31, 2016USD ($)ft² | Mar. 31, 2016USD ($)ft² | Jun. 30, 2016USD ($) | |
Leases and contractual obligations | |||
Future minimum lease payments | $ 56,012,000 | ||
Future minimum lease payments | |||
2016 (remaining 6 months) | 3,990,000 | ||
2,017 | 9,226,000 | ||
2,018 | 9,678,000 | ||
2,019 | 9,389,000 | ||
2,020 | 8,929,000 | ||
Thereafter | 14,800,000 | ||
Total | $ 56,012,000 | ||
San Mateo Lease Agreement, Incremental Portion | |||
Leases and contractual obligations | |||
Area of office space (in square feet) | ft² | 33,779 | ||
Future minimum lease payments | $ 36,700,000 | ||
Term of operating lease | 70 months | ||
Standby letter of credit for amended lease agreement | $ 700,000 | ||
Future minimum lease payments | |||
Total | $ 36,700,000 | ||
Dublin, Ireland lease agreement | |||
Leases and contractual obligations | |||
Area of office space (in square feet) | ft² | 17,227 | ||
Future minimum lease payments | $ 2,800,000 | ||
Term of operating lease | 60 months | ||
Future minimum lease payments | |||
Total | $ 2,800,000 |
Stockholders' Equity and Stoc37
Stockholders' Equity and Stock Based Compensation - Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Stockholders' Equity and Stock Based Compensation | |||
Common stock, shares authorized | 1,000,000,000 | ||
Common stock, par value (in dollars per share) | $ 0.0001 | ||
Preferred stock, shares authorized | 20,000,000 | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | ||
Common stock, shares issued | 45,000,000 | ||
Common stock, shares outstanding | 45,000,000 | ||
Aggregate Intrinsic Value | |||
Closing stock price (in dollars per share) | $ 34.82 | ||
Stock options to purchase common stock | |||
Number of Stock Options Outstanding | |||
Balance at the beginning of the period (in shares) | 3,777,000 | ||
Granted (in shares) | 91,000 | ||
Exercised (in shares) | (692,000) | ||
Cancelled/Forfeited (in shares) | (206,000) | ||
Balance at the end of the period (in shares) | 2,970,000 | 3,777,000 | |
Exercisable at the end of the period (in shares) | 2,558,000 | ||
Vested and expected to vest at the end of the period (in shares) | 2,903,000 | ||
Weighted-Average Exercise Price | |||
Balance at the beginning of the period (in dollars per share) | $ 13.55 | ||
Granted (in dollars per share) | 30.56 | ||
Exercised (in dollars per share) | 5.04 | ||
Cancelled/Forfeited (in dollars per share) | 28.80 | ||
Balance at end of the period (in dollars per share) | 14.99 | $ 13.55 | |
Exercisable at the end of the period (in dollars per share) | 11.60 | ||
Vested and expected to vest at the end of the period (in dollars per share) | $ 14.67 | ||
Weighted-Average Remaining Contractual Life | |||
Outstanding at the beginning of the period | 6 years 7 months 10 days | ||
Outstanding at the end of the period | 6 years 3 months 18 days | ||
Exercisable at the end of the period | 5 years 11 months 27 days | ||
Vested and expected to vest at the end of the period | 6 years 3 months 4 days | ||
Aggregate Intrinsic Value | |||
Outstanding at the beginning of the period | $ 65,915 | ||
Outstanding at the end of the period | 62,379 | $ 65,915 | |
Exercisable at the end of the period | 61,502 | ||
Vested and expected to vest at the end of the period | $ 61,835 | ||
Additional information | |||
Weighted average grant date fair value (in dollars per share) | $ 14.74 | $ 12.55 | |
Total intrinsic value of options exercised | $ 15,127 | $ 16,706 | |
Total estimated grant date fair value of options vested | $ 4,700 | ||
Stock options to purchase common stock | 2006 Stock Plan | |||
Additional information | |||
Vesting period | 4 years | ||
