Company Quick10K Filing
Quick10K
Logmein
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$80.28 50 $4,000
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-05-30 Shareholder Vote, Shareholder Vote, Exhibits
8-K 2019-04-25 Earnings, Regulation FD, Exhibits
8-K 2019-02-11 Earnings, Exit Costs, Officers, Regulation FD, Exhibits
8-K 2018-11-13 Officers, Exhibits
8-K 2018-11-05 Officers, Exhibits
8-K 2018-10-25 Earnings, Regulation FD, Exhibits
8-K 2018-07-24 Earnings, Officers, Regulation FD, Exhibits
8-K 2018-05-31 Shareholder Vote, Shareholder Vote
8-K 2018-04-26 Earnings, Regulation FD, Exhibits
8-K 2018-04-03 Officers, Exhibits
8-K 2018-04-02 M&A, Off-BS Arrangement, Exhibits
8-K 2018-03-20 Enter Agreement, M&A, Off-BS Arrangement, Officers, Exhibits
8-K 2018-02-27 Officers
8-K 2018-02-15 Earnings, Earnings, Exhibits
8-K 2018-02-07 Enter Agreement, Other Events, Exhibits
8-K 2018-02-01 Regulation FD, Regulation FD, Exhibits
MAR Marriott 45,610
NWLI National Western Life Group 968
CTO Consolidated Tomoka Land 298
TCI Transcontinental Realty Investors 275
FPAY Flexshopper 15
MEP Mewbourne Energy Partners 0
BLSP Blue Sphere 0
EVTN Enviro Technologies 0
LQMT Liquidmetal Technologies 0
CLOW Cloudweb 0
LOGM 2019-03-31
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-31.1 logm-ex311_9.htm
EX-31.2 logm-ex312_10.htm
EX-32.1 logm-ex321_7.htm
EX-32.2 logm-ex322_8.htm

Logmein Earnings 2019-03-31

LOGM 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 logm-10q_20190331.htm 10-Q logm-10q_20190331.htm

 

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, 2019

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: 001-34391

 

LOGMEIN, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

20-1515952

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

320 Summer Street

Boston, Massachusetts

 

02210

(Address of principal executive offices)

 

(Zip Code)

 

781-638-9050

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

 

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  

As of April 22, 2019, there were 49,823,436 shares of the registrant’s Common Stock, par value $0.01 per share, outstanding.

 

 

 

 


 LOGMEIN, INC.

INDEX

 

 

 

PAGE
NUMBER

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

ITEM 1: Financial Statements (Unaudited)

 

 

Condensed Consolidated Balance Sheets as of December 31, 2018 and March 31, 2019

 

3

Condensed Consolidated Statements of Operations for the three months ended March 31, 2018 and 2019

 

4

Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2018 and 2019

 

5

Condensed Consolidated Statements of Equity for the three months ended March 31, 2018 and 2019

 

6

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2019

 

7

Notes to Condensed Consolidated Financial Statements

 

8

ITEM 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

25

ITEM 3: Quantitative and Qualitative Disclosures about Market Risk

 

37

ITEM 4: Controls and Procedures

 

39

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

ITEM 1: Legal Proceedings

 

40

ITEM 1A: Risk Factors

 

40

ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds

 

54

ITEM 6: Exhibits

 

54

Signatures

 

56

 

2


LogMeIn, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

 

 

 

December 31,

2018

 

 

March 31,

2019

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

148,652

 

 

$

145,056

 

Accounts receivable (net of allowances of $2,785 and $3,334 as of

   December 31, 2018 and March 31, 2019, respectively)

 

 

95,354

 

 

 

88,954

 

Prepaid expenses and other current assets

 

 

83,887

 

 

 

80,944

 

Total current assets

 

 

327,893

 

 

 

314,954

 

Property and equipment, net

 

 

98,238

 

 

 

101,445

 

Operating lease assets (Note 9)

 

 

 

 

 

108,530

 

Restricted cash, net of current portion

 

 

1,840

 

 

 

1,803

 

Intangibles, net

 

 

1,059,988

 

 

 

1,014,935

 

Goodwill

 

 

2,400,390

 

 

 

2,413,172

 

Other assets

 

 

41,545

 

 

 

46,303

 

Deferred tax assets

 

 

6,059

 

 

 

6,106

 

Total assets

 

$

3,935,953

 

 

$

4,007,248

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

35,447

 

 

$

43,769

 

Current operating lease liabilities (Note 9)

 

 

 

 

 

16,024

 

Accrued liabilities

 

 

119,379

 

 

 

145,189

 

Deferred revenue, current portion

 

 

369,780

 

 

 

393,807

 

Total current liabilities

 

 

524,606

 

 

 

598,789

 

Long-term debt

 

 

200,000

 

 

 

200,000

 

Deferred revenue, net of current portion

 

 

9,518

 

 

 

8,488

 

Deferred tax liabilities

 

 

201,212

 

 

 

192,850

 

Non-current operating lease liabilities (Note 9)

 

 

 

 

 

98,293

 

Other long-term liabilities

 

 

25,929

 

 

 

13,892

 

Total liabilities

 

