Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Jul. 28, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Square, Inc. | |
Entity Central Index Key | 1,512,673 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Class A | ||
Class of Stock [Line Items] | ||
Entity Common Stock, Shares Outstanding | 251,876,547 | |
Class B | ||
Class of Stock [Line Items] | ||
Entity Common Stock, Shares Outstanding | 131,821,806 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 716,989 | $ 452,030 |
Short-term investments | 203,287 | 59,901 |
Restricted cash | 22,147 | 22,131 |
Settlements receivable | 309,021 | 321,102 |
Customer funds | 73,596 | 43,574 |
Loans held for sale | 50,079 | 42,144 |
Other current assets | 62,798 | 60,543 |
Total current assets | 1,437,917 | 1,001,425 |
Property and equipment, net | 87,442 | 88,328 |
Goodwill | 57,961 | 57,173 |
Acquired intangible assets, net | 16,452 | 19,292 |
Long-term investments | 124,099 | 27,366 |
Restricted cash | 14,565 | 14,584 |
Other assets | 3,278 | 3,194 |
Total assets | 1,741,714 | 1,211,362 |
Current liabilities: | ||
Accounts payable | 11,375 | 12,602 |
Customers payable | 465,926 | 431,632 |
Settlements payable | 41,834 | 51,151 |
Accrued transaction losses | 22,455 | 20,064 |
Accrued expenses | 56,699 | 39,543 |
Other current liabilities | 26,639 | 22,472 |
Total current liabilities | 624,928 | 577,464 |
Long-term debt (Note 10) | 349,960 | 0 |
Other liabilities | 63,082 | 57,745 |
Total liabilities | 1,037,970 | 635,209 |
Commitments and contingencies (Note 15) | ||
Stockholders’ equity: | ||
Preferred stock, $0.0000001 par value: 100,000,000 shares authorized at June 30, 2017 and December 31, 2016. None issued and outstanding at June 30, 2017 and December 31, 2016. | 0 | 0 |
Additional paid-in capital | 1,515,237 | 1,357,381 |
Accumulated deficit | (810,974) | (779,239) |
Accumulated other comprehensive loss | (519) | (1,989) |
Total stockholders’ equity | 703,744 | 576,153 |
Total liabilities and stockholders’ equity | 1,741,714 | 1,211,362 |
Class A | ||
Stockholders’ equity: | ||
Common stock | 0 | 0 |
Class B | ||
Stockholders’ equity: | ||
Common stock | $ 0 | $ 0 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Class of Stock [Line Items] | ||
Preferred stock, par value (in USD per share) | $ 0.00 | $ 0.00 |
Preferred stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Class A | ||
Class of Stock [Line Items] | ||
Common stock, par value (in USD per share) | $ 0.00 | $ 0.00 |
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (in shares) | 250,974,736 | 198,746,620 |
Common stock, shares outstanding (in shares) | 250,974,736 | 198,746,620 |
Class B | ||
Class of Stock [Line Items] | ||
Common stock, par value (in USD per share) | $ 0.00 | $ 0.00 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 131,645,329 | 165,800,756 |
Common stock, shares outstanding (in shares) | 131,645,329 | 165,800,756 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Revenue: | ||||
Hardware revenue | $ 10,289 | $ 11,085 | $ 19,305 | $ 27,267 |
Total net revenue | 551,505 | 438,533 | 1,013,059 | 817,802 |
Cost of revenue: | ||||
Hardware costs | 14,173 | 14,015 | 26,835 | 40,755 |
Amortization of acquired technology | 1,695 | 1,886 | 3,502 | 4,256 |
Total cost of revenue | 344,076 | 289,574 | 632,199 | 558,603 |
Gross profit | 207,429 | 148,959 | 380,860 | 259,199 |
Operating expenses: | ||||
Product development | 78,126 | 68,638 | 146,708 | 133,230 |
Sales and marketing | 59,916 | 39,220 | 109,816 | 77,716 |
General and administrative | 62,988 | 50,784 | 119,923 | 146,891 |
Transaction, loan and advance losses | 18,401 | 17,455 | 30,292 | 25,316 |
Amortization of acquired customer assets | 222 | 222 | 427 | 539 |
Total operating expenses | 219,653 | 176,319 | 407,166 | 383,692 |
Operating loss | (12,224) | (27,360) | (26,306) | (124,493) |
Interest and other (income) expense, net | 3,266 | (327) | 3,765 | (1,044) |
Loss before income tax | (15,490) | (27,033) | (30,071) | (123,449) |
Provision for income taxes | 472 | 312 | 981 | 651 |
Net loss | $ (15,962) | $ (27,345) | $ (31,052) | $ (124,100) |
Net loss per share: | ||||
Basic (in USD per share) | $ (0.04) | $ (0.08) | $ (0.08) | $ (0.37) |
Diluted (in USD per share) | $ (0.04) | $ (0.08) | $ (0.08) | $ (0.37) |
Weighted-average shares used to compute net loss per share | ||||
Basic (in shares) | 376,357 | 334,488 | 371,573 | 332,906 |
Diluted (in shares) | 376,357 | 334,488 | 371,573 | 332,906 |
Transaction | Customers Other than Starbucks | ||||
Revenue: | ||||
Revenue | $ 482,065 | $ 364,864 | $ 885,543 | $ 665,317 |
Cost of revenue: | ||||
Transaction and services-based costs | 311,092 | 234,857 | 568,870 | 429,133 |
Transaction | Starbucks | ||||
Revenue: | ||||
Revenue | 0 | 32,867 | 0 | 71,705 |
Cost of revenue: | ||||
Transaction and services-based costs | 0 | 28,672 | 0 | 65,282 |
Software and data product | ||||
Revenue: | ||||
Revenue | 59,151 | 29,717 | 108,211 | 53,513 |
Cost of revenue: | ||||
Transaction and services-based costs | $ 17,116 | $ 10,144 | $ 32,992 | $ 19,177 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (15,962) | $ (27,345) | $ (31,052) | $ (124,100) |
Net foreign currency translation adjustments | 430 | 85 | 1,187 | 595 |
Net unrealized gain (loss) on revaluation of intercompany loans | 432 | 329 | 403 | 582 |
Net unrealized gain (loss) on marketable securities | (139) | 4 | (120) | 80 |
Total comprehensive loss | $ (15,239) | $ (26,927) | $ (29,582) | $ (122,843) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (31,052) | $ (124,100) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 18,562 | 18,136 |
Non-cash interest and other expense | 5,680 | 131 |
Share-based compensation | 71,263 | 68,120 |
Transaction, loan and advance losses | 30,292 | 25,316 |
Deferred provision for income taxes | 99 | 63 |
Changes in operating assets and liabilities: | ||
Settlements receivable | 8,934 | (64,186) |
Customer funds | (30,022) | 3,233 |
Purchase of loans held for sale | (570,819) | (212,727) |
Sales and principal payments of loans held for sale | 560,209 | 183,748 |
Other current assets | (2,201) | 7,985 |
Other assets | (110) | (377) |
Accounts payable | 143 | 2,538 |
Customers payable | 34,149 | 84,826 |
Settlements payable | (9,317) | (10,579) |
Charge-offs to accrued transaction losses | (22,243) | (24,475) |
Accrued expenses | 17,000 | (13,784) |
Other current liabilities | 4,327 | 24,025 |
Other noncurrent liabilities | 5,696 | (431) |
Net cash provided by (used in) operating activities | 90,590 | (32,538) |
Cash flows from investing activities: | ||
Purchase of marketable securities | (314,055) | (102,245) |
Proceeds from maturities of marketable securities | 52,064 | 16,768 |
Proceeds from sale of marketable securities | 21,730 | 4,964 |
Purchase of property and equipment | (13,883) | (15,840) |
Payment for acquisition of intangible assets | 0 | (400) |
Business acquisitions | (1,600) | 0 |
Net cash used in investing activities | (255,744) | (96,753) |
Cash flows from financing activities: | ||
Proceeds from issuance of convertible senior notes, net | 428,250 | 0 |
Purchase of convertible senior note hedges | (92,136) | 0 |
Proceeds from issuance of warrants | 57,244 | 0 |
Payment for termination of Starbucks warrant | (54,808) | 0 |
Principal payments on capital lease obligation | (634) | 0 |
Payments of offering costs related to initial public offering | 0 | (5,530) |
Proceeds from the exercise of stock options and purchases under the employee stock purchase plan, net | 89,863 | 15,496 |
Net cash provided by financing activities | 427,779 | 9,966 |
Effect of foreign exchange rate changes on cash and cash equivalents | 2,331 | 2,672 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 264,956 | (116,653) |
Cash, cash equivalents and restricted cash, beginning of period | 488,745 | 489,552 |
Cash, cash equivalents and restricted cash, end of period | $ 753,701 | $ 372,899 |
DESCRIPTION OF BUSINESS AND SUM
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Square, Inc. (together with its subsidiaries, Square or the Company) creates tools that help sellers start, run, and grow their businesses. Square enables sellers to accept card payments and also provides reporting and analytics, next-day settlement, and chargeback protection. Square’s point-of-sale software and other business services help sellers manage inventory, locations, and employees; access financing; engage customers; and grow sales. Square Cash is an easy way for businesses and individuals to send and receive money, and Caviar is a food ordering service for restaurants. Square was founded in 2009 and is headquartered in San Francisco, with offices in the United States, Canada, Japan, Australia, Ireland, and the United Kingdom. Basis of Presentation The accompanying interim condensed consolidated financial statements of the Company are unaudited. These interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) and the applicable rules and regulations of the Securities and Exchange Commission (SEC) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The December 31, 2016 condensed consolidated balance sheet was derived from the audited financial statements as of that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to state fairly the Company's consolidated financial position, results of operations, comprehensive loss, and cash flows for the interim periods. All intercompany transactions and balances have been eliminated in consolidation. The interim results for the three and six months ended June 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017 , or for any other future annual or interim period. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Quantitative and Qualitative Disclosures About Market Risk,” and the Consolidated Financial Statements and notes thereto included in Items 7, 7A, and 8, respectively, in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 . Reclassifications and other adjustments As a result of the Company’s adoption of Accounting Standards Update (ASU) No. 2016-18, Restricted Cash, on January 1, 2017, the Company reclassified changes in restricted cash balances from investing activities in the statement of cash flows to changes in cash, cash equivalents and restricted cash. For the six months ended June 30, 2016 , $8.5 million was reclassified from cash outflows from investing activities to changes in cash, cash equivalents and restricted cash. The presentation of changes in customer funds in the statement of cash flows for the six months ended June 30, 2016 has also been revised for the correction of an immaterial error that was identified during the fourth quarter of 2016 whereby the Company had previously misclassified and reported certain customer funds as cash and cash equivalents rather than classifying these customer funds as a component of current assets impacting operating activities. The effect of the revision was to decrease the amount of net cash used in operating activities for the six months ended June 30, 2016 by $3.2 million and increase cash and cash equivalents as of June 30, 2016 by that same amount. Net cash provided by operating activities for the year ended December 31, 2016 and cash and cash equivalents as of December 31, 2016 were not misstated. The Company has reclassified certain prior period balances to conform to the current period presentation. In particular the Company has combined the Customer funds obligation and Customers payable into a single caption called Customer payable on the consolidated balance sheet. This classification change was made because both accounts reflect customer amounts that are held by Square that are obligations to the customer. Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, as well as related disclosure of contingent assets and liabilities. Actual results could differ from the Company’s estimates. To the extent that there are material differences between these estimates and actual results, the Company’s financial condition or operating results will be materially affected. The Company bases its estimates on past experience and other assumptions that the Company believes are reasonable under the circumstances, and the Company evaluates these estimates on an ongoing basis. Significant estimates, judgments, and assumptions in these consolidated financial statements include, but are not limited to, those related to revenue recognition, accrued transaction losses, valuation of the debt component of convertible senior notes, valuation of loans held for sale, goodwill and intangible assets, income and other taxes, and share-based compensation. Concentration of Credit Risk For the three and six months ended June 30, 2017 , the Company had no customer that accounted for greater than 10% of total net revenue. For the three and six months ended June 30, 2016 , the Company had no customer other than Starbucks that accounted for greater than 10% of total net revenue. During the fourth quarter of 2016, Starbucks completed its previously announced transition to another payments solution provider. Accordingly, the Company does not expect transaction-based revenue from Starbucks in the future. The Company had three third-party processors that represented approximately 44% , 42% , and 10% of settlements receivable as of June 30, 2017 . The same three parties represented approximately 52% , 35% , and 10% of settlements receivable as of December 31, 2016 . Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, marketable securities, settlements receivables, customer funds, and loans held for sale. The associated risk of concentration for cash and cash equivalents and restricted cash is mitigated by banking with creditworthy institutions. At certain times, amounts on deposit exceed federal deposit insurance limits. The associated risk of concentration for marketable securities is mitigated by holding a diversified portfolio of highly rated investments. Settlements receivable are amounts due from well-established payment processing companies and normally take one or two business days to settle which mitigates the associated risk of concentration. The associated risk of concentration for loans held for sale is partially mitigated by credit evaluations that are performed prior to facilitating the offering of loans and ongoing performance monitoring of the Company’s loan customers. Significant Accounting Policies Except for the adoption of ASU 2016-18, Restricted Cash, described above, there have been no material changes to the Company’s significant accounting policies during the six months ended June 30, 2017 , as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers , and issued subsequent amendments to the initial guidance within ASU 2015-04, ASU 2016-08, ASU 2016-10, ASU 2016-12, and ASU 2016-20. The new guidance will replace all current U.S. GAAP guidance on this topic and eliminate all industry specific guidance. The core principal of this new guidance is that revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration for which the Company expects to be entitled in exchange for those goods or services. