Company Quick10K Filing
Alteryx
Price118.23 EPS0
Shares64 P/E582
MCap7,563 P/FCF561
Net Debt-644 EBIT-1
TEV6,919 TEV/EBIT-7,696
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-07
10-K 2019-12-31 Filed 2020-02-14
10-Q 2019-09-30 Filed 2019-11-01
10-Q 2019-06-30 Filed 2019-08-01
10-Q 2019-03-31 Filed 2019-05-02
10-K 2018-12-31 Filed 2019-03-01
10-Q 2018-09-30 Filed 2018-11-08
10-Q 2018-06-30 Filed 2018-08-09
10-Q 2018-03-31 Filed 2018-05-10
10-K 2017-12-31 Filed 2018-03-08
10-Q 2017-09-30 Filed 2017-11-09
10-Q 2017-06-30 Filed 2017-08-03
10-Q 2017-03-31 Filed 2017-05-11
8-K 2020-05-06 Earnings, Exhibits
8-K 2020-05-05 Amend Bylaw, Exhibits
8-K 2020-04-29 Other Events, Exhibits
8-K 2020-02-13 Earnings, Exhibits
8-K 2019-12-03 Officers, Exhibits
8-K 2019-10-31 Earnings, Exhibits
8-K 2019-10-14 Enter Agreement
8-K 2019-08-07 Other Events, Exhibits
8-K 2019-08-07 Enter Agreement, Off-BS Arrangement, Sale of Shares, Other Events, Exhibits
8-K 2019-08-06 Other Events, Exhibits
8-K 2019-07-31 Earnings, Exhibits
8-K 2019-05-22 Shareholder Vote
8-K 2019-05-01 Earnings, Exhibits
8-K 2019-04-04 M&A
8-K 2019-02-27 Earnings, Exhibits
8-K 2019-02-05 Officers
8-K 2019-01-24 Earnings, Accountant, Exhibits
8-K 2018-11-07 Earnings, Exhibits
8-K 2018-09-27 Officers, Other Events
8-K 2018-08-08 Earnings, Officers, Exhibits
8-K 2018-06-13 Shareholder Vote
8-K 2018-05-15 Other Events, Exhibits
8-K 2018-05-15 Enter Agreement, Off-BS Arrangement, Sale of Shares, Other Events, Exhibits
8-K 2018-05-14 Other Events, Exhibits
8-K 2018-05-09 Earnings, Exhibits
8-K 2018-02-21 Earnings, Exhibits

AYX 10Q Quarterly Report

Part I: Financial Information
Item 1. Condensed Consolidated Financial Statements (Unaudited).
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part Ii: Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 6. Exhibits.
EX-10.1 ayxex101q1202010q.htm
EX-31.1 ayxex311q1202010q.htm
EX-31.2 ayxex312q1202010q.htm
EX-32.1 ayxex321q1202010q.htm
EX-32.2 ayxex322q1202010q.htm

Alteryx Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
1.31.00.80.50.30.02017201820192020
Assets, Equity
0.20.10.10.0-0.0-0.12017201820192020
Rev, G Profit, Net Income
0.60.40.30.1-0.0-0.22017201820192020
Ops, Inv, Fin

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
  _____________________________________________________
FORM 10-Q
 _____________________________________________________
 (Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 001-38034
  _____________________________________________________
Alteryx, Inc.
(Exact name of registrant as specified in its charter)
_____________________________________________________
Delaware
 
90-0673106
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
3345 Michelson Drive,
Suite 400,
Irvine,
California
 
92612
(Address of principal executive offices)
 
(Zip Code)
(888) 836-4274
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

_____________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
 
Trading Symbol(s)
 
Name of Each Exchange on Which Registered
Class A Common Stock, $0.0001 par value per share
 
AYX
 
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.




Large accelerated filer
Accelerated filer
 
 
 
 
 
Non-accelerated filer
 
Smaller reporting company
 
 
 
 
 
 
 
 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes       No  
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
On April 30, 2020, there were 52,972,514 shares of the registrant’s Class A common stock outstanding and 12,988,715 shares of the registrant’s Class B common stock outstanding.





Alteryx, Inc.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended March 31, 2020
TABLE OF CONTENTS
 
 
 
 
 
 
 
 
Page Number
Part I:
 
 
 
 
 
 
 
 
 
 
A.
 
 
 
 
 
B.
 
 
 
 
 
C.
 
 
 
 
 
D.
 
 
 
 
 
E.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Part II:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of the federal securities laws. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. In some cases, forward-looking statements can be identified by the use of terminology such as “believe,” “may,” “will,” “intend,” “expect,” “plan,” “anticipate,” “estimate,” “potential,” or “continue,” or other comparable terminology. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about our expectations regarding:
 
