Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Oct. 25, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | RIBBON COMMUNICATIONS INC. | |
Entity Central Index Key | 0001708055 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Shell Company | false | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 110,715,311 | |
Entity Current Reporting Status | Yes |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 40,397 | $ 43,694 |
Marketable securities | 0 | 7,284 |
Accounts receivable, net | 162,964 | 187,853 |
Inventory | 14,103 | 22,602 |
Other current assets | 29,880 | 17,002 |
Total current assets | 247,344 | 278,435 |
Property and equipment, net | 27,023 | 27,042 |
Intangible assets, net | 225,762 | 251,391 |
Goodwill | 389,196 | 383,655 |
Deferred income taxes | 5,463 | 9,152 |
Operating lease right-of-use assets | 37,132 | 0 |
Other assets | 25,161 | 7,484 |
Total assets | 957,081 | 957,159 |
Current liabilities: | ||
Current portion of long-term debt | 2,500 | 0 |
Revolving credit facility | 34,000 | 55,000 |
Accounts payable | 25,113 | 45,304 |
Accrued expenses and other | 52,650 | 84,263 |
Operating lease liabilities | 7,568 | 0 |
Deferred revenue | 83,423 | 105,087 |
Total current liabilities | 205,254 | 289,654 |
Long-term debt, net of current | 46,605 | 0 |
Long-term debt, related party | 0 | 24,100 |
Operating lease liabilities, net of current | 37,600 | 0 |
Deferred revenue, net of current | 18,687 | 17,572 |
Deferred income taxes | 4,865 | 4,738 |
Other long-term liabilities | 13,055 | 30,797 |
Total liabilities | 326,066 | 366,861 |
Commitments and contingencies (Note 17) | ||
Stockholders' equity: | ||
Preferred stock, $0.01 par value per share; 10,000,000 shares authorized, none issued and outstanding | 0 | 0 |
Common stock, $0.0001 par value per share; 240,000,000 shares authorized; 110,156,325 shares issued and outstanding at September 30, 2019; 106,815,636 shares issued and outstanding at December 31, 2018 | 11 | 11 |
Additional paid-in capital | 1,743,089 | 1,723,576 |
Accumulated deficit | (1,116,704) | (1,136,992) |
Accumulated other comprehensive income | 4,619 | 3,703 |
Total stockholders' equity | 631,015 | 590,298 |
Total liabilities and stockholders' equity | $ 957,081 | $ 957,159 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 240,000,000 | 240,000,000 |
Common stock, shares issued (in shares) | 110,156,325 | 106,815,636 |
Common stock, shares outstanding (in shares) | 110,156,325 | 106,815,636 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenue: | ||||
Total revenue | $ 137,653 | $ 152,468 | $ 402,002 | $ 411,009 |
Cost of revenue: | ||||
Total cost of revenue | 58,776 | 70,234 | 185,863 | 198,391 |
Gross profit | 78,877 | 82,234 | 216,139 | 212,618 |
Operating expenses: | ||||
Research and development | 34,222 | 34,403 | 105,456 | 109,056 |
Sales and marketing | 28,227 | 31,488 | 87,179 | 94,152 |
General and administrative | 9,673 | 15,942 | 40,833 | 46,571 |
Acquisition- and integration-related | 1,697 | 5,570 | 6,861 | 14,262 |
Restructuring and related | 2,372 | 2,397 | 16,448 | 15,162 |
Total operating expenses | 76,191 | 89,800 | 256,777 | 279,203 |
Income (loss) from operations | 2,686 | (7,566) | (40,638) | (66,585) |
Interest expense, net | (726) | (1,420) | (3,352) | (2,754) |
Other income (expense), net | (507) | (1,254) | 70,128 | (3,058) |
Income (loss) before income taxes | 1,453 | (10,240) | 26,138 | (72,397) |
Income tax benefit (provision) | 197 | 82 | (5,850) | (2,587) |
Net income (loss) | $ 1,650 | $ (10,158) | $ 20,288 | $ (74,984) |
Earnings (loss) per share: | ||||
Basic (in dollars per share) | $ 0.01 | $ (0.10) | $ 0.19 | $ (0.73) |
Diluted (in dollars per share) | $ 0.01 | $ (0.10) | $ 0.18 | $ (0.73) |
Shares used to compute earnings (loss) per share: | ||||
Basic (in shares) | 110,080 | 104,918 | 109,523 | 103,009 |
Diluted (in shares) | 110,756 | 104,918 | 110,100 | 103,009 |
Product | ||||
Revenue: | ||||
Total revenue | $ 61,152 | $ 77,283 | $ 180,691 | $ 191,937 |
Cost of revenue: | ||||
Total cost of revenue | 31,476 | 38,891 | 101,056 | 102,183 |
Service | ||||
Revenue: | ||||
Total revenue | 76,501 | 75,185 | 221,311 | 219,072 |
Cost of revenue: | ||||
Total cost of revenue | $ 27,300 | $ 31,343 | $ 84,807 | $ 96,208 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 1,650 | $ (10,158) | $ 20,288 | $ (74,984) |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustments | 270 | (80) | 326 | (43) |
Unrealized gain (loss) on available-for sale marketable securities, net of reclassification adjustments for realized amounts | 0 | 23 | 590 | (10) |
Employee retirement benefits | 0 | 156 | 0 | 156 |
Other comprehensive income, net of tax | 270 | 99 | 916 | 103 |
Comprehensive income (loss) | $ 1,920 | $ (10,059) | $ 21,204 | $ (74,881) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common stock | Additional paid-in capital | Accumulated deficit | Accumulated other comprehensive income | Anova Data, Inc. | Anova Data, Inc.Common stock | Anova Data, Inc.Additional paid-in capital | Edgewater Networks, Inc. | Edgewater Networks, Inc.Common stock | Edgewater Networks, Inc.Additional paid-in capital |
Balance at Dec. 31, 2017 | $ 615,421 | $ 10 | $ 1,684,768 | $ (1,072,426) | $ 3,069 | ||||||
Balance (in shares) at Dec. 31, 2017 | 101,752,856 | ||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Exercise of stock options (in shares) | 8,653 | ||||||||||
Exercise of stock options | 11 | 11 | |||||||||
Vesting of restricted stock awards and units (in shares) | 769,195 | ||||||||||
Vesting of performance-based stock awards (in shares) | 57,768 | ||||||||||
Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations (in shares) | (311,473) | ||||||||||
Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations | (830) | (830) | |||||||||
Shares issued as consideration in connection with acquisition (in shares) | 4,235,531 | ||||||||||
Shares issued as consideration in connection with acquisition | $ 30,000 | $ 1 | $ 29,999 | ||||||||
Assumption of equity awards in connection with acquisition of Edgewater Networks, Inc. | 747 | 747 | |||||||||
Stock-based compensation expense | 7,421 | 7,421 | |||||||||
Other comprehensive income (loss) | 123 | 123 | |||||||||
Net income (loss) | (74,984) | (74,984) | |||||||||
Balance (in shares) at Sep. 30, 2018 | 106,512,530 | ||||||||||
Balance at Sep. 30, 2018 | 590,362 | $ 11 | 1,722,116 | (1,134,957) | 3,192 | ||||||
Balance at Jun. 30, 2018 | 567,250 | $ 10 | 1,688,966 | (1,124,799) | 3,073 | ||||||
Balance (in shares) at Jun. 30, 2018 | 102,243,477 | ||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Exercise of stock options (in shares) | 6,070 | ||||||||||
Exercise of stock options | 1 | 1 | |||||||||
Vesting of restricted stock awards and units (in shares) | 44,209 | ||||||||||
Vesting of restricted stock awards and units | 0 | ||||||||||
Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations (in shares) | (16,757) | ||||||||||
Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations | (113) | (113) | |||||||||
Shares issued as consideration in connection with acquisition (in shares) | 4,235,531 | ||||||||||
Shares issued as consideration in connection with acquisition | 30,000 | $ 1 | 29,999 | ||||||||
Assumption of equity awards in connection with acquisition of Edgewater Networks, Inc. | $ 747 | $ 747 | |||||||||
Stock-based compensation expense | 2,516 | 2,516 | |||||||||
Other comprehensive income (loss) | 119 | 119 | |||||||||
Net income (loss) | (10,158) | (10,158) | |||||||||
Balance (in shares) at Sep. 30, 2018 | 106,512,530 | ||||||||||
Balance at Sep. 30, 2018 | 590,362 | $ 11 | 1,722,116 | (1,134,957) | 3,192 | ||||||
Balance at Dec. 31, 2018 | $ 590,298 | $ 11 | 1,723,576 | (1,136,992) | 3,703 | ||||||
Balance (in shares) at Dec. 31, 2018 | 106,815,636 | 106,815,636 | |||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Issuance of common stock in connection with employee stock purchase plan (in shares) | 139,390 | ||||||||||
Issuance of common stock in connection with employee stock purchase plan | $ 506 | 506 | |||||||||
Exercise of stock options (in shares) | 126,015 | ||||||||||
Exercise of stock options | 233 | 233 | |||||||||
Vesting of restricted stock awards and units (in shares) | 1,296,966 | ||||||||||
Vesting of performance-based stock awards (in shares) | 9,466 | ||||||||||
Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations (in shares) | (204,027) | ||||||||||
Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations | (1,082) | (1,082) | |||||||||
Shares issued as consideration in connection with acquisition (in shares) | 2,948,793 | ||||||||||
Shares issued as consideration in connection with acquisition | $ 15,186 | $ 15,186 | |||||||||
Repurchase and retirement of common stock (in shares) | (975,914) | ||||||||||
Repurchase and retirement of common stock | (4,536) | (4,536) | |||||||||
Reclassification of liability to equity for bonuses converted to stock awards | 1,052 | 1,052 | |||||||||
Stock-based compensation expense | 8,154 | 8,154 | |||||||||
Other comprehensive income (loss) | 916 | 916 | |||||||||
Net income (loss) | $ 20,288 | 20,288 | |||||||||
Balance (in shares) at Sep. 30, 2019 | 110,156,325 | 110,156,325 | |||||||||
Balance at Sep. 30, 2019 | $ 631,015 | $ 11 | 1,743,089 | (1,116,704) | 4,619 | ||||||
Balance at Jun. 30, 2019 | 626,569 | $ 11 | 1,740,563 | (1,118,354) | 4,349 | ||||||
Balance (in shares) at Jun. 30, 2019 | 110,007,237 | ||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Exercise of stock options (in shares) | 19,009 | ||||||||||
Exercise of stock options | 43 | 43 | |||||||||
Vesting of restricted stock awards and units (in shares) | 130,580 | ||||||||||
Vesting of restricted stock awards and units | 0 | ||||||||||
Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations (in shares) | (501) | ||||||||||
Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations | $ (2) | (2) | |||||||||
Repurchase and retirement of common stock (in shares) | 0 | ||||||||||
Stock-based compensation expense | $ 2,485 | 2,485 | |||||||||
Other comprehensive income (loss) | 270 | 270 | |||||||||
Net income (loss) | $ 1,650 | 1,650 | |||||||||
Balance (in shares) at Sep. 30, 2019 | 110,156,325 | 110,156,325 | |||||||||
Balance at Sep. 30, 2019 | $ 631,015 | $ 11 | $ 1,743,089 | $ (1,116,704) | $ 4,619 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 20,288 | $ (74,984) |
Adjustments to reconcile net income (loss) to cash flows provided by (used in) operating activities: | ||
Depreciation and amortization of property and equipment | 8,824 | 8,270 |
Amortization of intangible assets | 36,829 | 37,721 |
Stock-based compensation | 8,154 | 7,421 |
Deferred income taxes | 4,559 | (39) |
Foreign exchange losses | 1,042 | 3,066 |
Reduction in deferred purchase consideration | (8,124) | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 25,598 | 24,550 |
Inventory | 8,387 | 2,783 |
Other operating assets | (20,242) | 2,796 |
Accounts payable | (20,260) | (7,679) |
Accrued expenses and other long-term liabilities | (21,535) | (20,033) |
Deferred revenue | (20,889) | (7,413) |
Net cash provided by (used in) operating activities | 22,631 | (23,541) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (8,594) | (5,950) |
Business acquisitions, net of cash acquired | 0 | (46,389) |
Maturities of marketable securities | 7,295 | 18,919 |
Net cash used in investing activities | (1,299) | (33,420) |
Cash flows from financing activities: | ||
Borrowings under revolving line of credit | 109,000 | 142,500 |
Principal payments on revolving line of credit | (130,000) | (104,500) |
Proceeds from issuance of long-term debt | 50,000 | 0 |
Principal payment of debt, related party | (24,716) | 0 |
Principal payment of long-term debt | (625) | 0 |
Payment of deferred purchase consideration | (21,876) | 0 |
Principal payments of finance leases | (698) | (436) |
Payment of debt issuance costs | (891) | (624) |
Proceeds from the sale of common stock in connection with employee stock purchase plan | 506 | 0 |
Proceeds from the exercise of stock options | 233 | 43 |
Payment of tax withholding obligations related to net share settlements of restricted stock awards | (1,082) | (830) |
Repurchase of common stock | (4,536) | 0 |
Net cash (used in) provided by financing activities | (24,685) | 36,153 |
Effect of exchange rate changes on cash and cash equivalents | 56 | (281) |
Net decrease in cash and cash equivalents | (3,297) | (21,089) |
Cash and cash equivalents, beginning of year | 43,694 | 57,073 |
Cash and cash equivalents, end of period | 40,397 | 35,984 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 3,649 | 1,568 |
Income taxes paid | 3,527 | 4,047 |
Income tax refunds received | 291 | 426 |
Supplemental disclosure of non-cash investing activities: | ||
Capital expenditures incurred, but not yet paid | 560 | 344 |
Property and equipment acquired under finance leases | 150 | 1,218 |
Acquisition purchase consideration - deferred payments | 1,700 | 30,000 |
Shares of common stock issued as purchase consideration | 15,186 | 30,000 |
Acquisition purchase consideration - assumed equity awards | 0 | 747 |
Supplemental disclosure of non-cash financing activities: | ||
Total fair value of restricted stock awards, restricted stock units and performance-based stock units on date vested | $ 6,765 | $ 5,462 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION Business Ribbon is a leading provider of next generation ("NextGen") software solutions to telecommunications, wireless and cable service providers and enterprises of all sizes across industry verticals. With over 1,000 customers around the globe, including some of the largest telecommunications service providers and enterprises in the world, Ribbon enables service providers and enterprises to modernize their communications networks through software and provide secure real-time communications ("RTC") solutions to their customers and employees. By securing and enabling reliable and scalable Internet Protocol ("IP") networks, Ribbon helps service providers and enterprises adopt the next generation of software-based virtualized and cloud communications technologies to drive new, incremental revenue, while protecting their existing revenue streams. Ribbon's software solutions provide a secure way for its customers to connect and leverage multivendor, multiprotocol communications systems and applications across their networks and the cloud, in a rapidly changing ecosystem of IP-enabled devices, such as smartphones and tablets. In addition, Ribbon's software solutions secure cloud-based delivery of unified communications ("UC") solutions - both for service providers transforming to a cloud-based network and for enterprises using cloud-based UC. Ribbon sells its software solutions through both direct sales and indirect channels, leveraging the assistance of resellers, and provides ongoing support to its customers through a global services team with experience in design, deployment and maintenance of some of the world's largest software IP networks. Basis of Presentation In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring items, necessary for their fair presentation with accounting principles generally accepted in the United States of America ("GAAP") and with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). On February 28, 2019 (the "Anova Acquisition Date"), the Company acquired the business and technology assets of Anova Data, Inc. ("Anova"). The financial results of Anova are included in the Company's condensed consolidated financial statements for the period subsequent to the Anova Acquisition Date. On August 3, 2018 (the "Edgewater Acquisition Date"), the Company completed the acquisition of Edgewater Networks, Inc. (“Edgewater”). The financial results of Edgewater are included in the Company's condensed consolidated financial statements for the periods subsequent to the Edgewater Acquisition Date. Interim results are not necessarily indicative of results for a full year or any future interim period. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company's Annual Report on Form 10-K/A for the year ended December 31, 2018 (the "Annual Report"), which was filed with the SEC on March 5, 2019. Significant Accounting Policies The Company's significant accounting policies are disclosed in Note 2 to the Consolidated Financial Statements included in the Annual Report. There were no material changes to the significant accounting policies during the nine months ended September 30, 2019 , apart from the Company's accounting policy related to accounting for leases, as discussed below. Effective January 1, 2019, the Company adopted the Financial Accounting Standard Board's ("FASB") new standard on accounting for leases, Accounting Standards Codification ("ASC") 842, Leases ("ASC 842") . ASC 842 replaced existing lease accounting rules with a comprehensive lease measurement and recognition standard and expanded disclosure requirements (see Note 16). ASC 842 requires lessees to recognize most leases on their balance sheets and eliminates the current GAAP requirement for an entity to use bright-line tests in determining lease classification. The Company elected to use the alternative transition method, which allows entities to initially apply ASC 842 at the adoption date with no subsequent adjustments to prior period lease costs for comparability. The Company elected the package of practical expedients permitted under the transition guidance, which provided that a company need not reassess whether expired or existing contracts contained a lease, the lease classification of expired or existing leases, and the amount of initial direct costs for existing leases. In connection with the adoption of ASC 842, the Company recorded additional lease assets of $43.9 million and additional lease liabilities of $47.8 million as of January 1, 2019. The difference between the additional lease assets and lease liabilities, net of the deferred tax impact, was due to the absorption of related balances into the right-of-use assets, such as deferred rent. The adoption of this standard had no impact on the Company's condensed consolidated statements of operations or cash flows. Principles of Consolidation The condensed consolidated financial statements include the accounts of Ribbon and its wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. Use of Estimates and Judgments The preparation of financial statements in conformity with GAAP requires Ribbon to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and judgments relied upon in preparing these condensed consolidated financial statements include accounting for business combinations, revenue recognition for multiple element arrangements, inventory valuations, assumptions used to determine the fair value of stock-based compensation, intangible asset and goodwill valuations, including impairments, legal contingencies and recoverability of Ribbon's net deferred tax assets and the related valuation allowances. Ribbon regularly assesses these estimates and records changes in estimates in the period in which they become known. Ribbon bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates. Reclassifications Certain reclassifications may be made to the previously issued financial statements to conform to the current period presentation, none of which affected the net income (loss) as previously reported. Fair Value of Financial Instruments The carrying amounts of the Company's financial instruments approximate their fair values and include cash equivalents, investments, accounts receivable, borrowings under a revolving credit facility, accounts payable and long-term debt. Operating Segments The Company operates in a single segment, as the chief operating decision maker makes decisions and assesses performance at the company level. Operating segments are identified as components of an enterprise about which separate discrete financial information is utilized for evaluation by the chief operating decision maker in making decisions regarding resource allocation and assessing performance. To date, the chief operating decision maker has made such decisions and assessed performance at the company level as one segment. The Company's chief operating decision maker is its President and Chief Executive Officer. Recent Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"), which adds an impairment model that is based on expected losses rather than incurred losses. Under ASU 2016-13, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. In April and May 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments ("ASU 2019-04") and ASU 2019-05 Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief ("ASU 2019-05"), respectively. ASU 2019-04 provides transition relief for entities adopting ASU 2016-13 and ASU 2019-05 clarifies certain aspects of the accounting for credit losses, hedging activities and financial instruments in connection with the adoption of ASU 2016-13. ASU 2019-04 and ASU 2019-05 are effective with the adoption of ASU 2016-13, which is effective for the Company beginning January 1, 2020 for both interim and annual reporting periods, with early adoption permitted. The Company continues to assess the potential impact of the adoption of ASU 2016-13 and related amendments and currently does not believe that it will have a material impact on the Company's condensed consolidated financial statements. The FASB has issued the following accounting pronouncements, all of which became effective for the Company on January 1, 2019 and none of which had a material impact on the Company's condensed consolidated financial statements: In July 2018, the FASB issued ASU 2018-09, Codification Improvements (“ASU 2018-09”), which contains amendments to clarify, correct errors in or make minor improvements to the FASB Codification. ASU 2018-09 makes improvements to multiple topics, including but not limited to comprehensive income, debt, income taxes related to both stock-based compensation and business combinations, fair value measurement and defined contribution benefit plans. In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting ("ASU 2018-07"), which expands the scope of ASC 718, Compensation - Stock Compensation ("ASC 718"), to include all share-based payment arrangements related to the acquisition of goods and services from both nonemployees and employees. As a result, most of the guidance in ASC 718 associated with employee share-based payments, including most of its requirements related to classification and measurement, applies to nonemployee share-based payment arrangements. In February 2018, the FASB issued ASU 2018-02, I ncome Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ("ASU 2018-02"), which amends ASC 220, Income Statement - Reporting Comprehensive Income , to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (the "Tax Act") and requires entities to provide certain disclosures regarding stranded tax effects. The Company did not elect to reclassify the income tax effects of the Tax Act from accumulated other comprehensive income to accumulated deficit. In October 2016, the FASB issued ASU 2016-16, I ncome Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory ("ASU 2016-16"), which removes the prohibition in ASC 740, Income Taxes , against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. In addition, the FASB has issued the following accounting pronouncements, none of which the Company believes will have a material impact on its condensed consolidated financial statements: In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”), which provides guidance on implementation costs incurred in a cloud computing arrangement (“CCA”) that is a service contract. ASU 2018-15 amends ASC 350, Intangibles - Goodwill and Other (“ASC 350”) to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply the guidance in ASC 350-40 to determine which implementation costs should be capitalized in such a CCA. ASU 2018-15 is effective for the Company beginning January 1, 2020. In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans (“ASU 2018-14”), which amends ASC 715, Compensation - Retirement Benefits , to add, remove and clarify disclosure requirements related to defined benefit pension and other postretirement plans. ASU 2018-14 is effective for the Company beginning January 1, 2020. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which changes the fair value measurement requirements of ASC 820, Fair Value Measurement. ASU 2018-13 is effective for the Company beginning January 1, 2020 for both interim and annual reporting. |
BUSINESS ACQUISITIONS
BUSINESS ACQUISITIONS | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