Percentage of awards which will vest after one year | 25.00% |
Stockholders' Equity and Stoc38
Stockholders' Equity and Stock Based Compensation ESPP & RSU (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Additional information | ||||
Closing stock price (in dollars per share) | $ 34.82 | $ 34.82 | ||
Employee Stock Purchase Plan | ||||
Valuation assumptions | ||||
Expected term | 6 months | 6 months | 6 months | 6 months |
Risk-free interest rate (as a percent) | 0.42% | 0.07% | 0.42% | 0.07% |
Expected volatility (as a percent) | 41.00% | 39.00% | 41.00% | 39.00% |
Expected dividend rate (as a percent) | 0.00% | 0.00% | 0.00% | 0.00% |
Additional information | ||||
Average purchase price of shares issued (in dollars per share) | $ 12.65 | $ 12.65 | ||
Issuance of common stock under employee stock purchase plan | 200 | |||
Estimate of fair value of options | ||||
Valuation assumptions | ||||
Expected term | 6 years | 6 years | 6 years | 6 years |
Risk-free interest rate (as a percent) | 1.70% | 1.70% | ||
Expected volatility (as a percent) | 44.80% | 44.80% | ||
Expected dividend rate (as a percent) | 0.00% | 0.00% | 0.00% | 0.00% |
Estimate of fair value of options | Minimum | ||||
Valuation assumptions | ||||
Risk-free interest rate (as a percent) | 1.52% | 1.52% | ||
Expected volatility (as a percent) | 47.99% | 47.99% | ||
Estimate of fair value of options | Maximum | ||||
Valuation assumptions | ||||
Risk-free interest rate (as a percent) | 1.55% | 1.55% | ||
Expected volatility (as a percent) | 53.83% | 53.83% | ||
RSUs | ||||
Number of RSUs | ||||
Balance at the beginning of the period (in shares) | 3,037 | |||
RSUs Granted (in shares) | 1,397 | |||
RSUs Vested (in shares) | (484) | |||
RSUs Cancelled/Forfeited (in shares) | (366) | |||
Balance at the end of the period (in shares) | 3,584 | 3,584 | ||
Average Grant Date Fair Value | ||||
Balance at the beginning of the period (in dollars per share) | $ 32.84 | |||
RSUs Granted (in dollars per share) | 18.01 | $ 33.65 | ||
RSUs Vested (in dollars per share) | 35.61 | |||
RSUs Cancelled/Forfeited (in dollars per share) | 28.67 | |||
Balance at the end of the period (in dollars per share) | $ 27.12 | 27.12 | ||
Additional information | ||||
RSUs Granted (in dollars per share) | $ 18.01 | $ 33.65 | ||
Total intrinsic value of vested Units | $ 8,348 | $ 8,472 | ||
RSUs | Minimum | ||||
Aggregate Intrinsic Value | ||||
Vesting period | 3 years | |||
RSUs | Maximum | ||||
Aggregate Intrinsic Value | ||||
Vesting period | 4 years |
Stockholders' Equity and Stoc39
Stockholders' Equity and Stock Based Compensation - MSU (Details) $ / shares in Units, shares in Thousands, $ in Thousands | Mar. 07, 2016$ / sharesshares | Feb. 18, 2016$ / sharesshares | Feb. 17, 2016$ / sharesshares | Mar. 31, 2016item$ / sharesshares | Mar. 31, 2015item | Jun. 30, 2016USD ($)$ / sharesshares | Jun. 30, 2015$ / shares |
Additional information | |||||||
Closing stock price (in dollars per share) | $ 34.82 | ||||||
MSU's | Executive Officers | |||||||
Valuation assumptions | |||||||
Expected term | 3 years | 3 years | |||||
Risk-free interest rate (as a percent) | 0.99% | ||||||
Expected volatility (as a percent) | 45.00% | 39.00% | |||||
Expected dividend rate (as a percent) | 0.00% | 0.00% | |||||
Number of shares underlying MSU's | |||||||
Balance at the beginning of the period (in shares) | shares | 193 | 193 | |||||
Granted to employees (in shares) | shares | 18,835 | 65,000 | 136,350 | 220 | |||
Vested (in shares) | shares | (36) | ||||||
Cancelled/Forfeited (in shares) | shares | (28) | ||||||
Balance at the end of the period (in shares) | shares | 349 | ||||||
Average Grant Date Fair Value | |||||||
