Company Quick10K Filing
10-Q 2019-06-30 Quarter: 2019-06-30
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 2017-03-31 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
8-K 2019-09-03 Officers, Exhibits
8-K 2019-08-28 Off-BS Arrangement, Sale of Shares, Exhibits
8-K 2019-08-13 Enter Agreement, Leave Agreement, Off-BS Arrangement, Sale of Shares, Regulation FD, Other Events, Exhibits
8-K 2019-08-06 Earnings, Exhibits
8-K 2019-06-11 Shareholder Vote
8-K 2019-05-01 Earnings, Exhibits
8-K 2019-02-20 Earnings, Exhibits
8-K 2018-11-01 Regulation FD, Exhibits
8-K 2018-08-07 Earnings, Exhibits
8-K 2018-06-13 Officers, Shareholder Vote, Exhibits
8-K 2018-03-02 Enter Agreement, Off-BS Arrangement, Exhibits
INTU Intuit 74,387
MOMO Momo 15,496
BOX Box 2,035
CVLT Commvault Systems 1,917
MTLS Materialise 1,045
XNET Xunlei 905
DDD 3D Systems 781
EIGI Endurance International 752
OKTA Okta 0
WK 2019-06-30
Part I. Financial Information
Item 1. Financial Statements
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 Securities and Use of Proceeds
Item 6. Exhibits
EX-31.1 exhibit311-section302x.htm
EX-31.2 exhibit312-section302x.htm
EX-32.1 exhibit321-section906x.htm
EX-32.2 exhibit322-section906x.htm

Workiva Earnings 2019-06-30

WK 10Q Quarterly Report

Balance SheetIncome StatementCash Flow


Washington, D.C. 20549
(Mark One)
For the quarterly period ended June 30, 2019
For transition period from               to
Commission File Number 001-36773
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification Number)
2900 University Blvd
Ames, IA 50010
(888) 275-3125
(Address of principal executive offices and zip code)
(888) 275-3125
(Registrant's telephone number, including area code)

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 ý No o
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 ý No o
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 ý
Accelerated filer o
Non-accelerated filer o
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 ý
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Class A common stock, par value $0.001WKNew York Stock Exchange
As of August 2, 2019, there were approximately 36,762,217 shares of the registrant's Class A common stock and 9,265,596 shares of the registrant's Class B common stock outstanding.


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Certain statements in this Quarterly Report on Form 10-Q are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical facts, 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. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2018, in “Item 1A. Risk Factors” in Part II of this Quarterly Report on Form 10-Q and in any subsequent filing we make with the SEC, as well as in any documents incorporated by reference that describe risks and factors that could cause results to differ materially from those projected in these forward-looking statements.
Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management 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 future events and trends discussed 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.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements or events and circumstances reflected in the forward-looking statements will occur. We are under no duty to update any of these forward-looking statements after completion of this Quarterly Report on Form 10-Q to conform these statements to actual results or revised expectations.

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Part I. Financial Information
Item 1.  Financial Statements

(in thousands, except share and per share amounts) 
As of June 30, 2019As of December 31, 2018
Current assets 
Cash and cash equivalents$94,713 $77,584 
Marketable securities42,855 20,764 
Accounts receivable, net of allowance for doubtful accounts of $1,000 and $956 at June 30, 2019 and December 31, 2018, respectively
47,206 65,107 
Deferred commissions11,380 8,178 
Other receivables1,236 1,181 
Prepaid expenses7,963 4,417 
Total current assets 205,353 177,231 
Property and equipment, net41,046 41,468 
Operating lease right-of-use assets16,510 — 
Deferred commissions, non-current13,259 10,569 
Intangible assets, net 1,832 1,266 
Other assets 1,982 577 
Total assets $279,982 $231,111 