the duration and impact of the novel coronavirus and the coronavirus disease, or COVID-19, pandemic;
trends in revenue, cost of revenue, and gross margin;
our investments in cloud infrastructure and the cost of third-party data center hosting fees;
trends in operating expenses, including research and development expense, sales and marketing expense, and general and administrative expense, and expectations regarding these expenses as a percentage of revenue;
expansion of our international operations and the impact on foreign tax expense;
maintaining a valuation allowance for net deferred tax assets to the extent they are not expected to be recoverable;
the timing and method of settlement of any series of our convertible senior notes;
the global opportunity for our self-service data analytics solutions;
our investments in our marketing efforts and sales organization, including indirect sales channels and headcount, and the impact of any changes to our sales organization on revenue and growth;
the continued development of Alteryx Community, our online user community, distribution channels and other partner relationships;
expansion of and within our customer base;
continued investments in research and development;
competitors and competition in our markets;
the impact of foreign currency exchange rates;
cash and cash equivalents and short-term investments and any positive cash flows from operations being sufficient to support our working capital and capital expenditure requirements for at least the next 12 months; and
other statements regarding our future operations, financial condition, and prospects and business strategies.
Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, these expectations or any of the forward-looking statements could prove to be incorrect, and actual results could differ materially from those projected or assumed in the forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to risks and uncertainties, including, but not limited to, the factors set forth in this Quarterly Report on Form 10-Q under Part II, Item 1A. Risk Factors. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the forward-looking statements made in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
All forward-looking statements and reasons why results may differ included in this Quarterly Report on Form 10-Q are made as of the date of the filing of this Quarterly Report on Form 10-Q, and we assume no obligation to update any such forward-looking statements or reasons why actual results may differ. The following discussion should be read in conjunction with our condensed consolidated financial statements and notes thereto appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q.


1



PART I: FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (unaudited).
Alteryx, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(in thousands, except per share data)
(unaudited)
 
 
Three Months Ended March 31,
 
2020
 
2019
Revenue:
 
 
 
Subscription-based software license
$
50,744

 
$
34,807

PCS and services
58,087

 
41,213

Total revenue
108,831

 
76,020

Cost of revenue:
 
 
 
Subscription-based software license
1,981

 
597

PCS and services
11,066

 
7,403

Total cost of revenue
13,047

 
8,000

Gross profit
95,784

 
68,020

Operating expenses:
 
 
 
Research and development
26,181

 
14,072

Sales and marketing
65,165

 
38,450

General and administrative
24,543

 
19,900

Total operating expenses
115,889

 
72,422

Loss from operations
(20,105
)
 
(4,402
)
Interest expense
(9,303
)
 
(2,986
)
Other income (expense), net
(2,462
)
 
2,829

Loss before benefit of income taxes
(31,870
)
 
(4,559
)
Benefit of income taxes
(16,397
)
 
(10,473
)
Net income (loss)
$
(15,473
)
 
$
5,914

Net income (loss) per share attributable to common stockholders, basic
$
(0.24
)
 
$
0.10

Net income (loss) per share attributable to common stockholders, diluted
$
(0.24
)
 
$
0.09

Weighted-average shares used to compute net income (loss) per share attributable to common stockholders, basic
65,569

 
61,926

Weighted-average shares used to compute net income (loss) per share attributable to common stockholders, diluted
65,569

 
67,478

Other comprehensive income (loss), net of tax:
 
 
 
Net unrealized holding income on investments, net of tax
1,243

 
702

Foreign currency translation adjustments
998

 
(1,011
)
Other comprehensive income (loss), net of tax
2,241

 
(309
)
Total comprehensive income (loss)
$
(13,232
)
 
$
5,605

The accompanying notes are an integral part of these condensed consolidated financial statements

2



Alteryx, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value)
(unaudited)
 
 
March 31,
2020
 
December 31, 2019
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
228,020

 
$
409,949

Short-term investments
534,887

 
376,995

Accounts receivable, net
53,824

 
129,912

Prepaid expenses and other current assets
63,547

 
55,129

Total current assets
880,278

 
971,985

Property and equipment, net
24,483

 
20,296

Operating lease right-of-use assets
45,266

 
33,600

Long-term investments
229,027

 
187,921

Goodwill
36,756

 
36,910

Intangible assets, net
18,716

 
22,083

Other assets
88,796

 
69,543

Total assets
$
1,323,322

 
$
1,342,338

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
13,280

 
$
9,383

Accrued payroll and payroll related liabilities
23,668

 
53,683

Accrued expenses and other current liabilities
29,412

 
31,715

Deferred revenue
78,469

 
83,895

Convertible senior notes, net
69,233

 
68,154

Total current liabilities
214,062

 
246,830

Convertible senior notes, net
636,917

 
630,321

Deferred revenue
2,216

 
2,733

Operating lease liabilities
40,569

 
29,293

Other liabilities
3,173

 
8,254

Total liabilities
896,937

 
917,431

Stockholders’ equity:
 
 
 
Preferred stock, $0.0001 par value: 10,000 shares authorized as of March 31, 2020 and
December 31, 2019, respectively; no shares issued and outstanding as of March 31,
2020 and December 31, 2019, respectively

 

Common stock, $0.0001 par value: 500,000 Class A shares authorized, 52,847 and
52,056 shares issued and outstanding as of March 31, 2020 and December 31, 2019,
respectively; 500,000 Class B shares authorized, 13,038 and 13,204 shares issued
and outstanding as of March 31, 2020 and December 31, 2019, respectively
7

 
7

Additional paid-in capital
427,510

 
412,191

Retained earnings (accumulated deficit)
(1,847
)
 
14,235

Accumulated other comprehensive income (loss)
715

 
(1,526
)
Total stockholders’ equity
426,385

 
424,907

Total liabilities and stockholders’ equity
$
1,323,322

 
$
1,342,338

The accompanying notes are an integral part of these condensed consolidated financial statements

3



Alteryx, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands)
(unaudited)
 
Three Months Ended March 31, 2020
 
Common Stock
 
Additional
Paid-in
Capital
 
Retained Earnings (Accumulated Deficit)
 
Accumulated
Other
Comprehensive
Gain (Loss)
 