BUSINESS ACQUISITIONS | BUSINESS ACQUISITIONS Anova Data, Inc. On the Anova Acquisition Date, the Company acquired the business and technology assets of Anova, a private company headquartered in Westford, Massachusetts that provides advanced analytics solutions (the "Anova Acquisition"). The Anova Acquisition was completed in accordance with the terms and conditions of an asset purchase agreement, dated as of January 31, 2019 (the "Anova Asset Purchase Agreement"). The Company believes that the Anova Acquisition will reinforce and extend Ribbon's strategy to expand into network optimization, security and data monetization via big data analytics and machine learning. As consideration for the Anova Acquisition, Ribbon issued 2.9 million shares of Ribbon common stock with a fair value of $15.2 million to Anova's sellers and equity holders on the Anova Acquisition Date and held back an additional 0.3 million shares with a fair value of $1.7 million , some or all of which could be issued subject to post-closing adjustments (the "Anova Deferred Consideration"). The Anova Deferred Consideration is included as a component of Accrued expenses and other current liabilities in the Company's condensed consolidated balance sheet at September 30, 2019. The Anova Acquisition has been accounted for as a business combination and the financial results of Anova have been included in the Company's condensed consolidated financial statements for the period subsequent to the Anova Acquisition Date. The results for the three and nine months ended September 30, 2019 are not significant to the Company's condensed consolidated financial statements. The Company has not provided pro forma financial information, as the historical amounts are not significant to the Company's condensed consolidated financial statements. As of September 30, 2019, the valuation of acquired assets, identifiable intangible assets and certain assumed liabilities was preliminary. The purchase consideration aggregating $16.9 million has been preliminarily allocated to $11.2 million of identifiable intangible assets (comprised of $7.2 million of customer relationships and $4.0 million of developed technology) and working capital items aggregating $0.1 million of net assets acquired. The remaining unallocated amount of $5.5 million has been recorded as goodwill. The valuation of the acquired intangible assets is inherently subjective and relies on significant unobservable inputs. The Company used an income approach to value the acquired intangible assets relating to developed technology and customer relationships. The valuation for each of these intangible assets was based on estimated projections of expected cash flows to be generated by the assets, discounted to the present value at discount rates commensurate with perceived risk. The valuation assumptions take into consideration the Company's estimates of customer attrition, technology obsolescence and revenue growth projections. The Company is amortizing the identifiable intangible assets in relation to the expected cash flows from the individual intangible assets over their respective useful lives, which have a weighted average life of 7.5 years . The preliminary purchase price allocation is subject to change, and such change could be material based on numerous factors, including the final estimated fair value of the assets acquired and liabilities assumed and the amount of the final post-closing net working capital adjustment. The Company expects to finalize the valuation of the assets acquired and liabilities assumed by the fourth quarter of 2019. The excess of purchase consideration over net tangible and identifiable intangible assets acquired was recorded as goodwill. The goodwill is deductible for tax purposes. Edgewater Networks, Inc. On the Edgewater Acquisition Date, the Company completed its acquisition of Edgewater, a private company headquartered in San Jose, California (the "Edgewater Acquisition"). The Edgewater Acquisition was completed in accordance with the terms and conditions of an agreement and plan of merger, dated as of June 24, 2018 (the "Edgewater Merger Agreement"). Edgewater is a market leader in Network Edge Orchestration for the small and medium enterprise and UC market. The Company believes that the Edgewater Acquisition advances its strategy by offering its global customer base a complete core-to-edge product portfolio, end-to-end service assurance and analytics solutions, and a fully integrated software-defined wide-area network ("SD-WAN") service. As consideration for the Edgewater Acquisition, Ribbon paid, in the aggregate, $46.4 million of cash, net of cash acquired, and issued 4.2 million shares of Ribbon common stock to Edgewater's selling shareholders and holders of vested in-the-money options and warrants to acquire common stock of Edgewater (the "Edgewater Selling Stakeholders") on the Edgewater Acquisition Date. Pursuant to the Edgewater Merger Agreement and subject to the terms and conditions contained therein, Ribbon agreed to pay the Edgewater Selling Stakeholders an additional $30 million of cash, $15 million of which was to be paid 6 months from the closing date and the other $15 million of which was to be paid as early as 9 months from the closing date and no later than 18 months from the closing date (the exact timing of which would depend on the amount of revenue generated from the sales of Edgewater products in 2018) (the "Edgewater Deferred Consideration"). The current portion of this deferred purchase consideration was included as a component of Accrued expenses and other, and the noncurrent portion was included as a component of Other long-term liabilities in the Company's condensed consolidated balance sheet as of December 31, 2018. On February 15, 2019, the Company and the Edgewater Selling Stakeholders agreed to reduce the amount of Edgewater Deferred Consideration from $30 million to $21.9 million and agreed that all such deferred consideration would be payable on March 8, 2019. The Company paid the Edgewater Selling Stakeholders $21.9 million on March 8, 2019 and recorded the reduction to the Edgewater Deferred Consideration of $8.1 million in Other income (expense), net, in the Company's condensed consolidated statement of operations and as a non-cash adjustment to reconcile net income to cash flows provided by operating activities in the Company's condensed consolidated statement of cash flows for the nine months ended September 30, 2019. The Edgewater Acquisition has been accounted for as a business combination and the financial results of Edgewater have been included in the Company's condensed consolidated financial statements for the period subsequent to its acquisition. As of September 30, 2019, the valuation of acquired assets, identifiable intangible assets and certain assumed liabilities was final. A summary of the final allocation of the purchase consideration for Edgewater as of September 30, 2019 is as follows (in thousands): Fair value of consideration transferred: Cash consideration: Cash paid to Edgewater Selling Stakeholders $ 51,162 Less cash acquired (4,773 ) Net cash consideration 46,389 Deferred purchase consideration 30,000 Fair value of Ribbon stock issued 30,000 Fair value of equity awards assumed (see Note 12) 747 Fair value of total consideration $ 107,136 Fair value of assets acquired and liabilities assumed: Current assets, net of cash acquired $ 16,098 Property and equipment 245 Intangible assets: Developed technology 29,500 Customer relationships 26,100 Trade names 1,100 Goodwill 48,053 Other noncurrent assets 103 Deferred revenue (2,749 ) Other current liabilities (9,926 ) Deferred revenue, net of current (669 ) Other long-term liabilities (719 ) $ 107,136 The valuation of the acquired intangible assets is inherently subjective and relies on significant unobservable inputs. The Company used an income approach to value the acquired developed technology, customer relationships and trade name intangible assets. The valuation for each of these intangible assets was based on estimated projections of expected cash flows to be generated by the assets, discounted to the present value at discount rates commensurate with perceived risk. The valuation assumptions take into consideration the Company's estimates of customer attrition, technology obsolescence and revenue growth projections. The Company is amortizing the identifiable intangible assets in relation to the expected cash flows from the individual intangible assets over their respective useful lives, which have a weighted average life of 8.4 years. Goodwill resulting from the transaction is primarily due to expected synergies between the combined companies and is not deductible for tax purposes. The Company has not provided pro forma financial information as the historical amounts are not significant to the Company's condensed consolidated financial statements. Acquisition- and Integration-Related Expenses Acquisition- and integration-related expenses include those expenses related to acquisitions that would otherwise not have been incurred by the Company, including professional and services fees such as legal, audit, consulting, paying agent and other fees, and expenses related to cash payments to certain former executives of the acquired businesses in connection with their respective employment agreements. These amounts include costs related to prior acquisitions, as well as nominal amounts related to acquisitive activities. Integration-related expenses represent incremental costs related to combining the Company and its business acquisitions, such as third-party consulting and other third-party services related to merging previously separate companies' systems and processes. The Company's acquisition- and integration-related expenses for the three and nine months ended September 30, 2019 and 2018 were as follows (in thousands): Three months ended Nine months ended September 30, September 30, September 30, September 30, Professional and services fees (acquisition-related) $ 743 $ 2,905 $ 2,569 $ 5,314 Management bonuses (acquisition-related) — — — 1,972 Integration-related expenses 954 2,665 4,292 6,976 $ 1,697 $ 5,570 $ 6,861 $ 14,262 |
EARNINGS (LOSS) PER SHARE
EARNINGS (LOSS) PER SHARE | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
EARNINGS (LOSS) PER SHARE | EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares outstanding during the period. For periods in which the Company reports net income, diluted net earnings per share is determined by using the weighted average number of common and dilutive common equivalent shares outstanding during the period unless the effect is antidilutive. The calculations of shares used to compute earnings (loss) per share were as follows (in thousands): Three months ended Nine months ended September 30, September 30, September 30, September 30, Weighted average shares outstanding—basic 110,080 104,918 109,523 103,009 Potential dilutive common shares 676 — 577 — Weighted average shares outstanding—diluted 110,756 104,918 110,100 103,009 Options to purchase the Company's common stock aggregating 0.3 million shares have not been included in the computation of diluted earnings per share for the three and nine months ended September 30, 2019 because their effect would have been antidilutive. Options to purchase the Company's common stock and unvested shares of restricted and performance-based stock and stock units aggregating 3.5 million shares have not been included in the computation of diluted loss per share for the three and nine months ended September 30, 2018 because their effect would have been antidilutive. |
CASH EQUIVALENTS, MARKETABLE SE
CASH EQUIVALENTS, MARKETABLE SECURITIES AND INVESTMENTS | 9 Months Ended |
Sep. 30, 2019 | |
Investments, All Other Investments [Abstract] | |
CASH EQUIVALENTS, MARKETABLE SECURITIES AND INVESTMENTS | CASH EQUIVALENTS, MARKETABLE SECURITIES AND INVESTMENTS The Company invests in debt instruments, primarily U.S. government-backed, municipal and corporate obligations, which management believes to be high quality (investment grade) credit instruments. The Company's remaining available-for-sale securities matured during the three months ended June 30, 2019. The Company did not hold any cash equivalents at September 30, 2019. As a result of the Company no longer holding any marketable securities or investments at September 30, 2019, the remaining tax effect on the unrealized gain (loss) on available-for-sale marketable securities was realized in the three months ended June 30, 2019 and is included in the income tax provision in the Company's condensed consolidated statement of operations for the nine months ended September 30, 2019 as a reclassification from Unrealized gain (loss) on available-for-sale marketable securities in the Company's condensed consolidated statement of comprehensive income (loss) for the same nine-month period. The Company had not sold any of its available-for-sale securities during the 2019 period prior to their full maturity. The Company sold $12.5 million of its available-for-sale marketable securities in both the three and nine months ended September 30, 2018, primarily to provide cash for acquisition-related payments in connection with the Edgewater Acquisition and to support integration-related and restructuring activities in connection with the Merger. The Company recognized nominal gross gains and losses from the sales of these securities. The Company did not hold any investments that would mature beyond one year at December 31, 2018. The amortized cost, gross unrealized gains and losses and fair value of the Company's marketable debt securities at December 31, 2018 were comprised of the following (in thousands): December 31, 2018 Amortized cost Unrealized gains Unrealized losses Fair value Cash equivalents $ 310 $ — $ — $ 310 Marketable securities U.S. government agency notes $ 3,998 $ — $ (9 ) $ 3,989 Corporate debt securities 3,301 — (6 ) 3,295 $ 7,299 $ — $ (15 ) $ 7,284 Fair Value Hierarchy Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The three-tier fair value hierarchy is based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows: Level 1. Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2. Level 2 applies to assets or liabilities for which there are inputs that are directly or indirectly observable in the marketplace, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets). Level 3. Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The following table shows the fair value of the Company's financial assets at December 31, 2018 . These financial assets are comprised of the Company's available-for-sale debt securities and reported under the captions Cash and cash equivalents and Marketable securities in the condensed consolidated balance sheet (in thousands): Fair value measurements at Total carrying Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Cash equivalents $ 310 $ 310 $ — $ — Marketable securities U.S. government agency notes $ 3,989 $ — $ 3,989 $ — Corporate debt securities 3,295 — 3,295 — $ 7,284 $ — $ 7,284 $ — The Company's marketable securities were valued with the assistance of valuations provided by third-party pricing services, as derived from such services' pricing models. Inputs to the models may include, but are not limited to, reported trades, executable bid and asked prices, broker/dealer quotations, prices or yields of securities with similar characteristics, benchmark curves or information pertaining to the issuer, as well as industry and economic events. The pricing services may use a matrix approach, which considers information regarding securities with similar characteristics to determine the valuation for a security. The Company is ultimately responsible for the condensed consolidated financial statements and underlying estimates. Accordingly, the Company assesses the reasonableness of the valuations provided by the third-party pricing services by reviewing actual trade data, broker/dealer quotes and other similar data, which are obtained from quoted market prices or other sources. |
INVENTORY
INVENTORY | 9 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
INVENTORY | INVENTORY Inventory at September 30, 2019 and December 31, 2018 consisted of the following (in thousands): September 30, December 31, On-hand final assemblies and finished goods inventories $ 12,137 $ 19,879 Deferred cost of goods sold 2,525 3,798 14,662 23,677 Less noncurrent portion (included in other assets) (559 ) (1,075 ) Current portion $ 14,103 $ 22,602 |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS AND GOODWILL | INTANGIBLE ASSETS AND GOODWILL The Company's intangible assets at September 30, 2019 and December 31, 2018 consisted of the following (in thousands): September 30, 2019 Weighted average amortization period (years) Cost Accumulated amortization Net carrying value In-process research and development * $ 5,600 $ — $ 5,600 Developed technology 6.83 186,880 92,446 94,434 Customer relationships 9.47 154,140 29,363 124,777 Trade names 5.20 2,000 1,049 951 Internal use software 3.00 730 730 — 7.86 $ 349,350 $ 123,588 $ 225,762 December 31, 2018 Weighted average amortization period (years) Cost Accumulated amortization Net carrying value In-process research and development * $ 5,600 $ — $ 5,600 Developed technology 6.91 182,880 63,187 119,693 Customer relationships 9.44 146,940 22,218 124,722 Trade names 5.20 2,000 624 1,376 Internal use software 3.00 730 730 — 7.88 $ 338,150 $ 86,759 $ 251,391 * An in-process research and development intangible asset has an indefinite life until the product is generally available, at which time such asset is typically reclassified to developed technology. Amortization expense for intangible assets for the three and nine months ended September 30, 2019 and 2018 was as follows (in thousands): Three months ended Nine months ended Statement of operations classification September 30, September 30, September 30, September 30, Developed technology $ 9,522 $ 10,593 $ 29,259 $ 29,455 Cost of revenue - product Customer relationships 2,608 2,695 7,145 7,881 Sales and marketing Trade names 130 160 425 385 Sales and marketing $ 12,260 $ 13,448 $ 36,829 $ 37,721 Estimated future amortization expense for the Company's intangible assets at September 30, 2019 was as follows (in thousands): Years ending December 31, Remainder of 2019 $ 12,396 2020 48,815 2021 42,493 2022 35,113 2023 27,538 Thereafter 59,407 $ 225,762 The changes in the carrying value of the Company's goodwill in the nine months ended September 30, 2019 and 2018 were as follows (in thousands): Balance at January 1 2019 2018 Goodwill $ 386,761 $ 338,822 Accumulated impairment losses (3,106 ) (3,106 ) 383,655 335,716 Acquisition of Anova 5,541 — Acquisition of Edgewater — 46,777 Balance at September 30 $ 389,196 $ 382,493 Balance at September 30 Goodwill $ 392,302 $ 385,599 Accumulated impairment losses (3,106 ) (3,106 ) $ 389,196 $ 382,493 |
ACCRUED EXPENSES
ACCRUED EXPENSES | 9 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES | ACCRUED EXPENSES Accrued expenses at September 30, 2019 and December 31, 2018 consisted of the following (in thousands): September 30, December 31, Employee compensation and related costs $ 26,326 $ 42,852 Deferred purchase consideration 1,700 15,000 Other 24,624 26,411 $ 52,650 $ 84,263 |
RESTRUCTURING AND FACILITIES CO
RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES | 9 Months Ended |
Sep. 30, 2019 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES | RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES The Company recorded restructuring and related expense aggregating $2.4 million and $16.4 million in the three and nine months ended September 30, 2019, respectively, and $2.4 million and $15.2 million in the three and nine months ended September 30, 2018, respectively. Restructuring and related expense includes both restructuring expense (primarily severance and related costs), estimated future variable lease costs for vacated properties with no intent or ability of sublease, and accelerated rent amortization expense. For restructuring events that involve lease assets and liabilities, the Company applies lease reassessment and modification guidance and evaluates the right-of-use assets for potential impairment. If the Company plans to exit all or distinct portions of a facility and does not have the ability or intent to sublease, the Company will accelerate the amortization of each of those lease components through the vacate date. The accelerated amortization is recorded as a component of Restructuring and related expense in the Company's condensed consolidated statements of operations. Related variable lease expenses will continue to be expensed as incurred through the vacate date, at which time the Company will reassess the liability balance to ensure it appropriately reflects the remaining liability associated with the premises and record a liability for the estimated future variable lease costs. The components of Restructuring and related expense for the three and nine months ended September 30, 2019 were as follows (in thousands): Three months ended Nine months ended September 30, September 30, Severance and related costs $ 719 $ 11,619 Variable and other facilities-related costs 1,052 1,370 Accelerated amortization of lease assets due to cease-use 601 3,459 $ 2,372 $ 16,448 Prior to the adoption of ASC 842, the Company recorded restructuring accruals for future lease obligations related to vacated facilities at the time that it ceased usage of the respective facility. The components of Restructuring and related expense recorded in the three and nine months ended September 30, 2018 were as follows (in thousands): Three months ended Nine months ended September 30, September 30, Severance and related costs 2,481 14,603 Facilities (84 ) 559 $ 2,397 $ 15,162 2019 Restructuring and Facilities Consolidation Initiative In June 2019, the Company implemented a restructuring plan to further streamline the Company's global footprint, improve its operations and enhance its customer delivery (the "2019 Restructuring Initiative"). The 2019 Restructuring Initiative includes facility consolidations, refinement of the Company's research and development activities, and a reduction in workforce. In connection with this initiative, the Company expects to reduce its focus on hardware and appliance-based development over time and to increase its development focus on software virtualization, functional simplicity and important customer requirements. The facility consolidations under the 2019 Restructuring Initiative (the "Facilities Initiative") include a consolidation of the Company's North Texas sites into a single campus, housing engineering, customer training and support, and administrative functions, as well as a reduction or elimination of certain excess and duplicative facilities worldwide. In addition, the Company intends to substantially consolidate its global software laboratories and server farms into two lower cost North American sites. The Company continues to evaluate its properties included in the Facilities Initiative for accelerated amortization and/or right-of-use asset impairment. The Company expects that the actions under the Facilities Initiative will be completed by the end of 2020. In connection with the 2019 Restructuring Initiative, the Company recorded restructuring expense of $7.8 million in the nine months ended September 30, 2019, comprised of $1.8 million in the three months ended September 30, 2019 and $6.0 million in the three months ended June 30, 2019. The amount recorded in the three months ended September 30, 2019 was comprised of $0.7 million for severance and related costs for approximately 20 employees and $1.1 million for variable and other facilities-related costs. The amount recorded in the three months ended June 30, 2019 was primarily for severance and related costs for approximately 110 employees. The Company expects that nearly all of the amount accrued for severance and related costs will be paid by the end of the first half of 2020. The Company estimates that it will record nominal additional restructuring expense related to severance and related costs under the 2019 Restructuring Initiative. A summary of the 2019 Restructuring Initiative accrual activity for severance and related costs for the nine months ended September 30, 2019 is as follows (in thousands): Balance at Initiatives Cash Balance at Severance $ — $ 6,543 $ (2,620 ) $ 3,923 Variable and other facilities costs — 1,214 (220 ) 994 $ — $ 7,757 $ (2,840 ) $ 4,917 Accelerated rent amortization is recognized from the date that the Company commences the plan to fully or partially vacate a facility, for which there is no intent or ability to enter into a sublease, through the final vacate date. The Company recorded $0.6 million and $3.5 million of accelerated rent amortization in the three