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(in thousands, except share and per share amounts) 
As of June 30, 2019As of December 31, 2018
Current liabilities 
Accounts payable
$4,768 $5,461 
Accrued expenses and other current liabilities
42,147 36,353 
Deferred revenue
156,234 148,545 
Current portion of financing obligations
1,285 1,222 
Total current liabilities 204,434 191,581 
Deferred revenue, non-current
28,049 25,171 
Other long-term liabilities
1,284 6,891 
Operating lease liabilities, non-current20,038 — 
Financing obligations, non-current
16,550 17,208 
Total liabilities 270,355 240,851 
Stockholders’ equity (deficit) 
Class A common stock, $0.001 par value per share, 1,000,000,000 shares authorized, 36,633,696 and 34,498,391 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively
37 34 
Class B common stock, $0.001 par value per share, 500,000,000 shares authorized, 9,265,596 and 9,545,596 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively
9 10 
Preferred stock, $0.001 par value per share, 100,000,000 shares authorized, no shares issued and outstanding
Additional paid-in-capital
332,161 297,145 
Accumulated deficit
Accumulated other comprehensive income
232 98 
Total stockholders’ equity (deficit) 9,627 (9,740)
Total liabilities and stockholders’ equity (deficit)$279,982 $231,111 
See accompanying notes.

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(in thousands, except share and per share amounts)
Three months ended June 30, Six months ended June 30, 
Subscription and support$60,472 $48,837 $116,595 $95,307 
Professional services13,012 10,293 26,852 23,729 
Total revenue 73,484 59,130 143,447 119,036 
Cost of revenue 
Subscription and support10,202 8,637 20,011 17,439 
Professional services10,475 7,659 20,202 15,368 
Total cost of revenue 20,677 16,296 40,213 32,807 
Gross profit 52,807 42,834 103,234 86,229 
Operating expenses 
Research and development21,795 20,718 43,806 40,845 
Sales and marketing28,213 22,252 53,578 43,258 
General and administrative11,226 21,654 21,609 33,422 
Total operating expenses 61,234 64,624 118,993 117,525 
Loss from operations (8,427)(21,790)(15,759)(31,296)
Interest expense(433)(449)(873)(899)
Other income, net 530 492 850 835 
Loss before (benefit) provision for income taxes (8,330)(21,747)(15,782)(31,360)
(Benefit) provision for income taxes (8)21 3 26 
Net loss $(8,322)$(21,768)(15,785)(31,386)
Net loss per common share: 
Basic and diluted$(0.18)$(0.50)$(0.35)$(0.73)
Weighted-average common shares outstanding - basic and diluted46,166,660 43,234,655 45,700,559 43,048,110 

See accompanying notes.


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(in thousands)
Three months ended June 30, Six months ended June 30, 
Net loss $(8,322)$(21,768)$(15,785)$(31,386)
Other comprehensive income, net of tax 
Foreign currency translation adjustment, net of income tax benefit (expense) of $(2) and $0 for the three months ended June 30, 2019 and 2018, respectively, and net of income tax benefit (expense) of $(5) and $0 for the six months ended June 30, 2019 and 2018, respectively
6 42 15 31 
Unrealized gain (loss) on available-for-sale securities, net of income tax benefit (expense) of $(26) and $0 for the three months ended June 30, 2019 and 2018, respectively, and net of income tax benefit (expense) of $(41) and $0 for the six months ended June 30, 2019 and 2018, respectively
76 17 119 (28)
Other comprehensive income, net of tax 82 59 134 3 
Comprehensive loss $(8,240)$(21,709)$(15,651)$(31,383)

See accompanying notes.


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(in thousands)
Common Stock (Class A and B)
SharesAmountAdditional Paid-in-CapitalAccumulated Other Comprehensive IncomeAccumulated DeficitTotal Stockholders' Equity (Deficit)
Balances at December 31, 201844,044 $44 $297,145 $98 $(307,027)$(9,740)
Stock-based compensation expense— — 8,193 — — 8,193 
Issuance of common stock upon exercise of stock options961 1 11,054 — — 11,055 
Issuance of common stock under employee stock purchase plan101 — 2,149 — — 2,149 
Issuance of restricted stock units25 — — — — — 
Tax withholding related to net share settlements of stock-based compensation awards(10— (390— — (390)
Net loss— — — — (7,463(7,463)
Other comprehensive income— — — 52 — 52 
Balances at March 31, 201945,121 $45 $318,151 $150 $(314,490)$3,856 
Stock-based compensation expense— — 8,513 — — 8,513 
Issuance of common stock upon exercise of stock options455 1 5,497 — — 5,498 
Issuance of restricted stock units323 — — — — — 
Net loss— — — — (8,322(8,322
Other comprehensive income— — — 82 — 82 
Balances at June 30, 201945,899 $46 $332,161 $232 $(322,812)$9,627 