Total
Shares
 
Amount
 
Balances at December 31, 2019
65,260

 
$
7

 
$
412,191

 
$
14,235

 
$
(1,526
)
 
$
424,907

Cumulative effect of adoption of ASC 326

 

 

 
(609
)
 

 
(609
)
Shares issued pursuant to stock
    awards, net of tax withholdings
    related to vesting of restricted
    stock units

625

 

 
1,655

 

 

 
1,655

Stock-based compensation

 

 
13,664

 

 

 
13,664

Cumulative translation adjustment

 

 

 

 
998

 
998

Unrealized gain on investments, net of tax

 

 

 

 
1,243

 
1,243

Net loss

 

 

 
(15,473
)
 

 
(15,473
)
Balances at March 31, 2020
65,885

 
$
7

 
$
427,510

 
$
(1,847
)
 
$
715

 
$
426,385


The accompanying notes are an integral part of these condensed consolidated financial statements

4



Alteryx, Inc.
Condensed Consolidated Statements of Stockholders’ Equity (continued)
(in thousands)
(unaudited)

 
Three Months Ended March 31, 2019
 
Common Stock
 
Additional
Paid-in
Capital
 
Accumulated Deficit
 
Accumulated
Other
Comprehensive Gain (Loss)
 
Total
Shares
 
Amount
 
Balances at December 31, 2018
61,579

 
$
6

 
$
315,291

 
$
(12,908
)
 
$
(571
)
 
$
301,818

Receipt of Section 16(b) disgorgement, net of tax effect

 

 
3,743

 

 

 
3,743

Shares issued pursuant to stock awards, net of tax withholdings related to vesting of restricted stock units
863

 

 
8,587

 

 

 
8,587

Stock-based compensation

 

 
5,335

 

 

 
5,335

Equity-settled contingent consideration
21

 

 
750

 

 

 
750

Cumulative translation adjustment

 

 

 

 
(1,011
)
 
(1,011
)
Unrealized gain on investments, net of tax

 

 

 

 
702

 
702

Net income

 

 

 
5,914

 

 
5,914

Balances at March 31, 2019
62,463

 
$
6

 
$
333,706

 
$
(6,994
)
 
$
(880
)
 
$
325,838

The accompanying notes are an integral part of these condensed consolidated financial statements

5



Alteryx, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
 
Three Months Ended March 31,
 
2020
 
2019
Cash flows from operating activities:
 
 
 
Net income (loss)
$
(15,473
)
 
$
5,914

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Depreciation and amortization
2,760

 
1,412

Non-cash operating lease cost
1,757

 
1,000

Stock-based compensation
13,664

 
5,335

Amortization (accretion) of discounts and premiums on investments, net
(606
)
 
(764
)
Amortization of debt discount and issuance costs
7,675

 
2,699

Deferred income taxes
(16,628
)
 
(10,550
)
Other non-cash operating activities, net
7,509

 
(1,035
)
Changes in operating assets and liabilities, net of effect of business
    acquisitions:
 
 
 
Accounts receivable
74,901

 
42,880

Deferred commissions
461

 
(1,177
)
Prepaid expenses, other current assets, and other assets
(20,371
)
 
(7,476
)
Accounts payable
4,285

 
1,762

Accrued payroll and payroll related liabilities
(29,690
)
 
(10,543
)
Accrued expenses, other current liabilities, operating lease liabilities, and other liabilities
(4,919
)
 
(595
)
Deferred revenue
(5,350
)
 
(12,824
)
Net cash provided by operating activities
19,975

 
16,038

Cash flows from investing activities:
 
 
 
Purchases of property and equipment
(4,976
)
 
(1,528
)
Purchases of investments
(313,611
)
 
(73,553
)
Sales and maturities of investments
116,691

 
76,981

Net cash provided by (used in) investing activities
(201,896
)
 
1,900

Cash flows from financing activities:
 
 
 
Proceeds from receipt of Section 16(b) disgorgement

 
4,918

Proceeds from exercise of stock options and taxes withheld
11,600

 
18,425

Minimum tax withholding paid on behalf of employees for restricted stock units
(9,945
)
 
(2,439
)
Other financing activity
(433
)
 
(1,305
)
Net cash provided by financing activities
1,222

 
19,599

Effect of exchange rate changes on cash, cash equivalents and restricted cash
(1,228
)
 
(105
)
Net increase (decrease) in cash, cash equivalents and restricted cash
(181,927
)
 
37,432

Cash, cash equivalents and restricted cash—beginning of period
411,424

 
90,961

Cash, cash equivalents and restricted cash—end of period
$
229,497

 
$
128,393

The accompanying notes are an integral part of these condensed consolidated financial statements

6



Alteryx, Inc.
Condensed Consolidated Statements of Cash Flows (continued)
(in thousands)
(unaudited)
 
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid for interest
 
$
2,817

 
$

Cash paid for income taxes
 
$
529

 
$

Cash paid for amounts included in the measurement of operating lease liabilities
 
$
2,061

 
$
1,187

Supplemental disclosure of noncash investing and financing activities:
 
 
 
 
Property and equipment recorded in accounts payable and accrued expenses and
    other current liabilities
 
$
3,167

 
$
569

Right-of-use assets obtained in exchange for new operating lease liabilities
 
$
14,400

 
$
1,604

Contingent consideration settled through issuance of common stock
 
$

 
$
750

The accompanying notes are an integral part of these condensed consolidated financial statements