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The Company does not plan to early adopt the guidance. The guidance can be adopted either through the full retrospective approach which requires restatement of all periods presented or through a modified retrospective approach which requires a cumulative effect adjustment as of the date of adoption. The modified retrospective approach also requires additional disclosures, during the year of adoption, of the impact of the new guidance to each of the financial statements line items and qualitative explanation of the significant changes between the reported results under the new revenue guidance and the previous revenue guidance. The Company plans to apply the modified retrospective approach in the year of adoption of this guidance and is currently assessing the impact that the adoption of the guidance will have on the consolidated financial statements and related disclosures. The Company is also assessing any financial reporting system changes that would be necessary to implement the new guidance. In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, as part of its simplification initiative. The current guidance requires an entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less a normal profit margin. Under the new guidance, inventory is measured at the lower of cost and net realizable value, which would eliminate the other two options that currently exist for market replacement cost and net realizable value less a normal profit margin. The amendment is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years, with early adoption permitted. The Company adopted this new guidance on January 1, 2017, and it did not have any effect on the consolidated financial statements and related disclosures. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. This guidance is intended to improve the recognition, measurement, presentation, and disclosure of financial instruments. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted with certain restrictions. The Company is currently evaluating the impact this new guidance may have on the consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases , which will require, among other items, lessees to recognize most leases as assets and liabilities on the balance sheet. Qualitative and quantitative disclosures will be enhanced to better understand the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. The Company does not plan to early adopt this guidance. The Company’s operating leases primarily comprise of office spaces, with the most significant leases relating to corporate headquarters in San Francisco and an office in New York. Based on the Company's initial assessment of its current leases and potential, the Company does not anticipate the adoption of this guidance to have a material impact on its operating results. The Company will continue to evaluate the impact of recording right to use assets and related liabilities on its consolidated balance sheets. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting , which is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years, with early adoption permitted. The Company adopted this new guidance on January 1, 2017. As part of the adoption, the Company elected to account for forfeitures as they occur. As this guidance requires a modified retrospective approach when eliminating the forfeiture rate, the Company recorded an adjustment of $ 0.7 million to increase accumulated deficit and additional paid-in capital as of January 1, 2017. With respect to classification of excess tax benefits on the Statement of Cash Flows, the Company has elected to apply this guidance on a prospective basis. Thus, the prior periods have not been adjusted. The remaining areas of simplification in this guidance did not have an impact on the consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments , which requires measurement and recognition of expected credit losses for financial assets held. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact this new guidance may have on the consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. This guidance addresses several cash flow issues with the objective of reducing the existing diversity in practice. Specific issues addressed in this guidance include, but are not limited to, debt prepayment or extinguishment costs, contingent consideration payments made after a business combination and application of the predominance principle. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The amendments should be applied retrospectively. The Company does not expect the adoption of this new guidance to have a material impact on the consolidated financial statements and related disclosures. In October 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory , which amends existing guidance on the recognition of current and deferred income tax impacts for intra-entity asset transfers other than inventory. The current guidance requires companies to defer the income tax effects of intercompany transfers of all assets, until the asset has been sold to an outside party whereas the new guidance will not allow the deferral of income tax effects of intercompany transfers of assets except for inventory. This standard is effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The amendments in this guidance should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company is currently evaluating the impact this new guidance may have on the consolidated financial statements and related disclosures. In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash , which provides guidance on the classification of restricted cash to be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts on the statement of cash flows. This standard is effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The Company early adopted this guidance on January 1, 2017, and adjusted its condensed consolidated statements of cash flow for each of the periods presented. In January 2017, the FASB issued ASU No. 2017-01, Clarifying the Definition of a Business . The amendment seeks to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, intangible assets and consolidation. This standard is effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The amendments should be applied prospectively on or after the effective dates. The Company is currently evaluating the impact this new guidance may have on the consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment . This guidance modified the concept of impairment assessment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. This standard should be adopted when the Company performs its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted. The amendments should be applied on a prospective basis. The Company does not expect the adoption of this guidance to have a material the impact on the consolidated financial statements and related disclosures. In March 2017, the FASB issued ASU No. 2017-08, Premium Amortization on Purchased Callable Debt Securities, which amends the amortization period for certain purchased callable debt securities held at a premium, shortening such period to the earliest call date. This standard is effective for annual periods beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. The amendments in this guidance should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company is currently evaluating the impact this new guidance may have on the consolidated financial statements and related disclosures. In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting, which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. This standard is effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The amendments should be applied on a prospective basis. The Company is currently evaluating the impact this new guidance may have on the consolidated financial statements and related disclosures. |
RESTRICTED CASH
RESTRICTED CASH | 6 Months Ended |
Jun. 30, 2017 | |
Cash and Cash Equivalents [Abstract] | |
RESTRICTED CASH | RESTRICTED CASH As of both June 30, 2017 and December 31, 2016 , restricted cash of $22.1 million is related to pledged cash deposited into savings accounts at the financial institutions that process the Company's sellers' payment transactions and as collateral pursuant to an agreement with the originating bank for the Company's loan product. The Company uses the restricted cash to secure letters of credit with the financial institution to provide collateral for cash flow timing differences in the processing of these payments and loans. The Company has recorded this amount as a current asset on the condensed consolidated balance sheets due to the short-term nature of these cash flow timing differences and that there is no minimum time frame during which the cash must remain restricted. As of both June 30, 2017 and December 31, 2016 , the remaining restricted cash of $14.6 million is primarily related to cash deposited into money market funds that is used as collateral pursuant to multi-year lease agreements entered into in 2012 and 2014 (see Note 15 ). The Company has recorded this amount as a non-current asset on the condensed consolidated balance sheets as the terms of the related leases extend beyond one year. |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | AIR VALUE OF FINANCIAL INSTRUMENTS The Company measures its cash equivalents and short-term and long-term investments at fair value. The Company classifies its cash equivalents and short-term and long-term investments within Level 1 or Level 2 of the fair value hierarchy because the Company values these investments using quoted market prices or alternative pricing sources and models utilizing market observable inputs. The Company’s financial assets and liabilities that are measured at fair value on a recurring basis are classified as follows (in thousands): June 30, 2017 December 31, 2016 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Cash and Cash Equivalents: Money market funds $ 333,693 $ — $ — $ 207,168 $ — $ — U.S. agency securities — 7,498 — — — — Commercial paper — 15,740 — — 7,496 — U.S. government securities — — — — — — Corporate bonds — — — — — — Municipal securities — — — — 1,000 — Short-term securities: U.S. agency securities — 15,584 — — 9,055 — Corporate bonds — 48,404 — — 6,980 — Commercial paper — 54,285 — — 17,298 — Municipal securities — 17,655 — — 8,028 — U.S. government securities 67,359 — — 18,540 — — Long-term securities: U.S. agency securities — 15,023 — — 3,502 — Corporate bonds — 53,253 — — 12,914 — Municipal securities — 18,961 — — 2,492 — U.S. government securities 36,862 — — 8,458 — — Total $ 437,914 $ 246,403 $ — $ 234,166 $ 68,765 $ — The carrying amounts of certain financial instruments, including cash equivalents, settlements receivable, customer funds, accounts payable, customers payable, and settlements payable, approximate their fair values due to their short-term nature. The Company estimates the fair value of its convertible senior notes based on their last actively traded prices (Level 1) or market observable inputs (Level 2). The estimated fair value and carrying value of the convertible senior notes were as follows (in thousands): June 30, 2017 Carrying Value Fair Value (Level 2) Convertible senior notes $ 349,960 $ 539,062 Total $ 349,960 $ 539,062 Loans held for sale are recorded at the lower of cost or fair value. To determine the fair value of loans, the Company utilizes industry-standard valuation modeling, such as discounted cash flow models, applied to the loans held for sale, to arrive at an estimate of fair value. A summary of loans disclosed at fair value on a recurring basis is as follows (in thousands): June 30, 2017 December 31, 2016 Carrying Value Fair Value (Level 3) Carrying Value Fair Value (Level 3) Loans held for sale $ 50,079 $ 52,266 $ 42,144 $ 42,633 Total $ 50,079 $ 52,266 $ 42,144 $ 42,633 If applicable, the Company will recognize transfers into and out of levels within the fair value hierarchy at the end of the reporting period in which the actual event or change in circumstance occurs. During the three and six months ended June 30, 2017 and 2016 , the Company did not have any transfers in or out of Level 1, Level 2, or Level 3 assets or liabilities. |
INVESTMENTS
INVESTMENTS | 6 Months Ended |
Jun. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
INVESTMENTS | INVESTMENTS The Company determines the appropriate classification of its investments in marketable securities at the time of purchase and reevaluates such designation at each balance sheet date. The Company has classified and accounted for its marketable securities as available-for-sale. The Company's short-term and long-term investments as of June 30, 2017 are as follows (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Short-term securities: U.S. agency securities $ 15,593 $ 1 $ (10 ) $ 15,584 Corporate bonds 48,397 29 (22 ) 48,404 Commercial paper 54,285 — — 54,285 Municipal securities 17,668 8 (21 ) 17,655 U.S. government securities 67,388 2 (31 ) 67,359 Total $ 203,331 $ 40 $ (84 ) $ 203,287 Long-term securities: U.S. agency securities $ 15,028 $ 3 $ (8 ) $ 15,023 Corporate bonds 53,282 20 (49 ) 53,253 Municipal securities 18,973 6 (18 ) 18,961 U.S. government securities 36,911 6 (55 ) 36,862 Total $ 124,194 $ 35 $ (130 ) $ 124,099 The Company's short-term and long-term investments as of December 31, 2016 are as follows (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Short-term securities: U.S. agency securities $ 9,048 $ 7 $ — $ 9,055 Corporate bonds 17,318 — (20 ) 17,298 Commercial paper 6,980 — — 6,980 Municipal securities 8,037 — (9 ) 8,028 U.S. government securities 18,537 3 — 18,540 Total $ 59,920 $ 10 $ (29 ) $ 59,901 Long-term securities: U.S. agency securities $ 3,502 $ — $ — $ 3,502 Corporate bonds 12,939 — (25 ) 12,914 Municipal securities 2,505 — (13 ) 2,492 U.S. government securities 8,478 — (20 ) 8,458 Total $ 27,424 $ — $ (58 ) $ 27,366 For the periods presented, gains or losses realized on the sale of investments were not material. Investments are reviewed periodically to identify possible other-than-temporary impairments. As the Company has the ability and intent to hold these investments with unrealized losses until a recovery of fair value, or for a reasonable period of time sufficient for the recovery of fair value, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired for any of the periods presented. The contractual maturities of the Company's short-term and long-term investments as of June 30, 2017 are as follows (in thousands): Amortized Cost Fair Value Due in one year or less $ 203,331 $ 203,287 Due in one to five years 124,194 124,099 Total $ 327,525 $ 327,386 |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | PROPERTY AND EQUIPMENT, NET The following is a summary of property, equipment, and internally-developed software at cost, less accumulated depreciation and amortization (in thousands): June 30, December 31, Leasehold improvements $ 74,138 $ 73,366 Computer equipment 60,041 52,915 Capitalized software 28,475 24,642 Office furniture and equipment 12,509 10,737 Total 175,163 161,660 Less: Accumulated depreciation and amortization (87,721 ) (73,332 ) Property and equipment, net $ 87,442 $ 88,328 Depreciation and amortization expense on property and equipment was $7.2 million and $14.5 million for the three and six months ended June 30, 2017 , respectively. Depreciation and amortization expense on property and equipment was $6.9 million and $13.3 million for the three and six months ended June 30, 2016 , respectively. |