 

961,265

 

 

 

1,112,312

 

Commitments and contingencies (Note 13)

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value — 5,000 shares authorized, 0 shares

   outstanding as of December 31, 2018 and March 31, 2019

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

Common stock, $0.01 par value—150,000 shares authorized; 56,703 and

   56,890 shares issued; and 50,692 and 50,166 outstanding as of

   December 31, 2018 and March 31, 2019, respectively

 

 

567

 

 

 

569

 

Additional paid-in capital

 

 

3,316,603

 

 

 

3,322,862

 

Retained earnings

 

 

84,043

 

 

 

58,487

 

Accumulated other comprehensive income (loss)

 

 

2,133

 

 

 

(492

)

Treasury stock, at cost - 6,011 and 6,725 shares as of December 31, 2018

   and March 31, 2019, respectively

 

 

(428,658

)

 

 

(486,490

)

Total equity

 

 

2,974,688

 

 

 

2,894,936

 

Total liabilities and equity

 

$

3,935,953

 

 

$

4,007,248

 

 

See notes to condensed consolidated financial statements.

 

3


LogMeIn, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

 

 

 

Three Months Ended March 31,

 

 

 

2018

 

 

2019

 

Revenue

 

$

279,217

 

 

$

307,700

 

Cost of revenue

 

 

62,942

 

 

 

77,688

 

Gross profit

 

 

216,275

 

 

 

230,012

 

Operating expenses

 

 

 

 

 

 

 

 

Research and development

 

 

43,116

 

 

 

40,717

 

Sales and marketing

 

 

88,215

 

 

 

114,634

 

General and administrative

 

 

35,443

 

 

 

33,886

 

Restructuring charge

 

 

 

 

 

8,474

 

Gain on disposition of assets

 

 

(33,910

)

 

 

 

Amortization of acquired intangibles

 

 

41,083

 

 

 

39,499

 

Total operating expenses

 

 

173,947

 

 

 

237,210

 

Income (loss) from operations

 

 

42,328

 

 

 

(7,198

)

Interest income

 

 

673

 

 

 

661

 

Interest expense

 

 

(326

)

 

 

(2,143

)

Other income (expense), net

 

 

(240

)

 

 

(260

)

Income (loss) before income taxes

 

 

42,435

 

 

 

(8,940

)

(Provision for) benefit from income taxes

 

 

(12,723

)

 

 

(99

)

Net income (loss)

 

$

29,712

 

 

$

(9,039

)

Net income (loss) per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.57

 

 

$

(0.18

)

Diluted

 

$

0.56

 

 

$

(0.18

)

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

52,457

 

 

 

50,639

 

Diluted

 

 

53,415

 

 

 

50,639

 

Cash dividends declared and paid per share

 

$

0.30

 

 

$

0.325

 

 

 

See notes to condensed consolidated financial statements.

 

4


LogMeIn, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2018

 

 

2019

 

Net income (loss)

 

$

29,712

 

 

$

(9,039

)

Other comprehensive gain (loss):

 

 

 

 

 

 

 

 

Net translation gains (losses)

 

 

5,457

 

 

 

(2,625

)

Comprehensive income (loss)

 

$

35,169

 

 

$

(11,664

)

 

See notes to condensed consolidated financial statements.

5


LogMeIn, Inc.

Condensed Consolidated Statements of Equity

(In thousands)

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Number of

Shares

 

 

Amount

 

 

Additional

Paid-In

Capital

 

 

Retained Earnings

 

 

Other

Comprehensive

Income (Loss)

 

 

Treasury

Stock

 

 

Total

Equity

 

Balance at January 1, 2018

 

 

52,564

 

 

$

560

 

 

$

3,276,891

 

 

$

50,445

 

 

$

15,570

 

 

$

(179,725

)

 

$

3,163,741

 

Issuance of common stock upon exercise of stock options

 

 

4

 

 

 

 

 

 

63

 

 

 

 

 

 

 

 

 

 

 

 

63

 

Net issuance of common stock upon vesting of restricted stock units

 

 

183

 

 

 

2

 

 

 

(11,232

)

 

 

 

 

 

 

 

 

 

 

 

(11,230

)

Stock-based compensation

 

 

 

 

 

 

 

 

15,966

 

 

 

 

 

 

 

 

 

 

 

 

15,966

 

Treasury stock

 

 

(404

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(49,039

)

 

 

(49,039

)

Dividends on common stock

 

 

 

 

 

 

 

 

 

 

 

(15,738

)

 

 

 

 

 

 

 

 

(15,738

)

Adoption of ASC 606

 

 

 

 

 

 

 

 

 

 

 

21,430

 

 

 

 

 

 

 

 

 

21,430

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

29,712

 

 

 

 

 

 

 

 

 

29,712

 

Cumulative translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,457

 

 

 

 

 

 

5,457

 

Balance at March 31, 2018

 

 

52,347

 

 

$

562

 

 

$

3,281,688

 

 

$

85,849

 

 

$

21,027

 

 

$

(228,764

)

 

$

3,160,362

 

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Number of

Shares

 

 

Amount

 

 