7



Alteryx, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
1. Business
Our Company
Alteryx, Inc. and its subsidiaries, or we, our, or us, are improving business through data science and analytics by enabling analytic producers, regardless of technical acumen, to quickly and easily transform data into actionable insights and deliver improved data-driven business outcomes. Every day, our users leverage our end-to-end analytic platform to quickly and easily discover, access, prepare, and analyze data from a multitude of sources, then deploy and share analytics at scale. The ease-of-use, speed, and sophistication that our platform provides is enhanced through intuitive and highly repeatable visual workflows.
Basis of Presentation
Our unaudited interim condensed consolidated financial statements are presented in accordance with accounting standards generally accepted in the United States of America, or U.S. GAAP, for interim financial information. Certain information and disclosures normally included in consolidated financial statements presented in accordance with U.S. GAAP have been condensed or omitted. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission, or SEC, on February 14, 2020. The unaudited interim condensed consolidated financial statements have been prepared on a basis consistent with that used to prepare the audited annual consolidated financial statements and reflect all adjustments which are, in the opinion of our management, of a normal recurring nature and necessary for a fair statement of the condensed consolidated financial statements. All intercompany accounts and transactions have been eliminated in consolidation.
The operating results for the three months ended March 31, 2020 are not necessarily indicative of the results expected for the full year ending December 31, 2020.
2. Significant Accounting Policies
There have been no changes to our accounting policies disclosed in our audited consolidated financial statements and the related notes for the year ended December 31, 2019, other than, during the three months ended March 31, 2020, we adopted new accounting guidance related to the measurement of credit losses and implementation costs incurred in cloud computing arrangements. See Recently Adopted Accounting Pronouncements below and Note 5, Allowance for Doubtful Accounts and Sales Reserves, for additional information.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates and assumptions.
On an ongoing basis, our management evaluates these estimates and assumptions, including those related to determination of standalone selling prices of our products and services, allowance for doubtful account and sales reserves, income tax valuations, stock-based compensation, goodwill, and intangible assets valuations and recoverability. We base our estimates on historical data and experience, as well as various other factors that our management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities.
Due to the COVID-19 pandemic, there has been uncertainty and disruption in the global economy and financial markets. Except for the increase in expected credit losses as discussed in Note 5, Allowance for Doubtful Accounts and Sales Reserves, we are not aware of any specific event or circumstance that would require an update to our estimates or assumptions or a revision of the carrying value of our assets or liabilities as of the date of this Quarterly Report on Form 10-Q. These estimates and assumptions may change as new events occur and additional information is obtained. As a result, actual results could differ materially from these estimates and assumptions.

8



Operating Segments
Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker, or CODM, who is our chief executive officer, in deciding how to allocate resources and assess our financial and operational performance. Our CODM evaluates our financial information and resources and assesses the performance of these resources on a consolidated and aggregated basis. As a result, we have determined that our business operates in a single operating segment.
Recently Adopted Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2016-13, Financial Instruments - Credit Losses, or ASC 326. The new standard amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology. As a result, we are now required to use a forward-looking expected credit loss model for accounts receivables and other commitments to extend credit. Through December 31, 2019, we calculated our allowance for credit losses using a single pool of trade receivables as the basis for our credit loss rate. Effective January 1, 2020, we adopted ASC 326 and made changes to our accounting policies related to credit loss calculations, including the consideration of forecasted economic data and the pooling of financial assets with similar risk profiles, and now recognize credit losses associated with our available-for-sale securities. We adopted the new allowance for credit losses accounting standard on January 1, 2020 by means of a cumulative-effect adjustment, where we recognized the cumulative effect of initially applying the guidance as a $0.6 million addition to our contract asset reserve with an offsetting adjustment to retained earnings. See Note 4, Fair Value Measurements and Note 5Allowance for Doubtful Accounts and Sales Reserves, for additional details.
In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing costs incurred to develop or obtain internal-use software. We adopted this standard prospectively effective January 1, 2020. As a result of the adoption, we are required to capitalize additional costs related to the implementation of cloud computing arrangements that we have historically expensed as incurred, particularly costs incurred during the application development phase. This policy aligns the accounting for implementation costs associated with cloud computing arrangements with our existing policy related to internal-use software. Capitalized costs related to cloud computing arrangements for the three months ended March 31, 2020, which are included in prepaid expenses and other current assets on our condensed consolidated balance sheets, were not material.

3. Revenue

Disaggregation of Revenue
The disaggregation of revenue by region was as follows (in thousands):
 
Three Months Ended March 31,
 
2020
 
2019
Revenue by region:
 
 
 
United States
$
80,535

 
$
52,896

International
28,296

 
23,124

Total
$
108,831


$
76,020


Revenue attributable to the United Kingdom comprised 10.4% of total revenue for the three months ended March 31, 2019. Other than the United Kingdom for the three months ended March 31, 2019, no other countries outside the United States comprised more than 10% of revenue for any of the periods presented. Our operations outside the United States include sales offices in Australia, Canada, the Czech Republic, France, Germany, Japan, Singapore, the United Arab Emirates, and the United Kingdom, and a research and development center in Ukraine and the Czech Republic. Revenue by location is determined by the billing address of the customer.    
Revenue recognized on our subscription-based software licenses is recognized at a point in time when the platform is first made available to the customer, or the beginning of the subscription term, if later. Revenue recognized related to post-contract support, or PCS, service, and hosted services is recognized ratably over the subscription term, with the exception of professional services related to training services. Revenue related to professional services is recognized at a point in time as the services are performed and represents 5% or less of total revenue for all periods presented.