GOODWILL
GOODWILL | 6 Months Ended |
Jun. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL | GOODWILL Goodwill is recorded when the consideration paid for an acquisition of a business exceeds the fair value of identifiable net tangible and intangible assets acquired. As of June 30, 2017 and December 31, 2016 , goodwill was $58.0 million and $57.2 million , respectively. The Company performs a goodwill impairment test annually on December 31 and more frequently if events and circumstances indicate that the asset might be impaired. For the periods presented, the Company had recorded no impairment charges. |
ACQUIRED INTANGIBLE ASSETS
ACQUIRED INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
ACQUIRED INTANGIBLE ASSETS | ACQUIRED INTANGIBLE ASSETS The following table presents the detail of acquired intangible assets as of the periods presented (in thousands): Balance at June 30, 2017 Cost Accumulated Amortization Net Patents $ 1,285 $ (506 ) $ 779 Technology Assets 29,158 (18,287 ) 10,871 Customer Assets 8,886 (4,084 ) 4,802 Total $ 39,329 $ (22,877 ) $ 16,452 Balance at December 31, 2016 Cost Accumulated Amortization Net Patents $ 1,285 $ (454 ) $ 831 Technology Assets 29,075 (14,702 ) 14,373 Customer Assets 7,745 (3,657 ) 4,088 Total $ 38,105 $ (18,813 ) $ 19,292 The weighted average amortization periods for acquired patents, acquired technology, and customer intangible assets are approximately 13 years , four years , and nine years , respectively. Amortization expense associated with other intangible assets was $1.9 million and $4.1 million for the three and six months ended June 30, 2017 , respectively. Amortization expense associated with other intangible assets was $2.1 million and $4.8 million for the three and six months ended June 30, 2016 , respectively. The total estimated annual future amortization expense of these intangible assets as of June 30, 2017 is as follows (in thousands): 2017 (remaining 6 months) $ 3,538 2018 6,037 2019 3,253 2020 1,296 2021 759 Thereafter 1,569 Total $ 16,452 |
OTHER CONSOLIDATED BALANCE SHEE
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (CURRENT) | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (CURRENT) | OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (CURRENT) Other Current Assets The following table presents the detail of other current assets (in thousands): June 30, December 31, Inventory, net $ 18,457 $ 13,724 Prepaid expenses 10,216 7,365 Accounts receivable, net 8,104 6,191 Processing costs receivable 7,514 8,593 Deferred hardware costs 5,458 4,546 Deferred magstripe reader costs 2,681 3,911 Merchant cash advance receivable, net 885 4,212 Tenant improvement reimbursement receivable 213 1,189 Other 9,270 10,812 Total $ 62,798 $ 60,543 Accrued Expenses The following table presents the detail of accrued expenses (in thousands): June 30, December 31, Accrued marketing $ 9,406 $ 3,972 Accrued payroll 8,469 5,799 Processing costs payable 7,170 9,655 Accrued professional fees 7,151 5,788 Accrued hardware costs 5,873 3,148 Other accrued liabilities 18,630 11,181 Total $ 56,699 $ 39,543 Other Current Liabilities The following table presents the detail of other current liabilities (in thousands): June 30, December 31, Square Payroll payable $ 9,158 $ 4,769 Deferred revenue 4,523 5,407 Current portion of deferred rent 2,944 2,862 Accrued redemptions 1,794 1,628 Other 8,220 7,806 Total $ 26,639 $ 22,472 OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (NON-CURRENT) Other Non-Current Liabilities The following table presents the detail of other non-current liabilities (in thousands): June 30, December 31, Statutory liabilities $ 34,736 $ 29,497 Deferred rent 21,770 23,119 Deferred tax liabilities 476 476 Other 6,100 4,653 Total $ 63,082 $ 57,745 |
OTHER CONSOLIDATED BALANCE SH15
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (NON-CURRENT) | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (NON-CURRENT) | OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (CURRENT) Other Current Assets The following table presents the detail of other current assets (in thousands): June 30, December 31, Inventory, net $ 18,457 $ 13,724 Prepaid expenses 10,216 7,365 Accounts receivable, net 8,104 6,191 Processing costs receivable 7,514 8,593 Deferred hardware costs 5,458 4,546 Deferred magstripe reader costs 2,681 3,911 Merchant cash advance receivable, net 885 4,212 Tenant improvement reimbursement receivable 213 1,189 Other 9,270 10,812 Total $ 62,798 $ 60,543 Accrued Expenses The following table presents the detail of accrued expenses (in thousands): June 30, December 31, Accrued marketing $ 9,406 $ 3,972 Accrued payroll 8,469 5,799 Processing costs payable 7,170 9,655 Accrued professional fees 7,151 5,788 Accrued hardware costs 5,873 3,148 Other accrued liabilities 18,630 11,181 Total $ 56,699 $ 39,543 Other Current Liabilities The following table presents the detail of other current liabilities (in thousands): June 30, December 31, Square Payroll payable $ 9,158 $ 4,769 Deferred revenue 4,523 5,407 Current portion of deferred rent 2,944 2,862 Accrued redemptions 1,794 1,628 Other 8,220 7,806 Total $ 26,639 $ 22,472 OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (NON-CURRENT) Other Non-Current Liabilities The following table presents the detail of other non-current liabilities (in thousands): June 30, December 31, Statutory liabilities $ 34,736 $ 29,497 Deferred rent 21,770 23,119 Deferred tax liabilities 476 476 Other 6,100 4,653 Total $ 63,082 $ 57,745 |
INDEBTEDNESS
INDEBTEDNESS | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
INDEBTEDNESS | INDEBTEDNESS Revolving Credit Facility In November 2015 , the Company entered into a revolving credit agreement with certain lenders, which extinguished the prior revolving credit agreement and provided for a $375.0 million revolving secured credit facility maturing in November 2020 . This revolving credit agreement is secured by certain tangible and intangible assets. Loans under the credit facility bear interest at the Company’s option of (i) a base rate based on the highest of the prime rate, the federal funds rate plus 0.50% , and an adjusted LIBOR rate for a one-month interest period, in each case plus a margin ranging from 0.00% to 1.00% , or (ii) an adjusted LIBOR rate plus a margin ranging from 1.00% to 2.00% . This margin is determined based on the Company’s total leverage ratio for the preceding four fiscal quarters. The Company is obligated to pay other customary fees for a credit facility of this size and type including an annual administrative agent fee of $0.1 million and an unused commitment fee of 0.15% . To date no funds have been drawn under the credit facility, with $375.0 million remaining available. The Company paid $0.1 million and $0.3 million in unused commitment fees during the three and six months ended June 30, 2017 and 2016 , respectively. As of June 30, 2017 , the Company was in compliance with all financial covenants associated with this credit facility. Convertible Senior Notes On March 6, 2017, the Company issued an aggregate principal amount of $ 400.0 million of convertible senior notes (Notes) and an additional 10% or $ 40.0 million pursuant to the exercise in full of the option to the initial purchasers to cover over-allotments. The Notes mature on March 1, 2022, unless earlier converted or repurchased, and bear interest at a rate of 0.375% payable semi-annually on March 1 and September 1 of each year. The Notes are convertible at an initial conversion rate of 43.5749 shares of the Company's Class A common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $ 22.95 per share of Class A common stock. Holders may convert their Notes at any time prior to the close of business on the business day immediately preceding December 1, 2021 only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2017 (and only during such calendar quarter), if the last reported sale price of the Company’s Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the measurement period) in which the trading price (as defined in the indenture governing the Notes) per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s Class A common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events, including certain distributions, the occurrence of a fundamental change (as defined in the Indenture governing the Notes) or a transaction resulting in the Company’s Class A common stock converting into other securities or property or assets. On or after December 1, 2021, up until the close of business on the second scheduled trading day immediately preceding the maturity date, a holder may convert all or any portion of its Notes regardless of the foregoing circumstances. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of its Class A common stock, or a combination of cash and shares of its Class A common stock, at the Company’s election. It is the Company’s current intent and policy to settle conversions through combination settlement with a specified dollar amount of $ 1,000 per $ 1,000 principal amount of notes. In accounting for the issuance of the Notes, the Company separated the Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was $ 86.2 million and was determined by deducting the fair value of the liability component from the par value of the Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount ("debt discount") is amortized to interest expense over the term of the Notes at an effective interest rate of 5.34% over the contractual terms of the Notes. Debt issuance costs related to the Notes comprised of discounts and commissions payable to the initial purchasers of $ 11.0 million and third party offering costs of $ 0.8 million . The Company allocated the total amount incurred to the liability and equity components of the Notes based on their relative values. Issuance costs attributable to the liability component were $ 9.4 million and will be amortized to interest expense using the effective interest method over the contractual term. Issuance costs attributable to the equity component were netted with the equity component in stockholders’ equity. The Notes consisted of the following (in thousands): June 30, 2017 Principal $ 440,000 Less: unamortized debt discount (81,146 ) Less: unamortized debt issuance costs (8,894 ) Net carrying amount $ 349,960 The net carrying amount of the equity component of the Notes was as follows (in thousands): June 30, 2017 Debt discount related to value of conversion option $ 86,203 Less: allocated debt issuance costs (2,302 ) Equity component, net $ 83,901 The Company recognized interest expense on the Notes as follows (in thousands, except for percentages): Three Months Ended Six Months Ended June 30, June 30, 2017 2017 Contractual interest expense based on 0.375% per annum $ 413 $ 526 Amortization of debt discount and issuance costs 4,221 5,611 Total $ 4,634 $ 6,137 Effective interest rate of the liability component 5.34 % 5.34 % Convertible Note Hedge and Warrant Transactions In connection with the offering of the Notes, the Company entered into convertible note hedge transactions with certain financial institutions (Counterparties) whereby the Company has the option to purchase a total of approximately 19.2 million shares of its Class A common stock at a price of approximately $ 22.95 per share. The total cost of the convertible note hedge transactions was $ 92.1 million . In addition, the Company sold warrants to the Counterparties whereby the Counterparties have the option to purchase a total of approximately 19.2 million shares of the Company’s Class A common stock at a price of approximately $ 31.18 per share. The Company received $ 57.2 million in cash proceeds from the sale of these warrants. Taken together, the purchase of the convertible note hedges and sale of the warrants are intended to offset any actual dilution from the conversion of the Notes and to effectively increase the overall conversion price from approximately $ 22.95 per share to approximately $ 31.18 per share. As these instruments are considered indexed to the Company's own stock and are considered equity classified, the convertible note hedges and warrants are recorded in stockholders’ equity, are not accounted for as derivatives and are not remeasured each reporting period. The net costs incurred in connection with the convertible note hedge and warrant transactions were recorded as a reduction to additional paid-in capital on the condensed consolidated balance sheets. |
ACCRUED TRANSACTION LOSSES
ACCRUED TRANSACTION LOSSES | 6 Months Ended |
Jun. 30, 2017 | |
Product Warranties Disclosures [Abstract] | |