Additional

Paid-In

Capital

 

 

Retained Earnings

 

 

Other

Comprehensive

Income (Loss)

 

 

Treasury

Stock

 

 

Total

Equity

 

Balance at January 1, 2019

 

 

50,692

 

 

$

567

 

 

$

3,316,603

 

 

$

84,043

 

 

$

2,133

 

 

$

(428,658

)

 

$

2,974,688

 

Issuance of common stock upon exercise of stock options

 

 

1

 

 

 

 

 

 

41

 

 

 

 

 

 

 

 

 

 

 

 

41

 

Net issuance of common stock upon vesting of restricted stock units

 

 

187

 

 

 

2

 

 

 

(8,813

)

 

 

 

 

 

 

 

 

 

 

 

(8,811

)

Stock-based compensation

 

 

 

 

 

 

 

 

15,031

 

 

 

 

 

 

 

 

 

 

 

 

15,031

 

Treasury stock

 

 

(714

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(57,832

)

 

 

(57,832

)

Dividends on common stock

 

 

 

 

 

 

 

 

 

 

 

(16,517

)

 

 

 

 

 

 

 

 

(16,517

)

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

(9,039

)

 

 

 

 

 

 

 

 

(9,039

)

Cumulative translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,625

)

 

 

 

 

 

(2,625

)

Balance at March 31, 2019

 

 

50,166

 

 

$

569

 

 

$

3,322,862

 

 

$

58,487

 

 

$

(492

)

 

$

(486,490

)

 

$

2,894,936

 

 

See notes to condensed consolidated financial statements.

 

 

6


LogMeIn, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2018

 

 

2019

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net income (loss)

 

$

29,712

 

 

$

(9,039

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

15,966

 

 

 

15,031

 

Depreciation and amortization

 

 

71,290

 

 

 

75,944

 

Gain on disposition of assets, excluding transaction costs

 

 

(36,281

)

 

 

-

 

Benefit from deferred income taxes

 

 

(9,353

)

 

 

(11,651

)

Other, net

 

 

464

 

 

 

337

 

Changes in assets and liabilities, excluding effect of acquisitions and dispositions:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

9,820

 

 

 

6,024

 

Prepaid expenses and other current assets

 

 

4,767

 

 

 

2,883

 

Other assets

 

 

(2,767

)

 

 

(6,674

)

Accounts payable

 

 

9,646

 

 

 

9,344

 

Accrued liabilities

 

 

19,812

 

 

 

19,350

 

Deferred revenue

 

 

38,685

 

 

 

23,820

 

Other long-term liabilities

 

 

2,212

 

 

 

(5,719

)

Net cash provided by operating activities

 

 

153,973

 

 

 

119,650

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(7,249

)

 

 

(12,187

)

Intangible asset additions

 

 

(7,096

)

 

 

(8,915

)

Cash paid for acquisitions, net of cash acquired

 

 

 

 

 

(22,463

)

Proceeds from disposition of assets

 

 

42,394

 

 

 

 

Net cash provided by (used in) investing activities

 

 

28,049

 

 

 

(43,565

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock upon option exercises

 

 

63

 

 

 

41

 

Payments of withholding taxes in connection with restricted stock unit vesting

 

 

(9,230

)

 

 

(7,789

)

Dividends paid on common stock

 

 

(15,738

)

 

 

(16,517

)

Purchase of treasury stock

 

 

(46,901

)

 

 

(54,067

)

Net cash used in financing activities

 

 

(71,806

)

 

 

(78,332

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

2,657

 

 

 

(1,385

)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

112,873

 

 

 

(3,632

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

254,209

 

 

 

150,492

 

Cash, cash equivalents and restricted cash, end of period

 

$

367,082

 

 

$

146,860

 

Supplemental disclosure of cash flow information

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

 

 

$

1,906

 

Cash paid for (refunded from) income taxes

 

$

4,738

 

 

$

(313

)

Noncash investing and financing activities

 

 

 

 

 

 

 

 

Purchases of property and equipment included in accounts payable and

   accrued liabilities

 

$

2,657

 

 

$

7,704

 

Withholding taxes in connection with restricted stock unit vesting in accrued liabilities

 

$

1,999

 

 

$

1,023

 

Purchases of treasury stock included in accrued liabilities

 

$

2,137

 

 

$

5,554

 

Purchases of intangible assets included in accrued liabilities

 

$

2,500

 

 

$

 

Fair value of contingent consideration in connection with acquisition, included in accrued liabilities

 

$

 

 

$

3,170

 

 

See notes to condensed consolidated financial statements.

 

7


LogMeIn, Inc.

Notes to Condensed Consolidated Financial Statements

1. Nature of the Business

LogMeIn, Inc., which is referred to herein as LogMeIn or the Company, provides a portfolio of cloud-based unified communications and collaboration, identity and access management, and customer engagement and support solutions designed to simplify how people connect with each other and the world around them to drive meaningful interactions, deepen relationships, and create better outcomes for individuals and businesses. The Company is headquartered in Boston, Massachusetts with additional locations in North America, South America, Europe, Asia and Australia.