9



Contract Assets and Contract Liabilities
Timing may differ between the satisfaction of performance obligations and the invoicing and collection of amounts related to our contracts with customers. Contract assets primarily relate to unbilled amounts for contracts with customers for which the amount of revenue recognized exceeds the amount billed to the customer. Contract assets are transferred to accounts receivable when the right to invoice becomes unconditional. Contract liabilities, or deferred revenue, are recorded for amounts that are collected in advance of the satisfaction of performance obligations. These liabilities are classified as current and non-current deferred revenue.
As of March 31, 2020, our contract assets are expected to be transferred to receivables within the next 12 to 24 months and, with respect to these contract assets, $26.6 million is included in prepaid expenses and other current assets and $49.2 million is included in other assets on our condensed consolidated balance sheet. As of December 31, 2019, we had contract assets of $18.5 million included in prepaid expenses and other current assets and $39.3 million included in other assets on our consolidated balance sheet. There were no impairments of contract assets during the three months ended March 31, 2020.
During the three months ended March 31, 2020 and 2019, we recognized $38.1 million and $35.8 million, respectively, of revenue related to amounts that were included in deferred revenue as of December 31, 2019 and 2018, respectively.
Assets Recognized from the Costs to Obtain our Contracts with Customers
We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. This primarily consists of sales commissions and partner referral fees that are earned upon execution of the related contracts. We amortize these deferred commissions, which include partner referral fees, proportionate with related revenues over the benefit period. A summary of the activity impacting our deferred commissions during the three months ended March 31, 2020 is presented below (in thousands):
Balances at December 31, 2019
$
43,035

Additional deferred commissions
7,899

Amortization of deferred commissions
(8,331
)
Effects of foreign currency translation
(747
)
Balances at March 31, 2020
$
41,856



As of March 31, 2020, $17.9 million of our deferred commissions are expected to be amortized within the next 12 months and therefore are included in prepaid expenses and other current assets. The remaining amount of our deferred commissions are included in other assets. There were no impairments of assets related to deferred commissions during the three months ended March 31, 2020. There were no assets recognized related to the costs to fulfill contracts during the three months ended March 31, 2020 as these costs were not material.
Remaining Performance Obligations
Transaction price allocated to the remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue on our condensed consolidated balance sheets and unbilled amounts that will be recognized as revenue in future periods. As of March 31, 2020, we had an aggregate transaction price of $400.4 million allocated to unsatisfied performance obligations related primarily to PCS, cloud-based offerings, and subscriptions to third-party syndicated data. We expect to recognize $344.1 million as revenue over the next 24 months, with the remaining amount recognized thereafter.

10



4. Fair Value Measurements
Instruments Measured at Fair Value on a Recurring Basis. The following tables present our cash and cash equivalents’ and investments’ costs, gross unrealized gains (losses), and fair value by major security type recorded as cash and cash equivalents or short-term or long-term investments as of March 31, 2020 and December 31, 2019 (in thousands):
 
 
As of March 31, 2020
 
Cost
 
Net
Unrealized
Gains (Losses)
 
Fair Value
 
Cash and
Cash
Equivalents
 
Short-term
Investments
 
Long-term
Investments
Cash
$
64,782

 
$

 
$
64,782

 
$
64,782

 
$

 
$

Level 1:
 
 
 
 
 
 
 
 
 
 
 
Money market funds
$
77,563

 
$

 
$
77,563

 
$
77,563

 
$

 
$

Subtotal
$
77,563

 
$

 
$
77,563

 
$
77,563

 
$

 
$

Level 2:
 
 
 
 
 
 
 
 
 
 
 
Commercial paper
$
256,539

 
$
(38
)
 
$
256,501

 
$
56,966

 
$
199,535

 
$

Certificates of deposit
1,000

 

 
1,000

 

 
1,000

 

U.S. Treasury and agency bonds
378,558

 
2,691

 
381,249

 
25,559

 
161,444

 
194,246

Corporate bonds
211,374

 
(535
)
 
210,839

 
3,150

 
172,908

 
34,781

Subtotal
$
847,471

 
$
2,118

 
$
849,589

 
$
85,675

 
$
534,887

 
$
229,027

Level 3:
$

 
$

 
$

 
$

 
$

 
$

Total
$
989,816

 
$
2,118

 
$
991,934

 
$
228,020

 
$
534,887

 
$
229,027

 
 
 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2019
 
Cost
 
Net
Unrealized
Gains (Losses)
 
Fair Value
 
Cash and
Cash
Equivalents
 
Short-term
Investments
 
Long-term
Investments
Cash
$
53,039

 
$

 
$
53,039

 
$
53,039

 
$

 
$

Level 1:
 
 
 
 
 
 
 
 
 
 
 
Money market funds
$
223,580

 
$

 
$
223,580

 
$
223,580

 
$

 
$

Subtotal
$
223,580

 
$

 
$
223,580

 
$
223,580

 
$

 
$

Level 2:
 
 
 
 
 
 
 
 
 
 
 
Commercial paper
$
217,140

 
$
(6
)
 
$
217,134

 
$
98,325

 
$
118,809

 
$

Certificates of deposit
1,000

 

 
1,000

 

 

 
1,000

U.S. Treasury and agency bonds
294,953

 
199

 
295,152

 
35,005

 
161,767

 
98,380

Corporate bonds
184,516

 
444

 
184,960

 