ACCRUED TRANSACTION LOSSES | ACCRUED TRANSACTION LOSSES The Company is exposed to transaction losses due to chargebacks as a result of fraud or uncollectibility. The following table summarizes the activities of the Company’s reserve for transaction losses (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Accrued transaction losses, beginning of the period $ 20,444 $ 15,419 $ 20,064 $ 17,176 Provision for transaction losses 13,076 16,210 24,634 23,392 Charge-offs to accrued transaction losses (11,065 ) (15,536 ) (22,243 ) (24,475 ) Accrued transaction losses, end of the period $ 22,455 $ 16,093 $ 22,455 $ 16,093 |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company recorded an income tax expense of $0.5 million and $1.0 million for the three and six months ended June 30, 2017 , respectively, compared to income tax expense of $0.3 million and $0.7 million for the three and six months ended June 30, 2016 , respectively. The income tax expense recorded for the three and six months ended June 30, 2017 and June 30, 2016 was primarily due to state and foreign income tax expense. The Company’s effective tax rate was (3.0)% and (3.3)% for the three and six months ended June 30, 2017 , respectively, compared to an effective tax rate of (1.2)% and (0.5)% for the three and six months ended June 30, 2016 , respectively. The difference between the effective tax rate and the federal statutory tax rate for the three and six months ended June 30, 2017 and June 30, 2016 primarily relates to the valuation allowance on the Company’s deferred tax assets. The Company’s effective tax rate may be subject to fluctuation during the year as new information is obtained, which may affect the assumptions used to estimate the annual effective tax rate, including factors such as the mix of forecasted pre-tax earnings in the various jurisdictions in which the Company operates, valuation allowances against deferred tax assets, the recognition and de-recognition of tax benefits related to uncertain tax positions, and changes in or the interpretation of tax laws in jurisdictions where the Company conducts business. As of June 30, 2017 , the Company retains a full valuation allowance on its deferred tax assets in the U.S. and certain foreign jurisdictions. The realization of the Company’s deferred tax assets depends primarily on its ability to generate taxable income in future periods. The amount of deferred tax assets considered realizable in future periods may change as management continues to reassess the underlying factors it uses in estimating future taxable income. The tax provision for the three and six months ended June 30, 2017 and June 30, 2016 , was calculated on a jurisdiction basis. The Company estimated the foreign income tax provision using the effective income tax rate expected to be applicable for the full year. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY The changes in total stockholders’ equity were as follows (in thousands): Total stockholders’ equity Balance at December 31, 2016 $ 576,153 Net loss (31,052 ) Exercise of stock options 82,225 Purchases under the employee stock purchase plan 7,767 Vesting of early exercised stock options and other 488 Conversion feature of convertible senior notes, due 2022, net of allocated debt issuance costs 83,901 Purchase of bond hedges in conjunction with issuance of convertible senior notes, due 2022 (92,136 ) Sale of warrants in conjunction with issuance of convertible senior notes, due 2022 57,244 Payment for termination of Starbucks warrant (54,808 ) Change in other comprehensive loss 1,470 Share-based compensation 72,492 Balance at June 30, 2017 $ 703,744 Common Stock The Company has authorized the issuance of Class A common stock and Class B common stock. Class A common stock and Class B common stock are referred to as "common stock" throughout these Notes to the Condensed Consolidated Financial Statements, unless otherwise noted. As of June 30, 2017 , the Company was authorized to issue 1,000,000,000 shares of Class A common stock and 500,000,000 shares of Class B common stock, each with a par value of $0.0000001 per share. As of June 30, 2017 , there were 250,974,736 shares of Class A common stock and 131,645,329 shares of Class B common stock outstanding. Options and awards granted following the Company's Initial Public Offering are related to underlying Class A common stock. Additionally, holders of Class B common stock are able to convert such shares into Class A common stock. Warrants On February 24, 2017, the Company and Starbucks entered into a Warrant Cancellation and Payment Agreement pursuant to which the Company paid Starbucks cash consideration of approximately $ 54.8 million in return for the termination of the Warrant to Purchase Stock dated August 7, 2012, as amended, that provided Starbucks with the right to purchase an aggregate of 9,456,955 shares of the Company’s common stock. In conjunction with the Notes offering, the Company sold warrants whereby the Counterparties have the option to purchase a total of approximately 19.2 million shares of the Company’s Class A common stock at a price of $ 31.18 per share. The Company received $ 57.2 million in cash proceeds from the sale of these warrants. See Note 10 , Indebtedness , for more details on this transaction. Stock Plans The Company maintains two share-based employee compensation plans: the 2009 Stock Plan (2009 Plan) and the 2015 Equity Incentive Plan (2015 Plan). The 2015 Plan serves as the successor to the 2009 Plan. The 2015 Plan became effective as of November 17, 2015. Outstanding awards under the 2009 Plan continue to be subject to the terms and conditions of the 2009 Plan. Since November 17, 2015, no additional securities have been nor will be in the future issued under the 2009 Plan. Under the 2015 Plan, shares of the Company's Class A common stock are reserved for the issuance of incentive and nonstatutory stock options, restricted stock awards, restricted stock units (RSUs), performance shares, and stock bonuses to qualified employees, directors, and consultants. The shares may be granted at a price per share not less than the fair market value at the date of grant. Initially, 30,000,000 shares were reserved under the 2015 Plan, and any shares subject to options or other similar awards granted under the 2009 Plan that expire, are forfeited, are repurchased by the Company, or otherwise terminate unexercised, will become available under the 2015 Plan. The number of shares available for issuance under the 2015 Plan will be increased on the first day of each fiscal year, in an amount equal to the least of (i) 40,000,000 shares, (ii) 5% of the outstanding shares on the last day of the immediately preceding fiscal year, or (iii) such number of shares determined by the Company’s board of directors. As of June 30, 2017 , the total number of shares subject to stock options and RSUs outstanding under the 2015 Plan was 25,989,237 , and 47,378,192 shares were available for future issuance. As of June 30, 2017 , the total number of shares subject to stock options and RSUs outstanding under the 2009 Plan was 52,709,658 . A summary of stock option activity for the six months ended June 30, 2017 is as follows (in thousands, except share and per share data): Number of Stock Options Outstanding Weighted Weighted Aggregate Balance at December 31, 2016 73,261,562 $ 7.70 7.28 $ 443,711 Granted 1,216,959 17.20 Exercised (14,912,966 ) 5.51 Forfeited (2,144,552 ) 11.38 Balance at June 30, 2017 57,421,003 $ 8.33 6.80 $ 868,556 Options exercisable as of June 30, 2017 53,717,383 $ 8.03 6.65 $ 829,122 Restricted Stock Activity Activity related to RSUs during the six months ended June 30, 2017 is set forth below: Number of Weighted Unvested as of December 31, 2016 15,443,391 $ 12.09 Granted 9,656,680 16.78 Vested (2,383,941 ) 11.91 Forfeited (1,438,238 ) 12.66 Unvested as of June 30, 2017 21,277,892 $ 14.20 Share-Based Compensation The fair value of stock options and employee stock purchase plan rights are estimated on the date of grant using the Black-Scholes-Merton option valuation model. The fair value of stock options granted was estimated using the following weighted-average assumptions: Three and Six Months Ended June 30, 2017 2016 Dividend yield — % — % Risk-free interest rate 1.88 % 1.55 % Expected volatility 32.22 % 42.71 % Expected term (years) 6.02 6.08 As a result of the Company’s adoption of ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting , the Company elected to account for forfeitures as they occur. As this guidance requires a modified retrospective approach when eliminating the forfeiture rate, the Company recorded an adjustment of $ 0.7 million to increase accumulated deficit and additional paid-in capital as of January 1, 2017. The following table summarizes the effects of share-based compensation on the Company's condensed consolidated statements of operations (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Cost of revenue $ 18 $ — $ 18 $ — Product development 25,136 24,168 44,492 46,115 Sales and marketing 4,355 3,363 8,290 6,266 General and administrative 10,084 9,391 18,463 15,739 Total $ 39,593 $ 36,922 $ 71,263 $ 68,120 The Company recorded $1.2 million and $3.0 million of share-based compensation expense related to the Company's 2015 Employee Stock Purchase Plan during the three and six months ended June 30, 2017 , respectively, compared to $1.5 million and $3.0 million for the three and six months ended June 30, 2016 , respectively, which are included in the table above. The Company capitalized $0.7 million and $1.2 million of share-based compensation expense related to capitalized software costs during the three and six months ended June 30, 2017 , respectively, compared to $0.9 million for both the three and six months ended June 30, 2016 . As of June 30, 2017 , there was $386.0 million of total unrecognized compensation cost related to outstanding stock options that is expected to be recognized over a weighted-average period of 2.93 years . |
LOSS PER SHARE
LOSS PER SHARE | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
LOSS PER SHARE | 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. Diluted loss per share is the same as basic loss per share for all years presented because the effects of potentially dilutive items were anti-dilutive given the Company’s net loss. The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Net loss $ (15,962 ) $ (27,345 ) $ (31,052 ) $ (124,100 ) Basic shares: Weighted-average common shares outstanding 377,959 337,635 373,291 336,406 Weighted-average unvested shares (1,602 ) (3,147 ) (1,718 ) (3,500 ) Weighted-average shares used to compute basic net loss per share 376,357 334,488 371,573 332,906 Diluted shares: Weighted-average shares used to compute diluted loss per share 376,357 334,488 371,573 332,906 Net loss per share: Basic $ (0.04 ) $ (0.08 ) $ (0.08 ) $ (0.37 ) Diluted $ (0.04 ) $ (0.08 ) $ (0.08 ) $ (0.37 ) The following potential common shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented (in thousands): Three and Six Months Ended June 30, 2017 2016 Stock options and restricted stock units 78,699 113,981 Common stock warrants 19,173 9,458 Unvested shares 1,469 2,878 Employee stock purchase plan 262 127 Total anti-dilutive securities 99,603 126,444 Additionally, since the Company expects to settle the principal amount of its outstanding Notes in cash, the Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. The conversion spread will have a dilutive impact on diluted net income per share of common stock when the average market price of the Company’s common stock for a given period exceeds the conversion price of $ 22.95 per share for the Notes, which has not occurred as of June 30, 2017. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Operating and Capital Leases The Company has entered into various non-cancelable operating leases for certain offices with contractual lease periods expiring between 2017 and 2025 . The Company recognized total rental expenses under operating leases of $3.1 million and $5.9 million for the three and six months ended June 30, 2017 , respectively, compared to $2.7 million and $5.5 million for the three and six months ended June 30, 2016 , respectively. Future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) and future minimum capital lease payments as of June 30, 2017 are as follows (in thousands): Capital Operating Year: 2017 (remaining 6 months) $ 762 $ 8,599 2018 1,495 17,065 2019 1,380 16,165 2020 142 16,223 2021 — 16,614 Thereafter — 36,084 Total $ 3,779 $ 110,750 Less amount representing interest (2 ) Present value of capital lease obligations 3,777 Less current portion of capital lease obligation (1,511 ) Non-current portion of capital lease obligation $ 2,266 Litigation The Company is currently a party to, and may in the future be involved in, various litigation matters (including intellectual property litigation), legal claims, and government investigations. The Company is involved in a class action lawsuit concerning independent contractors in connection with the Company’s Caviar business. On March 19, 2015, Jeffry Levin, on behalf of a putative nationwide class, filed a lawsuit in the United States District Court for the Northern District of California against the Company’s wholly owned subsidiary, Caviar, Inc., which, as amended, alleges that Caviar misclassified Mr. Levin and other similarly situated couriers as independent contractors and, in doing so, violated various provisions of the California Labor Code and California Business and Professions Code by requiring them to pay various business expenses that should have been borne by Caviar. The Court compelled arbitration of Mr. Levin’s individual claims on November 16, 2015 and dismissed the lawsuit in its entirety with prejudice on May 2, 2016. On June 1, 2016, Mr. Levin filed a Notice of Appeal of the Court’s order compelling arbitration with the United States Court of Appeals for the Ninth Circuit. Mr. Levin filed his opening appellate brief regarding the order compelling arbitration of his individual claims on October 7, 2016. The Company filed its answering brief on December 7, 2016, and Mr. Levin filed his reply on December 21, 2016. No hearing date has been set. Mr. Levin also sought an award of penalties pursuant to the Labor Code Private Attorneys General Act of 2004 (PAGA). The parties stipulated that Mr. Levin would no longer pursue this PAGA claim but that it may instead be pursued by a different courier. Subsequently, couriers Nadezhda Rosen and La’Dell Brewster filed a new PAGA-only claim in the Superior Court of the State of California for the County of San Francisco on November 7, 2016. Plaintiffs claim that Caviar misclassified its couriers as independent contractors resulting in numerous violations of the California Labor Code, pursuant to which plaintiffs seek statutory penalties for those violations. In February 2017, the Company participated in a mediation with the parties in these Caviar misclassification suits to explore resolution of the matters at hand. After continued negotiation, the parties reached a preliminary global settlement of these suits, which is subject to final approval by the arbitrator. The Company has made appropriate accruals in the financial statements for the immaterial amounts expected to be paid as settlement. In addition, from time to time, the Company is involved in various other litigation matters and disputes arising in the ordinary course of business. The Company cannot at this time fairly estimate a reasonable range of exposure, if any, of the potential liability with respect to these other matters. While the Company does not believe, at this time, that any ultimate liability resulting from any of these other matters will have a material adverse effect on the Company's results of operations, financial position, or liquidity, the Company cannot give any assurance regarding the ultimate outcome of these other matters, and their resolution could be material to the Company's operating results for any particular period, depending on the level of income for the period. |
SEGMENT AND GEOGRAPHICAL INFORM
SEGMENT AND GEOGRAPHICAL INFORMATION | 6 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