and nine months ended September 30, 2019, respectively. The liability for the total lease payments for each respective facility is included as a component of Operating lease liabilities in the Company's condensed consolidated balance sheets, both current and noncurrent (see Note 16 ). The Company may incur additional future expense if it is unable to sublease other locations included in the Facilities Initiative. Merger Restructuring Initiative In connection with the Merger, the Company implemented a restructuring plan in the fourth quarter of 2017 to eliminate certain redundant positions and facilities within the combined companies (the "Merger Restructuring Initiative"). In connection with this initiative, the Company recorded restructuring expense of $5.2 million in the nine months ended September 30, 2019. The Company recorded $2.5 million and $14.3 million of restructuring and related expense in the three and nine months ended September 30, 2018, respectively. Of the amount recorded in the nine months ended September 30, 2019, virtually all was for severance and related costs for approximately 40 employees. The amount recorded in the nine months ended September 30, 2018 represented severance and related costs for approximately 285 employees. The Merger Restructuring Initiative is substantially complete, and the Company anticipates it will record nominal future expense in connection with this initiative. In connection with the adoption of ASC 842 effective January 1, 2019, the Company wrote off the remaining restructuring accrual related to facilities. The Company expects that the amount accrued at September 30, 2019 for severance will be paid by the end of the first half of 2020. A summary of the Merger Restructuring Initiative accrual activity for the nine months ended September 30, 2019 is as follows (in thousands): Balance at Initiatives Adjustment for the impact of ASC 842 adoption Cash Balance at Severance $ 1,910 $ 5,076 $ — $ (5,818 ) $ 1,168 Facilities 771 156 (771 ) (156 ) — $ 2,681 $ 5,232 $ (771 ) $ (5,974 ) $ 1,168 Balance Sheet Classification The current portions of accrued restructuring are included as a component of Accrued expenses and the long-term portions of accrued restructuring are included as a component of Other long-term liabilities in the condensed consolidated balance sheets. The long-term portions of accrued restructuring totaled $0.9 million and $0.5 million at September 30, 2019 and December 31, 2018 , respectively. These amounts represent future payments related to restructured facilities. |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Senior Secured Credit Facility On December 21, 2017, the Company entered into a Senior Secured Credit Facilities Credit Agreement (the “Credit Facility”), by and among the Company, as a guarantor, Sonus Networks, Inc., as the borrower (“Borrower”), Silicon Valley Bank ("SVB"), as administrative agent (in such capacity, the “Administrative Agent”), issuing lender, swingline lender and lead arranger and the lenders party thereto (each referred to individually as a “Lender”, and collectively, the “Lenders”), which refinanced the prior credit agreement with SVB that the Company had assumed in connection with the Merger. The Credit Facility includes $100 million of commitments, the full amount of which is available for revolving loans, a $15 million sublimit that is available for letters of credit and a $15 million sublimit that is available for swingline loans. On June 24, 2018, the Company amended the Credit Facility to, among other things, permit the Edgewater Acquisition and related transactions. At December 31, 2018, the Company had an outstanding debt balance of $55.0 million at an interest rate of 5.96% and $2.7 million of outstanding letters of credit at an average interest rate of 1.75% under the Credit Facility. The Company was in compliance with all covenants of the Credit Facility at December 31, 2018. On April 29, 2019, the Company entered into a syndicated, amended and restated Credit Facility (the "New Credit Facility"). The New Credit Facility provides for a $50 million term loan facility that was advanced in full on April 29, 2019 and a $100 million revolving line of credit. The New Credit Facility also includes procedures for additional financial institutions to become syndicate lenders, or for any existing lender to increase its commitment under either the term loan facility or the revolving loan facility, subject to an aggregate increase of $75 million for incremental commitments under the New Credit Facility. The New Credit Facility is scheduled to mature in April 2024. At September 30, 2019 , the Company had an outstanding term loan debt balance of $49.4 million , an outstanding revolving line of credit balance of $34.0 million , with a combined average interest rate of 3.76% , and $3.4 million of outstanding letters of credit at an average interest rate of 1.50% . The indebtedness and other obligations under the New Credit Facility are unconditionally guaranteed on a senior secured basis by the Company and each other material U.S. domestic subsidiary of the Company (collectively, the “Guarantors”). The New Credit Facility is secured by first-priority liens on substantially all of the assets of the Borrower and the Guarantors, including the Company. The New Credit Facility requires periodic interest payments on any outstanding borrowings under the facility. The Borrower may prepay all revolving loans under the New Credit Facility at any time without premium or penalty (other than customary LIBOR breakage costs), subject to certain notice requirements. Revolving loans under the New Credit Facility bear interest at the Borrower’s option at either the Eurodollar (LIBOR) rate plus a margin ranging from 1.50% to 3.00% per year or the base rate (the highest of the Federal Funds rate plus 0.50% , or the prime rate announced from time to time in The Wall Street Journal) plus a margin ranging from 0.50% to 2.00% per year (such margins being referred to as the “Applicable Margin”). The Applicable Margin varies depending on the Company’s consolidated leverage ratio (as defined in the New Credit Facility). The base rate and the LIBOR rate are each subject to a zero percent floor. The New Credit Facility requires compliance with certain financial covenants, including a minimum consolidated quick ratio, minimum consolidated fixed charge coverage ratio and maximum consolidated leverage ratio, all of which are defined in the New Credit Facility and tested on a quarterly basis. The Company was in compliance with all covenants of the New Credit Facility at September 30, 2019. In addition, the New Credit Facility contains various covenants that, among other restrictions, limit the Company’s and its subsidiaries’ ability to enter into certain types of transactions, including, but not limited to: incurring or assuming indebtedness; granting or assuming liens; making acquisitions or engaging in mergers; making dividend and certain other restricted payments; making investments; selling or otherwise transferring assets; engaging in transactions with affiliates; entering into sale and leaseback transactions; entering into burdensome agreements; changing the nature of its business; modifying its organizational documents; and amending or making prepayments on certain junior debt. The New Credit Facility contains events of default that are customary for a secured credit facility. If an event of default relating to bankruptcy or other insolvency events with respect to a borrower occurs, all obligations under the New Credit Facility will immediately become due and payable. If any other event of default exists under the New Credit Facility, the lenders may accelerate the maturity of the obligations outstanding under the New Credit Facility and exercise other rights and remedies, including charging a default rate of interest equal to 2.00% per year above the rate that would otherwise be applicable. In addition, if any event of default exists under the New Credit Facility, the lenders may commence foreclosure or other actions against the collateral. If any default exists under the New Credit Facility, or if the Borrower is unable to make any of the representations and warranties as stated in the New Credit Facility at the applicable time, the Borrower will be unable to borrow funds or have letters of credit issued under the New Credit Facility, which, depending on the circumstances prevailing at that time, could have a material adverse effect on the Borrower’s liquidity and working capital. Promissory Note In connection with the Merger, on October 27, 2017, the Company issued the Promissory Note for $22.5 million to certain of GENBAND's equity holders (the "Promissory Note"). The Promissory Note did not amortize, and the principal thereon was payable in full on the third anniversary of its execution. Interest on the Promissory Note was payable quarterly in arrears and accrued at a rate of 7.5% per year for the first six months after issuance, and thereafter at a rate of 10% per year. The failure to make any payment under the Promissory Note when due and, with respect to payment of any interest, the continuation of such failure for a period of thirty days thereafter, constituted an event of default under the Promissory Note. If an event of default occurred under the Promissory Note, the payees could declare the entire balance of the Promissory Note due and payable (including principal and accrued and unpaid interest) within five business days of the payees' notification to the Company of such acceleration. Interest that was not paid on the interest payment date increased the principal amount of the Promissory Note. At December 31, 2018 , the Promissory Note balance was $24.1 million , comprised of $22.5 million of principal and $1.6 million of interest converted to principal. On April 29, 2019, concurrently with the closing of the New Credit Facility as discussed above, the Company repaid in full all outstanding amounts under the Promissory Note, aggregating $24.7 million . The Company did not incur any early termination penalties in connection with this repayment. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | REVENUE RECOGNITION The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers ("ASC 606" or the "New Revenue Standard"), which it adopted on January 1, 2018 using the modified retrospective method. The Company derives revenues from two primary sources: products and services. Product revenue includes the Company's hardware and software that function together to deliver the products' essential functionality. Software and hardware are also sold on a standalone basis. Services include customer support (software updates, upgrades and technical support), consulting, design services, installation services and training. Generally, contracts with customers contain multiple performance obligations, consisting of products and services. For these contracts, the Company accounts for individual performance obligations separately if they are considered distinct. When an arrangement contains more than one performance obligation, the Company will generally allocate the transaction price to each performance obligation on a relative standalone selling price basis. The best evidence of a standalone selling price is the observable price of a good or service when the entity sells that good or service separately in similar circumstances and to similar customers. If the good or service is not sold separately, an entity must estimate the standalone selling price by using an approach that maximizes the use of observable inputs. Acceptable estimation methods include but are not limited to: (1) adjusted market assessment; (2) expected cost plus a margin; and (3) a residual approach (when the standalone selling price is not directly observable and is either highly variable or uncertain). The Company's software licenses typically provide a perpetual right to use the Company's software. The Company also sells term-based software licenses that expire and Software-as-a-Service ("SaaS")-based software which are referred to as subscription arrangements. The Company does not customize its software nor are installation services required, as the customer has a right to utilize internal resources or a third-party service company. The software and hardware are delivered before related services are provided and are functional without professional services or customer support. The Company has concluded that its software licenses are functional intellectual property that are distinct, as the user can benefit from the software on its own. The product revenue is typically recognized upon transfer of control or when the software is made available for download, as this is the point that the user of the software can direct the use of, and obtain substantially all of the remaining benefits from, the functional intellectual property. The Company does not recognize software revenue related to the renewal of subscription software licenses earlier than the beginning of the subscription period. Hardware product is generally sold with software to provide the customer solution. Services revenue includes revenue from customer support and other professional services. The Company offers warranties on its products. Certain of the Company's warranties are considered to be assurance-type in nature and do not cover anything beyond ensuring that the product is functioning as intended. Based on the guidance in ASC 606, assurance-type warranties do not represent separate performance obligations. The Company also sells separately-priced maintenance service contracts, which qualify as service-type warranties and represent separate performance obligations. The Company does not allow and has no history of accepting product returns. Customer support includes software updates on a when-and-if-available basis, telephone support, integrated web-based support and bug fixes or patches. The Company sells its customer support contracts at a percentage of list or net product price related to the support. Customer support revenue is recognized ratably over the term of the customer support agreement, which is typically one year. The Company's professional services include consulting, technical support, resident engineer services, design services and installation services. Because control transfers over time, revenue is recognized based on progress toward completion of the performance obligation. The method to measure progress toward completion requires judgment and is based on the nature of the products or services to be provided. The Company generally uses the input method to measure progress for its contracts because it believes such method best depicts the transfer of assets to the customer, which occurs as the Company incurs costs for the contracts. Under the cost-to-cost measure of progress, the progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. When the measure of progress is based upon expended labor, progress toward completion is measured as the ratio of labor time expended to date versus the total estimated labor time required to complete the performance obligation. Revenue is recorded proportionally as costs are incurred or labor is expended. Costs to fulfill these obligations include internal labor as well as subcontractor costs. Customer training includes courses offered by the Company. The related revenue is typically recognized as the training services are performed. The Company's typical performance obligations include the following: Performance Obligation When Performance Obligation is Typically Satisfied When Payment is Typically Due Software and Product Revenue Software licenses (perpetual or term) Upon transfer of control; typically, when made available for download (point in time) Generally, within 30 days of invoicing except for term licenses, which may be paid for over time Software licenses (subscription) Upon activation of hosted site (over time) Generally, within 30 days of invoicing Appliances When control of the appliance passes to the customer; typically, upon delivery (point in time) Generally, within 30 days of invoicing Software upgrades Upon transfer of control; typically, when made available for download (point in time) Generally, within 30 days of invoicing Customer Support Revenue Customer support Ratably over the course of the support contract (over time) Generally, within 30 days of invoicing Professional Services Other professional services (excluding training services) As work is performed (over time) Generally, within 30 days of invoicing (upon completion of services) Training When the class is taught (point in time) Generally, within 30 days of services being performed Significant Judgments The Company's contracts with customers often include promises to transfer multiple products and services to the customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Judgment is required to determine the standalone selling price ("SSP") for each distinct performance obligation. The Company typically has more than one SSP for individual products and services due to the stratification of those products and services by customers and circumstances. In these instances, the Company may use information such as the size of the customer and geographic region in determining the SSP. Deferred Revenue Deferred revenue is a contract liability representing amounts collected from or invoiced to customers in excess of revenue recognized. This results primarily from the billing of annual customer support agreements where the revenue is recognized over the term of the agreement. The value of deferred revenue will increase or decrease based on the timing of recognition of revenue. Disaggregation of Revenue The Company disaggregates its revenue from contracts with customers based on the nature of the products and services and the geographic regions in which each customer is domiciled. The Company's revenue for the three and nine months ended September 30, 2019 and 2018 was disaggregated as follows: Three months ended September 30, 2019 Product revenue Service revenue (maintenance) Service revenue (professional services) Total revenue United States $ 44,701 $ 32,709 $ 10,113 $ 87,523 Europe, Middle East and Africa 7,346 10,899 2,635 20,880 Japan 2,318 2,932 1,652 6,902 Other Asia Pacific 3,199 4,191 1,567 8,957 Other 3,588 8,170 1,633 13,391 $ 61,152 $ 58,901 $ 17,600 $ 137,653 Three months ended September 30, 2018 Product revenue Service revenue (maintenance) Service revenue (professional services) Total revenue United States $ 49,699 $ 34,065 $ 9,040 $ 92,804 Europe, Middle East and Africa 10,380 11,504 2,169 24,053 Japan 3,588 2,882 503 6,973 Other Asia Pacific 6,959 3,551 906 11,416 Other 6,657 8,154 2,411 17,222 $ 77,283 $ 60,156 $ 15,029 $ 152,468 Nine months ended September 30, 2019 Product revenue Service revenue (maintenance) Service revenue (professional services) Total revenue United States $ 114,525 $ 99,281 $ 26,919 $ 240,725 Europe, Middle East and Africa 32,215 31,016 8,699 71,930 Japan 9,637 8,805 4,223 22,665 Other Asia Pacific 13,580 11,467 3,524 28,571 Other 10,734 22,462 4,915 38,111 $ 180,691 $ 173,031 $ 48,280 $ 402,002 Nine months ended September 30, 2018 Product revenue Service revenue (maintenance) Service revenue (professional services) Total revenue United States $ 109,977 $ 98,354 $ 25,535 $ 233,866 Europe, Middle East and Africa 29,807 35,550 8,157 73,514 Japan 16,128 8,431 2,296 26,855 Other Asia Pacific 21,970 8,905 3,185 34,060 Other 14,055 23,049 5,610 42,714 $ 191,937 $ 174,289 $ 44,783 $ 411,009 The Company's product revenue from indirect sales through its channel partner program and from its direct sales program for the three and nine months ended September 30, 2019 and 2018 was as follows (in thousands): Three months ended Nine months ended September 30, September 30, September 30, September 30, Indirect sales through channel partner program $ 21,537 $ 26,309 $ 69,380 $ 42,151 Direct sales 39,615 50,974 111,311 149,786 $ 61,152 $ 77,283 $ 180,691 $ 191,937 The Company's product revenue from sales to enterprise customers and from sales to service provider customers for the three and nine months ended September 30, 2019 and 2018 was as follows (in thousands): Three months ended Nine months ended September 30, September 30, September 30, September 30, Sales to enterprise customers $ 17,458 $ 23,581 $ 47,295 $ 37,534 Sales to service provider customers 43,694 53,702 133,396 154,403 $ 61,152 $ 77,283 $ 180,691 $ 191,937 Revenue Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable; unbilled receivables, which are contract assets; and customer advances and deposits, which are contract liabilities, in the Company's condensed consolidated balance sheets. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. Completion of services and billing may occur subsequent to revenue recognition, resulting in contract assets. The Company may receive advances or deposits from its customers before revenue is recognized, resulting in contract liabilities that are classified as deferred revenue. These assets and liabilities are reported in the Company's condensed consolidated balance sheets on a contract-by-contract basis as of the end of each reporting period. Changes in the contract asset and liability balances during the nine months ended September 30, 2019 were not materially impacted by any factors other than billing and revenue recognition. Nearly all of the Company's deferred revenue balance is related to services revenue, primarily customer support contracts. Unbilled receivables stem primarily from engagements where services have been performed; however, billing cannot occur until services are completed. In some arrangements, the Company allows customers to pay for term-based software licenses and products over the term of the software license. The Company also sells SaaS-based software under subscription arrangements, with payment terms over the term of the SaaS agreement. Amounts recognized as revenue in excess of amounts billed are recorded as unbilled receivables. Unbilled receivables that are anticipated to be invoiced in the next twelve months are included in Accounts receivable on the Company's condensed consolidated balance sheets. The changes in the Company's accounts receivable, unbilled receivables and deferred revenue balances for the nine months ended September 30, 2019 were as follows (in thousands): Accounts receivable Unbilled accounts receivable Deferred revenue (current) Deferred revenue (long-term) Balance at January 1, 2019 $ 174,310 $ 13,543 $ 105,087 $ 17,572 Increase (decrease), net (32,533 ) 7,644 (21,664 ) 1,115 Balance at September 30, 2019 $ 141,777 $ 21,187 $ 83,423 $ 18,687 The Company recognized approximately $80 million of revenue in the nine months ended September 30, 2019 that was recorded as deferred revenue at December 31, 2018. The Company recognized approximately $79 million of revenue in the nine months ended September 30, 2018 that was recorded as deferred revenue at December 31, 2017. Of the Company's deferred revenue reported as long-term in its condensed consolidated balance sheet at September 30, 2019, the Company expects that approximately $5 million will be recognized as revenue in 2020, approximately $8 million will be recognized as revenue in 2021 and approximately $6 million will be recognized as revenue in 2022 and beyond. All freight-related customer invoicing is recorded as revenue, while the shipping and handling costs that occur after control of the promised goods or services transfer to the customer are reported as fulfillment costs, a component of Cost of revenue - product in the Company's condensed consolidated statements of operations. Deferred Commissions Cost Sales commissions earned by the Company's employees are considered incremental and recoverable costs of obtaining a contract with a customer. Expense related to commission payments has been deferred on our condensed consolidated balance sheet and is being amortized over the expected life of the customer contract, which averages five years . At both September 30, 2019 and December 31, 2018, the Company had $2.7 million of deferred sales commissions capitalized. |
COMMON STOCK REPURCHASES
COMMON STOCK REPURCHASES | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