Balance at the beginning of the period (in dollars per share) | $ 37.53 | $ 37.53 | |||||
Granted (in dollars per share) | 9.67 | $ 37.53 | |||||
Vested (in dollars per share) | 27.30 | ||||||
Cancelled/Forfeited (in dollars per share) | 27.30 | ||||||
Balance at the end of the period (in dollars per share) | 21.82 | ||||||
Additional information | |||||||
Number of separate tranches | item | 3 | 3 | |||||
Grant date fair value per share | $ 13.28 | $ 8.68 | $ 9.64 | ||||
Granted (in dollars per share) | $ 9.67 | $ 37.53 | |||||
Total intrinsic value of vested Units | $ | $ 540 | ||||||
MSU's | Executive Officers | Tranche one | |||||||
Additional information | |||||||
Percent of shares in tranche that can be received | 100.00% | 100.00% | |||||
Grant date fair value per share | 2.19 | 1.15 | 1.36 | ||||
MSU's | Executive Officers | Tranche two | |||||||
Additional information | |||||||
Percent of shares in tranche that can be received | 100.00% | 100.00% | |||||
Grant date fair value per share | 2.80 | 1.76 | 1.98 | ||||
MSU's | Executive Officers | Tranche three | |||||||
Additional information | |||||||
Percent of shares in tranche that can be received | 150.00% | 150.00% | |||||
Grant date fair value per share | $ 8.29 | $ 5.77 | $ 6.30 | ||||
MSU's | Executive Officers | Minimum | |||||||
Valuation assumptions | |||||||
Risk-free interest rate (as a percent) | 0.86% | ||||||
Additional information | |||||||
Vesting period for each tranche (in years) | 1 year | 1 year | |||||
MSU's | Executive Officers | Maximum | |||||||
Valuation assumptions | |||||||
Risk-free interest rate (as a percent) | 1.05% | ||||||
Additional information | |||||||
Vesting period for each tranche (in years) | 3 years | 3 years |
Stockholders' Equity and Stoc40
Stockholders' Equity and Stock Based Compensation - Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Stock Compensation Expense | ||||
Total stock-based compensation expense | $ 10,138 | $ 9,726 | $ 20,138 | $ 19,007 |
Capitalized stock-based compensation expense | 300 | |||
Total unrecognized compensation cost related to unvested awards not yet recognized | ||||
Unrecognized Expense | 75,081 | $ 75,081 | ||
Expected Recognition Period | 2 years 7 months 13 days | |||
Employee Stock Purchase Plan | ||||
Stock Compensation Expense | ||||
Total stock-based compensation expense | $ 900 | |||
Total unrecognized compensation cost related to unvested awards not yet recognized | ||||
Unrecognized Expense | 208 | $ 208 | ||
Expected Recognition Period | 1 month 17 days | |||
Stock options to purchase common stock | ||||
Stock Compensation Expense | ||||
Total stock-based compensation expense | $ 3,400 | |||
Total unrecognized compensation cost related to unvested awards not yet recognized | ||||
Unrecognized Expense | 7,565 | $ 7,565 | ||
Expected Recognition Period | 1 year 3 months 26 days | |||
RSUs | ||||
Stock Compensation Expense | ||||
Total stock-based compensation expense | $ 14,600 | |||
Total unrecognized compensation cost related to unvested awards not yet recognized | ||||
Unrecognized Expense | 67,308 | $ 67,308 | ||
Expected Recognition Period | 2 years 9 months 7 days | |||
MSU's | ||||
Stock Compensation Expense | ||||
Total stock-based compensation expense | $ 1,500 | |||
Cost of subscription and support revenue | ||||
Stock Compensation Expense | ||||
Total stock-based compensation expense | 789 | 626 | 1,551 | 1,245 |
Cost of professional services and other revenue | ||||
Stock Compensation Expense | ||||
Total stock-based compensation expense | 1,174 | 1,100 | 2,386 | 2,037 |
Research and development | ||||
Stock Compensation Expense | ||||