2. Summary of Significant Accounting Policies

Principles of Consolidation — The accompanying condensed consolidated financial statements include the results of operations of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The Company has prepared the accompanying condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP.

Unaudited Interim Condensed Consolidated Financial Statements — The accompanying condensed consolidated financial statements and the related interim information contained within the notes to the condensed consolidated financial statements are unaudited and have been prepared in accordance with GAAP and applicable rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read along with the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 21, 2019. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited financial statements and in the opinion of management, reflect all adjustments, consisting of normal and recurring adjustments, necessary for the fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods presented. The results for the interim periods presented are not necessarily indicative of future results. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure.

Use of Estimates — The preparation of condensed consolidated financial statements in conformity with GAAP requires management 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 period. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results could differ from those estimates.

 

Costs to Obtain and Fulfill a Contract — The Company’s incremental costs of obtaining a contract consist of sales commissions and their related fringe benefits. Sales commissions and fringe benefits paid on renewals are not commensurate with sales commissions paid on the initial contract, but they are commensurate with each other. Sales commissions and fringe benefits are deferred and amortized on a straight-line basis over the period of benefit, which the Company has estimated to be three to four years for initial contracts and amortized over the renewal period for renewal contracts, typically one year. The period of benefit was determined based on an average customer contract term, expected contract renewals, changes in technology and the Company’s ability to retain customers. Deferred commissions are classified as current or noncurrent assets based on the timing the expense will be recognized. The current and noncurrent portions of deferred commissions are included in prepaid expenses and other current assets and other assets, respectively, in the Company’s condensed consolidated balance sheets. As of December 31, 2018 and March 31, 2019, the Company had $33.7 million of current deferred commissions and $31.2 million of noncurrent deferred commissions, and $36.4 million of current deferred commissions and $35.2 million of noncurrent deferred commissions, respectively. Commissions expense is primarily included in sales and marketing expense on the condensed consolidated statements of operations. The Company had amortization expense of $3.3 million and $8.5 million related to deferred commissions during the three months ended March 31, 2018 and 2019, respectively. Other costs incurred to fulfill contracts have been immaterial to date.

Revenue Recognition — The Company derives its revenue primarily from subscription fees for its premium subscription software services and, to a lesser extent, usage fees from audio services. Revenue is reported net of applicable sales and use tax, value-added tax and other transaction taxes imposed on the related transaction including mandatory government charges that are passed through to the Company’s customers. Revenue is recognized when control of these services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.

The Company determines revenue recognition through the following five steps:

 

Identification of the contract, or contracts, with a customer

8


 

Identification of the performance obligations in the contract

 

Determination of the transaction price

 

Allocation of the transaction price to the performance obligations in the contract

 

Recognition of revenue when, or as, performance obligations are satisfied

The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable.

Disaggregated Revenue — The Company disaggregates revenue from contracts with customers by geography and product grouping, as it believes it best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

The Company’s revenue by geography (based on customer address) is as follows (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

2018

 

 

2019

 

Revenues:

 

 

 

 

 

 

 

 

United States

 

$

211,754

 

 

$

241,294

 

International

 

 

67,463

 

 

 

66,406

 

Total revenue

 

$

279,217

 

 

$

307,700

 

 

The Company’s revenue by product grouping is as follows (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

2018

 

 

2019

 

Revenues:

 

 

 

 

 

 

 

 

Unified communications and collaboration

 

$

149,907

 

 

$

169,957

 

Identity and access management

 

 

84,670

 

 

 

94,179

 

Customer engagement and support

 

 

44,640

 

 

 

43,564

 

Total revenue

 

$

279,217

 

 

$

307,700

 

 

Performance Obligations

Premium Subscription Services — Revenue from the Company’s premium subscription services represents a single promise to provide continuous access (i.e., a stand-ready obligation) to its software solutions and their processing capabilities in the form of a service through one of the Company’s data centers. The Company’s software cannot be run on another entity’s hardware and customers do not have the right to take possession of the software and use it on their own or another entity’s hardware.

As each day of providing access to the software is substantially the same and the customer simultaneously receives and consumes the benefits as access is provided, the Company has determined that its premium subscription services arrangements include a single performance obligation comprised of a series of distinct services. Revenue from the Company’s premium subscription services is recognized over time on a ratable basis over the contract term beginning on the date that the Company’s service is made available to the customer. Subscription periods range from monthly to multi-year, are typically billed in advance and are non-cancelable.

Audio Services — Revenue from the Company’s audio services represent a single promise to stand-ready to provide access to the Company’s platform. As each day of providing audio services is substantially the same and the customer simultaneously receives and consumes the benefits as access is provided, the Company has determined that its audio services arrangements include a single performance obligation comprised of a series of distinct services. These audio services may include fixed consideration, variable consideration or a combination of the two. Variable consideration in these arrangements is typically a function of the corresponding rate per minute. The Company allocates the variable amount to each distinct service period within the series and recognizes revenue as each distinct service period is performed (i.e., recognized as incurred).