COMMON STOCK REPURCHASES | COMMON STOCK REPURCHASES In the second quarter of 2019, the Board approved a stock repurchase program (the "Repurchase Program") pursuant to which the Company may repurchase up to $75 million of the Company's common stock prior to April 18, 2021. Repurchases under the Repurchase Program may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases depending on market conditions and corporate discretion. The Repurchase Program does not obligate the Company to acquire any particular amount of common stock and may be extended, modified, suspended or discontinued at any time at the Board's discretion. The stock repurchases are being funded using the Company's working capital. During the nine months ended September 30, 2019, the Company spent $4.5 million , including transaction fees, to repurchase and retire 1.0 million shares of its common stock under the Repurchase Program. No shares were repurchased during the three months ended September 30, 2019. At September 30, 2019, the Company had $70.5 million remaining under the Repurchase Program for future repurchases. |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION PLANS | STOCK-BASED COMPENSATION PLANS 2019 Stock Incentive Plan At the Company's annual meeting of stockholders held on June 5, 2019, the Company's stockholders approved the Ribbon Communications Inc. 2019 Incentive Award Plan (the "2019 Plan"). The 2019 Plan had previously been approved by the Board subject to stockholder approval. Under the 2019 Plan, the Company may grant awards up to 7.0 million shares of common stock (subject to adjustment in the event of stock splits and other similar events), plus 5.1 million shares of common stock that remained available for issuance under the Company's Amended and Restated Stock Incentive Plan (the "2007 Plan") on June 5, 2019, plus any shares covered by awards under the 2007 Plan (or the Company's other prior equity compensation plans) that again become available for grant pursuant to the provisions of the 2007 Plan. The 2019 Plan provides for the grant of options to purchase the Company's common stock ("stock options"), stock appreciation rights ("SARs"), restricted stock awards ("RSAs"), performance-based stock awards ("PSAs"), restricted stock units ("RSUs"), performance-based stock units ("PSUs") and other stock- or cash-based awards. Awards can be granted under the 2019 Plan to the Company's employees, officers and non-employee directors, as well as consultants and advisors of the Company and its subsidiaries. 2007 Plan The Company's 2007 Plan provides for the award of stock options, SARs, RSAs, RSU, PSAs, PSUs and other stock-based awards to employees, officers, directors (including those directors who are not employees or officers of the Company), consultants and advisors of the Company and its subsidiaries. On and following June 5, 2019, with the exception of shares underlying awards outstanding as of that date, no additional shares may be granted under the 2007 Plan. 2002 Stock Option Plan In connection with the Edgewater Acquisition, the Company assumed Edgewater's Amended and Restated 2002 Stock Option Plan (the "Edgewater Plan") to the extent of the shares underlying the options outstanding under the Edgewater Plan as of the Edgewater Acquisition Date (the "Edgewater Options"). The Edgewater Options were converted to Ribbon stock options (the "Ribbon Replacement Options") using a conversion factor of 0.17 , which was calculated based on the acquisition consideration of $1.20 per share of Edgewater common stock divided by the weighted average of the closing price of Ribbon common stock for ten consecutive days, ending with the trading day that preceded the Edgewater Acquisition Date. This conversion factor was also used to convert the exercise prices of Edgewater Options to Ribbon Replacement Option exercise prices. The Ribbon Replacement Options are vesting under the same schedules as the respective Edgewater Options. The fair values of the Edgewater Options assumed were estimated using a Black-Scholes option pricing model. The Company recorded $0.7 million as additional purchase consideration for the fair value of the assumed Edgewater Options. The fair value of the Ribbon Replacement Options attributable to future service totaled $1.0 million , which is being recognized over a weighted average period of approximately two years. Executive Equity Arrangements Stock-for-Cash Bonus Election In connection with the Company's annual incentive program, certain executives of the Company were given the choice to receive a portion, ranging from 10% to 50% (the "Elected Percentage"), of their fiscal year 2018 bonuses (the "2018 Bonus"), if any were earned, in the form of shares of the Company's common stock (the "2018 Bonus Shares" and such program, the "Stock Bonus Election Program"). Each executive could also elect not to participate in this program and earn his or her 2018 Bonus, if any, in the form of cash. Any executive (other than the Company's Chief Executive Officer and other members of its senior leadership team) who elected to receive a portion of his or her 2018 Bonus in stock would also receive an additional "uplift" of 20% of the value of the 2018 Bonus Shares in additional shares of the Company’s common stock (the “Uplift Shares”). Under the Stock Bonus Election Program, the amount of the 2018 Bonus, if any, for each executive was determined by the Compensation Committee of the Board (the "Compensation Committee"). The number of shares earned by each of the 23 participants in the Stock Bonus Election Program was calculated by multiplying such participant's 2018 Bonus by the applicable Elected Percentage (plus the amount attributable to Uplift Shares, if applicable) and dividing the resulting amount by $4.97 , the closing price of the Company's common stock on March 8, 2019, the date of the company-wide cash bonus payments. The Company granted 198,949 shares in the aggregate in connection with the 2018 Bonus Shares on March 15, 2019, and such shares were fully vested on the date of grant. However, notwithstanding that each such share of common stock was fully vested, each participant in the Stock Bonus Election Program was contractually restricted from trading the 2018 Bonus Shares for five months after the date of grant. Both the grant and vesting of the 2018 Bonus Shares are included in the RSU table below. Performance-Based Stock Grants In addition to granting RSAs and RSUs to its executives and certain of its employees, the Company also grants PSUs to certain of its executives. 2019 PSU Grants . In March and April 2019, the Company granted certain of its executives an aggregate of 872,073 PSUs, of which 523,244 PSUs had both performance and service conditions (the "Performance PSUs") and 348,829 PSUs had both market and service conditions (the "Market PSUs"). Each executive's Performance PSU grant is comprised of three consecutive fiscal year performance periods from 2019 through 2021 (each, a "Fiscal Year Performance Period"), with one-third of the Performance PSUs attributable to each Fiscal Year Performance Period. The number of shares that will vest for each Fiscal Year Performance Period will be based on the achievement of certain metrics related to the Company's financial performance for the applicable year on a standalone basis (each, a "Fiscal Year Performance Condition"). In the third quarter of 2019, the Company adjusted the 2019 Performance PSU goals to reflect the changes to the Company's calculation of certain metrics. There was no incremental expense in connection with this modification. The Company's achievement of the 2019 Fiscal Year Performance Conditions (and the number of shares of Company common stock to vest as a result thereof) will be measured on a linear sliding scale in relation to specific threshold, target and stretch performance conditions. The Company is recording stock-based compensation expense for the Performance PSUs based on its assessment of the probability that each performance condition will be achieved and the level, if any, of such achievement. As of September 30, 2019, the Company determined that the grant date criteria for the 2020 and 2021 Fiscal Year Performance Periods had not been met, as the 2020 and 2021 Fiscal Year Performance Conditions had not been established by the Company. Accordingly, the stock-based compensation expense recorded in the nine months ended September 30, 2019 in connection with the Performance PSUs is related only to those PSUs with 2019 Fiscal Year Performance Conditions. The Compensation Committee will determine the number of shares earned, if any, after the Company's financial results for each Fiscal Year Performance Period are finalized. Upon the determination by the Compensation Committee of the number of shares that will be received upon vesting of the Performance PSUs, such number of shares will become fixed and the unamortized expense will be recorded through the remainder of the service period that ends March 15, 2022, at which time the total Performance PSUs earned, if any, will vest, pending each executive's continued employment with the Company through that date. The number of shares of common stock to be achieved upon vesting of the Performance PSUs will in no event exceed 200% of the Performance PSUs. Shares subject to the Performance PSUs that fail to be earned will be forfeited. The Market PSUs have one three -year performance period which will end on December 31, 2021 (the "Market Performance Period"). The number of shares subject to the Market PSUs that will vest, if any, on March 15, 2022, will be dependent upon the Company's total shareholder return ("TSR") compared with the TSR of the companies included in the Nasdaq Telecommunications Index for the same Market Performance Period, measured by the Compensation Committee after the Market Performance Period ends. The shares determined to be earned will vest on March 15, 2022, pending each executive's continued employment with the Company through that date. The number of shares of common stock to be achieved upon vesting of the Market PSUs will in no event exceed 200% of the Market PSUs. Shares subject to the Market PSUs that fail to be earned will be forfeited. 2018 PSU Grant . In May 2018, the Company granted its President and Chief Executive Officer Franklin (Fritz) Hobbs ("Mr. Hobbs"), 195,000 PSUs with both performance and service conditions (the "2018 PSUs"). Of the 195,000 2018 PSUs, one-half of such PSUs were eligible to vest based on the achievement of two separate metrics related to the Company's 2018 financial performance (the "2018 Performance Conditions"). The Company's achievement of the 2018 Performance Conditions (and the number of shares of Company common stock to be received upon vesting as a result thereof) were measured on a linear sliding scale in relation to specific threshold, target and stretch performance conditions. The number of shares of common stock to be received upon vesting of the 2018 PSUs would in no event exceed 150% of the 2018 PSUs. In February 2019, the Compensation Committee determined that the performance metrics for one-half of the 2018 PSUs had been achieved at the 106.49% achievement level and one-half of the 2018 PSUs had been achieved at the 150% level. However, in April 2019, the Compensation Committee subsequently determined that the performance metrics for the entire 2018 PSUs had been achieved at the 150% level, for a total of 292,500 shares eligible to be issued, pending Mr. Hobbs’ continued employment with the Company through December 31, 2020, the vesting date of the 2018 PSUs. 2017 PSU Grants . On March 31, 2017, the Company granted an aggregate of 165,000 PSUs with both market and service conditions to five of its executives (the "2017 PSUs"). The terms of each PSU grant were such that up to one-third of the shares subject to the respective PSU grant would vest, if at all, on each of the respective first, second and third anniversaries of the date of grant, depending on the Company's TSR compared with the TSR of the companies included in the Nasdaq Telecommunications Index for the same fiscal year, measured by the Compensation Committee after each of the fiscal years as defined by each grant (each, a "Performance Period"). The shares determined to be earned would vest on the anniversary of the grant date following each Performance Period. Shares subject to the PSUs that failed to be earned would be forfeited. In March 2018, the Compensation Committee determined that the performance metrics for the 2017 PSUs for the 2017 Performance Period had been achieved at the 130% level and accordingly, 33,584 shares in the aggregate were released to the three executives holding such outstanding grants, comprised of 25,834 shares, representing the 100% achievement target, granted on March 31, 2017 and 7,750 shares, representing the 30% achievement over target, granted on March 31, 2018. In February 2019, the Compensation Committee determined that the performance metrics for the 2017 PSUs for the 2018 Performance Period had been achieved at the 61.4% level and accordingly, 9,466 were released to the three executives holding such outstanding grants on March 31, 2019. The shares that failed to be earned for the 2018 Performance Period, aggregating 5,950 shares, were forfeited. Accordingly, at September 30, 2019, there were no remaining unvested 2017 PSUs outstanding. The release and forfeiture of the shares related to the 2018 Performance Period are included in the PSU table below. Accounting for PSUs with Market Conditions . PSUs that include a market condition require the use of a Monte Carlo simulation approach to model future stock price movements based upon the risk-free rate of return, the date of return, the volatility of each entity and the pair-wise covariance between each entity. These results are then used to calculate the grant date fair values of the respective PSUs. The Company is required to record expense for the PSUs with market conditions through their respective final vesting dates, regardless of the number of shares that are ultimately earned. During the three months ended June 30, 2019, the Company completed the analysis required to determine the grant date fair value of the Market PSUs, determining that such value was $7.24 per share, and the Company recorded nominal incremental stock-based compensation expense to account for the adjustment to the grant date fair value of the Market PSUs from the prior quarter. The adjusted grant date fair value of the Market PSUs is reflected in the PSU activity reported in the PSU table below. Stock Options The activity related to the Company's outstanding stock options for the nine months ended September 30, 2019 was as follows: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value (in thousands) Outstanding at January 1, 2019 582,061 $ 9.01 Granted — $ — Exercised (126,015 ) $ 1.85 Forfeited (38,666 ) $ 2.55 Expired (109,757 ) $ 12.15 Outstanding at September 30, 2019 307,623 $ 11.63 5.12 $ 416 Vested or expected to vest at September 30, 2019 302,858 $ 11.78 5.07 $ 399 Exercisable at September 30, 2019 260,793 $ 13.35 4.67 $ 240 Additional information regarding the Company's stock options for the three and nine months ended September 30, 2019 was as follows (in thousands): Three months ended Nine months ended September 30, September 30, Total intrinsic value of stock options exercised $ 59 $ 456 Cash received from the exercise of stock options $ 43 $ 233 Restricted Stock Awards and Units The activity related to the Company's RSAs for the nine months ended September 30, 2019 was as follows: Shares Weighted Average Grant Date Fair Value Unvested balance at January 1, 2019 1,508,011 $ 6.90 Granted — $ — Vested (866,650 ) $ 6.92 Forfeited (45,244 ) $ 7.04 Unvested balance at September 30, 2019 596,117 $ 6.85 The activity related to the Company's RSUs for the nine months ended September 30, 2019 was as follows: Shares Weighted Average Grant Date Fair Value Unvested balance at January 1, 2019 636,300 $ 6.52 Granted 2,805,132 $ 4.99 Vested (430,316 ) $ 6.07 Forfeited (116,794 ) $ 5.37 Unvested balance at September 30, 2019 2,894,322 $ 5.16 The total grant date fair value of shares of restricted stock granted under RSAs and RSUs that vested during the nine months ended September 30, 2019 was $8.6 million . Performance-Based Stock Units The activity related to the Company's PSUs for the nine months ended September 30, 2019 was as follows: Shares Weighted Average Grant Date Fair Value Unvested balance at January 1, 2019 210,416 $ 5.77 Granted 872,073 $ 6.03 Vested (9,466 ) $ 8.55 Forfeited (5,950 ) $ 8.55 Unvested balance at September 30, 2019 1,067,073 $ 5.94 The total grant date fair value of shares of restricted stock granted under PSUs that vested during the nine months ended September 30, 2019 was $0.1 million . Employee Stock Purchase Plan The Company's Amended and Restated 2000 Employee Stock Purchase Plan ("ESPP") is designed to provide eligible employees of the Company and its participating subsidiaries an opportunity to purchase common stock of the Company through accumulated payroll deductions. The ESPP provides for six -month offering periods with the purchase price of the stock equal to 85% of the lesser of the closing market price on the first or last day of the offering period. The maximum number of shares of common stock an employee may purchase during each offering period is 500 , subject to certain adjustments pursuant to the ESPP. In May 2017, the Compensation Committee determined to suspend all offering periods under the ESPP, effective September 1, 2017, until such time after the Merger Date as the Compensation Committee determined was best in its sole discretion. The Board voted to re-implement the ESPP effective December 1, 2018 for employees in certain geographic regions, with the first purchase date of the re-implemented ESPP completed on May 31, 2019. The ESPP will expire on May 20, 2020. Stock-Based Compensation The condensed consolidated statements of operations include stock-based compensation for the three and nine months ended September 30, 2019 and 2018 as follows (in thousands): Three months ended Nine months ended September 30, September 30, September 30, September 30, Product cost of revenue $ 26 $ 21 $ 62 $ 91 Service cost of revenue 124 65 367 264 Research and development 521 313 1,359 1,364 Sales and marketing 721 585 2,265 1,944 General and administrative 1,093 1,532 4,101 3,758 $ 2,485 $ 2,516 $ 8,154 $ 7,421 There was no income tax benefit for employee stock-based compensation expense for the nine months ended September 30, 2019 or 2018 due to the valuation allowance recorded. At September 30, 2019 , there was $9.1 million , net of expected forfeitures, of unrecognized stock-based compensation expense related to unvested stock options, awards and units and the ESPP. This expense is expected to be recognized over a weighted average period of approximately two years . |
MAJOR CUSTOMERS
MAJOR CUSTOMERS | 9 Months Ended |
Sep. 30, 2019 | |
Risks and Uncertainties [Abstract] | |
MAJOR CUSTOMERS | MAJOR CUSTOMERS The following customers contributed 10% or more of the Company's revenue in the three and nine months ended September 30, 2019 and 2018 : Three months ended Nine months ended September 30, September 30, September 30, September 30, AT&T Inc. 16% 12% 12% 10% Verizon Communications Inc. 15% 13% 17% 15% At September 30, 2019 , three customers accounted for 10% or more of the Company's accounts receivable balance, representing approximately 42% in the aggregate of the Company's total accounts receivable. At December 31, 2018 , two customers accounted for 10% or more of the Company's accounts receivable balance, representing approximately 32% in the aggregate of total accounts receivable. The Company performs ongoing credit evaluations of its customers and generally does not require collateral on accounts receivable. The Company maintains an allowance for doubtful accounts and such losses have been within management's expectations. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS As a portion of the consideration for the Merger, on October 27, 2017, the Company issued a Promissory Note for $22.5 million to certain of GENBAND's equity holders who, following the Merger, owned greater than five percent of the Company's outstanding shares. As described in Note 9 , the Promissory Note did not amortize and the principal thereon was payable in full on the third anniversary of its execution. Interest on the Promissory Note was payable quarterly in arrears and accrued at a rate of 7.5% per year for the first six months after issuance, and thereafter at a rate of 10% per year. The failure to make any payment under the Promissory Note when due and, with respect to payment of any interest, the continuation of such failure for a period of thirty days thereafter, constituted an event of default under the Promissory Note. If an event of default occurred under the Promissory Note, the payees could declare the entire balance of the Promissory Note due and payable (including principal and accrued and unpaid interest) within five business days of the payees' notification to the Company of such acceleration. At December 31, 2018, the Promissory Note balance was $24.1 million , which was comprised of $22.5 million of principal, plus $1.6 million of interest converted to principal. On April 29, 2019, the Company repaid in full all outstanding amounts under the Promissory Note, aggregating $24.7 million . The Company did not incur any early termination penalties in connection with this repayment. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company's income tax provisions for the nine months ended September 30, 2019 and 2018 reflect the Company's estimates of the effective rates expected to be applicable for the respective full years, adjusted for any discrete events, which are recorded in the period that they occur. These estimates are reevaluated each quarter based on the Company's estimated tax expense for the full year. The estimated effective rates for the nine months ended September 30, 2019 and 2018 do not include any expense or benefit for the Company's domestic or Ireland operations, since the Company concluded that a valuation allowance was required for both jurisdictions. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