SEGMENT AND GEOGRAPHIC INFORMATION | SEGMENT AND GEOGRAPHICAL INFORMATION Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker (CODM) for purposes of allocating resources and evaluating financial performance. The Company’s CODM is the chief executive officer who reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. As such, the Company’s operations constitute a single operating segment and one reportable segment. Revenue Revenue by geography is based on the billing addresses of the merchants. The following table sets forth revenue by geographic area (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Revenue United States $ 530,008 $ 421,808 $ 974,907 $ 789,387 International 21,497 16,725 38,152 28,415 Total net revenue $ 551,505 $ 438,533 $ 1,013,059 $ 817,802 No individual country from the international markets contributed in excess of 10% of total revenue for the three and six months ended June 30, 2017 and 2016 . Long-Lived Assets The following table sets forth long-lived assets by geographic area (in thousands): June 30, December 31, Long-lived assets United States $ 158,721 $ 162,118 International 3,134 2,675 Total long-lived assets $ 161,855 $ 164,793 |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 6 Months Ended |
Jun. 30, 2017 | |
Supplemental Cash Flow Elements [Abstract] | |
SUPPLEMENTAL CASH FLOW INFORMATION | SUPPLEMENTAL CASH FLOW INFORMATION The supplemental disclosures of cash flow information consist of the following (in thousands): Six Months Ended June 30, 2017 2016 Supplemental Cash Flow Data: Cash paid for interest $ 284 $ 284 Cash paid for income taxes 850 168 Supplemental disclosures of non-cash investing and financing activities: Change in purchases of property and equipment in accounts payable and accrued expenses 1,454 4,192 Unpaid business acquisition purchase price 644 — |
DESCRIPTION OF BUSINESS AND S24
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The accompanying interim condensed consolidated financial statements of the Company are unaudited. These interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) and the applicable rules and regulations of the Securities and Exchange Commission (SEC) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The December 31, 2016 condensed consolidated balance sheet was derived from the audited financial statements as of that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to state fairly the Company's consolidated financial position, results of operations, comprehensive loss, and cash flows for the interim periods. All intercompany transactions and balances have been eliminated in consolidation. The interim results for the three and six months ended June 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017 , or for any other future annual or interim period. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Quantitative and Qualitative Disclosures About Market Risk,” and the Consolidated Financial Statements and notes thereto included in Items 7, 7A, and 8, respectively, in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 . |
Reclassifications and Other Adjustments | As a result of the Company’s adoption of Accounting Standards Update (ASU) No. 2016-18, Restricted Cash, on January 1, 2017, the Company reclassified changes in restricted cash balances from investing activities in the statement of cash flows to changes in cash, cash equivalents and restricted cash. For the six months ended June 30, 2016 , $8.5 million was reclassified from cash outflows from investing activities to changes in cash, cash equivalents and restricted cash. The presentation of changes in customer funds in the statement of cash flows for the six months ended June 30, 2016 has also been revised for the correction of an immaterial error that was identified during the fourth quarter of 2016 whereby the Company had previously misclassified and reported certain customer funds as cash and cash equivalents rather than classifying these customer funds as a component of current assets impacting operating activities. The effect of the revision was to decrease the amount of net cash used in operating activities for the six months ended June 30, 2016 by $3.2 million and increase cash and cash equivalents as of June 30, 2016 by that same amount. Net cash provided by operating activities for the year ended December 31, 2016 and cash and cash equivalents as of December 31, 2016 were not misstated. The Company has reclassified certain prior period balances to conform to the current period presentation. In particular the Company has combined the Customer funds obligation and Customers payable into a single caption called Customer payable on the consolidated balance sheet. This classification change was made because both accounts reflect customer amounts that are held by Square that are obligations to the customer. |
Use of Estimates | The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, as well as related disclosure of contingent assets and liabilities. Actual results could differ from the Company’s estimates. To the extent that there are material differences between these estimates and actual results, the Company’s financial condition or operating results will be materially affected. The Company bases its estimates on past experience and other assumptions that the Company believes are reasonable under the circumstances, and the Company evaluates these estimates on an ongoing basis. Significant estimates, judgments, and assumptions in these consolidated financial statements include, but are not limited to, those related to revenue recognition, accrued transaction losses, valuation of the debt component of convertible senior notes, valuation of loans held for sale, goodwill and intangible assets, income and other taxes, and share-based compensation. |
Concentration of Credit Risk | For the three and six months ended June 30, 2017 , the Company had no customer that accounted for greater than 10% of total net revenue. For the three and six months ended June 30, 2016 , the Company had no customer other than Starbucks that accounted for greater than 10% of total net revenue. During the fourth quarter of 2016, Starbucks completed its previously announced transition to another payments solution provider. Accordingly, the Company does not expect transaction-based revenue from Starbucks in the future. The Company had three third-party processors that represented approximately 44% , 42% , and 10% of settlements receivable as of June 30, 2017 . The same three parties represented approximately 52% , 35% , and 10% of settlements receivable as of December 31, 2016 . Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, marketable securities, settlements receivables, customer funds, and loans held for sale. The associated risk of concentration for cash and cash equivalents and restricted cash is mitigated by banking with creditworthy institutions. At certain times, amounts on deposit exceed federal deposit insurance limits. The associated risk of concentration for marketable securities is mitigated by holding a diversified portfolio of highly rated investments. Settlements receivable are amounts due from well-established payment processing companies and normally take one or two business days to settle which mitigates the associated risk of concentration. The associated risk of concentration for loans held for sale is partially mitigated by credit evaluations that are performed prior to facilitating the offering of loans and ongoing performance monitoring of the Company’s loan customers. |
Recent Accounting Pronouncements | In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers , and issued subsequent amendments to the initial guidance within ASU 2015-04, ASU 2016-08, ASU 2016-10, ASU 2016-12, and ASU 2016-20. The new guidance will replace all current U.S. GAAP guidance on this topic and eliminate all industry specific guidance. The core principal of this new guidance is that revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration for which the Company expects to be entitled in exchange for those goods or services. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The Company does not plan to early adopt the guidance. The guidance can be adopted either through the full retrospective approach which requires restatement of all periods presented or through a modified retrospective approach which requires a cumulative effect adjustment as of the date of adoption. The modified retrospective approach also requires additional disclosures, during the year of adoption, of the impact of the new guidance to each of the financial statements line items and qualitative explanation of the significant changes between the reported results under the new revenue guidance and the previous revenue guidance. The Company plans to apply the modified retrospective approach in the year of adoption of this guidance and is currently assessing the impact that the adoption of the guidance will have on the consolidated financial statements and related disclosures. The Company is also assessing any financial reporting system changes that would be necessary to implement the new guidance. In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, as part of its simplification initiative. The current guidance requires an entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less a normal profit margin. Under the new guidance, inventory is measured at the lower of cost and net realizable value, which would eliminate the other two options that currently exist for market replacement cost and net realizable value less a normal profit margin. The amendment is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years, with early adoption permitted. The Company adopted this new guidance on January 1, 2017, and it did not have any effect on the consolidated financial statements and related disclosures. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. This guidance is intended to improve the recognition, measurement, presentation, and disclosure of financial instruments. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted with certain restrictions. The Company is currently evaluating the impact this new guidance may have on the consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases , which will require, among other items, lessees to recognize most leases as assets and liabilities on the balance sheet. Qualitative and quantitative disclosures will be enhanced to better understand the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. The Company does not plan to early adopt this guidance. The Company’s operating leases primarily comprise of office spaces, with the most significant leases relating to corporate headquarters in San Francisco and an office in New York. Based on the Company's initial assessment of its current leases and potential, the Company does not anticipate the adoption of this guidance to have a material impact on its operating results. The Company will continue to evaluate the impact of recording right to use assets and related liabilities on its consolidated balance sheets. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting , which is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years, with early adoption permitted. The Company adopted this new guidance on January 1, 2017. As part of the adoption, the Company elected to account for forfeitures as they occur. As this guidance requires a modified retrospective approach when eliminating the forfeiture rate, the Company recorded an adjustment of $ 0.7 million to increase accumulated deficit and additional paid-in capital as of January 1, 2017. With respect to classification of excess tax benefits on the Statement of Cash Flows, the Company has elected to apply this guidance on a prospective basis. Thus, the prior periods have not been adjusted. The remaining areas of simplification in this guidance did not have an impact on the consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments , which requires measurement and recognition of expected credit losses for financial assets held. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact this new guidance may have on the consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. This guidance addresses several cash flow issues with the objective of reducing the existing diversity in practice. Specific issues addressed in this guidance include, but are not limited to, debt prepayment or extinguishment costs, contingent consideration payments made after a business combination and application of the predominance principle. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The amendments should be applied retrospectively. The Company does not expect the adoption of this new guidance to have a material impact on the consolidated financial statements and related disclosures. In October 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory , which amends existing guidance on the recognition of current and deferred income tax impacts for intra-entity asset transfers other than inventory. The current guidance requires companies to defer the income tax effects of intercompany transfers of all assets, until the asset has been sold to an outside party whereas the new guidance will not allow the deferral of income tax effects of intercompany transfers of assets except for inventory. This standard is effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The amendments in this guidance should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company is currently evaluating the impact this new guidance may have on the consolidated financial statements and related disclosures. In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash , which provides guidance on the classification of restricted cash to be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts on the statement of cash flows. This standard is effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The Company early adopted this guidance on January 1, 2017, and adjusted its condensed consolidated statements of cash flow for each of the periods presented. In January 2017, the FASB issued ASU No. 2017-01, Clarifying the Definition of a Business . The amendment seeks to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, intangible assets and consolidation. This standard is effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The amendments should be applied prospectively on or after the effective dates. The Company is currently evaluating the impact this new guidance may have on the consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment . This guidance modified the concept of impairment assessment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. This standard should be adopted when the Company performs its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted. The amendments should be applied on a prospective basis. The Company does not expect the adoption of this guidance to have a material the impact on the consolidated financial statements and related disclosures. In March 2017, the FASB issued ASU No. 2017-08, Premium Amortization on Purchased Callable Debt Securities, which amends the amortization period for certain purchased callable debt securities held at a premium, shortening such period to the earliest call date. This standard is effective for annual periods beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. The amendments in this guidance should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company is currently evaluating the impact this new guidance may have on the consolidated financial statements and related disclosures. In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting, which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. This standard is effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The amendments should be applied on a prospective basis. The Company is currently evaluating the impact this new guidance may have on the consolidated financial statements and related disclosures. |