 
96,419

 
88,541

Subtotal
$
697,609

 
$
637

 
$
698,246

 
$
133,330

 
$
376,995

 
$
187,921

Level 3:
$

 
$

 
$

 
$

 
$

 
$

Total
$
974,228

 
$
637

 
$
974,865

 
$
409,949

 
$
376,995

 
$
187,921


All long-term investments had maturities of between one and two years in duration as of March 31, 2020. Cash and cash equivalents, restricted cash, and investments as of March 31, 2020 and December 31, 2019 held domestically were approximately $977.3 million and $963.4 million, respectively.
As of January 1, 2020, we did not have an allowance for credit losses related to our available-for-sale securities, which are comprised of fixed income securities, certificates of deposit, and money market funds. Our fixed income securities, which are predominantly high-grade corporate bonds, U.S. Treasury bonds, and U.S. Agency bonds, hold similar risk characteristics in that they are traded infrequently, with contractual interest rates and maturity dates. Our certificates of deposit have infrequent secondary market trades and are priced mathematically based on accretion or amortization from purchase date to maturity. Money market funds are actively traded and short-term, and, as a result, the risk for these securities is lower than the risk associated with fixed income securities and certificates of deposit. As a result of our adoption of ASC 326 effective January 1, 2020, we determined that the gross unrealized losses of $0.1 million as of January 1, 2020 were not related to credit losses and, as a result, were recorded in accumulated other comprehensive income (loss) in our condensed consolidated balance sheets.

11



As of March 31, 2020, we had gross unrealized losses of $0.9 million with respect to our available-for-sale securities, and we do not intend to sell, nor is it more likely than not that we will be required to sell, these investments before recovery of their amortized cost basis. We determined that $0.1 million of the gross unrealized losses related to the credit quality of our investments and have recorded an equivalent credit loss expense during the three months ended March 31, 2020 in our condensed consolidated statements of operations and comprehensive income (loss). The remaining balance of $0.8 million related to factors other than credit quality and were recorded in accumulated other comprehensive income (loss) in our condensed consolidated balance sheets.
Contingent Consideration. The following table presents a reconciliation of the beginning and ending balances of acquisition-related accrued contingent consideration using significant unobservable inputs (Level 3) for the three months ended March 31, 2020 and 2019 (in thousands):
 
 
Three Months Ended March 31,
 
2020
 
2019
Beginning balance
$
500

 
$
2,143

Obligations assumed

 

Change in fair value

 

Settlements
(406
)
 
(1,750
)
Ending balance
$
94

 
$
393


Instruments Not Recorded at Fair Value on a Recurring Basis. As of March 31, 2020, the fair value of our Notes (as defined in Note 7, Convertible Senior Notes) was $912.1 million. The carrying amounts of our cash, accounts receivable, prepaid expenses and other current assets, accounts payable, and accrued liabilities approximate their current fair value because of their nature and relatively short maturity dates or durations.
5. Allowance for Doubtful Accounts and Sales Reserves
The following table summarizes the changes in the allowances applied to accounts receivable and contract assets for the three months ended March 31, 2020 (in thousands):
 
Accounts Receivable Reserve
 
Contract Asset Reserve
Balance at December 31, 2019
$
2,662

 
$
205

Adoption of new accounting standard

 
609

Provision
676

 
952

Recoveries
(306
)
 
(13
)
Charge-offs
(170
)
 
(10
)
Balance at March 31, 2020
$
2,862

 
$
1,743


During the three months ended March 31, 2020, we analyzed the risk associated with each portfolio segment within our accounts receivables and contract assets balances. Our historical loss rates have not shown any significant differences between customer industries or geographies, and, upon adoption of ASC 326, we grouped all accounts receivables and contract assets into a single portfolio. Subsequently, however, as a result of the economic uncertainties caused by the impact of the COVID-19 pandemic, we reassessed our portfolio into pools using different risk profiles. We increased our expected credit loss rates for customers in industries that we forecast will be more adversely impacted by the economic downturn caused by the COVID-19 pandemic. As the COVID-19 pandemic has had adverse impacts across all major geographies in which our customers reside, we have not forecasted significant differences in loss rates across geographies. As discussed in Note 3, Revenue, we do not have significant international geographic concentrations of revenue, and, as a result, we do not have significant concentrations of accounts receivables or contract assets in any single geography outside of the United States. This increase in expected credit losses due to the COVID-19 pandemic resulted in the recognition of an additional $0.8 million in expected credit losses, which is recorded in general and administrative expense in our condensed consolidated statements of operations and comprehensive income (loss).


12



6. Goodwill and Intangible Assets
The change in carrying amount of goodwill for the three months ended March 31, 2020 was as follows (in thousands):
 
Goodwill as of December 31, 2019
$
36,910

Effects of foreign currency translation
(154
)
Goodwill as of March 31, 2020
$
36,756


Intangible assets consisted of the following (in thousands, except years):
 
As of March 31, 2020
 
Weighted-
Average Useful
Life in Years
 
Gross Carrying
Value
 
Accumulated
Amortization
 
Net Carrying
Value
Customer relationships
7.0
 
$
1,318

 
$
(400
)
 
$
918

Completed technology
5.7
 
21,674

 
(3,876
)
 
17,798

 
 
 
$
22,992

 
$
(4,276
)
 
$
18,716

 
As of December 31, 2019
 
Weighted-
Average Useful
Life in Years
 
Gross Carrying
Value
 
Accumulated
Amortization
 
Net Carrying
Value
Customer relationships
7.0
 
$
1,503

 
$
(402
)
 