LEASES | LEASES The Company has operating and finance leases for corporate offices, research and development facilities, and certain equipment. Operating leases are reported separately in the Company's condensed consolidated balance sheet at September 30, 2019. Assets acquired under finance leases are included in Property and equipment, net, in the condensed consolidated balance sheets at September 30, 2019 and December 31, 2018. The Company determines if an arrangement is a lease at inception. A contract is determined to contain a lease component if the arrangement provides the Company with a right to control the use of an identified asset. Lease agreements may include lease and non-lease components. In such instances for all classes of underlying assets, the Company does not separate lease and non-lease components but rather, accounts for the entire arrangement under leasing guidance. Leases with an initial term of 12 months or less are not recorded on the balance sheet and lease expense for these leases is recognized on a straight-line basis over the lease term. Right-of-use assets and lease liabilities are initially measured based on the present value of the future minimum fixed lease payments (i.e., fixed payments in the lease contract) over the lease term at the commencement date. As many of the Company's leases do not have a readily determinable implicit rate, the Company typically uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future minimum fixed lease payments. The Company calculates its incremental borrowing rate to reflect the interest rate that it would have to pay to borrow on a collateralized basis an amount equal to the lease payments in a similar economic environment over a similar term and considers its historical borrowing activities and market data from entities with comparable credit ratings in this determination. The measurement of the right-of-use asset also includes any lease payments made prior to the commencement date (excluding any lease incentives) and initial direct costs incurred. The Company assessed its right-of-use assets for impairment as of September 30, 2019 and determined no impairment has occurred. Lease terms may include options to extend or terminate the lease and the Company incorporates such options in the lease term when it has the unilateral right to make such an election and it is reasonably certain that the Company will exercise that option. In making this determination, the Company considers its prior renewal and termination history and planned usage of the assets under lease, incorporating expected market conditions. For operating leases, lease expense for minimum fixed lease payments is recognized on a straight-line basis over the lease term. The expense for finance leases includes both interest and amortization expense components, with the interest component calculated based on the effective interest method and the amortization component calculated based on straight-line amortization of the right-of-use asset over the lease term. Lease contracts may contain variable lease costs, such as common area maintenance, utilities and tax reimbursements that vary over the term of the contract. Variable lease costs are not included in minimum fixed lease payments and as a result, are excluded from the measurement of the right-of-use assets and lease liabilities. The Company expenses all variable lease costs as incurred. In connection with the 2019 Restructuring Initiative, certain lease assets related to facilities will be partially or fully vacated as the Company consolidates its facilities. The Company has no plans to enter into sublease agreements for certain facilities. The Company ceased use of these facilities in the third quarter of 2019. Accordingly, the Company accelerated the amortization of the associated lease assets through the planned cease-use date of each facility, resulting in additional amortization expense of $0.6 million and $3.5 million in the three and nine months ended September 30, 2019, respectively. The Company also recorded a liability of $0.9 million and $1.0 million in the three and nine months ended September 30, 2019, respectively, for all future anticipated variable lease costs related to these facilities. This incremental accelerated amortization and estimated future variable lease costs are included in Restructuring and related expense in the Company's condensed consolidated statements of operations, as applicable, for the three and nine months ended September 30, 2019. The Company may incur additional future expense if it is unable to sublease other locations included in the Facilities Initiative. The Company leases its corporate offices and other facilities under operating leases, which expire at various times through 2029. The Company's corporate headquarters is located in a leased facility in Westford, Massachusetts, consisting of 97,500 square feet under a lease that expires in August 2028. The Company's finance leases primarily consist of equipment. The Company's right-of-use lease assets and lease liabilities at September 30, 2019 and December 31, 2018 were as follows (in thousands): Classification September 30, December 31, Assets Operating lease assets Operating lease right-of-use assets $ 37,132 $ — Finance lease assets* Property and equipment, net 1,362 2,104 Total leased assets $ 38,494 $ 2,104 Liabilities Current Operating Operating lease liabilities $ 7,568 $ — Finance Accrued expenses and other 1,026 1,039 Noncurrent Operating Operating lease liabilities, net of current 37,600 — Finance Other long-term liabilities 1,096 1,324 Total lease liabilities $ 47,290 $ 2,363 * Finance lease assets were recorded net of accumulated depreciation of $1.6 million and $0.9 million at September 30, 2019 and December 31, 2018, respectively, and were reported as capital lease assets prior to the Company's adoption of ASC 842. The components of lease expense for the three and nine months ended September 30, 2019 were as follows (in thousands): Three months ended Nine months ended September 30, September 30, Operating lease cost* $ 2,988 $ 11,063 Finance lease cost Amortization of leased assets 244 732 Interest on lease liabilities 90 210 Short-term lease cost 4,777 14,183 Variable lease costs (costs excluded from minimum fixed lease payments)** 1,727 2,932 Net lease cost $ 9,826 $ 29,120 * Operating lease cost for the three and nine months ended September 30, 2019 includes $0.6 million and $3.5 million , respectively, of accelerated amortization for certain assets partially or fully vacated in 2019 with no intent or ability to sublease. ** Variable lease costs for the three and nine months ended September 30, 2019 include a $0.9 million accrual for all future estimated variable expenses related to certain assets partially or fully vacated in 2019 with no intent or ability to sublease. The Company elected to use the alternative transition method, which allows entities to initially apply ASC 842 at the adoption date with no subsequent adjustments to prior period lease costs for comparability. As a result, operating leases in periods prior to the Company's adoption of ASC 842 were not recorded on the condensed consolidated balance sheet. Prior to the adoption of ASC 842, rent expense (including any escalation clauses, free rent and other lease concessions) on operating leases was recognized on a straight-line basis over the minimum lease term, and this remains consistent with the Company's application of ASC 842. Rent expense for operating leases was $2.8 million and $8.8 million for the three and nine months ended September 30, 2018, respectively. Interest expense for finance leases was approximately $13,000 and $49,000 for the three and nine months ended September 30, 2018, respectively. Amortization expense for finance leases was $0.1 million and $0.3 million for the three and nine months ended September 30, 2018, respectively. Other information related to the Company's leases as of and for the nine months ended September 30, 2019 was as follows (in thousands, except lease terms and percentages): Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 7,850 Operating cash flows from finance leases $ 210 Financing cash flows from finance leases $ 698 Weighted average remaining lease term (years) Operating leases 6.87 Finance leases 2.11 Weighted average discount rate Operating leases 6.54 % Finance leases 10.84 % Future minimum fixed lease payments under noncancelable leases at September 30, 2019 were as follows (in thousands): Operating Finance leases leases Remainder of 2019 $ 2,621 $ 341 2020 9,866 1,178 2021 9,039 708 2022 7,314 144 2023 6,968 — 2024 and beyond 20,419 — Total lease payments 56,227 2,371 Less: interest (11,059 ) (249 ) Present value of lease liabilities $ 45,168 $ 2,122 Future minimum fixed lease payments under noncancelable leases at December 31, 2018 and as reported in the Company's Annual Report on Form 10-K/A for the year ended December 31, 2018 were as follows (in thousands): Operating Finance leases* leases 2019 $ 10,705 $ 1,386 2020 8,384 1,010 2021 7,455 288 2022 5,691 — 2023 5,430 — 2024 and beyond 19,818 — Total lease payments $ 57,483 2,684 Less: interest (321 ) Present value of lease liabilities** $ 2,363 * The amounts in this column include restructuring payments aggregating approximately $1 million , of which approximately 50% was due in less than one year and the remainder was due in one to three years. These amounts exclude current estimated sublease income aggregating approximately $125,000 over the remaining lease terms for restructured facilities. ** Prior to the Company's adoption of ASC 842 on January 1, 2019, operating leases were not recorded on the condensed consolidated balance sheet and no interest component was calculated. |
LEASES | LEASES The Company has operating and finance leases for corporate offices, research and development facilities, and certain equipment. Operating leases are reported separately in the Company's condensed consolidated balance sheet at September 30, 2019. Assets acquired under finance leases are included in Property and equipment, net, in the condensed consolidated balance sheets at September 30, 2019 and December 31, 2018. The Company determines if an arrangement is a lease at inception. A contract is determined to contain a lease component if the arrangement provides the Company with a right to control the use of an identified asset. Lease agreements may include lease and non-lease components. In such instances for all classes of underlying assets, the Company does not separate lease and non-lease components but rather, accounts for the entire arrangement under leasing guidance. Leases with an initial term of 12 months or less are not recorded on the balance sheet and lease expense for these leases is recognized on a straight-line basis over the lease term. Right-of-use assets and lease liabilities are initially measured based on the present value of the future minimum fixed lease payments (i.e., fixed payments in the lease contract) over the lease term at the commencement date. As many of the Company's leases do not have a readily determinable implicit rate, the Company typically uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future minimum fixed lease payments. The Company calculates its incremental borrowing rate to reflect the interest rate that it would have to pay to borrow on a collateralized basis an amount equal to the lease payments in a similar economic environment over a similar term and considers its historical borrowing activities and market data from entities with comparable credit ratings in this determination. The measurement of the right-of-use asset also includes any lease payments made prior to the commencement date (excluding any lease incentives) and initial direct costs incurred. The Company assessed its right-of-use assets for impairment as of September 30, 2019 and determined no impairment has occurred. Lease terms may include options to extend or terminate the lease and the Company incorporates such options in the lease term when it has the unilateral right to make such an election and it is reasonably certain that the Company will exercise that option. In making this determination, the Company considers its prior renewal and termination history and planned usage of the assets under lease, incorporating expected market conditions. For operating leases, lease expense for minimum fixed lease payments is recognized on a straight-line basis over the lease term. The expense for finance leases includes both interest and amortization expense components, with the interest component calculated based on the effective interest method and the amortization component calculated based on straight-line amortization of the right-of-use asset over the lease term. Lease contracts may contain variable lease costs, such as common area maintenance, utilities and tax reimbursements that vary over the term of the contract. Variable lease costs are not included in minimum fixed lease payments and as a result, are excluded from the measurement of the right-of-use assets and lease liabilities. The Company expenses all variable lease costs as incurred. In connection with the 2019 Restructuring Initiative, certain lease assets related to facilities will be partially or fully vacated as the Company consolidates its facilities. The Company has no plans to enter into sublease agreements for certain facilities. The Company ceased use of these facilities in the third quarter of 2019. Accordingly, the Company accelerated the amortization of the associated lease assets through the planned cease-use date of each facility, resulting in additional amortization expense of $0.6 million and $3.5 million in the three and nine months ended September 30, 2019, respectively. The Company also recorded a liability of $0.9 million and $1.0 million in the three and nine months ended September 30, 2019, respectively, for all future anticipated variable lease costs related to these facilities. This incremental accelerated amortization and estimated future variable lease costs are included in Restructuring and related expense in the Company's condensed consolidated statements of operations, as applicable, for the three and nine months ended September 30, 2019. The Company may incur additional future expense if it is unable to sublease other locations included in the Facilities Initiative. The Company leases its corporate offices and other facilities under operating leases, which expire at various times through 2029. The Company's corporate headquarters is located in a leased facility in Westford, Massachusetts, consisting of 97,500 square feet under a lease that expires in August 2028. The Company's finance leases primarily consist of equipment. The Company's right-of-use lease assets and lease liabilities at September 30, 2019 and December 31, 2018 were as follows (in thousands): Classification September 30, December 31, Assets Operating lease assets Operating lease right-of-use assets $ 37,132 $ — Finance lease assets* Property and equipment, net 1,362 2,104 Total leased assets $ 38,494 $ 2,104 Liabilities Current Operating Operating lease liabilities $ 7,568 $ — Finance Accrued expenses and other 1,026 1,039 Noncurrent Operating Operating lease liabilities, net of current 37,600 — Finance Other long-term liabilities 1,096 1,324 Total lease liabilities $ 47,290 $ 2,363 * Finance lease assets were recorded net of accumulated depreciation of $1.6 million and $0.9 million at September 30, 2019 and December 31, 2018, respectively, and were reported as capital lease assets prior to the Company's adoption of ASC 842. The components of lease expense for the three and nine months ended September 30, 2019 were as follows (in thousands): Three months ended Nine months ended September 30, September 30, Operating lease cost* $ 2,988 $ 11,063 Finance lease cost Amortization of leased assets 244 732 Interest on lease liabilities 90 210 Short-term lease cost 4,777 14,183 Variable lease costs (costs excluded from minimum fixed lease payments)** 1,727 2,932 Net lease cost $ 9,826 $ 29,120 * Operating lease cost for the three and nine months ended September 30, 2019 includes $0.6 million and $3.5 million , respectively, of accelerated amortization for certain assets partially or fully vacated in 2019 with no intent or ability to sublease. ** Variable lease costs for the three and nine months ended September 30, 2019 include a $0.9 million accrual for all future estimated variable expenses related to certain assets partially or fully vacated in 2019 with no intent or ability to sublease. The Company elected to use the alternative transition method, which allows entities to initially apply ASC 842 at the adoption date with no subsequent adjustments to prior period lease costs for comparability. As a result, operating leases in periods prior to the Company's adoption of ASC 842 were not recorded on the condensed consolidated balance sheet. Prior to the adoption of ASC 842, rent expense (including any escalation clauses, free rent and other lease concessions) on operating leases was recognized on a straight-line basis over the minimum lease term, and this remains consistent with the Company's application of ASC 842. Rent expense for operating leases was $2.8 million and $8.8 million for the three and nine months ended September 30, 2018, respectively. Interest expense for finance leases was approximately $13,000 and $49,000 for the three and nine months ended September 30, 2018, respectively. Amortization expense for finance leases was $0.1 million and $0.3 million for the three and nine months ended September 30, 2018, respectively. Other information related to the Company's leases as of and for the nine months ended September 30, 2019 was as follows (in thousands, except lease terms and percentages): Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 7,850 Operating cash flows from finance leases $ 210 Financing cash flows from finance leases $ 698 Weighted average remaining lease term (years) Operating leases 6.87 Finance leases 2.11 Weighted average discount rate Operating leases 6.54 % Finance leases 10.84 % Future minimum fixed lease payments under noncancelable leases at September 30, 2019 were as follows (in thousands): Operating Finance leases leases Remainder of 2019 $ 2,621 $ 341 2020 9,866 1,178 2021 9,039 708 2022 7,314 144 2023 6,968 — 2024 and beyond 20,419 — Total lease payments 56,227 2,371 Less: interest (11,059 ) (249 ) Present value of lease liabilities $ 45,168 $ 2,122 Future minimum fixed lease payments under noncancelable leases at December 31, 2018 and as reported in the Company's Annual Report on Form 10-K/A for the year ended December 31, 2018 were as follows (in thousands): Operating Finance leases* leases 2019 $ 10,705 $ 1,386 2020 8,384 1,010 2021 7,455 288 2022 5,691 — 2023 5,430 — 2024 and beyond 19,818 — Total lease payments $ 57,483 2,684 Less: interest (321 ) Present value of lease liabilities** $ 2,363 * The amounts in this column include restructuring payments aggregating approximately $1 million , of which approximately 50% was due in less than one year and the remainder was due in one to three years. These amounts exclude current estimated sublease income aggregating approximately $125,000 over the remaining lease terms for restructured facilities. ** Prior to the Company's adoption of ASC 842 on January 1, 2019, operating leases were not recorded on the condensed consolidated balance sheet and no interest component was calculated. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Litigation Settlement As previously disclosed, the Company was involved in six lawsuits (together, the "Lawsuits") with Metaswitch Networks Ltd., Metaswitch Networks Corp. and Metaswitch Inc. (together, "Metaswitch"). In five of the Lawsuits, the Company was the plaintiff and, in three of those five lawsuits, the Company was also a counterclaim defendant. In the sixth case, the Company was the defendant. On April 22, 2019, the Company and Metaswitch agreed to a binding mediator's proposal that resolved the six Lawsuits between the Company and Metaswitch (the "Lawsuits"). The Company and Metaswitch signed a Settlement and Cross-License Agreement on May 29, 2019 (the "Royalty Agreement"). Pursuant to the terms of the Royalty Agreement, Metaswitch has agreed to pay the Company an aggregate amount of $63.0 million , which includes cash payments of $37.5 million during the second quarter of 2019 and $25.5 million payable in three installments annually, beginning June 26, 2020, with such installment payments accruing interest at a rate of 4% per year. As part of the Royalty Agreement, the Company and Metaswitch (i) have released the other from all claims and liabilities; (ii) have licensed each party's existing patent portfolio to the other party; and (iii) have requested the applicable courts to dismiss the Lawsuits. The Company received $37.5 million of aggregate payments from Metaswitch in the second quarter of 2019 and recorded notes receivable for future payments of $25.5 million , comprised of $8.5 million in Other current assets and $17.0 million in Other assets in the condensed consolidated balance sheet at September 30, 2019. This activity is included in cash flows from operating activities in the condensed consolidated statement of cash flows for the nine months ended September 30, 2019. The gain from the settlement of $63.0 million is included in Other income (expense), net, in the Company's condensed consolidated statement of operations for the nine months ended September 30, 2019. Contingencies On November 8, 2018, Ron Miller, a purported stockholder of the Company, filed a Class Action Complaint (the "Miller Complaint") in the United States District Court for the District of Massachusetts (the "Massachusetts District Court") against the Company and three of its former officers (collectively, the "Defendants"), claiming to represent a class of purchasers of Sonus common stock during the period from January 8, 2015 through March 24, 2015 and alleging violations of the federal securities laws. Similar to a previous complaint entitled Sousa et al. vs. Sonus Networks, Inc. et al., which was dismissed with prejudice by an order dated June 6, 2017, the Miller Complaint claims that the Defendants made misleading forward-looking statements concerning Sonus' expected fiscal first quarter of 2015 financial performance, which statements were also the subject of an August 7, 2018 Securities and Exchange Commission Cease and Desist Order, whose findings the Company neither admitted nor denied. The Miller plaintiffs are seeking monetary damages. After the Miller Complaint was filed, several parties filed and briefed motions seeking to be selected by the Massachusetts District Court to serve as a Lead Plaintiff in the action. On June 21, 2019, the Massachusetts District Court appointed a group as Lead Plaintiffs and the Lead Plaintiffs filed an amended complaint on July 19, 2019. On August 30, 2019, the Defendants filed a motion to dismiss the Miller Complaint and, on October 4, 2019, the Lead Plaintiffs filed an opposition to the motion to dismiss. The Defendants are expected to reply to such opposition on or before November 1, 2019. In addition, the Company is often a party to disputes and legal proceedings that it considers routine and incidental to its business. Management does not expect the results of any of these actions to have a material effect on the Company's business or condensed consolidated financial statements. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring items, necessary for their fair presentation with accounting principles generally accepted in the United States of America ("GAAP") and with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). On February 28, 2019 (the "Anova Acquisition Date"), the Company acquired the business and technology assets of Anova Data, Inc. ("Anova"). The financial results of Anova are included in the Company's condensed consolidated financial statements for the period subsequent to the Anova Acquisition Date. On August 3, 2018 (the "Edgewater Acquisition Date"), the Company completed the acquisition of Edgewater Networks, Inc. (“Edgewater”). The financial results of Edgewater are included in the Company's condensed consolidated financial statements for the periods subsequent to the Edgewater Acquisition Date. Interim results are not necessarily indicative of results for a full year or any future interim period. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company's Annual Report on Form 10-K/A for the year ended December 31, 2018 (the "Annual Report"), which was filed with the SEC on March 5, 2019. |
Leases | Effective January 1, 2019, the Company adopted the Financial Accounting Standard Board's ("FASB") new standard on accounting for leases, Accounting Standards Codification ("ASC") 842, Leases ("ASC 842") . ASC 842 replaced existing lease accounting rules with a comprehensive lease measurement and recognition standard and expanded disclosure requirements (see Note 16). ASC 842 requires lessees to recognize most leases on their balance sheets and eliminates the current GAAP requirement for an entity to use bright-line tests in determining lease classification. The Company elected to use the alternative transition method, which allows entities to initially apply ASC 842 at the adoption date with no subsequent adjustments to prior period lease costs for comparability. The Company elected the package of practical expedients permitted under the transition guidance, which provided that a company need not reassess whether expired or existing contracts contained a lease, the lease classification of expired or existing leases, and the amount of initial direct costs for existing leases. |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of Ribbon and its wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates and Judgments | Use of Estimates and Judgments The preparation of financial statements in conformity with GAAP requires Ribbon to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and judgments relied upon in preparing these condensed consolidated financial statements include accounting for business combinations, revenue recognition for multiple element arrangements, inventory valuations, assumptions used to determine the fair value of stock-based compensation, intangible asset and goodwill valuations, including impairments, legal contingencies and recoverability of Ribbon's net deferred tax assets and the related valuation allowances. Ribbon regularly assesses these estimates and records changes in estimates in the period in which they become known. Ribbon bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates. |
Reclassifications | Reclassifications Certain reclassifications may be made to the previously issued financial statements to conform to the current period presentation, none of which affected the net income (loss) as previously reported. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of the Company's financial instruments approximate their fair values and include cash equivalents, investments, accounts receivable, borrowings under a revolving credit facility, accounts payable and long-term debt. |