Accounts Receivable, Net — Accounts receivable, net, are amounts due from customers where there is an unconditional right to consideration. Unbilled receivables of $5.4 million and $6.4 million are included in this balance at December 31, 2018 and March 31, 2019, respectively. The payment of consideration related to these unbilled receivables is subject only to the passage of time. As of December 31, 2018 and March 31, 2019, lease receivables totaled $4.9 million (of which, $2.8 million was long term and in other assets), and $5.9 million (of which, $3.0 million was long term and in other assets), respectively.

9


Contract Assets and Contract Liabilities — Contract assets and contract liabilities (deferred revenue) are reported net at the contract level for each reporting period.

Contract Assets — Contract assets primarily relate to unbilled amounts typically resulting from sales contracts when revenue recognized exceeds the amount billed to the customer, and right to payment is not just subject to the passage of time. The contract assets are transferred to accounts receivable when the rights become unconditional. The Company had contract assets of $2.3 million as of December 31, 2018 ($1.3 million included in prepaid and other current assets and $1.0 million included in other assets) and $2.9 million as of March 31, 2019 ($1.6 million included in prepaid and other current assets and $1.3 million included in other assets).

Contract Liabilities (Deferred Revenue) — Deferred revenue primarily consists of billings and payments received in advance of revenue recognition. The Company primarily bills and collects payments from customers for its services in advance on a monthly and annual basis. The Company initially records subscription fees as deferred revenue and then recognizes revenue as performance obligations are satisfied over the subscription period. Typically, subscriptions automatically renew at the end of the subscription period unless the customer specifically terminates it prior to the end of the period. Deferred revenue to be recognized within the next twelve months is included in current deferred revenue, and the remaining amount is included in long-term deferred revenue in the condensed consolidated balance sheets.

For the three months ended March 31, 2019, revenue recognized related to deferred revenue at January 1, 2019 was approximately $163 million. As of March 31, 2019 approximately $572.9 million of revenue is expected to be recognized from remaining performance obligations, including backlog, primarily over the next two years.

Changes in contract balances for the three months ended March 31, 2019 are as follows (in thousands):

 

 

 

Deferred Revenue

 

 

 

Current

 

 

Non-Current

 

 

Total

 

Balance as of January 1, 2019

 

$

369,780

 

 

$

9,518

 

 

$

379,298

 

Increase (decrease), net

 

 

24,027

 

 

 

(1,030

)

 

 

22,997

 

Balance as of March 31, 2019

 

$

393,807

 

 

$

8,488

 

 

$

402,295

 

 

Concentrations of Credit Risk and Significant Customers — The Company’s principal credit risk relates to its cash, cash equivalents, restricted cash and accounts receivable. Cash, cash equivalents and restricted cash are deposited primarily with financial institutions that management believes to be of high-credit quality. To manage accounts receivable credit risk, the Company regularly evaluates the creditworthiness of its customers and maintains allowances for potential credit losses. To date, losses resulting from uncollected receivables have not exceeded management’s expectations.

For the three months ended March 31, 2018 and 2019, no customer accounted for more than 10% of revenue. As of December 31, 2018 and March 31, 2019, no customer accounted for more than 10% of accounts receivable.

Segment Data — Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision-maker or decision-making group when making decisions regarding resource allocation and assessing performance. The Company’s chief operating decision maker is its Chief Executive Officer. The Company, whose management uses consolidated financial information in determining how to allocate resources and assess performance, has determined that it operates in one segment.

Goodwill — Goodwill is the excess of the acquisition price over the fair value of the tangible and identifiable intangible net assets acquired. The Company does not amortize goodwill but performs an impairment test of goodwill annually or whenever events and circumstances indicate that the carrying amount of goodwill may exceed its fair value. The Company operates as a single operating segment with one reporting unit and consequently evaluates goodwill for impairment based on an evaluation of the fair value of the Company as a whole. As of November 30, 2018, our measurement date, the fair value of the Company as a whole exceeded the carrying amount of the Company. Through March 31, 2019, no events have been identified indicating an impairment.

Long-Lived Assets and Intangible Assets — The Company records intangible assets at their respective estimated fair values at the date of acquisition. Intangible assets are being amortized based upon the pattern in which their economic benefit will be realized, or if this pattern cannot be reliably determined, using the straight-line method over their estimated useful lives, which range up to eleven years.

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets, including intangible assets, may not be recoverable. When such events occur, the Company compares the carrying amounts of the assets to their undiscounted expected future cash flows. If this comparison indicates that there is impairment,

10


the amount of the impairment is calculated as the difference between the carrying value and fair value. Through March 31, 2019, the Company recorded no material impairments.

Foreign Currency Translation — The functional currency of operations outside the United States of America is deemed to be the currency of the local country, unless otherwise determined that the United States dollar would serve as a more appropriate functional currency given the economic operations of the entity. Accordingly, the assets and liabilities of the Company’s foreign subsidiaries are translated into United States dollars using the period-end exchange rate, and income and expense items are translated using the average exchange rate during the period. Cumulative translation adjustments are reflected as a separate component of equity. Foreign currency transaction gains and losses are charged to operations.