FAIR VALUE OF FINANCIAL INSTR25
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | A summary of loans disclosed at fair value on a recurring basis is as follows (in thousands): June 30, 2017 December 31, 2016 Carrying Value Fair Value (Level 3) Carrying Value Fair Value (Level 3) Loans held for sale $ 50,079 $ 52,266 $ 42,144 $ 42,633 Total $ 50,079 $ 52,266 $ 42,144 $ 42,633 The estimated fair value and carrying value of the convertible senior notes were as follows (in thousands): June 30, 2017 Carrying Value Fair Value (Level 2) Convertible senior notes $ 349,960 $ 539,062 Total $ 349,960 $ 539,062 The Company’s financial assets and liabilities that are measured at fair value on a recurring basis are classified as follows (in thousands): June 30, 2017 December 31, 2016 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Cash and Cash Equivalents: Money market funds $ 333,693 $ — $ — $ 207,168 $ — $ — U.S. agency securities — 7,498 — — — — Commercial paper — 15,740 — — 7,496 — U.S. government securities — — — — — — Corporate bonds — — — — — — Municipal securities — — — — 1,000 — Short-term securities: U.S. agency securities — 15,584 — — 9,055 — Corporate bonds — 48,404 — — 6,980 — Commercial paper — 54,285 — — 17,298 — Municipal securities — 17,655 — — 8,028 — U.S. government securities 67,359 — — 18,540 — — Long-term securities: U.S. agency securities — 15,023 — — 3,502 — Corporate bonds — 53,253 — — 12,914 — Municipal securities — 18,961 — — 2,492 — U.S. government securities 36,862 — — 8,458 — — Total $ 437,914 $ 246,403 $ — $ 234,166 $ 68,765 $ — |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Short-term and Long-term Investments | The Company's short-term and long-term investments as of June 30, 2017 are as follows (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Short-term securities: U.S. agency securities $ 15,593 $ 1 $ (10 ) $ 15,584 Corporate bonds 48,397 29 (22 ) 48,404 Commercial paper 54,285 — — 54,285 Municipal securities 17,668 8 (21 ) 17,655 U.S. government securities 67,388 2 (31 ) 67,359 Total $ 203,331 $ 40 $ (84 ) $ 203,287 Long-term securities: U.S. agency securities $ 15,028 $ 3 $ (8 ) $ 15,023 Corporate bonds 53,282 20 (49 ) 53,253 Municipal securities 18,973 6 (18 ) 18,961 U.S. government securities 36,911 6 (55 ) 36,862 Total $ 124,194 $ 35 $ (130 ) $ 124,099 The Company's short-term and long-term investments as of December 31, 2016 are as follows (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Short-term securities: U.S. agency securities $ 9,048 $ 7 $ — $ 9,055 Corporate bonds 17,318 — (20 ) 17,298 Commercial paper 6,980 — — 6,980 Municipal securities 8,037 — (9 ) 8,028 U.S. government securities 18,537 3 — 18,540 Total $ 59,920 $ 10 $ (29 ) $ 59,901 Long-term securities: U.S. agency securities $ 3,502 $ — $ — $ 3,502 Corporate bonds 12,939 — (25 ) 12,914 Municipal securities 2,505 — (13 ) 2,492 U.S. government securities 8,478 — (20 ) 8,458 Total $ 27,424 $ — $ (58 ) $ 27,366 |
Investments Classified by Contractual Maturity Date | The contractual maturities of the Company's short-term and long-term investments as of June 30, 2017 are as follows (in thousands): Amortized Cost Fair Value Due in one year or less $ 203,331 $ 203,287 Due in one to five years 124,194 124,099 Total $ 327,525 $ 327,386 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Equipment, and Internally Developed Software | The following is a summary of property, equipment, and internally-developed software at cost, less accumulated depreciation and amortization (in thousands): June 30, December 31, Leasehold improvements $ 74,138 $ 73,366 Computer equipment 60,041 52,915 Capitalized software 28,475 24,642 Office furniture and equipment 12,509 10,737 Total 175,163 161,660 Less: Accumulated depreciation and amortization (87,721 ) (73,332 ) Property and equipment, net $ 87,442 $ 88,328 |
ACQUIRED INTANGIBLE ASSETS (Tab
ACQUIRED INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite Lived Intangible Assets | The following table presents the detail of acquired intangible assets as of the periods presented (in thousands): Balance at June 30, 2017 Cost Accumulated Amortization Net Patents $ 1,285 $ (506 ) $ 779 Technology Assets 29,158 (18,287 ) 10,871 Customer Assets 8,886 (4,084 ) 4,802 Total $ 39,329 $ (22,877 ) $ 16,452 Balance at December 31, 2016 Cost Accumulated Amortization Net Patents $ 1,285 $ (454 ) $ 831 Technology Assets 29,075 (14,702 ) 14,373 Customer Assets 7,745 (3,657 ) 4,088 Total $ 38,105 $ (18,813 ) $ 19,292 |
Schedule of Annual Future Amortization Expense of Intangible Assets | The total estimated annual future amortization expense of these intangible assets as of June 30, 2017 is as follows (in thousands): 2017 (remaining 6 months) $ 3,538 2018 6,037 2019 3,253 2020 1,296 2021 759 Thereafter 1,569 Total $ 16,452 |
OTHER CONSOLIDATED BALANCE SH29
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (CURRENT) (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Other Current Assets | The following table presents the detail of other current assets (in thousands): June 30, December 31, Inventory, net $ 18,457 $ 13,724 Prepaid expenses 10,216 7,365 Accounts receivable, net 8,104 6,191 Processing costs receivable 7,514 8,593 Deferred hardware costs 5,458 4,546 Deferred magstripe reader costs 2,681 3,911 Merchant cash advance receivable, net 885 4,212 Tenant improvement reimbursement receivable 213 1,189 Other 9,270 10,812 Total $ 62,798 $ 60,543 |
Schedule of Accrued Expenses | The following table presents the detail of accrued expenses (in thousands): June 30, December 31, Accrued marketing $ 9,406 $ 3,972 Accrued payroll 8,469 5,799 Processing costs payable 7,170 9,655 Accrued professional fees 7,151 5,788 Accrued hardware costs 5,873 3,148 Other accrued liabilities 18,630 11,181 Total $ 56,699 $ 39,543 |
Schedule of Other Current Liabilities | The following table presents the detail of other current liabilities (in thousands): June 30, December 31, Square Payroll payable $ 9,158 $ 4,769 Deferred revenue 4,523 5,407 Current portion of deferred rent 2,944 2,862 Accrued redemptions 1,794 1,628 Other 8,220 7,806 Total $ 26,639 $ 22,472 |
OTHER CONSOLIDATED BALANCE SH30
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (NON-CURRENT) (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Other Non-Current Liabilities | The following table presents the detail of other non-current liabilities (in thousands): June 30, December 31, Statutory liabilities $ 34,736 $ 29,497 Deferred rent 21,770 23,119 Deferred tax liabilities 476 476 Other 6,100 4,653 Total $ 63,082 $ 57,745 |
INDEBTEDNESS (Tables)
INDEBTEDNESS (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Convertible Notes | The Notes consisted of the following (in thousands): June 30, 2017 Principal $ 440,000 Less: unamortized debt discount (81,146 ) Less: unamortized debt issuance costs (8,894 ) Net carrying amount $ 349,960 The net carrying amount of the equity component of the Notes was as follows (in thousands): June 30, 2017 Debt discount related to value of conversion option $ 86,203 Less: allocated debt issuance costs (2,302 ) Equity component, net $ 83,901 |
Interest Expense on Convertible Notes | The Company recognized interest expense on the Notes as follows (in thousands, except for percentages): Three Months Ended Six Months Ended June 30, June 30, 2017 2017 Contractual interest expense based on 0.375% per annum $ 413 $ 526 Amortization of debt discount and issuance costs 4,221 5,611 Total $ 4,634 $ 6,137 Effective interest rate of the liability component 5.34 % 5.34 % |
ACCRUED TRANSACTION LOSSES (Tab
ACCRUED TRANSACTION LOSSES (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Product Warranties Disclosures [Abstract] | |
Schedule of Reserve for Transaction Losses | The following table summarizes the activities of the Company’s reserve for transaction losses (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Accrued transaction losses, beginning of the period $ 20,444 $ 15,419 $ 20,064 $ 17,176 Provision for transaction losses 13,076 16,210 24,634 23,392 Charge-offs to accrued transaction losses (11,065 ) (15,536 ) (22,243 ) (24,475 ) Accrued transaction losses, end of the period $ 22,455 $ 16,093 $ 22,455 $ 16,093 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Changes in Stockholder's Equity | The changes in total stockholders’ equity were as follows (in thousands): Total stockholders’ equity Balance at December 31, 2016 $ 576,153 Net loss (31,052 ) Exercise of stock options 82,225 Purchases under the employee stock purchase plan 7,767 Vesting of early exercised stock options and other 488 Conversion feature of convertible senior notes, due 2022, net of allocated debt issuance costs 83,901 Purchase of bond hedges in conjunction with issuance of convertible senior notes, due 2022 (92,136 ) Sale of warrants in conjunction with issuance of convertible senior notes, due 2022 57,244 Payment for termination of Starbucks warrant (54,808 ) Change in other comprehensive loss 1,470 Share-based compensation 72,492 Balance at June 30, 2017 $ 703,744 |
Summary of Stock Option Activity | A summary of stock option activity for the six months ended June 30, 2017 is as follows (in thousands, except share and per share data): Number of Stock Options Outstanding Weighted Weighted Aggregate Balance at December 31, 2016 73,261,562 $ 7.70 7.28 $ 443,711 Granted 1,216,959 17.20 Exercised (14,912,966 ) 5.51 Forfeited (2,144,552 ) 11.38 Balance at June 30, 2017 57,421,003 $ 8.33 6.80 $ 868,556 Options exercisable as of June 30, 2017 53,717,383 $ 8.03 6.65 $ 829,122 |
Schedule of RSU Activity | Activity related to RSUs during the six months ended June 30, 2017 is set forth below: Number of Weighted Unvested as of December 31, 2016 15,443,391 $ 12.09 Granted 9,656,680 16.78 Vested (2,383,941 ) 11.91 Forfeited (1,438,238 ) 12.66 Unvested as of June 30, 2017 21,277,892 $ 14.20 |
Schedule of Fair Value Assumptions for Options | The fair value of stock options granted was estimated using the following weighted-average assumptions: Three and Six Months Ended June 30, 2017 2016 Dividend yield — % — % Risk-free interest rate 1.88 % 1.55 % Expected volatility 32.22 % 42.71 % Expected term (years) 6.02 6.08 |
Summary of the Effect of Share-Based Compensation on the Condensed Consolidated Statements of Operations | The following table summarizes the effects of share-based compensation on the Company's condensed consolidated statements of operations (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Cost of revenue $ 18 $ — $ 18 $ — Product development 25,136 24,168 44,492 46,115 Sales and marketing 4,355 3,363 8,290 6,266 General and administrative 10,084 9,391 18,463 15,739 Total $ 39,593 $ 36,922 $ 71,263 $ 68,120 |
LOSS PER SHARE (Tables)
LOSS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Net Loss Per Share | The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Net loss $ (15,962 ) $ (27,345 ) $ (31,052 ) $ (124,100 ) Basic shares: Weighted-average common shares outstanding 377,959 337,635 373,291 336,406 Weighted-average unvested shares (1,602 ) (3,147 ) (1,718 ) (3,500 ) Weighted-average shares used to compute basic net loss per share 376,357 334,488 371,573 332,906 Diluted shares: Weighted-average shares used to compute diluted loss per share 376,357 334,488 371,573 332,906 Net loss per share: Basic $ (0.04 ) $ (0.08 ) $ (0.08 ) $ (0.37 ) Diluted $ (0.04 ) $ (0.08 ) $ (0.08 ) $ (0.37 ) |
Schedule of Antidilutive Securities Excluded from Calculation of Diluted Net Loss Per Share | The following potential common shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented (in thousands): Three and Six Months Ended June 30, 2017 2016 Stock options and restricted stock units 78,699 113,981 Common stock warrants 19,173 9,458 Unvested shares 1,469 2,878 Employee stock purchase plan 262 127 Total anti-dilutive securities 99,603 126,444 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Payments Under Operating and Capital Leases | Future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) and future minimum capital lease payments as of June 30, 2017 are as follows (in thousands): Capital Operating Year: 2017 (remaining 6 months) $ 762 $ 8,599 2018 1,495 17,065 2019 1,380 16,165 2020 142 16,223 2021 — 16,614 Thereafter — 36,084 Total $ 3,779 $ 110,750 Less amount representing interest (2 ) Present value of capital lease obligations 3,777 Less current portion of capital lease obligation (1,511 ) Non-current portion of capital lease obligation $ 2,266 |
SEGMENT AND GEOGRAPHICAL INFO36
SEGMENT AND GEOGRAPHICAL INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Revenue from External Customers by Geographic Areas | Revenue by geography is based on the billing addresses of the merchants. The following table sets forth revenue by geographic area (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Revenue United States $ 530,008 $ 421,808 $ 974,907 $ 789,387 International 21,497 16,725 38,152 28,415 Total net revenue $ 551,505 $ 438,533 $ 1,013,059 $ 817,802 |
Long-lived Assets by Geographic Areas | The following table sets forth long-lived assets by geographic area (in thousands): June 30, December 31, Long-lived assets United States $ 158,721 $ 162,118 International 3,134 2,675 Total long-lived assets $ 161,855 $ 164,793 |
SUPPLEMENTAL CASH FLOW INFORM37
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Cash Flow, Supplemental Disclosures | The supplemental disclosures of cash flow information consist of the following (in thousands): Six Months Ended June 30, 2017 2016 Supplemental Cash Flow Data: Cash paid for interest $ 284 $ 284 Cash paid for income taxes 850 168 Supplemental disclosures of non-cash investing and financing activities: Change in purchases of property and equipment in accounts payable and accrued expenses 1,454 4,192 Unpaid business acquisition purchase price 644 — |
DESCRIPTION OF BUSINESS AND S38
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Reclassifications (Details) - USD ($) $ in Thousands | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Net cash used in investing activities | $ (255,744) | $ (96,753) | ||
Net decrease in cash, cash equivalents and restricted cash | (264,956) | 116,653 | ||
Decrease in net cash used in operating activities | 90,590 | (32,538) | ||
Increase in cash and cash equivalents | $ 753,701 | 372,899 | $ 488,745 | $ 489,552 |
Immaterial Error Correction | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Decrease in net cash used in operating activities | 3,200 | |||