Operating Segments | Operating Segments The Company operates in a single segment, as the chief operating decision maker makes decisions and assesses performance at the company level. Operating segments are identified as components of an enterprise about which separate discrete financial information is utilized for evaluation by the chief operating decision maker in making decisions regarding resource allocation and assessing performance. To date, the chief operating decision maker has made such decisions and assessed performance at the company level as one segment. The Company's chief operating decision maker is its President and Chief Executive Officer. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"), which adds an impairment model that is based on expected losses rather than incurred losses. Under ASU 2016-13, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. In April and May 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments ("ASU 2019-04") and ASU 2019-05 Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief ("ASU 2019-05"), respectively. ASU 2019-04 provides transition relief for entities adopting ASU 2016-13 and ASU 2019-05 clarifies certain aspects of the accounting for credit losses, hedging activities and financial instruments in connection with the adoption of ASU 2016-13. ASU 2019-04 and ASU 2019-05 are effective with the adoption of ASU 2016-13, which is effective for the Company beginning January 1, 2020 for both interim and annual reporting periods, with early adoption permitted. The Company continues to assess the potential impact of the adoption of ASU 2016-13 and related amendments and currently does not believe that it will have a material impact on the Company's condensed consolidated financial statements. The FASB has issued the following accounting pronouncements, all of which became effective for the Company on January 1, 2019 and none of which had a material impact on the Company's condensed consolidated financial statements: In July 2018, the FASB issued ASU 2018-09, Codification Improvements (“ASU 2018-09”), which contains amendments to clarify, correct errors in or make minor improvements to the FASB Codification. ASU 2018-09 makes improvements to multiple topics, including but not limited to comprehensive income, debt, income taxes related to both stock-based compensation and business combinations, fair value measurement and defined contribution benefit plans. In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting ("ASU 2018-07"), which expands the scope of ASC 718, Compensation - Stock Compensation ("ASC 718"), to include all share-based payment arrangements related to the acquisition of goods and services from both nonemployees and employees. As a result, most of the guidance in ASC 718 associated with employee share-based payments, including most of its requirements related to classification and measurement, applies to nonemployee share-based payment arrangements. In February 2018, the FASB issued ASU 2018-02, I ncome Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ("ASU 2018-02"), which amends ASC 220, Income Statement - Reporting Comprehensive Income , to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (the "Tax Act") and requires entities to provide certain disclosures regarding stranded tax effects. The Company did not elect to reclassify the income tax effects of the Tax Act from accumulated other comprehensive income to accumulated deficit. In October 2016, the FASB issued ASU 2016-16, I ncome Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory ("ASU 2016-16"), which removes the prohibition in ASC 740, Income Taxes , against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. In addition, the FASB has issued the following accounting pronouncements, none of which the Company believes will have a material impact on its condensed consolidated financial statements: In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”), which provides guidance on implementation costs incurred in a cloud computing arrangement (“CCA”) that is a service contract. ASU 2018-15 amends ASC 350, Intangibles - Goodwill and Other (“ASC 350”) to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply the guidance in ASC 350-40 to determine which implementation costs should be capitalized in such a CCA. ASU 2018-15 is effective for the Company beginning January 1, 2020. In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans (“ASU 2018-14”), which amends ASC 715, Compensation - Retirement Benefits , to add, remove and clarify disclosure requirements related to defined benefit pension and other postretirement plans. ASU 2018-14 is effective for the Company beginning January 1, 2020. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which changes the fair value measurement requirements of ASC 820, Fair Value Measurement. ASU 2018-13 is effective for the Company beginning January 1, 2020 for both interim and annual reporting. |
Revenue Recognition | The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers ("ASC 606" or the "New Revenue Standard"), which it adopted on January 1, 2018 using the modified retrospective method. The Company derives revenues from two primary sources: products and services. Product revenue includes the Company's hardware and software that function together to deliver the products' essential functionality. Software and hardware are also sold on a standalone basis. Services include customer support (software updates, upgrades and technical support), consulting, design services, installation services and training. Generally, contracts with customers contain multiple performance obligations, consisting of products and services. For these contracts, the Company accounts for individual performance obligations separately if they are considered distinct. When an arrangement contains more than one performance obligation, the Company will generally allocate the transaction price to each performance obligation on a relative standalone selling price basis. The best evidence of a standalone selling price is the observable price of a good or service when the entity sells that good or service separately in similar circumstances and to similar customers. If the good or service is not sold separately, an entity must estimate the standalone selling price by using an approach that maximizes the use of observable inputs. Acceptable estimation methods include but are not limited to: (1) adjusted market assessment; (2) expected cost plus a margin; and (3) a residual approach (when the standalone selling price is not directly observable and is either highly variable or uncertain). The Company's software licenses typically provide a perpetual right to use the Company's software. The Company also sells term-based software licenses that expire and Software-as-a-Service ("SaaS")-based software which are referred to as subscription arrangements. The Company does not customize its software nor are installation services required, as the customer has a right to utilize internal resources or a third-party service company. The software and hardware are delivered before related services are provided and are functional without professional services or customer support. The Company has concluded that its software licenses are functional intellectual property that are distinct, as the user can benefit from the software on its own. The product revenue is typically recognized upon transfer of control or when the software is made available for download, as this is the point that the user of the software can direct the use of, and obtain substantially all of the remaining benefits from, the functional intellectual property. The Company does not recognize software revenue related to the renewal of subscription software licenses earlier than the beginning of the subscription period. Hardware product is generally sold with software to provide the customer solution. Services revenue includes revenue from customer support and other professional services. The Company offers warranties on its products. Certain of the Company's warranties are considered to be assurance-type in nature and do not cover anything beyond ensuring that the product is functioning as intended. Based on the guidance in ASC 606, assurance-type warranties do not represent separate performance obligations. The Company also sells separately-priced maintenance service contracts, which qualify as service-type warranties and represent separate performance obligations. The Company does not allow and has no history of accepting product returns. Customer support includes software updates on a when-and-if-available basis, telephone support, integrated web-based support and bug fixes or patches. The Company sells its customer support contracts at a percentage of list or net product price related to the support. Customer support revenue is recognized ratably over the term of the customer support agreement, which is typically one year. The Company's professional services include consulting, technical support, resident engineer services, design services and installation services. Because control transfers over time, revenue is recognized based on progress toward completion of the performance obligation. The method to measure progress toward completion requires judgment and is based on the nature of the products or services to be provided. The Company generally uses the input method to measure progress for its contracts because it believes such method best depicts the transfer of assets to the customer, which occurs as the Company incurs costs for the contracts. Under the cost-to-cost measure of progress, the progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. When the measure of progress is based upon expended labor, progress toward completion is measured as the ratio of labor time expended to date versus the total estimated labor time required to complete the performance obligation. Revenue is recorded proportionally as costs are incurred or labor is expended. Costs to fulfill these obligations include internal labor as well as subcontractor costs. Customer training includes courses offered by the Company. The related revenue is typically recognized as the training services are performed. |
BUSINESS ACQUISITIONS (Tables)
BUSINESS ACQUISITIONS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | A summary of the final allocation of the purchase consideration for Edgewater as of September 30, 2019 is as follows (in thousands): Fair value of consideration transferred: Cash consideration: Cash paid to Edgewater Selling Stakeholders $ 51,162 Less cash acquired (4,773 ) Net cash consideration 46,389 Deferred purchase consideration 30,000 Fair value of Ribbon stock issued 30,000 Fair value of equity awards assumed (see Note 12) 747 Fair value of total consideration $ 107,136 Fair value of assets acquired and liabilities assumed: Current assets, net of cash acquired $ 16,098 Property and equipment 245 Intangible assets: Developed technology 29,500 Customer relationships 26,100 Trade names 1,100 Goodwill 48,053 Other noncurrent assets 103 Deferred revenue (2,749 ) Other current liabilities (9,926 ) Deferred revenue, net of current (669 ) Other long-term liabilities (719 ) $ 107,136 |
Schedule of Components of Acquisition Related Costs | The Company's acquisition- and integration-related expenses for the three and nine months ended September 30, 2019 and 2018 were as follows (in thousands): Three months ended Nine months ended September 30, September 30, September 30, September 30, Professional and services fees (acquisition-related) $ 743 $ 2,905 $ 2,569 $ 5,314 Management bonuses (acquisition-related) — — — 1,972 Integration-related expenses 954 2,665 4,292 6,976 $ 1,697 $ 5,570 $ 6,861 $ 14,262 |
EARNINGS (LOSS) PER SHARE (Tabl
EARNINGS (LOSS) PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of calculations of shares used to compute basic and diluted earnings (loss) per share | The calculations of shares used to compute earnings (loss) per share were as follows (in thousands): Three months ended Nine months ended September 30, September 30, September 30, September 30, Weighted average shares outstanding—basic 110,080 104,918 109,523 103,009 Potential dilutive common shares 676 — 577 — Weighted average shares outstanding—diluted 110,756 104,918 110,100 103,009 |
CASH EQUIVALENTS, MARKETABLE _2
CASH EQUIVALENTS, MARKETABLE SECURITIES AND INVESTMENTS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Investments, All Other Investments [Abstract] | |
Schedule of amortized cost, gross unrealized gains and losses and fair value of marketable debt and equity securities and investments | The amortized cost, gross unrealized gains and losses and fair value of the Company's marketable debt securities at December 31, 2018 were comprised of the following (in thousands): December 31, 2018 Amortized cost Unrealized gains Unrealized losses Fair value Cash equivalents $ 310 $ — $ — $ 310 Marketable securities U.S. government agency notes $ 3,998 $ — $ (9 ) $ 3,989 Corporate debt securities 3,301 — (6 ) 3,295 $ 7,299 $ — $ (15 ) $ 7,284 |
Schedule of fair value of financial assets | The following table shows the fair value of the Company's financial assets at December 31, 2018 . These financial assets are comprised of the Company's available-for-sale debt securities and reported under the captions Cash and cash equivalents and Marketable securities in the condensed consolidated balance sheet (in thousands): Fair value measurements at Total carrying Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Cash equivalents $ 310 $ 310 $ — $ — Marketable securities U.S. government agency notes $ 3,989 $ — $ 3,989 $ — Corporate debt securities 3,295 — 3,295 — $ 7,284 $ — $ 7,284 $ — |
INVENTORY (Tables)
INVENTORY (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | Inventory at September 30, 2019 and December 31, 2018 consisted of the following (in thousands): September 30, December 31, On-hand final assemblies and finished goods inventories $ 12,137 $ 19,879 Deferred cost of goods sold 2,525 3,798 14,662 23,677 Less noncurrent portion (included in other assets) (559 ) (1,075 ) Current portion $ 14,103 $ 22,602 |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | The Company's intangible assets at September 30, 2019 and December 31, 2018 consisted of the following (in thousands): September 30, 2019 Weighted average amortization period (years) Cost Accumulated amortization Net carrying value In-process research and development * $ 5,600 $ — $ 5,600 Developed technology 6.83 186,880 92,446 94,434 Customer relationships 9.47 154,140 29,363 124,777 Trade names 5.20 2,000 1,049 951 Internal use software 3.00 730 730 — 7.86 $ 349,350 $ 123,588 $ 225,762 December 31, 2018 Weighted average amortization period (years) Cost Accumulated amortization Net carrying value In-process research and development * $ 5,600 $ — $ 5,600 Developed technology 6.91 182,880 63,187 119,693 Customer relationships 9.44 146,940 22,218 124,722 Trade names 5.20 2,000 624 1,376 Internal use software 3.00 730 730 — 7.88 $ 338,150 $ 86,759 $ 251,391 * An in-process research and development intangible asset has an indefinite life until the product is generally available, at which time such asset is typically reclassified to developed technology. |
Schedule of amortization expense related to intangible assets | Amortization expense for intangible assets for the three and nine months ended September 30, 2019 and 2018 was as follows (in thousands): Three months ended Nine months ended Statement of operations classification September 30, September 30, September 30, September 30, Developed technology $ 9,522 $ 10,593 $ 29,259 $ 29,455 Cost of revenue - product Customer relationships 2,608 2,695 7,145 7,881 Sales and marketing Trade names 130 160 425 385 Sales and marketing $ 12,260 $ 13,448 $ 36,829 $ 37,721 |
Schedule of estimated future amortization expense for intangible assets | Estimated future amortization expense for the Company's intangible assets at September 30, 2019 was as follows (in thousands): Years ending December 31, Remainder of 2019 $ 12,396 2020 48,815 2021 42,493 2022 35,113 2023 27,538 Thereafter 59,407 $ 225,762 |
Schedule of goodwill | The changes in the carrying value of the Company's goodwill in the nine months ended September 30, 2019 and 2018 were as follows (in thousands): Balance at January 1 2019 2018 Goodwill $ 386,761 $ 338,822 Accumulated impairment losses (3,106 ) (3,106 ) 383,655 335,716 Acquisition of Anova 5,541 — Acquisition of Edgewater — 46,777 Balance at September 30 $ 389,196 $ 382,493 Balance at September 30 Goodwill $ 392,302 $ 385,599 Accumulated impairment losses (3,106 ) (3,106 ) $ 389,196 $ 382,493 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | Accrued expenses at September 30, 2019 and December 31, 2018 consisted of the following (in thousands): September 30, December 31, Employee compensation and related costs $ 26,326 $ 42,852 Deferred purchase consideration 1,700 15,000 Other 24,624 26,411 $ 52,650 $ 84,263 |
RESTRUCTURING AND FACILITIES _2
RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Restructuring and Related Activities [Abstract] | |
Summary of restructuring accrual activity | The components of Restructuring and related expense recorded in the three and nine months ended September 30, 2018 were as follows (in thousands): Three months ended Nine months ended September 30, September 30, Severance and related costs 2,481 14,603 Facilities (84 ) 559 $ 2,397 $ 15,162 A summary of the Merger Restructuring Initiative accrual activity for the nine months ended September 30, 2019 is as follows (in thousands): Balance at Initiatives Adjustment for the impact of ASC 842 adoption Cash Balance at Severance $ 1,910 $ 5,076 $ — $ (5,818 ) $ 1,168 Facilities 771 156 (771 ) (156 ) — $ 2,681 $ 5,232 $ (771 ) $ (5,974 ) $ 1,168 The components of Restructuring and related expense for the three and nine months ended September 30, 2019 were as follows (in thousands): Three months ended Nine months ended September 30, September 30, Severance and related costs $ 719 $ 11,619 Variable and other facilities-related costs 1,052 1,370 Accelerated amortization of lease assets due to cease-use 601 3,459 $ 2,372 $ 16,448 A summary of the 2019 Restructuring Initiative accrual activity for severance and related costs for the nine months ended September 30, 2019 is as follows (in thousands): Balance at Initiatives Cash Balance at Severance $ — $ 6,543 $ (2,620 ) $ 3,923 Variable and other facilities costs — 1,214 (220 ) 994 $ — $ 7,757 $ (2,840 ) $ 4,917 |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Timing of Performance Obligation | The Company's typical performance obligations include the following: Performance Obligation When Performance Obligation is Typically Satisfied When Payment is Typically Due Software and Product Revenue Software licenses (perpetual or term) Upon transfer of control; typically, when made available for download (point in time) Generally, within 30 days of invoicing except for term licenses, which may be paid for over time Software licenses (subscription) Upon activation of hosted site (over time) Generally, within 30 days of invoicing Appliances When control of the appliance passes to the customer; typically, upon delivery (point in time) Generally, within 30 days of invoicing Software upgrades Upon transfer of control; typically, when made available for download (point in time) Generally, within 30 days of invoicing Customer Support Revenue Customer support Ratably over the course of the support contract (over time) Generally, within 30 days of invoicing Professional Services Other professional services (excluding training services) As work is performed (over time) Generally, within 30 days of invoicing (upon completion of services) Training When the class is taught (point in time) Generally, within 30 days of services being performed |
Disaggregation of Revenue | The Company's product revenue from sales to enterprise customers and from sales to service provider customers for the three and nine months ended September 30, 2019 and 2018 was as follows (in thousands): Three months ended Nine months ended September 30, September 30, September 30, September 30, Sales to enterprise customers $ 17,458 $ 23,581 $ 47,295 $ 37,534 Sales to service provider customers 43,694 53,702 133,396 154,403 $ 61,152 $ 77,283 $ 180,691 $ 191,937 The Company's product revenue from indirect sales through its channel partner program and from its direct sales program for the three and nine months ended September 30, 2019 and 2018 was as follows (in thousands): Three months ended Nine months ended September 30, September 30, September 30, September 30, Indirect sales through channel partner program $ 21,537 $ 26,309 $ 69,380 $ 42,151 Direct sales 39,615 50,974 111,311 149,786 $ 61,152 $ 77,283 $ 180,691 $ 191,937 The Company's revenue for the three and nine months ended September 30, 2019 and 2018 was disaggregated as follows: Three months ended September 30, 2019 Product revenue Service revenue (maintenance) Service revenue (professional services) Total revenue United States $ 44,701 $ 32,709 $ 10,113 $ 87,523 Europe, Middle East and Africa 7,346 10,899 2,635 20,880 Japan 2,318 2,932 1,652 6,902 Other Asia Pacific 3,199 4,191 1,567 8,957 Other 3,588 8,170 1,633 13,391 $ 61,152 $ 58,901 $ 17,600 $ 137,653 Three months ended September 30, 2018 Product revenue Service revenue (maintenance) Service revenue (professional services) Total revenue United States $ 49,699 $ 34,065 $ 9,040 $ 92,804 Europe, Middle East and Africa 10,380 11,504 2,169 24,053 Japan 3,588 2,882 503 6,973 Other Asia Pacific 6,959 3,551 906 11,416 Other 6,657 8,154 2,411 17,222 $ 77,283 $ 60,156 $ 15,029 $ 152,468 Nine months ended September 30, 2019 Product revenue Service revenue (maintenance) Service revenue (professional services) Total revenue United States $ 114,525 $ 99,281 $ 26,919 $ 240,725 Europe, Middle East and Africa 32,215 31,016 8,699 71,930 Japan 9,637 8,805 4,223 22,665 Other Asia Pacific 13,580 11,467 3,524 28,571 Other 10,734 22,462 4,915 38,111 $ 180,691 $ 173,031 $ 48,280 $ 402,002 Nine months ended September 30, 2018 Product revenue Service revenue (maintenance) Service revenue (professional services) Total revenue United States $ 109,977 $ 98,354 $ 25,535 $ 233,866 Europe, Middle East and Africa 29,807 35,550 8,157 73,514 Japan 16,128 8,431 2,296 26,855 Other Asia Pacific 21,970 8,905 3,185 34,060 Other 14,055 23,049 5,610 42,714 $ 191,937 $ 174,289 $ 44,783 $ 411,009 |
Schedule of Customer Assets and Liabilities | The changes in the Company's accounts receivable, unbilled receivables and deferred revenue balances for the nine months ended September 30, 2019 were as follows (in thousands): Accounts receivable Unbilled accounts receivable Deferred revenue (current) Deferred revenue (long-term) Balance at January 1, 2019 $ 174,310 $ 13,543 $ 105,087 $ 17,572 Increase (decrease), net (32,533 ) 7,644 (21,664 ) 1,115 Balance at September 30, 2019 $ 141,777 $ 21,187 $ 83,423 $ 18,687 |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of activity related to outstanding stock options | The activity related to the Company's outstanding stock options for the nine months ended September 30, 2019 was as follows: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value (in thousands) Outstanding at January 1, 2019 582,061 $ 9.01 Granted — $ — Exercised (126,015 ) $ 1.85 Forfeited (38,666 ) $ 2.55 Expired (109,757 ) $ 12.15 Outstanding at September 30, 2019 307,623 $ 11.63 5.12 $ 416 Vested or expected to vest at September 30, 2019 302,858 $ 11.78 5.07 $ 399 Exercisable at September 30, 2019 260,793 $ 13.35 4.67 $ 240 |
Schedule of stock options, additional information | Additional information regarding the Company's stock options for the three and nine months ended September 30, 2019 was as follows (in thousands): Three months ended Nine months ended September 30, September 30, Total intrinsic value of stock options exercised $ 59 $ 456 Cash received from the exercise of stock options $ 43 $ 233 |
Schedule of activity related to unvested restricted stock grants | The activity related to the Company's RSAs for the nine months ended September 30, 2019 was as follows: Shares Weighted Average Grant Date Fair Value Unvested balance at January 1, 2019 1,508,011 $ 6.90 Granted — $ — Vested (866,650 ) $ 6.92 Forfeited (45,244 ) $ 7.04 Unvested balance at September 30, 2019 596,117 $ 6.85 The activity related to the Company's RSUs for the nine months ended September 30, 2019 was as follows: Shares Weighted Average Grant Date Fair Value Unvested balance at January 1, 2019 636,300 $ 6.52 Granted 2,805,132 $ 4.99 Vested (430,316 ) $ 6.07 Forfeited (116,794 ) $ 5.37 Unvested balance at September 30, 2019 2,894,322 $ 5.16 |
Schedule of activity related to performance stock awards | The activity related to the Company's PSUs for the nine months ended September 30, 2019 was as follows: Shares Weighted Average Grant Date Fair Value Unvested balance at January 1, 2019 210,416 $ 5.77 Granted 872,073 $ 6.03 Vested (9,466 ) $ 8.55 Forfeited (5,950 ) $ 8.55 Unvested balance at September 30, 2019 1,067,073 $ 5.94 |