$
1,101

Completed technology
5.4
 
27,821

 
(6,839
)
 
20,982

 
 
 
$
29,324

 
$
(7,241
)
 
$
22,083



During the three months ended March 31, 2020, we recorded an impairment charge of $2.0 million related to certain completed technology assets, due to our strategic decision to discontinue further investment and enhancements in the standalone existing technology.
We classified intangible asset amortization expense in the accompanying condensed consolidated statements of operations and comprehensive income (loss) as follows (in thousands):
 
 
Three Months Ended March 31,
 
2020
 
2019
Cost of revenue
$
1,118

 
$
446

Sales and marketing
50

 
59

Total
$
1,168

 
$
505


The following table presents our estimates of remaining amortization expense for finite-lived intangible assets at March 31, 2020 (in thousands):
 
 
Remainder of 2020
$
2,777

2021
4,561

2022
4,561

2023
2,569

2024
1,893

Thereafter
2,355

Total amortization expense
$
18,716



13



7. Convertible Senior Notes
The following table presents details of our convertible senior notes, which are further discussed below (original principal in thousands):
 
Month Issued
 
Maturity Date
 
Original Principal (including over-allotment)
 
Coupon Interest Rate
 
Effective Interest Rate
 
Conversion Rate
 
Initial Conversion Price
2023 Notes
May and June 2018
 
June 1, 2023
 
$
230,000

 
0.5
%
 
7.00
%
 
$
22.5572

 
$
44.33

2024 Notes
August 2019
 
August 1, 2024
 
$
400,000

 
0.5
%
 
4.96
%
 
$
5.2809

 
$
189.36

2026 Notes
August 2019
 
August 1, 2026
 
$
400,000

 
1.0
%
 
5.41
%
 
$
5.2809

 
$
189.36



As further defined and described below, the 2024 Notes and the 2026 Notes are together referred to as the 2024 & 2026 Notes, and the 2023 Notes and the 2024 & 2026 Notes are collectively referred to as the Notes.
In May and June 2018, we sold $230.0 million aggregate principal amount of our 0.50% Convertible Senior Notes due 2023, or the 2023 Notes, including the initial purchasers’ exercise in full of their option to purchase an additional $30.0 million of the 2023 Notes, in a private offering to qualified institutional buyers pursuant to Rule 144A promulgated under the Securities Act of 1933, as amended, or the Act. The 2023 Notes are our senior, unsecured obligations, and interest is payable semi-annually in arrears on June 1 and December 1 of each year beginning December 1, 2018.
In August 2019, we sold $400.0 million aggregate principal amount of our 0.50% Convertible Senior Notes due 2024, or the 2024 Notes, and $400.0 million aggregate principal amount of our 1.00% Convertible Senior Notes due 2026, or the 2026 Notes, including the initial purchasers’ exercise in full of their options to purchase an additional $50.0 million of the 2024 Notes and an additional $50.0 million of the 2026 Notes, in a private offering to qualified institutional buyers pursuant to Rule 144A promulgated under the Act. The 2024 & 2026 Notes are our senior, unsecured obligations, and interest is payable semi-annually in arrears on February 1 and August 1 of each year beginning February 1, 2020.
Prior to the close of business on the business day immediately preceding March 1, 2023, or the 2023 Conversion Date, in the case of the 2023 Notes, or May 1, 2024, or the 2024 Conversion Date, in the case of the 2024 Notes, or May 1, 2026, or the 2026 Conversion Date, in the case of the 2026 Notes, the respective Notes are convertible at the option of holders only upon satisfaction of certain conditions and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding the relevant maturity date. The applicable conversion rate is subject to customary adjustments for certain events as described in the applicable indenture between us and U.S. Bank National Association, as trustee, or, collectively, the Indentures. Upon conversion, the Notes may be settled in shares of our Class A common stock, cash or a combination of cash and shares of our Class A common stock, at our election. It is our current intent to settle the principal amount of the Notes with cash. During the year ended December 31, 2019, a portion of the 2023 Notes were exchanged, as further discussed below.
Prior to the close of business on the business day immediately preceding the applicable Conversion Date, the applicable series of Notes is convertible at the option of the holders under the following circumstances:
during any calendar quarter commencing after the calendar quarter subsequent to the calendar quarter in which the applicable series of Notes was issued (and only during such calendar quarter), if the last reported sale price of our Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the applicable conversion price of the applicable series of Notes on each applicable trading day;
during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of the applicable series of Notes for each day of that five day consecutive trading day period was less than 98% of the product of the last reported sale price of our Class A common stock and the applicable conversion rate of the applicable series of Notes on such applicable trading day; or
upon the occurrence of specified corporate events described in the applicable Indenture.