Increase in cash and cash equivalents | 3,200 | |||
Accounting Standards Update 2016-18 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Net cash used in investing activities | 8,500 | |||
Net decrease in cash, cash equivalents and restricted cash | $ 8,500 |
DESCRIPTION OF BUSINESS AND S39
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentration of Credit Risk (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2017customer | Jun. 30, 2016customer | Jun. 30, 2017customerthird_party_processor | Jun. 30, 2016customer | Dec. 31, 2016third_party_processor | |
Total Net Revenue | Customer Concentration Risk | |||||
Concentration Risk [Line Items] | |||||
Number of customers | customer | 0 | 1 | 0 | 1 | |
Settlements Receivable | Credit Concentration Risk | |||||
Concentration Risk [Line Items] | |||||
Number of third party processors | third_party_processor | 3 | 3 | |||
Settlements Receivable | Credit Concentration Risk | Third Party Processor One | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 44.00% | 52.00% | |||
Settlements Receivable | Credit Concentration Risk | Third Party Processor Two | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 42.00% | 35.00% | |||
Settlements Receivable | Credit Concentration Risk | Third Party Processor Three | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, percentage | 10.00% | 10.00% |
DESCRIPTION OF BUSINESS AND S40
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recent Accounting Pronouncements (Details) $ in Millions | Jan. 01, 2017USD ($) |
Accounting Standards Update 2016-09 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Adjustment to increase accumulated deficit and additional paid-in capital | $ 0.7 |
RESTRICTED CASH (Details)
RESTRICTED CASH (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Cash and Cash Equivalents [Abstract] | ||
Pledged cash | $ 22,147 | $ 22,131 |
Collateral | $ 14,565 | $ 14,584 |
FAIR VALUE OF FINANCIAL INSTR42
FAIR VALUE OF FINANCIAL INSTRUMENTS - Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term securities | $ 203,287 | $ 59,901 |
Long-term securities | 124,099 | 27,366 |
Fair Value, Measurements, Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | 437,914 | 234,166 |
Fair Value, Measurements, Recurring | Level 1 | U.S. agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term securities | 0 | 0 |
Long-term securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term securities | 0 | 0 |
Long-term securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term securities | 0 | 0 |
Long-term securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | U.S. government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term securities | 67,359 | 18,540 |
Long-term securities | 36,862 | 8,458 |
Fair Value, Measurements, Recurring | Level 1 | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 333,693 | 207,168 |
Fair Value, Measurements, Recurring | Level 1 | U.S. agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | U.S. government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Fair Value, Measurements, Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | 246,403 | 68,765 |
Fair Value, Measurements, Recurring | Level 2 | U.S. agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term securities | 15,584 | 9,055 |
Long-term securities | 15,023 | 3,502 |
Fair Value, Measurements, Recurring | Level 2 | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term securities | 48,404 | 6,980 |
Long-term securities | 53,253 | 12,914 |
Fair Value, Measurements, Recurring | Level 2 | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term securities | 54,285 | 17,298 |
Fair Value, Measurements, Recurring | Level 2 | Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term securities | 17,655 | 8,028 |
Long-term securities | 18,961 | 2,492 |
Fair Value, Measurements, Recurring | Level 2 | U.S. government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term securities | 0 | 0 |
Long-term securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 2 | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Fair Value, Measurements, Recurring | Level 2 | U.S. agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 7,498 | 0 |
Fair Value, Measurements, Recurring | Level 2 | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 15,740 | 7,496 |
Fair Value, Measurements, Recurring | Level 2 | U.S. government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Fair Value, Measurements, Recurring | Level 2 | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Fair Value, Measurements, Recurring | Level 2 | Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 0 | 1,000 |
Fair Value, Measurements, Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | U.S. agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term securities | 0 | 0 |
Long-term securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term securities | 0 | 0 |
Long-term securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term securities | 0 | 0 |
Long-term securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | U.S. government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term securities | 0 | 0 |
Long-term securities | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | U.S. agency securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | U.S. government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | $ 0 | $ 0 |
FAIR VALUE OF FINANCIAL INSTR43
FAIR VALUE OF FINANCIAL INSTRUMENTS - Fair Value of Convertible Senior Notes (Details) - Level 2 - Fair Value, Measurements, Recurring $ in Thousands | Jun. 30, 2017USD ($) |
Carrying Value | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Convertible senior notes | $ 349,960 |
Fair Value (Level 2) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Convertible senior notes | $ 539,062 |
FAIR VALUE OF FINANCIAL INSTR44
FAIR VALUE OF FINANCIAL INSTRUMENTS - Loans Disclosed at Fair Value (Details) - Level 3 - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Carrying Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Loans held for sale, fair value | $ 50,079 | $ 42,144 |
Fair Value (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Loans held for sale, fair value | $ 52,266 | $ 42,633 |
INVESTMENTS - Available for Sa
INVESTMENTS - Available for Sale Securities (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Schedule of Available-for-sale Securities [Line Items] | ||
Total | $ 327,525 | |
Fair Value | 327,386 | |
Short-term Investments | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Total | 203,331 | $ 59,920 |
Gross Unrealized Gains | 40 | 10 |
Gross Unrealized Losses | (84) | (29) |
Fair Value | 203,287 | 59,901 |
Long-term Investments | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Total | 124,194 | 27,424 |
Gross Unrealized Gains | 35 | 0 |
Gross Unrealized Losses | (130) | (58) |
Fair Value | 124,099 | 27,366 |
U.S. agency securities | Short-term Investments | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Total | 15,593 | 9,048 |
Gross Unrealized Gains | 1 | 7 |
Gross Unrealized Losses | (10) | 0 |
Fair Value | 15,584 | 9,055 |
U.S. agency securities | Long-term Investments | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Total | 15,028 | 3,502 |
Gross Unrealized Gains | 3 | 0 |
Gross Unrealized Losses | (8) | 0 |
Fair Value | 15,023 | 3,502 |
Corporate bonds | Short-term Investments | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Total | 48,397 | 17,318 |
Gross Unrealized Gains | 29 | 0 |
Gross Unrealized Losses | (22) | (20) |
Fair Value | 48,404 | 17,298 |
Corporate bonds | Long-term Investments | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Total | 53,282 | 12,939 |
Gross Unrealized Gains | 20 | 0 |
Gross Unrealized Losses | (49) | (25) |
Fair Value | 53,253 | 12,914 |
Commercial paper | Short-term Investments | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Total | 54,285 | 6,980 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 54,285 | 6,980 |
Municipal securities | Short-term Investments | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Total | 17,668 | 8,037 |
Gross Unrealized Gains | 8 | 0 |
Gross Unrealized Losses | (21) | (9) |
Fair Value | 17,655 | 8,028 |
Municipal securities | Long-term Investments | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Total | 18,973 | 2,505 |
Gross Unrealized Gains | 6 | 0 |
Gross Unrealized Losses | (18) | (13) |
Fair Value | 18,961 | 2,492 |
U.S. government securities | Short-term Investments | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Total | 67,388 | 18,537 |
Gross Unrealized Gains | 2 | 3 |
Gross Unrealized Losses | (31) | 0 |
Fair Value | 67,359 | 18,540 |
U.S. government securities | Long-term Investments | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Total | 36,911 | 8,478 |
Gross Unrealized Gains | 6 | 0 |
Gross Unrealized Losses | (55) | (20) |
Fair Value | $ 36,862 | $ 8,458 |
INVESTMENTS - Maturity of Avai
INVESTMENTS - Maturity of Available for Sale Securities (Details) $ in Thousands | Jun. 30, 2017USD ($) |
Amortized Cost | |
Due in one year or less | $ 203,331 |
Due in one to five years | 124,194 |
Total | 327,525 |
Fair Value | |
Due in one year or less | 203,287 |
Due in one to five years | 124,099 |
Total | $ 327,386 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 175,163 | $ 175,163 | $ 161,660 | ||
Less: Accumulated depreciation and amortization | (87,721) | (87,721) | (73,332) | ||
Property and equipment, net | 87,442 | 87,442 | 88,328 | ||
Depreciation | 7,200 | $ 6,900 | 14,500 | $ 13,300 | |
Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 74,138 | 74,138 | 73,366 | ||
Computer equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 60,041 | 60,041 | 52,915 | ||
Capitalized software | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 28,475 | 28,475 | 24,642 | ||
Office furniture and equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 12,509 | $ 12,509 | $ 10,737 |
GOODWILL (Details)
GOODWILL (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Goodwill | $ 57,961,000 | $ 57,173,000 | |
Goodwill, impairment charges | $ 0 | $ 0 |
ACQUIRED INTANGIBLE ASSETS - S
ACQUIRED INTANGIBLE ASSETS - Schedule of Acquired Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 39,329 | $ 38,105 |
Accumulated Amortization | (22,877) | (18,813) |
Net | 16,452 | 19,292 |
Patents | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Cost | 1,285 | 1,285 |
Accumulated Amortization | (506) | (454) |
Net | 779 | 831 |
Technology Assets | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Cost | 29,158 | 29,075 |
Accumulated Amortization | (18,287) | (14,702) |
Net | 10,871 | 14,373 |
Customer Assets | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Cost | 8,886 | 7,745 |
Accumulated Amortization | (4,084) | (3,657) |
Net | $ 4,802 | $ 4,088 |
ACQUIRED INTANGIBLE ASSETS - N
ACQUIRED INTANGIBLE ASSETS - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense | $ 1.9 | $ 2.1 | $ 4.1 | $ 4.8 |
Weighted Average | Patents | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Amortization period | 13 years | |||
Weighted Average | Technology Assets | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Amortization period | 4 years | |||
Weighted Average | Customer Assets | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Amortization period | 9 years |
ACQUIRED INTANGIBLE ASSETS - F
ACQUIRED INTANGIBLE ASSETS - Future Amortization of Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2017 (remaining 6 months) | $ 3,538 | |
2,018 | 6,037 | |
2,019 | 3,253 | |
2,020 | 1,296 | |
2,021 | 759 | |
Thereafter | 1,569 | |
Net | $ 16,452 | $ 19,292 |
OTHER CONSOLIDATED BALANCE SH52
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (CURRENT) - Other Current Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Inventory, net | $ 18,457 | $ 13,724 |
Prepaid expenses | 10,216 | 7,365 |
Accounts receivable, net | 8,104 | 6,191 |
Processing costs receivable | 7,514 | 8,593 |
Deferred hardware costs | 5,458 | 4,546 |
Deferred magstripe reader costs | 2,681 | 3,911 |
Merchant cash advance receivable, net | 885 | 4,212 |
Tenant improvement reimbursement receivable | 213 | 1,189 |
Other | 9,270 | 10,812 |
Total | $ 62,798 | $ 60,543 |
OTHER CONSOLIDATED BALANCE SH53
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (CURRENT) - Accrued Expenses (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accrued marketing | $ 9,406 | $ 3,972 |
Accrued payroll | 8,469 | 5,799 |
Processing costs payable | 7,170 | 9,655 |
Accrued professional fees | 7,151 | 5,788 |
Accrued hardware costs | 5,873 | 3,148 |
Other accrued liabilities | 18,630 | 11,181 |
Total | $ 56,699 | $ 39,543 |
OTHER CONSOLIDATED BALANCE SH54
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (CURRENT) - Other Current Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Square Payroll payable | $ 9,158 | $ 4,769 |
Deferred revenue | 4,523 | 5,407 |
Current portion of deferred rent | 2,944 | 2,862 |
Accrued redemptions | 1,794 | 1,628 |
Other | 8,220 | 7,806 |
Total | $ 26,639 | $ 22,472 |
OTHER CONSOLIDATED BALANCE SH55
OTHER CONSOLIDATED BALANCE SHEET COMPONENTS (NON-CURRENT) - Other Non-Current Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Statutory liabilities | $ 34,736 | $ 29,497 |
Deferred rent | 21,770 | 23,119 |
Deferred tax liabilities | 476 | 476 |
Other | 6,100 | 4,653 |
Total | $ 63,082 | $ 57,745 |
INDEBTEDNESS - Revolving Credi
INDEBTEDNESS - Revolving Credit Facility, Narrative (Details) - Revolving Credit Facility - Line of Credit - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Nov. 30, 2015 | |
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 375,000,000 | ||||
Administrative agent fee | $ 100,000 | $ 100,000 | |||
Unused commitment fee percentage | 0.15% | ||||
Remaining borrowing capacity | 375,000,000 | $ 375,000,000 | |||
Unused commitment fees | $ 100,000 | $ 100,000 | $ 300,000 | $ 300,000 | |
Federal Funds Rate | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 0.50% | ||||
One Month LIBOR | Minimum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 0.00% | ||||
One Month LIBOR | Maximum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 1.00% | ||||
LIBOR | Minimum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 1.00% | ||||
LIBOR | Maximum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 2.00% |
INDEBTEDNESS - Convertible Seni
INDEBTEDNESS - Convertible Senior Notes, Narrative (Details) - Convertible Debt | Mar. 06, 2017USD ($)day$ / shares | Jun. 30, 2017USD ($)$ / shares |
Debt Instrument [Line Items] | ||
Aggregate principal amount | $ 400,000,000 | |
Over-allotment option as a percentage of a principal amount | 10.00% | |
Over-allotment option | $ 40,000,000 | |
Interest rate | 0.375% | 0.375% |
Conversion rate | 0.0435749 | |
Conversion price (in USD per share) | $ / shares | $ 22.95 | $ 22.95 |
Conversion amount | $ 1,000 | |
Carrying amount of equity component | 86,200,000 | $ 83,901,000 |
Effective interest rate of the liability component | 5.34% | |
Discounts and commissions payable | 11,000,000 | |