Schedule of stock-based compensation expenses which are included in condensed consolidated statement of operations | The condensed consolidated statements of operations include stock-based compensation for the three and nine months ended September 30, 2019 and 2018 as follows (in thousands): Three months ended Nine months ended September 30, September 30, September 30, September 30, Product cost of revenue $ 26 $ 21 $ 62 $ 91 Service cost of revenue 124 65 367 264 Research and development 521 313 1,359 1,364 Sales and marketing 721 585 2,265 1,944 General and administrative 1,093 1,532 4,101 3,758 $ 2,485 $ 2,516 $ 8,154 $ 7,421 |
MAJOR CUSTOMERS (Tables)
MAJOR CUSTOMERS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Risks and Uncertainties [Abstract] | |
Schedule of customers contributing 10% or more of the revenue | The following customers contributed 10% or more of the Company's revenue in the three and nine months ended September 30, 2019 and 2018 : Three months ended Nine months ended September 30, September 30, September 30, September 30, AT&T Inc. 16% 12% 12% 10% Verizon Communications Inc. 15% 13% 17% 15% |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Right-of-use Lease Assets and Lease Liabilities | The Company's right-of-use lease assets and lease liabilities at September 30, 2019 and December 31, 2018 were as follows (in thousands): Classification September 30, December 31, Assets Operating lease assets Operating lease right-of-use assets $ 37,132 $ — Finance lease assets* Property and equipment, net 1,362 2,104 Total leased assets $ 38,494 $ 2,104 Liabilities Current Operating Operating lease liabilities $ 7,568 $ — Finance Accrued expenses and other 1,026 1,039 Noncurrent Operating Operating lease liabilities, net of current 37,600 — Finance Other long-term liabilities 1,096 1,324 Total lease liabilities $ 47,290 $ 2,363 * Finance lease assets were recorded net of accumulated depreciation of $1.6 million and $0.9 million at September 30, 2019 and December 31, 2018, respectively, and were reported as capital lease assets prior to the Company's adoption of ASC 842. |
Lease, Other Information | The components of lease expense for the three and nine months ended September 30, 2019 were as follows (in thousands): Three months ended Nine months ended September 30, September 30, Operating lease cost* $ 2,988 $ 11,063 Finance lease cost Amortization of leased assets 244 732 Interest on lease liabilities 90 210 Short-term lease cost 4,777 14,183 Variable lease costs (costs excluded from minimum fixed lease payments)** 1,727 2,932 Net lease cost $ 9,826 $ 29,120 * Operating lease cost for the three and nine months ended September 30, 2019 includes $0.6 million and $3.5 million , respectively, of accelerated amortization for certain assets partially or fully vacated in 2019 with no intent or ability to sublease. ** Variable lease costs for the three and nine months ended September 30, 2019 include a $0.9 million accrual for all future estimated variable expenses related to certain assets partially or fully vacated in 2019 with no intent or ability to sublease. Other information related to the Company's leases as of and for the nine months ended September 30, 2019 was as follows (in thousands, except lease terms and percentages): Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 7,850 Operating cash flows from finance leases $ 210 Financing cash flows from finance leases $ 698 Weighted average remaining lease term (years) Operating leases 6.87 Finance leases 2.11 Weighted average discount rate Operating leases 6.54 % Finance leases 10.84 % |
Schedule of Future Minimum Fixed Operating Lease Payments | Future minimum fixed lease payments under noncancelable leases at September 30, 2019 were as follows (in thousands): Operating Finance leases leases Remainder of 2019 $ 2,621 $ 341 2020 9,866 1,178 2021 9,039 708 2022 7,314 144 2023 6,968 — 2024 and beyond 20,419 — Total lease payments 56,227 2,371 Less: interest (11,059 ) (249 ) Present value of lease liabilities $ 45,168 $ 2,122 |
Schedule of Future Minimum Fixed Finance Lease Payments | Future minimum fixed lease payments under noncancelable leases at September 30, 2019 were as follows (in thousands): Operating Finance leases leases Remainder of 2019 $ 2,621 $ 341 2020 9,866 1,178 2021 9,039 708 2022 7,314 144 2023 6,968 — 2024 and beyond 20,419 — Total lease payments 56,227 2,371 Less: interest (11,059 ) (249 ) Present value of lease liabilities $ 45,168 $ 2,122 |
Schedule of Future Minimum Fixed Lease Payments, Operating | Future minimum fixed lease payments under noncancelable leases at December 31, 2018 and as reported in the Company's Annual Report on Form 10-K/A for the year ended December 31, 2018 were as follows (in thousands): Operating Finance leases* leases 2019 $ 10,705 $ 1,386 2020 8,384 1,010 2021 7,455 288 2022 5,691 — 2023 5,430 — 2024 and beyond 19,818 — Total lease payments $ 57,483 2,684 Less: interest (321 ) Present value of lease liabilities** $ 2,363 * The amounts in this column include restructuring payments aggregating approximately $1 million , of which approximately 50% was due in less than one year and the remainder was due in one to three years. These amounts exclude current estimated sublease income aggregating approximately $125,000 over the remaining lease terms for restructured facilities. ** Prior to the Company's adoption of ASC 842 on January 1, 2019, operating leases were not recorded on the condensed consolidated balance sheet and no interest component was calculated. |
Schedule of Future Minimum Fixed Lease Payments, Finance | Future minimum fixed lease payments under noncancelable leases at December 31, 2018 and as reported in the Company's Annual Report on Form 10-K/A for the year ended December 31, 2018 were as follows (in thousands): Operating Finance leases* leases 2019 $ 10,705 $ 1,386 2020 8,384 1,010 2021 7,455 288 2022 5,691 — 2023 5,430 — 2024 and beyond 19,818 — Total lease payments $ 57,483 2,684 Less: interest (321 ) Present value of lease liabilities** $ 2,363 * The amounts in this column include restructuring payments aggregating approximately $1 million , of which approximately 50% was due in less than one year and the remainder was due in one to three years. These amounts exclude current estimated sublease income aggregating approximately $125,000 over the remaining lease terms for restructured facilities. ** Prior to the Company's adoption of ASC 842 on January 1, 2019, operating leases were not recorded on the condensed consolidated balance sheet and no interest component was calculated. |
BASIS OF PRESENTATION - Narrati
BASIS OF PRESENTATION - Narrative (Details) customer in Thousands, $ in Thousands | 9 Months Ended | ||
Sep. 30, 2019USD ($)segmentcustomer | Jan. 01, 2019USD ($) | Dec. 31, 2018USD ($) | |
Accounting Policies [Abstract] | |||
Number of customers | customer | 1 | ||
Operating lease right-of-use assets | $ 37,132 | $ 43,900 | $ 0 |
Lease liabilities | $ 45,168 | $ 47,800 | |
Number of reportable operating segments | segment | 1 |
BUSINESS ACQUISITIONS - Anova D
BUSINESS ACQUISITIONS - Anova Data Narrative (Details) - USD ($) $ in Thousands, shares in Millions | Sep. 30, 2019 | Jan. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 |
Business Acquisition [Line Items] | |||||
Shares of common stock issued as purchase consideration | $ 15,186 | $ 15,200 | $ 30,000 | ||
Goodwill | 389,196 | $ 383,655 | $ 382,493 | $ 335,716 | |
Anova Data, Inc. | |||||
Business Acquisition [Line Items] | |||||
Common stock to be issued (in shares) | 2.9 | ||||
Number of additional shares potentially issued (in number of shares) | 0.3 | ||||
Fair value of additional shares potentially issued | $ 1,700 | ||||
Fair value of total consideration | 16,900 | ||||
Finite-lived intangibles | 11,200 | ||||
Net assets acquired | 100 | ||||
Goodwill | 5,500 | ||||
Weighted average useful life of intangible assets (in years) | 7 years 6 months | ||||
Customer relationships | Anova Data, Inc. | |||||
Business Acquisition [Line Items] | |||||
Finite-lived intangibles | 7,200 | ||||
Developed technology | Anova Data, Inc. | |||||
Business Acquisition [Line Items] | |||||
Finite-lived intangibles | $ 4,000 |
BUSINESS ACQUISITIONS - Edgewat
BUSINESS ACQUISITIONS - Edgewater Narrative (Details) - USD ($) $ in Thousands, shares in Millions | Jun. 24, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Mar. 08, 2019 | Feb. 15, 2019 |
Business Acquisition [Line Items] | |||||||
Payment to selling shareholders | $ 0 | $ 46,389 | |||||
Acquisition purchase consideration - deferred payments | $ 1,700 | $ 30,000 | 1,700 | 30,000 | |||
Other income (expense), net | $ (507) | $ (1,254) | 70,128 | $ (3,058) | |||
Edgewater Networks, Inc. | |||||||
Business Acquisition [Line Items] | |||||||
Payment to selling shareholders | $ 46,400 | 46,389 | |||||
Common stock to be issued (in shares) | 4.2 | ||||||
Acquisition purchase consideration - deferred payments | $ 30,000 | $ 21,900 | $ 21,900 | ||||
Deferred cash payments, within 6 months from closing date | 15,000 | ||||||
Deferred cash payments, within 9 to 18 months from closing date | $ 15,000 | ||||||
Other income (expense), net | $ 8,100 | ||||||
Weighted average useful life of intangible assets (in years) | 8 years 4 months 15 days |
BUSINESS ACQUISITIONS - Schedul
BUSINESS ACQUISITIONS - Schedule of Edgewater Acquisition (Details) - USD ($) $ in Thousands | Jun. 24, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Cash consideration: | |||||
Net cash consideration | $ 0 | $ 46,389 | |||
Intangible assets: | |||||
Goodwill | 389,196 | $ 382,493 | $ 383,655 | $ 335,716 | |
Edgewater Networks, Inc. | |||||
Cash consideration: | |||||
Cash paid to Edgewater Selling Stakeholders | 51,162 | ||||
Less cash acquired | (4,773) | ||||
Net cash consideration | $ 46,400 | 46,389 | |||
Deferred purchase consideration | 30,000 | ||||
Fair value of Ribbon stock issued | 30,000 | ||||
Fair value of equity awards assumed (see Note 12) | $ 700 | 747 | |||
Fair value of total consideration | 107,136 | ||||
Fair value of assets acquired and liabilities assumed: | |||||
Current assets, net of cash acquired | 16,098 | ||||
Property and equipment | 245 | ||||
Intangible assets: | |||||
Goodwill | 48,053 | ||||
Other noncurrent assets | 103 | ||||
Deferred revenue | (2,749) | ||||
Other current liabilities | (9,926) | ||||
Deferred revenue, net of current | (669) | ||||
Other long-term liabilities | (719) | ||||
Total | 107,136 | ||||
Developed technology | Edgewater Networks, Inc. | |||||
Intangible assets: | |||||
Finite-lived intangibles | 29,500 | ||||
Customer relationships | Edgewater Networks, Inc. | |||||
Intangible assets: | |||||
Finite-lived intangibles | 26,100 | ||||
Trade names | Edgewater Networks, Inc. | |||||
Intangible assets: | |||||
Finite-lived intangibles | $ 1,100 |
BUSINESS ACQUISITIONS - Summary
BUSINESS ACQUISITIONS - Summary of Acquisition Related Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Business Combinations [Abstract] | ||||
Professional and services fees (acquisition-related) | $ 743 | $ 2,905 | $ 2,569 | $ 5,314 |
Management bonuses (acquisition-related) | 0 | 0 | 0 | 1,972 |
Integration-related expenses | 954 | 2,665 | 4,292 | 6,976 |
Total | $ 1,697 | $ 5,570 | $ 6,861 | $ 14,262 |
EARNINGS (LOSS) PER SHARE (Deta
EARNINGS (LOSS) PER SHARE (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Reconciliation of weighted average shares outstanding from basic to diluted | ||||
Weighted average shares outstanding—basic (in shares) | 110,080 | 104,918 | 109,523 | 103,009 |
Potential dilutive common shares (in shares) | 676 | 0 | 577 | 0 |
Weighted average shares outstanding—diluted (in shares) | 110,756 | 104,918 | 110,100 | 103,009 |
Options not included in computation of diluted loss per share (in shares) | 300 | 3,500 | 300 | 3,500 |
CASH EQUIVALENTS, MARKETABLE _3
CASH EQUIVALENTS, MARKETABLE SECURITIES AND INVESTMENTS - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | Dec. 31, 2018 | |
Debt Securities, Available-for-sale [Line Items] | |||
Proceeds from sale of available-for-sale securities | $ 12.5 | $ 12.5 | |
Period considered to classify available-for-sale securities as investments | 1 year |
CASH EQUIVALENTS, MARKETABLE _4
CASH EQUIVALENTS, MARKETABLE SECURITIES AND INVESTMENTS - Schedule of Activity for Short-Term Investments (Detail) $ in Thousands | Dec. 31, 2018USD ($) |
Amortized cost, gross unrealized gains and losses and fair value of marketable debt and equity securities and investments | |
Cash equivalents, amortized cost | $ 310 |
Cash equivalents, fair value | 310 |
Marketable securities, amortized cost | 7,299 |
Marketable securities, unrealized gains | 0 |
Marketable securities, unrealized losses | (15) |
Marketable securities, fair value | 7,284 |
U.S. government agency notes | |
Amortized cost, gross unrealized gains and losses and fair value of marketable debt and equity securities and investments | |
Marketable securities, amortized cost | 3,998 |
Marketable securities, unrealized gains | 0 |
Marketable securities, unrealized losses | (9) |
Marketable securities, fair value | 3,989 |
Corporate debt securities | |
Amortized cost, gross unrealized gains and losses and fair value of marketable debt and equity securities and investments | |
Marketable securities, amortized cost | 3,301 |
Marketable securities, unrealized gains | 0 |
Marketable securities, unrealized losses | (6) |
Marketable securities, fair value | $ 3,295 |
CASH EQUIVALENTS, MARKETABLE _5
CASH EQUIVALENTS, MARKETABLE SECURITIES AND INVESTMENTS - Schedule of Short-Term Investments by Measurement (Detail) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Cash and cash equivalents, Marketable securities and Investments | ||
Cash equivalents, fair value | $ 310 | |
Marketable securities, fair value | $ 0 | 7,284 |
Quoted prices in active markets (Level 1) | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Cash equivalents, fair value | 310 | |
Marketable securities, fair value | 0 | |
Significant other observable inputs (Level 2) | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Cash equivalents, fair value | 0 | |
Marketable securities, fair value | 7,284 | |
Significant unobservable inputs (Level 3) | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Cash equivalents, fair value | 0 | |
Marketable securities, fair value | 0 | |
U.S. government agency notes | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 3,989 | |
U.S. government agency notes | Quoted prices in active markets (Level 1) | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 0 | |
U.S. government agency notes | Significant other observable inputs (Level 2) | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 3,989 | |
U.S. government agency notes | Significant unobservable inputs (Level 3) | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 0 | |
Corporate debt securities | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 3,295 | |
Corporate debt securities | Quoted prices in active markets (Level 1) | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 0 | |
Corporate debt securities | Significant other observable inputs (Level 2) | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 3,295 | |
Corporate debt securities | Significant unobservable inputs (Level 3) | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | $ 0 |
INVENTORY - (Details)
INVENTORY - (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
On-hand final assemblies and finished goods inventories | $ 12,137 | $ 19,879 |
Deferred cost of goods sold | 2,525 | 3,798 |
Gross inventory | 14,662 | 23,677 |
Less noncurrent portion (included in other assets) | (559) | (1,075) |
Current portion | $ 14,103 | $ 22,602 |
INTANGIBLE ASSETS AND GOODWIL_2
INTANGIBLE ASSETS AND GOODWILL - (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Intangible Assets And Goodwill | |||||
Weighted average amortization period (years) | 7 years 10 months 8 days | 7 years 10 months 16 days | |||
Cost | $ 349,350 | $ 349,350 | $ 338,150 | ||
Accumulated amortization | 123,588 | 123,588 | 86,759 | ||
Net carrying value | 225,762 | 225,762 | 251,391 | ||
Amortization expense | 12,260 | $ 13,448 | 36,829 | $ 37,721 | |
Estimated future amortization expense for intangible assets | |||||
Remainder of 2019 | 12,396 | 12,396 | |||
2020 | 48,815 | 48,815 | |||
2021 | 42,493 | 42,493 | |||
2022 | 35,113 | 35,113 | |||
2023 | 27,538 | 27,538 | |||
Thereafter | 59,407 | 59,407 | |||
Total | 225,762 | 225,762 | |||
In-process research and development | |||||
Intangible Assets And Goodwill | |||||
Cost | 5,600 | 5,600 | 5,600 | ||
Accumulated amortization | 0 | 0 | 0 | ||
Net carrying value | 5,600 | $ 5,600 | $ 5,600 | ||
Developed technology | |||||
Intangible Assets And Goodwill | |||||
Weighted average amortization period (years) | 6 years 10 months | 6 years 10 months 28 days | |||
Cost | 186,880 | $ 186,880 | $ 182,880 | ||
Accumulated amortization | 92,446 | 92,446 | 63,187 | ||
Net carrying value | 94,434 | 94,434 | $ 119,693 | ||
Amortization expense | 9,522 | 10,593 | $ 29,259 | 29,455 | |
Customer relationships | |||||
Intangible Assets And Goodwill | |||||
Weighted average amortization period (years) | 9 years 5 months 19 days | 9 years 5 months 10 days | |||
Cost | 154,140 | $ 154,140 | $ 146,940 | ||
Accumulated amortization | 29,363 | 29,363 | 22,218 | ||
Net carrying value | 124,777 | 124,777 | $ 124,722 | ||
Amortization expense | 2,608 | 2,695 | $ 7,145 | 7,881 | |
Trade names | |||||
Intangible Assets And Goodwill | |||||
Weighted average amortization period (years) | 5 years 2 months 12 days | 5 years 2 months 12 days | |||
Cost | 2,000 | $ 2,000 | $ 2,000 | ||
Accumulated amortization | 1,049 | 1,049 | 624 | ||
Net carrying value | 951 | 951 | $ 1,376 | ||
Amortization expense | 130 | $ 160 | $ 425 | $ 385 | |
Internal use software | |||||
Intangible Assets And Goodwill | |||||
Weighted average amortization period (years) | 3 years | 3 years | |||
Cost | 730 | $ 730 | $ 730 | ||
Accumulated amortization | 730 | 730 | 730 | ||
Net carrying value | $ 0 | $ 0 | $ 0 |
INTANGIBLE ASSETS AND GOODWIL_3
INTANGIBLE ASSETS AND GOODWILL - Schedule of Changes in Carrying Value of Goodwill (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Goodwill [Roll Forward] | ||
Goodwill, gross, beginning of period | $ 386,761 | $ 338,822 |
Accumulated impairment losses, beginning of period | (3,106) | (3,106) |
Goodwill. beginning of period | 383,655 | 335,716 |
Goodwill, gross, end of period | 392,302 | 385,599 |
Accumulated impairment losses, end of period | (3,106) | (3,106) |
Goodwill, end of period | 389,196 | 382,493 |
Anova Data, Inc. | ||
Goodwill [Roll Forward] | ||
Purchase accounting adjustments | 5,541 | 0 |
Goodwill, end of period | 5,500 | |
Edgewater Networks, Inc. | ||
Goodwill [Roll Forward] | ||
Purchase accounting adjustments | 0 | $ 46,777 |
Goodwill, end of period | $ 48,053 |
ACCRUED EXPENSES - Schedule of
ACCRUED EXPENSES - Schedule of Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||
Employee compensation and related costs | $ 26,326 | $ 42,852 |
Deferred purchase consideration | 1,700 | 15,000 |
Other | 24,624 | 26,411 |
Total | $ 52,650 | $ 84,263 |
RESTRUCTURING AND FACILITIES _3
RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019USD ($)employee | Jun. 30, 2019USD ($)employee | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)employee | Sep. 30, 2018USD ($)employee | |
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring and related | $ 2,372 | $ 2,397 | $ 16,448 | $ 15,162 | |
Accelerated rent amortization | 601 | 3,459 | |||
2019 Restructuring Initiative | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring and related | 1,800 | $ 6,000 | 7,757 | ||
Number of positions eliminated | employee | 110 | ||||
Accelerated rent amortization | 600 | 3,500 | |||
Merger Restructuring Initiative | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring and related | $ 2,500 | $ 5,232 | $ 14,300 | ||
Number of positions eliminated | employee | 40 | 285 | |||
Severance | 2019 Restructuring Initiative | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring and related | $ 700 | $ 6,543 | |||
Number of positions eliminated | employee | 20 | ||||
Severance | Merger Restructuring Initiative | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring and related | 5,076 | ||||
Facilities | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring and related | $ 900 | 1,000 | |||
Facilities | Merger Restructuring Initiative | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring and related | 156 | ||||
Variable and other facilities costs | 2019 Restructuring Initiative | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring and related | $ 1,100 | $ 1,214 |
RESTRUCTURING AND FACILITIES _4
RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES - Components of Restructuring Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Restructuring and Related Activities [Abstract] | ||||
Severance and related costs | $ 719 | $ 2,481 | $ 11,619 | $ 14,603 |
Variable and other facilities-related costs | 1,052 | (84) | 1,370 | 559 |
Accelerated amortization of lease assets due to cease-use | 601 | 3,459 | ||
Restructuring and related expense | $ 2,372 | $ 2,397 | $ 16,448 | $ 15,162 |
RESTRUCTURING AND FACILITIES _5
RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES - Accrual Activity for Severance and Related Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2019 | Jun. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Restructuring Reserve [Roll Forward] | ||||||
Initiatives charged to expense | $ 2,372 | $ 2,397 | $ 16,448 | $ 15,162 | ||
Cash payments | $ (1,000) | |||||
2019 Restructuring Initiative | ||||||
Restructuring Reserve [Roll Forward] | ||||||
Balance at the beginning of the period | 0 | |||||
Initiatives charged to expense | 1,800 | $ 6,000 | 7,757 | |||
Cash payments | (2,840) | |||||
Balance at the end of the period | 4,917 | 4,917 | 0 | |||
2019 Restructuring Initiative | Severance | ||||||
Restructuring Reserve [Roll Forward] | ||||||
Balance at the beginning of the period | 0 | |||||
Initiatives charged to expense | 700 | 6,543 | ||||
Cash payments | (2,620) | |||||
Balance at the end of the period | 3,923 | 3,923 | 0 | |||
2019 Restructuring Initiative | Variable and other facilities costs | ||||||
Restructuring Reserve [Roll Forward] | ||||||
Balance at the beginning of the period | 0 | |||||
Initiatives charged to expense | 1,100 | 1,214 | ||||
Cash payments | (220) | |||||
Balance at the end of the period | $ 994 | $ 994 | $ 0 |
RESTRUCTURING AND FACILITIES _6
RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES - Assumed Restructuring Initiative Rollforward (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Restructuring Reserve [Roll Forward] | |||||
Initiatives charged to expense | $ 2,372 | $ 2,397 | $ 16,448 | $ 15,162 | |
Cash payments | $ (1,000) | ||||
Merger Restructuring Initiative | |||||
Restructuring Reserve [Roll Forward] | |||||
Balance at the beginning of the period | 2,681 | ||||
Initiatives charged to expense | $ 2,500 | 5,232 | $ 14,300 | ||
Cash payments | (5,974) | ||||
Balance at the end of the period | 1,168 | 1,168 | 2,681 | ||
Severance | Merger Restructuring Initiative | |||||
Restructuring Reserve [Roll Forward] | |||||
Balance at the beginning of the period | 1,910 | ||||
Initiatives charged to expense | 5,076 | ||||
Cash payments | (5,818) | ||||
Balance at the end of the period | 1,168 | 1,168 | 1,910 | ||
Facilities | |||||
Restructuring Reserve [Roll Forward] | |||||
Initiatives charged to expense | 900 | 1,000 | |||
Facilities | Merger Restructuring Initiative | |||||
Restructuring Reserve [Roll Forward] | |||||
Balance at the beginning of the period | 771 | ||||
Initiatives charged to expense | 156 | ||||
Cash payments | (156) | ||||
Balance at the end of the period | $ 0 | 0 | $ 771 | ||
ASC 842 | Merger Restructuring Initiative | |||||
Restructuring Reserve [Roll Forward] | |||||
Adjustment for the impact of ASC 842 adoption | (771) | ||||
ASC 842 | Severance | Merger Restructuring Initiative | |||||
Restructuring Reserve [Roll Forward] | |||||
Adjustment for the impact of ASC 842 adoption | 0 | ||||
ASC 842 | Facilities | Merger Restructuring Initiative | |||||
Restructuring Reserve [Roll Forward] | |||||
Adjustment for the impact of ASC 842 adoption | $ (771) |
RESTRUCTURING AND FACILITIES _7
RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES - Balance Sheet Classification (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Restructuring and Related Activities [Abstract] | ||
Long-term portion of accrued restructuring | $ 0.9 | $ 0.5 |
DEBT - Senior Secured Credit Fa
DEBT - Senior Secured Credit Facility (Details) - USD ($) | Apr. 29, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 21, 2017 |
Revolving Credit Facility | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Commitments from lender | $ 100,000,000 | |||