Total stock-based compensation expense | 1,859 | 1,639 | 3,664 | 3,955 |
Sales and marketing | ||||
Stock Compensation Expense | ||||
Total stock-based compensation expense | 3,217 | 3,404 | 6,291 | 6,206 |
General and administrative | ||||
Stock Compensation Expense | ||||
Total stock-based compensation expense | $ 3,099 | $ 2,957 | 6,246 | $ 5,564 |
Internal use software projects | ||||
Stock Compensation Expense | ||||
Capitalized stock-based compensation expense | $ 300 |
Net Loss per Share (Details)
Net Loss per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Potentially dilutive securities that were excluded from the diluted per share | ||||
Potentially dilutive securities excluded from the diluted per share calculation | 7,120 | 7,828 | ||
Numerator: | ||||
Net loss attributable to Marketo | $ (20,759) | $ (17,950) | $ (39,182) | $ (36,108) |
Denominator: | ||||
Weighted-average common shares outstanding | 44,701 | 42,333 | 44,361 | 42,075 |
Less: Weighted-average unvested common shares subject to repurchase or forfeiture and shares held in escrow | (7) | (170) | (18) | (186) |
Weighted-average shares used in computing net loss per share of common stock, basic and diluted | 44,694 | 42,163 | 44,343 | 41,889 |
Net loss per share of common stock, basic and diluted (in dollars per share) | $ (0.46) | $ (0.43) | $ (0.88) | $ (0.86) |
Stock options to purchase common stock | ||||
Potentially dilutive securities that were excluded from the diluted per share | ||||
Potentially dilutive securities excluded from the diluted per share calculation | 2,970 | 4,498 | ||
Employee Stock Purchase Plan | ||||
Potentially dilutive securities that were excluded from the diluted per share | ||||
Potentially dilutive securities excluded from the diluted per share calculation | 207 | 110 | ||
Common stock held in escrow | ||||
Potentially dilutive securities that were excluded from the diluted per share | ||||
Potentially dilutive securities excluded from the diluted per share calculation | 22 | |||
Common stock subject to repurchase | ||||
Potentially dilutive securities that were excluded from the diluted per share | ||||
Potentially dilutive securities excluded from the diluted per share calculation | 10 | 23 | ||
RSUs | ||||
Potentially dilutive securities that were excluded from the diluted per share | ||||
Potentially dilutive securities excluded from the diluted per share calculation | 3,933 | 3,175 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Provision for income taxes | ||||
Provision for income taxes | $ 405 | $ 100 | $ 807 | $ 312 |
Income tax benefit for current year losses due to maintaining a full valuation allowance | $ 0 |
Segment Information and Infor43
Segment Information and Information about Geographic Areas (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)item | Jun. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
Revenue, customers and long-lived assets by geographic area | |||||
Number of business segments | item | 1 | ||||
Revenue | $ 65,995 | $ 50,680 | $ 128,211 | $ 96,680 | |
Long-lived assets | 24,795 | 24,795 | $ 21,323 | ||
United States | |||||
Revenue, customers and long-lived assets by geographic area | |||||
Revenue | 54,330 | 43,144 | 106,190 | 82,409 | |
Long-lived assets | 22,106 | 22,106 | 19,508 | ||
EMEA | |||||
Revenue, customers and long-lived assets by geographic area | |||||
Revenue | 5,084 | 3,380 | 9,669 | 6,532 | |
Long-lived assets | 1,469 | 1,469 | 327 | ||
Other | |||||
Revenue, customers and long-lived assets by geographic area | |||||
Revenue | 6,581 | $ 4,156 | 12,352 | $ 7,739 | |
Long-lived assets | $ 1,220 | $ 1,220 | $ 1,488 |