Derivative Financial Instruments — The Company’s earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. The Company uses foreign currency forward contracts to manage exposure to fluctuations in foreign exchange rates that arise from receivables and payables denominated in foreign currencies. The Company does not designate foreign currency forward contracts as hedges for accounting purposes, and changes in the fair value of these instruments are recognized immediately in earnings. Because the Company enters into forward contracts only as an economic hedge, any gain or loss on the underlying foreign-denominated balance would be offset by the loss or gain on the forward contract. Gains and losses on forward contracts and foreign denominated receivables and payables are included in foreign currency net gains and losses.

As of December 31, 2018 and March 31, 2019, the Company had outstanding forward contracts with notional amounts equivalent to the following (in thousands):

 

Currency Hedged

 

December 31,

2018

 

 

March 31,

2019

 

Euro / Canadian Dollar

 

$

537

 

 

$

 

Euro / U.S. Dollar

 

 

5,203

 

 

 

4,175

 

Euro / British Pound

 

 

3,809

 

 

 

3,681

 

British Pound / U.S. Dollar

 

 

563

 

 

 

 

Euro / Hungarian Forint

 

 

 

 

 

3,451

 

U.S. Dollar / Israeli Shekel

 

 

 

 

 

1,105

 

U.S. Dollar / Canadian Dollar

 

 

4,504

 

 

 

1,303

 

Total

 

$

14,616

 

 

$

13,715

 

 

Net realized and unrealized foreign currency gains and losses was a net loss of $0.2 million and $0.3 million for the three months ended March 31, 2018 and 2019, respectively, which are included in other income (expense), net in the condensed consolidated statements of operations. Excluding the underlying foreign currency exposure being hedged, net realized and unrealized gains and losses on forward contracts included in foreign currency gains and losses was a net gain of $0.3 million and a net loss of $0.5 million for the three months ended March 31, 2018 and 2019, respectively.

Stock-Based Compensation — The Company values all stock-based compensation awards, primarily restricted stock units, at fair value on the date of grant and recognizes the expense over the requisite service period, which is generally the vesting period, on a straight-line basis.

Income Taxes — Deferred income taxes are provided for the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and operating loss carryforwards and credits using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. At each balance sheet date, the Company assesses the likelihood that deferred tax assets will be realized and recognizes a valuation allowance if it is more likely than not that some portion of the deferred tax assets will not be realized. This assessment requires judgment as to the likelihood and amounts of future taxable income by tax jurisdiction.

The Company evaluates its uncertain tax positions based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings is more likely than not to be realized. Potential interest and penalties associated with any uncertain tax positions are recorded as a component of income tax expense.

Guarantees and Indemnification Obligations — As permitted under Delaware law, the Company has agreements whereby the Company indemnifies certain of its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. As permitted under Delaware law, the Company also has similar indemnification obligations under its certificate of incorporation and bylaws. The maximum potential amount of future payments the Company could be required to make under these indemnification

11


agreements is unlimited; however, the Company has directors’ and officers’ insurance coverage that the Company believes limits its exposure and enables it to recover a portion of any future amounts paid.

In the ordinary course of business, the Company enters into agreements with certain customers that contractually obligate the Company to provide indemnifications of varying scope and terms with respect to certain matters including, but not limited to, losses arising out of the breach of such agreements, from the services provided by the Company or claims alleging that the Company’s products infringe third-party patents, copyrights, or trademarks. The term of these indemnification obligations is generally perpetual. The maximum potential amount of future payments the Company could be required to make under these indemnification obligations is, in many cases, unlimited. Through March 31, 2019, the Company has not experienced any losses related to these indemnification obligations.

Net Income (Loss) Per Share — Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted net income (loss) per share is computed by dividing net income (loss) by the sum of the weighted average number of common shares outstanding during the period and, if dilutive, the weighted average number of potential common shares outstanding from the assumed exercise of stock options and the vesting of restricted stock units.

The Company excluded the following options to purchase common shares and restricted stock units from the computation of diluted net income (loss) per share because they had an anti-dilutive impact (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

2018

 

 

2019

 

Options to purchase common shares

 

 

 

 

 

44

 

Restricted stock units

 

 

 

 

 

1,335

 

Total options and restricted stock units

 

 

 

 

 

1,379

 

Basic and diluted net income (loss) per share was calculated as follows (in thousands, except per share data):

 

 

 

Three Months Ended March 31,

 

 

 

2018

 

 

2019

 

Net income (loss)

 

$

29,712

 

 

$

(9,039

)

Basic:

 

 

 

 

 

 

 

 

Weighted average common shares outstanding, basic

 

 

52,457

 

 

 

50,639

 

Net income (loss) per share, basic

 

$

0.57

 

 

$

(0.18

)

Diluted:

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

52,457

 

 

 

50,639

 

Add: Common stock equivalents

 

 

958

 

 

 

-

 

Weighted average common shares outstanding, diluted

 

 

53,415

 

 

 

50,639

 

Net income (loss) per share, diluted

 

$

0.56

 

 

$

(0.18

)

 

Recently Adopted Accounting Pronouncements

On January 1, 2019, the Company adopted ASU 2016-02, Leases Topic 842, or ASU 2016-02, which requires lessees to recognize most leases on their balance sheet as a right-of-use asset and a lease liability. In general, lease arrangements exceeding a twelve-month term must be recognized as assets and liabilities on the balance sheet. Under ASU 2016-02, a right of use asset and lease obligation is recorded for all leases, whether operating or financing, while the income statement reflects lease expense for operating leases and amortization/interest expense for financing leases. The Financial Accounting Standards Board, or FASB, also issued ASU 2018-10, Codification Improvements to Topic 842 Leases, and ASU 2018-11, Targeted Improvements to Topic 842 Leases, which allows the new lease standard to be applied as of the adoption date with a cumulative-effect adjustment to the opening balance of retained earnings rather than retroactive restatement of all periods presented.