14



For at least 20 trading days during the period of 30 consecutive trading days ending March 31, 2020, the last reported sale price of our Class A common stock was greater than or equal to 130% of the conversion price of the 2023 Notes on each applicable trading day. As a result, the 2023 Notes are convertible at the option of the holders during the quarter ending June 30, 2020 and were classified as current liabilities on the condensed consolidated balance sheet as of March 31, 2020. As of the date of this filing, none of the holders of the 2023 Notes have submitted requests for conversion. As of March 31, 2020, the if-converted value of the 2023 Notes exceeded its principal amount by $97.2 million. As of March 31, 2020, the 2024 & 2026 Notes were not currently convertible.
We may not redeem any series of Notes prior to the relevant maturity date. Holders of any series of Notes have the right to require us to repurchase for cash all or a portion of their applicable series of Notes, at 100% of its respective principal amount, plus any accrued and unpaid interest, upon the occurrence of a fundamental change as defined in the applicable Indenture for such series of Notes. We are also required to increase the conversion rate for holders who convert their Notes in connection with certain corporate events occurring prior to the relevant maturity date.
The Notes are our senior unsecured obligations and rank senior in right of payment to any of our indebtedness and other liabilities that are expressly subordinated in right of payment to the Notes, equal in right of payment among all series of Notes and to any other existing and future indebtedness and other liabilities that are not subordinated, effectively junior in right of payment to any of our secured indebtedness and other liabilities to the extent of the value of the assets securing such indebtedness and other liabilities, and structurally junior in right of payment to all of our existing and future indebtedness and other liabilities (including trade payables) of our current or future subsidiaries.
Capped Call Transactions
In connection with the pricing of the 2023 Notes, we entered into privately negotiated capped call transactions with an affiliate of one of the initial purchasers of the 2023 Notes and other financial institutions. In connection with the pricing of the 2024 & 2026 Notes, we entered into privately negotiated capped call transactions with other financial institutions. The capped call transactions are expected generally to reduce or offset potential dilution to holders of our common stock and/or offset the potential cash payments that we could be required to make in excess of the principal amount upon any conversion of the applicable series of Notes under certain circumstances, with such reduction and/or offset subject to a cap based on the cap price. Under the capped call transactions, we purchased capped call options that in the aggregate relate to the total number of shares of our Class A common stock underlying the applicable series of Notes, with an initial strike price of approximately $44.33 per share in the case of the 2023 Notes, which corresponds to the initial conversion price of the 2023 Notes, and approximately $189.36 per share in the case of the 2024 & 2026 Notes, which corresponds to the initial conversion price of each of the 2024 & 2026 Notes. Further, the capped call options are subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the applicable series of Notes, and have a cap price of $62.22 per share in the case of the 2023 Notes, and $315.60 per share in the case of the 2024 & 2026 Notes. The cost of the purchased capped calls of $19.1 million in the case of the 2023 Notes and $87.4 million in the case of the 2024 & 2026 Notes was recorded as a reduction to additional paid-in-capital.
We elected to integrate the applicable capped call options with the applicable series of Notes for federal income tax purposes pursuant to applicable U.S. Treasury Regulations. Accordingly, the $19.1 million gross cost of the purchased capped calls in the case of the 2023 Notes and the $87.4 million gross cost of the purchased capped calls in the case of the 2024 & 2026 Notes will be deductible for income tax purposes as original discount interest over the term of the 2023 Notes and the applicable series of the 2024 & 2026 Notes, respectively. We recorded deferred tax assets of $4.6 million with respect to the 2023 Notes and $20.9 million with respect to the 2024 & 2026 Notes, which represent the tax benefit of these deductions with an offsetting entry to additional paid-in capital.
In connection with the exchange agreements discussed below, we terminated a corresponding portion of the existing capped call transactions that we entered into in connection with the issuance of the 2023 Notes, which resulted in the net share settlement and our receipt and retirement of 285,466 shares of Class A common stock.

15



Exchange of 2023 Notes
In connection with the issuance of the 2024 & 2026 Notes discussed above, during the year ended December 31, 2019, we entered into exchange agreements with certain holders of our outstanding 2023 Notes and, using a portion of the net proceeds from the issuance of the 2024 & 2026 Notes, we exchanged $145.2 million principal amount, together with accrued and unpaid interest thereon, of the 2023 Notes for aggregate consideration of $145.4 million in cash, representing the principal and accrued interest of the exchanged 2023 Notes, and 2.2 million shares of Class A common stock.
The Notes consisted of the following (in thousands):
 
As of March 31, 2020
 
As of December 31, 2019
 
2023 Notes
 
2024 Notes
 
2026 Notes
 
2023 Notes
 
2024 Notes
 
2026 Notes
Liability:
 
 
 
 
 
 
 
 
 
 
 
Principal
$
84,759

 
$
400,000

 
$
400,000

 
$
84,759

 
$
400,000

 
$
400,000

Less: debt discount and issuance costs, net of amortization
(15,526
)
 
(69,140
)
 
(93,943
)
 
(16,605
)
 
(72,669
)
 
(97,010
)
Net carrying amount
$
69,233

 
$
330,860

 
$
306,057

 
$
68,154

 
$
327,331

 
$
302,990

 
 
 
 
 

 
 
 

 

Equity, net of issuance costs
$
46,474

 
$
69,749

 
$
93,380

 
$
46,474

 
$
69,749

 
$
93,380


The following table sets forth interest expense recognized related to the Notes (in thousands):
 
Three Months Ended March 31,
 
2020
 
2019
Contractual interest expense
$
1,606

 
$
287

Amortization of debt issuance costs and discount
7,675

 
2,699

Total
$
9,281

 
$
2,986



8. Equity Awards
Stock Options
Stock option activity during the three months ended March 31, 2020 consisted of the following (in thousands, except weighted-average information):
 
 
Options
Outstanding
 
Weighted-
Average
Exercise
Price
Options outstanding at December 31, 2019
2,712

 
$
22.58

Granted
178

 
153.26

Exercised
(451
)
 
18.32

Canceled/forfeited
(70
)
 
20.79

Options outstanding at March 31, 2020
2,369

 
$
33.28


As of March 31, 2020, there was $24.2 million of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of