Outstanding debt | $ 55,000,000 | |||
Debt interest rate | 3.76% | 5.96% | ||
Default rate percentage | 2.00% | |||
Revolving Credit Facility | Line of Credit | Maximum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 2.00% | |||
Revolving Credit Facility | Line of Credit | London Interbank Offered Rate (LIBOR) | Minimum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.50% | |||
Revolving Credit Facility | Line of Credit | London Interbank Offered Rate (LIBOR) | Maximum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 3.00% | |||
Revolving Credit Facility | Line of Credit | Base Rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.50% | |||
Revolving Credit Facility | Line of Credit | Additional Applicable Margin | Minimum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.50% | |||
Letter of Credit | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Commitments from lender | 15,000,000 | |||
Outstanding debt | $ 3,400,000 | $ 2,700,000 | ||
Debt interest rate | 1.50% | 1.75% | ||
Swingline loan | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Commitments from lender | $ 15,000,000 | |||
New Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Outstanding debt | $ 49,400,000 | |||
New Credit Facility | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Principal amount | $ 50,000,000 | |||
Increase commitment under debt instrument | $ 75,000,000 | |||
New Credit Facility | Revolving Credit Facility | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Outstanding debt | $ 34,000,000 |
DEBT - Promissory Note (Details
DEBT - Promissory Note (Details) - USD ($) | Apr. 29, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | Oct. 27, 2017 |
GENBAND | ||||
Debt Instrument [Line Items] | ||||
Promissory note | $ 22,500,000 | |||
GENBAND | Minimum | ||||
Debt Instrument [Line Items] | ||||
Promissory note interest rate | 7.50% | |||
GENBAND | Maximum | ||||
Debt Instrument [Line Items] | ||||
Promissory note interest rate | 10.00% | |||
Promissory Note | ||||
Debt Instrument [Line Items] | ||||
Promissory note | $ 24,100,000 | |||
Principal amount | 22,500,000 | |||
Interest converted to principal | $ 1,600,000 | |||
Notes payable | Promissory Note | ||||
Debt Instrument [Line Items] | ||||
Repayment of notes payable | $ 24,700,000 |
REVENUE RECOGNITION (Details)
REVENUE RECOGNITION (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |||
Revenue recognized | $ 80 | $ 79 | |
Customer contract expected life (in years) | 5 years | ||
Deferred sales commissions capitalized | $ 2.7 | $ 2.7 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |||
Revenue from Contract with Customer [Abstract] | |||
Revenue recognized | $ 5 | ||
Disaggregation of Revenue [Line Items] | |||
Revenue, remaining performance obligation, period | 1 year | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |||
Revenue from Contract with Customer [Abstract] | |||
Revenue recognized | $ 8 | ||
Disaggregation of Revenue [Line Items] | |||
Revenue, remaining performance obligation, period | 1 year | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |||
Revenue from Contract with Customer [Abstract] | |||
Revenue recognized | $ 6 | ||
Disaggregation of Revenue [Line Items] | |||
Revenue, remaining performance obligation, period |
REVENUE RECOGNITION - Schedule
REVENUE RECOGNITION - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 137,653 | $ 152,468 | $ 402,002 | $ 411,009 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 87,523 | 92,804 | 240,725 | 233,866 |
Europe, Middle East and Africa | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 20,880 | 24,053 | 71,930 | 73,514 |
Japan | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 6,902 | 6,973 | 22,665 | 26,855 |
Other Asia Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 8,957 | 11,416 | 28,571 | 34,060 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 13,391 | 17,222 | 38,111 | 42,714 |
Product | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 61,152 | 77,283 | 180,691 | 191,937 |
Product revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 61,152 | 77,283 | 180,691 | 191,937 |
Product revenue | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 44,701 | 49,699 | 114,525 | 109,977 |
Product revenue | Europe, Middle East and Africa | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 7,346 | 10,380 | 32,215 | 29,807 |
Product revenue | Japan | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 2,318 | 3,588 | 9,637 | 16,128 |
Product revenue | Other Asia Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 3,199 | 6,959 | 13,580 | 21,970 |
Product revenue | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 3,588 | 6,657 | 10,734 | 14,055 |
Service revenue (maintenance) | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 58,901 | 60,156 | 173,031 | 174,289 |
Service revenue (maintenance) | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 32,709 | 34,065 | 99,281 | 98,354 |
Service revenue (maintenance) | Europe, Middle East and Africa | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 10,899 | 11,504 | 31,016 | 35,550 |
Service revenue (maintenance) | Japan | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 2,932 | 2,882 | 8,805 | 8,431 |
Service revenue (maintenance) | Other Asia Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 4,191 | 3,551 | 11,467 | 8,905 |
Service revenue (maintenance) | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 8,170 | 8,154 | 22,462 | 23,049 |
Service revenue (professional services) | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 17,600 | 15,029 | 48,280 | 44,783 |
Service revenue (professional services) | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 10,113 | 9,040 | 26,919 | 25,535 |
Service revenue (professional services) | Europe, Middle East and Africa | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 2,635 | 2,169 | 8,699 | 8,157 |
Service revenue (professional services) | Japan | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 1,652 | 503 | 4,223 | 2,296 |
Service revenue (professional services) | Other Asia Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 1,567 | 906 | 3,524 | 3,185 |
Service revenue (professional services) | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 1,633 | 2,411 | 4,915 | 5,610 |
Indirect sales through channel partner program | Product | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 21,537 | 26,309 | 69,380 | 42,151 |
Direct sales | Product | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 39,615 | 50,974 | 111,311 | 149,786 |
Sales to enterprise customers | Product | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 17,458 | 23,581 | 47,295 | 37,534 |
Sales to service provider customers | Product | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 43,694 | $ 53,702 | $ 133,396 | $ 154,403 |
REVENUE RECOGNITION - Schedul_2
REVENUE RECOGNITION - Schedule of Customer Assets & Liabilities (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Accounts receivable | |
Beginning balance | $ 174,310 |
Increase (decrease), net | (32,533) |
Ending balance | 141,777 |
Unbilled accounts receivable | |
Beginning balance | 13,543 |
Increase (decrease), net | 7,644 |
Ending balance | 21,187 |
Deferred revenue (current) | |
Beginning balance | 105,087 |
Increase (decrease), net | (21,664) |
Ending balance | 83,423 |
Deferred revenue (long-term) | |
Beginning balance | 17,572 |
Increase (decrease), net | 1,115 |
Ending balance | $ 18,687 |
COMMON STOCK REPURCHASES (Detai
COMMON STOCK REPURCHASES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2019 | |
Class of Stock [Line Items] | ||||
Payments for repurchase of common stock | $ 4,536 | $ 0 | ||
Number of shares repurchased (in shares) | 0 | |||
Repurchase Program | ||||
Class of Stock [Line Items] | ||||
Repurchase amount authorized (up to) | $ 75,000 | |||
Payments for repurchase of common stock | $ 4,500 | |||
Stock repurchased and retired during period (in shares) | 1,000,000 | |||
Remaining authorized repurchase amount | $ 70,500 | $ 70,500 |
STOCK-BASED COMPENSATION PLAN_2
STOCK-BASED COMPENSATION PLANS - 2019 Stock Incentive Plan (Details) | Jun. 05, 2019shares |
2019 Plan | |
Stock-based compensation | |
Number of shares available to grant | 7,000,000 |
2007 Plan | |
Stock-based compensation | |
Number of shares available to grant | 5,100,000 |
STOCK-BASED COMPENSATION PLAN_3
STOCK-BASED COMPENSATION PLANS - 2002 Stock Option Plan (Details) - Edgewater Networks, Inc. - USD ($) $ / shares in Units, $ in Thousands | Jun. 24, 2018 | Sep. 30, 2019 |
Stock-based compensation | ||
Conversion factor | 17.00% | |
Acquisition consideration (in dollars per share) | $ 1.20 | |
Additional purchase consideration | $ 700 | $ 747 |
Fair value of Ribbon Replacement Options | $ 1,000 | |
Fair value of Ribbon Replacement Options, weighted average period (in years) | 2 years |
STOCK-BASED COMPENSATION PLAN_4
STOCK-BASED COMPENSATION PLANS - Executive Equity Arrangements (Details) $ / shares in Units, $ in Thousands | Mar. 15, 2019shares | Mar. 31, 2017executiveshares | Apr. 30, 2019shares | Feb. 28, 2019shares | May 31, 2018shares | Mar. 31, 2018executiveshares | Apr. 30, 2019shares | Sep. 30, 2019USD ($)participant$ / sharesshares | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)participant$ / sharesshares | Sep. 30, 2018USD ($) | Dec. 31, 2018shares | Mar. 08, 2019$ / shares |
Stock-based compensation | |||||||||||||
Share price (in dollars per share) | $ / shares | $ 4.97 | ||||||||||||
Stock-based compensation expense | $ | $ 2,485 | $ 2,516 | $ 8,154 | $ 7,421 | |||||||||
PSUs | |||||||||||||
Stock-based compensation | |||||||||||||
Share price (in dollars per share) | $ / shares | $ 7.24 | $ 7.24 | |||||||||||
Granted (in shares) | 872,073 | 872,073 | |||||||||||
Vested (in shares) | 9,466 | ||||||||||||
Remaining unvested (in shares) | 1,067,073 | 1,067,073 | 210,416 | ||||||||||
Market PSUs | PSUs | |||||||||||||
Stock-based compensation | |||||||||||||
Granted (in shares) | 348,829 | ||||||||||||
Percent of performance metrics achieved | 200.00% | ||||||||||||
Performance period (in years) | 3 years | ||||||||||||
Stock Bonus Election Program | Common stock | |||||||||||||
Stock-based compensation | |||||||||||||
Percentage of additional bonus | 20.00% | ||||||||||||
Number of participants in program | participant | 23 | 23 | |||||||||||
Granted (in shares) | 198,949 | ||||||||||||
Performance PSUs | PSUs | |||||||||||||
Stock-based compensation | |||||||||||||
Granted (in shares) | 523,244 | ||||||||||||
Percent of performance metrics achieved | 200.00% | ||||||||||||
Minimum | Stock Bonus Election Program | Common stock | |||||||||||||
Stock-based compensation | |||||||||||||
Percentage of bonus available for program | 10.00% | ||||||||||||
Maximum | Stock Bonus Election Program | Common stock | |||||||||||||
Stock-based compensation | |||||||||||||
Percentage of bonus available for program | 50.00% | ||||||||||||
Executives | 2018 Performance Share Units | PSUs | |||||||||||||
Stock-based compensation | |||||||||||||
Granted (in shares) | 195,000 | ||||||||||||
Percent of performance metrics achieved | 150.00% | 61.40% | 150.00% | ||||||||||
Achievement level (as a percentage) | 106.49% | ||||||||||||
Vested (in shares) | 292,500 | 9,466 | |||||||||||
Executives | 2018 Performance Share Units | March 16, 2018 | PSUs | |||||||||||||
Stock-based compensation | |||||||||||||
Vested (in shares) | 5,950 | ||||||||||||
Executives | 2017 Performance Share Units | PSUs | |||||||||||||
Stock-based compensation | |||||||||||||
Granted (in shares) | 165,000 | ||||||||||||
Percent of performance metrics achieved | 130.00% | ||||||||||||
Vested (in shares) | 33,584 | ||||||||||||
Number of executives granted shares | executive | 5 | ||||||||||||
Number of executives shares were released to | executive | 3 | ||||||||||||
Executives | 2017 Performance Share Units | March 31, 2017 | PSUs | |||||||||||||
Stock-based compensation | |||||||||||||
Percent of performance metrics achieved | 100.00% | ||||||||||||
Vested (in shares) | 25,834 | ||||||||||||
Remaining unvested (in shares) | 0 | 0 | |||||||||||
Executives | 2017 Performance Share Units | March 31, 2018 | PSUs | |||||||||||||
Stock-based compensation | |||||||||||||
Vested (in shares) | 7,750 | ||||||||||||
Percent of achievement over target | 30.00% |
STOCK-BASED COMPENSATION PLAN_5
STOCK-BASED COMPENSATION PLANS - Schedules (Details) - USD ($) | 2 Months Ended | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Weighted average grant-date fair value | |||||
Total fair value of restricted stock awards, restricted stock units and performance-based stock units on date vested | $ 6,765,000 | $ 5,462,000 | |||
Stock-based compensation expense (reversal) | $ 2,485,000 | $ 2,516,000 | 8,154,000 | 7,421,000 | |
Tax benefit from stock based compensation expense | 0 | 0 | |||
Fair value of the assumed awards attributable to future stock-based compensation expense | 9,100,000 | $ 9,100,000 | |||
Expected period for unrecognized expense | 2 years | ||||
Product cost of revenue | |||||
Weighted average grant-date fair value | |||||
Stock-based compensation expense (reversal) | 26,000 | 21,000 | $ 62,000 | 91,000 | |
Service cost of revenue | |||||
Weighted average grant-date fair value | |||||
Stock-based compensation expense (reversal) | 124,000 | 65,000 | 367,000 | 264,000 | |
Research and development | |||||
Weighted average grant-date fair value | |||||
Stock-based compensation expense (reversal) | 521,000 | 313,000 | 1,359,000 | 1,364,000 | |
Sales and marketing | |||||
Weighted average grant-date fair value | |||||
Stock-based compensation expense (reversal) | 721,000 | 585,000 | 2,265,000 | 1,944,000 | |
General and administrative | |||||
Weighted average grant-date fair value | |||||
Stock-based compensation expense (reversal) | $ 1,093,000 | $ 1,532,000 | $ 4,101,000 | $ 3,758,000 | |
PSUs | |||||
Change in unvested restricted stock awards | |||||
Unvested balance at the beginning of the period (in shares) | 210,416 | ||||
Granted (in shares) | 872,073 | 872,073 | |||
Vested (in shares) | (9,466) | ||||
Forfeited (in shares) | (5,950) | ||||
Unvested balance at the end of the period (in shares) | 1,067,073 | 1,067,073 | |||
Weighted average grant-date fair value | |||||
Unvested balance at the end of the period (in dollars per share) | $ 5.77 | ||||
Granted (in dollars per share) | 6.03 | ||||
Vested (in dollars per share) | 8.55 | ||||
Forfeited (in dollars per share) | 8.55 | ||||
Unvested balance at end of the period (in dollars per share) | $ 5.94 | $ 5.94 | |||
Total fair value of restricted stock awards, restricted stock units and performance-based stock units on date vested | $ 100,000 | ||||
Stock Options | |||||
Number of shares | |||||
Outstanding at the beginning of the period (in shares) | 582,061 | ||||
Granted (in shares) | 0 | ||||
Exercised (in shares) | (126,015) | ||||
Forfeited (in shares) | (38,666) | ||||
Expired (in shares) | (109,757) | ||||
Outstanding at the end of the period (in shares) | 307,623 | 307,623 | |||
Vested or expected to vest at the end of the period (in shares) | 302,858 | 302,858 | |||
Exercisable at the end of the period (in shares) | 260,793 | 260,793 | |||
Weighted average exercise price | |||||
Outstanding at the beginning of the period (in dollars per share) | $ 9.01 | ||||
Granted (in dollars per share) | 0 | ||||
Exercised (in dollars per share) | 1.85 | ||||
Forfeited (in dollars per share) | 2.55 | ||||
Expired (in dollars per share) | 12.15 | ||||
Outstanding at the end of the period (in dollars per share) | $ 11.63 | 11.63 | |||
Vested or expected to vest at the end of the period (in dollars per share) | 11.78 | 11.78 | |||
Exercisable at the end of the period (in dollars per share) | $ 13.35 | $ 13.35 | |||
Weighted average remaining contractual life (in years) | |||||
Outstanding at the end of the period | 5 years 1 month 15 days | ||||
Vested or expected to vest at the end of the period | 5 years 25 days | ||||
Exercisable at the end of the period | 4 years 8 months | ||||
Aggregate intrinsic value (in dollars) | |||||
Outstanding at the end of the period (in dollars) | $ 416,000 | $ 416,000 | |||
Vested or expected to vest at the end of the period (in dollars) | 399,000 | 399,000 | |||
Exercisable at the end of the period (in dollars) | 240,000 | 240,000 | |||
Total intrinsic values of stock options exercised (in dollars) | 59,000 | 456,000 | |||
Cash received from the exercise of stock options (in dollars) | $ 43,000 | $ 233,000 | |||
RSAs | |||||
Change in unvested restricted stock awards | |||||
Unvested balance at the beginning of the period (in shares) | 1,508,011 | ||||
Granted (in shares) | 0 | ||||
Vested (in shares) | (866,650) | ||||
Forfeited (in shares) | (45,244) | ||||
Unvested balance at the end of the period (in shares) | 596,117 | 596,117 | |||
Weighted average grant-date fair value | |||||
Unvested balance at the end of the period (in dollars per share) | $ 6.90 | ||||
Granted (in dollars per share) | 0 | ||||
Vested (in dollars per share) | 6.92 | ||||
Forfeited (in dollars per share) | 7.04 | ||||
Unvested balance at end of the period (in dollars per share) | $ 6.85 | $ 6.85 | |||
Total fair value of restricted stock awards, restricted stock units and performance-based stock units on date vested | $ 8,600,000 | ||||
RSUs | |||||
Change in unvested restricted stock awards | |||||
Unvested balance at the beginning of the period (in shares) | 636,300 | ||||
Granted (in shares) | 2,805,132 | ||||
Vested (in shares) | (430,316) | ||||
Forfeited (in shares) | (116,794) | ||||
Unvested balance at the end of the period (in shares) | 2,894,322 | 2,894,322 | |||
Weighted average grant-date fair value | |||||
Unvested balance at the end of the period (in dollars per share) | $ 6.52 | ||||
Granted (in dollars per share) | 4.99 | ||||
Vested (in dollars per share) | 6.07 | ||||
Forfeited (in dollars per share) | 5.37 | ||||
Unvested balance at end of the period (in dollars per share) | $ 5.16 | $ 5.16 | |||
Employee Stock | |||||
Weighted average grant-date fair value | |||||
Offering period (in months) | 6 months | ||||
Purchase price of common stock (percentage) | 85.00% | ||||
Maximum number of shares purchasable per employee | 500 |
MAJOR CUSTOMERS - (Details)
MAJOR CUSTOMERS - (Details) - Customer | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Revenue | AT&T Inc. | |||||
MAJOR CUSTOMERS | |||||
Concentration risk, percentage | 16.00% | 12.00% | 12.00% | 10.00% | |
Revenue | Verizon Communications Inc. | |||||
MAJOR CUSTOMERS | |||||
Concentration risk, percentage | 15.00% | 13.00% | 17.00% | 15.00% | |
Accounts receivable balance | |||||
MAJOR CUSTOMERS | |||||
Concentration risk, percentage | 42.00% | 32.00% |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | Apr. 29, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | Oct. 27, 2017 |
GENBAND | ||||
Related Party Transaction [Line Items] | ||||
Promissory note issued to GENBAND equity holders | $ 22,500,000 | |||
Minimum | GENBAND | ||||
Related Party Transaction [Line Items] | ||||
Promissory note interest rate | 7.50% | |||
Maximum | GENBAND | ||||
Related Party Transaction [Line Items] | ||||
Promissory note interest rate | 10.00% | |||
Promissory Note | ||||
Related Party Transaction [Line Items] | ||||
Promissory note issued to GENBAND equity holders | $ 24,100,000 | |||
Principal amount | 22,500,000 | |||
Interest converted to principal | $ 1,600,000 | |||
Notes payable | Promissory Note | ||||
Related Party Transaction [Line Items] | ||||
Repayment of notes payable | $ 24,700,000 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2019USD ($)ft² | Jun. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)ft² | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Lessee, Lease, Description [Line Items] | ||||||
Additional amortization expense | $ 601 | $ 3,459 | ||||
Restructuring and related | $ 2,372 | $ 2,397 | $ 16,448 | $ 15,162 | ||
Square feet under lease | ft² | 97,500 | 97,500 | ||||
Rent expense | 2,800 | 8,800 | ||||
Interest expense for finance leases | $ 90 | 13 | $ 210 | 49 | ||
Amortization expense for finance leases | 244 | $ 100 | 732 | $ 300 | ||
Facilities | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Restructuring and related | 900 | 1,000 | ||||
2019 Restructuring Initiative | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Additional amortization expense | 600 | 3,500 | ||||
Restructuring and related | 1,800 | $ 6,000 | 7,757 | |||
Variable lease cost | $ 4,917 | $ 4,917 | $ 0 |
LEASES - Assets and Liabilities
LEASES - Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Assets | |||
Operating lease assets | $ 37,132 | $ 43,900 | $ 0 |
Finance lease assets | 1,362 | 2,104 | |
Total leased assets | 38,494 | 2,104 | |
Current | |||
Operating | 7,568 | 0 | |
Finance | 1,026 | 1,039 | |
Noncurrent | |||
Operating | 37,600 | 0 | |
Finance | 1,096 | 1,324 | |
Total lease liabilities | 47,290 | 2,363 | |
Finance lease assets, net of accumulated depreciation | $ 1,600 | $ 900 |
LEASES - Components of Lease Ex
LEASES - Components of Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Leases [Abstract] | ||||
Operating lease cost | $ 2,988 | $ 11,063 | ||
Finance lease cost | ||||
Amortization of leased assets | 244 | $ 100 | 732 | $ 300 |
Interest on lease liabilities | 90 | $ 13 | 210 | $ 49 |
Short-term lease cost | 4,777 | 14,183 | ||
Variable lease costs (costs excluded from minimum fixed lease payments) | 1,727 | 2,932 | ||
Net lease cost | 9,826 | 29,120 | ||
Accelerated rent amortization | 601 | 3,459 | ||
Variable lease, payment | $ 900 | $ 900 |
LEASES - Other Information (Det
LEASES - Other Information (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Cash paid for amounts included in the measurement of lease liabilities | |
Operating cash flows from operating leases | $ 7,850 |
Operating cash flows from finance leases | 210 |
Financing cash flows from finance leases | $ 698 |
Weighted average remaining lease term (years) | |
Operating leases (in years) | 6 years 10 months 12 days |
Finance leases (in years) | 2 years 1 month 8 days |
Weighted average discount rate | |
Operating leases (as a percentage) | 6.54% |
Finance leases (as a percentage) | 10.84% |
LEASES - Future Minimum Lease P
LEASES - Future Minimum Lease Payments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Sep. 30, 2019 | Jan. 01, 2019 | |
Operating Leases, After Adoption of 842: | |||
Remainder of 2019 | $ 2,621 | ||
2020 | 9,866 | ||
2021 | 9,039 | ||
2022 | 7,314 | ||
2023 | 6,968 | ||
2024 and beyond | 20,419 | ||
Total lease payments | 56,227 | ||
Less: interest | (11,059) | ||
Present value of lease liabilities | 45,168 | $ 47,800 | |
Finance Leases, After Adoption of 842: | |||
Remainder of 2019 | 341 | ||
2020 | 1,178 | ||
2021 | 708 | ||
2022 | 144 | ||
2023 | 0 | ||
2024 and beyond | 0 | ||
Total lease payments | 2,371 | ||
Less: interest | (249) | ||
Present value of lease liabilities | $ 2,122 | ||
Operating Leases, Before Adoption of 842 | |||
2019 | $ 10,705 | ||
2020 | 8,384 | ||
2021 | 7,455 | ||
2022 | 5,691 | ||
2023 | 5,430 | ||
2024 and beyond | 19,818 | ||
Total lease payments | 57,483 | ||
Finance Leases, Before Adoption of 842 | |||
2019 | 1,386 | ||
2020 | 1,010 | ||
2021 | 288 | ||
2022 | 0 | ||
2023 | 0 | ||
2024 and beyond | 0 | ||
Total lease payments | 2,684 | ||
Less: interest | (321) | ||
Present value of lease liabilities | 2,363 | ||
Cash payments | $ 1,000 | ||
Percent of restructuring charges due in less than one year | 50.00% | ||
Restructuring payments, current, term (in years) | 1 year | ||
Sublease income | $ 125 | ||
Minimum | |||
Finance Leases, Before Adoption of 842 | |||
Restructuring payments, noncurrent, term (in years) | 1 year | ||
Maximum | |||
Finance Leases, Before Adoption of 842 | |||
Restructuring payments, noncurrent, term (in years) | 3 years |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | Apr. 22, 2019USD ($) | Sep. 30, 2019USD ($)case | Sep. 30, 2019USD ($)case |
Loss Contingencies [Line Items] | |||
Ongoing lawsuits | case | 6 | 6 | |
Damages awarded from other party | $ 63 | ||
Cash payments from settlement | $ 37.5 | ||
Annual installment receivable | $ 25.5 | 25.5 | $ 25.5 |
Installment payments interest rate (as a percentage) | 4.00% | ||
Gain from settlement | 63 | 63 | |
Interest Income (Expense), Net | 0.3 | 0.3 | |
Other current assets | |||
Loss Contingencies [Line Items] | |||
Annual installment receivable | 8.5 | 8.5 | |
Other assets | |||
Loss Contingencies [Line Items] | |||
Annual installment receivable | $ 17 | $ 17 |
Uncategorized Items - sons-2019
Label | Element | Value |
Accounting Standards Update 2014-09 [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 12,453,000 |
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 12,453,000 |