 

The Company adopted ASU 2016-02 and related amendments (collectively referred to herein as Topic 842) on January 1, 2019 using the modified retrospective approach applied at the beginning of the period of adoption and recorded operating lease assets of $117.3 million and operating lease liabilities of $123.4 million. The operating lease assets are lower than the operating lease liabilities, primarily because previously recorded net deferred rent balances were reclassified into the operating lease assets. There was no impact to retained earnings upon adoption of Topic 842.

12


The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which, among other things, allowed the Company to carry forward its historical lease classification. In addition, the Company has elected to exempt short term leases that qualify from recognizing right of use assets or lease liabilities, and has elected to not separate lease and non-lease components for all leases of which it is the lessee. The Company’s non-lease components are primarily related to maintenance related costs, which are typically variable in nature and are expensed in the period incurred.

The Company accounts for a contract as a lease when it has the right to control the asset for a period of time while obtaining substantially all of the assets’ economic benefits. The Company’s leases are primarily for office space. The Company determines the initial classification and measurement of its operating right-of-use assets and operating lease liabilities at the lease commencement date and thereafter if modified. The lease term includes any renewal options that the Company is reasonably assured to exercise. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the Company uses its estimated incremental borrowing rate for that lease term.

Rent expense for operating leases is recognized on a straight-line basis over the reasonably assured lease term based on the total lease payments and is included in operating expense in the condensed consolidated statements of operations. For finance leases, any interest expense is recognized using the effective interest method and is included within interest expense. Amounts related to finance leases were immaterial as of March 31, 2019.

For all leases, payments that are based on a fixed index or rate are included in the measurement of right-of-use assets and lease liabilities using the index or rate at the lease commencement date. The portion of future payments that vary based on the outcome of future indexes or rates are expensed in the period incurred.

Recently Issued Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software: Customers Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, referred to herein as ASU 2018-15. The amendments in ASU 2018-15 align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by these amendments. The provisions may be adopted prospectively or retrospectively. ASU 2018-15 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted. The Company is currently assessing the potential impact of the adoption of ASU 2018-15 on its condensed consolidated financial statements.

3. Fair Value of Financial Instruments

The carrying value of the Company’s financial instruments, including cash equivalents, restricted cash, accounts receivable and accounts payable, approximate their fair values due to their short maturities and the debt outstanding under the credit facility approximates fair value. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The three levels are as follows:

 

Level 1: Unadjusted quoted prices for identical assets or liabilities in active markets accessible by the Company at the measurement date.

 

Level 2: Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Money market funds and time deposits are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets.

13


Certificates of deposit, commercial paper and certain U.S. government agency securities are classified within Level 2 of the fair value hierarchy. These instruments are valued based on quoted prices in markets that are not active or based on other observable inputs consisting of market yields, reported trades and broker/dealer quotes.

The principal market in which the Company executes foreign currency contracts is the institutional market in an over-the-counter environment with a relatively high level of price transparency. The market participants are usually large financial institutions. The Company’s foreign currency contracts’ valuation inputs are based on quoted prices and quoted pricing intervals from public data sources and do not involve management judgment. These contracts are typically classified within Level 2 of the fair value hierarchy.

The Company’s Level 3 liability at March 31, 2019 consisted of contingent consideration related to a 2019 acquisition, as described further in Note 4 below. The contingent consideration of up to $4.0 million was based on the achievement of certain development milestones, the fair value of which was estimated at $3.2 million as of March 31, 2019. The fair value of contingent consideration was estimated by applying a probability-based model, which utilized inputs that were unobservable in the market.

The Company’s significant financial assets and liabilities are measured at fair value in the table below (in thousands), which excludes cash on hand and assets and liabilities that are measured at historical cost or any basis other than fair value.