Third party offering costs | 800,000 | |
Issuance costs attributable to the liability component | $ 9,400,000 | $ 8,894,000 |
Debt Instrument, Conversion Term One | ||
Debt Instrument [Line Items] | ||
Threshold trading days | day | 20 | |
Threshold consecutive trading days | day | 30 | |
Threshold percentage of stock price trigger | 130.00% | |
Debt Instrument Conversion Term Two | ||
Debt Instrument [Line Items] | ||
Threshold trading days | day | 5 | |
Threshold consecutive trading days | day | 5 | |
Threshold percentage of stock price trigger | 98.00% |
INDEBTEDNESS - Components of Co
INDEBTEDNESS - Components of Convertible Notes (Details) - Convertible Debt - USD ($) $ in Thousands | Jun. 30, 2017 | Mar. 06, 2017 |
Debt Instrument [Line Items] | ||
Principal | $ 440,000 | |
Less: unamortized debt discount | (81,146) | |
Less: unamortized debt issuance costs | (8,894) | $ (9,400) |
Net carrying amount | $ 349,960 |
INDEBTEDNESS - Carrying Amount
INDEBTEDNESS - Carrying Amount of Equity Component of Convertible Notes (Details) - Convertible Debt - USD ($) $ in Thousands | Jun. 30, 2017 | Mar. 06, 2017 |
Debt Instrument [Line Items] | ||
Debt discount related to value of conversion option | $ 86,203 | |
Less: allocated debt issuance costs | (2,302) | |
Equity component, net | $ 83,901 | $ 86,200 |
INDEBTEDNESS - Interest Expense
INDEBTEDNESS - Interest Expense (Details) - Convertible Debt - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2017 | Mar. 06, 2017 | |
Debt Instrument [Line Items] | |||
Contractual interest expense based on 0.375% per annum | $ 413 | $ 526 | |
Amortization of debt discount and issuance costs | 4,221 | 5,611 | |
Total | $ 4,634 | $ 6,137 | |
Effective interest rate of the liability component | 5.34% | 5.34% | |
Interest rate | 0.375% | 0.375% | 0.375% |
INDEBTEDNESS - Convertible Bond
INDEBTEDNESS - Convertible Bond Hedge and Warrant Transactions (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions | Mar. 06, 2017 | Jun. 30, 2017 | Jun. 30, 2016 |
Debt Instrument [Line Items] | |||
Proceeds from issuance of warrants | $ 57,244 | $ 0 | |
Convertible Debt | |||
Debt Instrument [Line Items] | |||
Conversion price of convertible debt (in USD per share) | $ 22.95 | $ 22.95 | |
Conversion price of convertible debt after effect of warrants and note hedge (in USD per share) | $ 31.18 | ||
Common Stock Warrant | |||
Debt Instrument [Line Items] | |||
Warrants to purchase aggregate shares of capital stock (in shares) | 19.2 | ||
Warrants, weighted average exercise price (in USD per share) | $ 31.18 | ||
Proceeds from issuance of warrants | $ 57,200 | ||
Options | |||
Debt Instrument [Line Items] | |||
Convertible note hedge, option to purchase common stock, price (in USD per share) | $ 22.95 | ||
Cost of convertible note hedge | $ 92,100 |
ACCRUED TRANSACTION LOSSES (Det
ACCRUED TRANSACTION LOSSES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Loss Contingency Accrual | ||||
Accrued transaction losses, beginning of the period | $ 20,064 | |||
Provision for transaction losses | 30,292 | $ 25,316 | ||
Accrued transaction losses, end of the period | $ 22,455 | 22,455 | ||
Transaction Losses | ||||
Loss Contingency Accrual | ||||
Accrued transaction losses, beginning of the period | 20,444 | $ 15,419 | 20,064 | 17,176 |
Provision for transaction losses | 13,076 | 16,210 | 24,634 | 23,392 |
Charge-offs to accrued transaction losses | (11,065) | (15,536) | (22,243) | (24,475) |
Accrued transaction losses, end of the period | $ 22,455 | $ 16,093 | $ 22,455 | $ 16,093 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 472 | $ 312 | $ 981 | $ 651 |
Effective tax rate | (3.00%) | (1.20%) | (3.30%) | (0.50%) |
STOCKHOLDERS' EQUITY - Changes
STOCKHOLDERS' EQUITY - Changes in Stockholder's Equity (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Balance at December 31, 2016 | $ 576,153 | |||
Net loss | $ (15,962) | $ (27,345) | (31,052) | $ (124,100) |
Exercise of stock options | 82,225 | |||
Purchases under the employee stock purchase plan | 7,767 | |||
Vesting of early exercised stock options and other | 488 | |||
Conversion feature of convertible senior notes, due 2022, net of allocated debt issuance costs | 83,901 | |||
Purchase of bond hedges in conjunction with issuance of convertible senior notes, due 2022 | (92,136) | |||
Sale of warrants in conjunction with issuance of convertible senior notes, due 2022 | 57,244 | |||
Payment for termination of Starbucks warrant | (54,808) | |||
Change in other comprehensive loss | 1,470 | |||
Share-based compensation | 72,492 | |||
Balance at June 30, 2017 | $ 703,744 | $ 703,744 |
STOCKHOLDERS' EQUITY - Common
STOCKHOLDERS' EQUITY - Common Stock and Warrants Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 06, 2017 | Feb. 24, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 |
Class of Stock [Line Items] | |||||
Payments for the termination of warrants | $ 54,808 | $ 0 | |||
Proceeds from issuance of warrants | $ 57,244 | $ 0 | |||
Common Stock Warrant | |||||
Class of Stock [Line Items] | |||||
Payments for the termination of warrants | $ 54,800 | ||||
Warrants canceled (in shares) | 9,456,955 | ||||
Warrants to purchase aggregate shares of capital stock (in shares) | 19,200,000 | ||||
Warrants, weighted average exercise price (in USD per share) | $ 31.18 | ||||
Proceeds from issuance of warrants | $ 57,200 | ||||
Class A | |||||
Class of Stock [Line Items] | |||||
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 | |||
Common stock, par value (in USD per share) | $ 0.00 | $ 0.00 | |||
Common stock, shares outstanding (in shares) | 250,974,736 | 198,746,620 | |||
Class B | |||||
Class of Stock [Line Items] | |||||
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 | |||
Common stock, par value (in USD per share) | $ 0.00 | $ 0.00 | |||
Common stock, shares outstanding (in shares) | 131,645,329 | 165,800,756 |
STOCKHOLDERS' EQUITY - Share B
STOCKHOLDERS' EQUITY - Share Based Compensation Narrative (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2017USD ($)shares | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)planshares | Jun. 30, 2016USD ($) | Jan. 01, 2017USD ($) | Nov. 17, 2015shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of share based compensation plans | plan | 2 | |||||
Employee stock purchase plan, compensation expense | $ | $ 39,593 | $ 36,922 | $ 71,263 | $ 68,120 | ||
Capitalized share-based compensation expense | $ | 700 | 900 | 1,200 | 900 | ||
Unrecognized compensation cost, options | $ | 386,000 | 386,000 | ||||
Accounting Standards Update 2016-09 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Adjustment to increase accumulated deficit and additional paid-in capital | $ | $ 700 | |||||
Employee stock purchase plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Employee stock purchase plan, compensation expense | $ | $ 1,200 | $ 1,500 | $ 3,000 | $ 3,000 | ||
Stock options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Unrecognized compensation cost, period for recognition | 2 years 11 months 5 days | |||||
2009 Stock Option Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares available for future issuance (in shares) | 0 | |||||
2009 Stock Option Plan | Stock options and restricted stock units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Equity instruments outstanding (in shares) | 52,709,658 | 52,709,658 | ||||
2015 Equity Incentive Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares available for future issuance (in shares) | 47,378,192 | 47,378,192 | ||||
Shares reserved for future issuance (in shares) | 30,000,000 | |||||
Shares reserved for future issuance, percentage of annual increase | 5.00% | |||||
2015 Equity Incentive Plan | Stock options and restricted stock units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Equity instruments outstanding (in shares) | 25,989,237 | 25,989,237 | ||||
2015 Equity Incentive Plan | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares reserved for future issuance, amount of annual increase (in shares) | 40,000,000 | 40,000,000 |
STOCKHOLDERS' EQUITY - Stock O
STOCKHOLDERS' EQUITY - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 | Jun. 30, 2017 |
Number of Stock Options Outstanding | |||
Beginning balance (in shares) | 73,261,562 | ||
Granted (in shares) | 1,216,959 | ||
Exercised (in shares) | (14,912,966) | ||
Forfeited (in shares) | (2,144,552) | ||
Ending balance (in shares) | 57,421,003 | 73,261,562 | 57,421,003 |
Weighted Average Exercise Price | |||
Beginning balance (in USD per share) | $ 7.70 | ||
Granted (in USD per share) | 17.20 | ||
Exercised (in USD per share) | 5.51 | ||
Forfeited (in USD per share) | 11.38 | ||
Ending balance (in USD per share) | $ 8.33 | $ 7.70 | $ 7.70 |
Options Exercisable | |||
Options exercisable (in shares) | 53,717,383 | ||
Options exercisable (in USD per share) | $ 8.03 | ||
Additional Disclosures | |||
Weighted average remaining contractual term, options outstanding | 6 years 9 months 18 days | 7 years 3 months 11 days | |
Weighted average remaining contractual term, options exercisable | 6 years 7 months 24 days | ||
Aggregate intrinsic value, options outstanding | $ 868,556 | $ 443,711 | |
Aggregate intrinsic value, options exercisable | $ 829,122 |
STOCKHOLDERS' EQUITY - RSU Act
STOCKHOLDERS' EQUITY - RSU Activity (Details) - RSUs | 6 Months Ended |
Jun. 30, 2017$ / sharesshares | |
Number of RSUs | |
Beginning balance (in shares) | shares | 15,443,391 |
Granted (in shares) | shares | 9,656,680 |
Vested (in shares) | shares | (2,383,941) |
Forfeited (in shares) | shares | (1,438,238) |
Ending balance (in shares) | shares | 21,277,892 |
Weighted Average Grant Date Fair Value | |
Beginning balance (in USD per share) | $ / shares | $ 12.09 |
Granted (in USD per share) | $ / shares | 16.78 |
Vested (in USD per share) | $ / shares | 11.91 |
Forfeited (in USD per share) | $ / shares | 12.66 |
Ending balance (in USD per share) | $ / shares | $ 14.20 |
STOCKHOLDERS' EQUITY - Stock69
STOCKHOLDERS' EQUITY - Stock Option Fair Value Assumptions (Details) - Stock options | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Risk-free interest rate | 1.88% | 1.55% | 1.88% | 1.55% |
Expected volatility | 32.22% | 42.71% | 32.22% | 42.71% |
Expected term (years) | 6 years 7 days | 6 years 29 days | 6 years 7 days | 6 years 29 days |
STOCKHOLDERS' EQUITY - Effects
STOCKHOLDERS' EQUITY - Effects of Share-Based Compensation on Statements of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expense | $ 39,593 | $ 36,922 | $ 71,263 | $ 68,120 |
Cost of revenue | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expense | 18 | 0 | 18 | 0 |
Product development | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expense | 25,136 | 24,168 | 44,492 | 46,115 |
Sales and marketing | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expense | 4,355 | 3,363 | 8,290 | 6,266 |
General and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expense | $ 10,084 | $ 9,391 | $ 18,463 | $ 15,739 |
LOSS PER SHARE - Calculation o
LOSS PER SHARE - Calculation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Earnings Per Share [Abstract] | ||||
Net loss | $ (15,962) | $ (27,345) | $ (31,052) | $ (124,100) |
Basic shares: | ||||
Weighted-average common shares outstanding (in shares) | 377,959 | 337,635 | 373,291 | 336,406 |
Weighted-average unvested shares (in shares) | (1,602) | (3,147) | (1,718) | (3,500) |
Weighted-average shares used to compute basic net loss per share (in shares) | 376,357 | 334,488 | 371,573 | 332,906 |
Diluted shares: | ||||
Weighted-average shares used to compute diluted loss per share (in shares) | 376,357 | 334,488 | 371,573 | 332,906 |
Net loss per share: | ||||
Basic (in USD per share) | $ (0.04) | $ (0.08) | $ (0.08) | $ (0.37) |
Diluted (in USD per share) | $ (0.04) | $ (0.08) | $ (0.08) | $ (0.37) |
LOSS PER SHARE - Antidilutive
LOSS PER SHARE - Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - $ / shares shares in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Mar. 06, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 99,603 | 126,444 | 99,603 | 126,444 | |
Convertible Debt | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Conversion price of convertible debt (in USD per share) | $ 22.95 | $ 22.95 | $ 22.95 | ||
Stock options and restricted stock units | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 78,699 | 113,981 | 78,699 | 113,981 | |
Common stock warrants | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 19,173 | 9,458 | 19,173 | 9,458 | |
Unvested shares | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 1,469 | 2,878 | 1,469 | 2,878 | |
Employee stock purchase plan | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 262 | 127 | 262 | 127 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES - Operating and Capital Leases- Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Operating leases, rent expense | $ 3.1 | $ 2.7 | $ 5.9 | $ 5.5 |
COMMITMENTS AND CONTINGENCIES74
COMMITMENTS AND CONTINGENCIES - Schedule of Future Payments Under Operating and Capital Leases (Details) $ in Thousands | Jun. 30, 2017USD ($) |
Capital | |
2017 (remaining 6 months) | $ 762 |
2,018 | 1,495 |
2,019 | 1,380 |
2,020 | 142 |
2,021 | 0 |
Thereafter | 0 |
Total | 3,779 |
Less amount representing interest | (2) |
Present value of capital lease obligations | 3,777 |
Less current portion of capital lease obligation | (1,511) |
Non-current portion of capital lease obligation | 2,266 |
Operating | |
2017 (remaining 6 months) | 8,599 |
2,018 | 17,065 |
2,019 | 16,165 |
2,020 | 16,223 |
2,021 | 16,614 |
Thereafter | 36,084 |
Total | $ 110,750 |
SEGMENT AND GEOGRAPHICAL INFO75
SEGMENT AND GEOGRAPHICAL INFORMATION - Narrative (Details) | 6 Months Ended |
Jun. 30, 2017segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 1 |
Number of reportable segments | 1 |
SEGMENT AND GEOGRAPHICAL INFO76
SEGMENT AND GEOGRAPHICAL INFORMATION - Revenue by Geography (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | $ 551,505 | $ 438,533 | $ 1,013,059 | $ 817,802 |
United States | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | 530,008 | 421,808 | 974,907 | 789,387 |
International | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | $ 21,497 | $ 16,725 | $ 38,152 | $ 28,415 |
SEGMENT AND GEOGRAPHICAL INFO77
SEGMENT AND GEOGRAPHICAL INFORMATION - Long-lived Assets by Geography (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 161,855 | $ 164,793 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 158,721 | 162,118 |
International | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 3,134 | $ 2,675 |
SUPPLEMENTAL CASH FLOW INFORM78
SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Supplemental Cash Flow Data: | ||
Cash paid for interest | $ 284 | $ 284 |
Cash paid for income taxes | 850 | 168 |
Supplemental disclosures of non-cash investing and financing activities: | ||
Change in purchases of property and equipment in accounts payable and accrued expenses | 1,454 | 4,192 |
Unpaid business acquisition purchase price | $ 644 | $ 0 |