 

 

 

Fair Value Measurements at December 31, 2018

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Financial assets (liabilities):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents — money market funds

 

$

7,207

 

 

$

19,943

 

 

$

 

 

$

27,150

 

Forward contracts ($14.6 million notional amount)

 

$

 

 

$

5

 

 

$

 

 

$

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements at March 31, 2019

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Financial assets (liabilities):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents — money market funds

 

$

2,092

 

 

$

19,940

 

 

$

 

 

$

22,032

 

Forward contracts ($13.7 million notional amount)

 

$

 

 

$

(35

)

 

$

 

 

$

(35

)

Contingent consideration liability

 

$

 

 

$

 

 

$

(3,151

)

 

$

(3,151

)

14


 

4. Acquisitions

Acquisition-Related Costs

Acquisition-related costs were $5.1 million and $3.9 million for the three months ended March 31, 2018 and 2019, respectively. Acquisition-related costs are associated with the acquisitions of businesses and intellectual property and include transaction, transition and integration-related charges (including legal, accounting and other professional fees, severance, and retention bonuses) and subsequent adjustments to the Company’s initial estimated amount of contingent consideration associated with acquisitions. Acquisition-related costs for the three months ended March 31, 2018 were primarily related to $2.1 million in integration-related severance costs, $2.0 million of transaction, transition and integration-related expenses primarily for the acquisition of Jive Communications, Inc., or Jive, in April 2018, and $1.0 million of retention-based bonuses primarily related to the acquisition of Nanorep Technologies Ltd., or Nanorep, in July 2017. Acquisition-related costs for the three months ended March 31, 2019 were primarily related to $0.9 million of transaction, transition and integration-related costs and $3.0 million of retention-based bonuses primarily related to the Jive and Nanorep acquisitions.

2019 Acquisitions

On February 6, 2019, the Company acquired substantially all of the assets of an Israeli-based company specializing in artificial intelligence, or A.I., and speech-to-text recognition, pursuant to an asset purchase agreement. The Company completed the acquisition for $5.0 million in cash and potential acquisition-related contingent consideration totaling up to $4.0 million payable in 2019 and 2020 contingent upon the achievement of certain development milestones. This contingent liability was recorded at an estimated fair value of $3.2 million at the acquisition date which is included in accrued expenses on the accompanying consolidated balance sheet as of March 31, 2019. The Company will re-measure the fair value of the contingent consideration at each subsequent reporting period and recognize any adjustments to fair value as part of earnings. Additionally, the Company expects to pay up to $2.0 million in retention-based bonus payments to certain employees upon the achievement of specified retention milestones over the two-year period following the closing of the transaction. The Company accounted for the acquisition as a business combination. Assets acquired were primarily intellectual property.  The Company’s preliminary purchase price allocation of the $8.2 million purchase consideration was $5.1 million of completed technology and $3.1 million of goodwill. The allocation of the purchase price is preliminary for the valuation of intangible assets as the Company is still gathering information. The Company plans to finalize the preliminary purchase price allocation in the second quarter of 2019.

On February 21, 2019, the Company acquired a California-based provider of multi-factor and single-sign-on, or SSO, services pursuant to a stock purchase agreement dated February 13, 2019 for $17.5 million, net of cash acquired. Additionally, the Company expects to pay up to $4.4 million in retention-based bonus payments to certain employees upon the achievement of specified retention milestones over a three-year period following the closing of the transaction. The Company accounted for the acquisition as a business combination. The Company’s preliminary purchase price allocation of the $17.5 million purchase consideration was $11.8 million of completed technology, $9.0 million of goodwill and other current assets of $0.1 million partially offset by current liabilities of $0.3 million and a long-term deferred tax liability of $3.1 million primarily related to the amortization of intangible assets which cannot be deducted for tax purposes. The allocation of the purchase price is preliminary for income taxes and the valuation of intangible assets as the Company is still gathering information. The Company plans to finalize the preliminary purchase price allocation in the second quarter of 2019.

The operating results of these February 2019 acquisitions, which have been included in the Company’s results since the date of the acquisitions, are not material. Accordingly, pro forma financial information for these business combinations has not been presented.

2018 Acquisition

Jive Communications, Inc.

On April 3, 2018, the Company acquired all of the outstanding equity of Jive Communications, Inc., a provider of cloud-based phone systems and Unified Communications services for $342.1 million, net of cash acquired. The Company funded the purchase price through a combination of existing cash on-hand and a $200.0 million revolving loan borrowed pursuant to its existing credit agreement.

Additionally, the Company expects to pay up to $15 million in retention-based bonus payments to certain employees of Jive upon the achievement of specified retention milestones over the two-year period following the closing of the transaction, of which $1.1 million has been paid as of March 31, 2019. At the time of the closing, Jive had approximately 700 employees and fiscal year 2017 revenue was approximately $80 million. The operating results of Jive have been included in the Company’s results since the date of the acquisition. The Company continues to integrate Jive into its business and has begun selling new bundled product offerings. In 2019, stand-alone Jive revenue and operating income are not provided as the continued integration of the business and go-to-market strategy made these metrics incomparable to prior periods.

15


The acquisition was accounted for under the acquisition method of accounting. The acquisition method of accounting requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The fair value of assets acquired and liabilities assumed has been recognized based on management’s estimates and assumptions using the information about facts and circumstances that existed at the acquisition date. The Company finalized the allocation of purchase price in the fourth quarter of 2018.

The following table summarizes the Company’s purchase price allocation (in thousands):

 

Cash

 

$

2,571

 

Accounts receivable

 

 

11,986

 

Property and equipment

 

 

2,492

 

Prepaid expenses and other current assets

 

 

2,511

 

Other assets

 

 

2,255

 

Intangible assets:

 

 

 

 

Completed technology (9 years)