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(in thousands)
Common Stock (Class A and B)
SharesAmountAdditional Paid-in-CapitalAccumulated Other Comprehensive IncomeAccumulated DeficitTotal Stockholders' Deficit
Balances at December 31, 201742,369 $42 $248,289 $72 $(265,337)$(16,934)
Cumulative-effect adjustment in connection with the adoption of ASU 2014-09— — — — 8,381 8,381 
Stock-based compensation expense— — 5,905 — — 5,905 
Issuance of common stock upon exercise of stock options296 1 3,075 — — 3,076 
Issuance of common stock under employee stock purchase plan80 — 1,370 — — 1,370 
Issuance of restricted stock units9 — — — — — 
Tax withholding related to net share settlements of stock-based compensation awards(61— (1,342)— — (1,342)
Net loss— — — — (9,618)(9,618)
Other comprehensive loss— — — (56)— (56)
Balances at March 31, 201842,693 $43 $257,297 $16 $(266,574)$(9,218)
Stock-based compensation expense— — 10,465 — — 10,465 
Issuance of common stock upon exercise of stock options328 — 3,317 — — 3,317 
Issuance of restricted stock units64 — — — — — 
Tax withholding related to net share settlements of stock-based compensation awards(23— (519)— — (519)
Net loss— — — — (21,768)(21,768)
Other comprehensive loss— — — 59 — 59 
Balances at June 30, 201843,062 $43 $270,560 $75 $(288,342)$(17,664)

See accompanying notes.


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(in thousands)
Three months ended June 30, Six months ended June 30, 
Cash flows from operating activities 
Net loss $(8,322)$(21,768)$(15,785)$(31,386)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: 
Depreciation and amortization971 876 1,874 1,748 
Stock-based compensation expense8,513 10,465 16,706 16,370 
Provision for doubtful accounts 233 139 46 183 
(Accretion) amortization of premiums and discounts on marketable securities, net (23)(15)(104)3 
Deferred income tax(28) (46) 
Changes in assets and liabilities:
Accounts receivable3,133 (236)17,951 6,306 
Deferred commissions(3,833)(2,020)(5,862)(3,669)
Operating lease right-of-use asset556 — 1,224 — 
Other receivables161 148 (53)175 
Prepaid expenses and other(310)(2,020)(3,546)(1,789)
Other assets58 (110)(1,406)(168)
Accounts payable1,206 (1,294)(356)1,383 
Deferred revenue8,295 8,747 10,282 6,402 
Operating lease liability(813)— (1,468)— 
Accrued expenses and other liabilities8,966 4,542 4,425 3,679 
Net cash provided by (used in) operating activities 18,763 (2,546)23,882 (763)
Cash flows from investing activities 
Purchase of property and equipment(454)(210)(2,197)(219)
Purchase of marketable securities(18,562)(11,283)(40,717)(11,283)
Maturities of marketable securities11,500 3,900 18,890 4,400 
Purchase of intangible assets(577)(64)(661)(128)
Net cash used in investing activities (8,093)(7,657)(24,685)(7,230)

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(in thousands)
Three months ended June 30, Six months ended June 30, 
Cash flows from financing activities 
Proceeds from option exercises5,498 3,318 16,553 6,393 
Taxes paid related to net share settlements of stock-based compensation awards (519)(390)(1,861)
Proceeds from shares issued in connection with employee stock purchase plan   2,149 1,370 
Principal payments on capital lease and financing obligations (301)(294)(595)(592)
Proceeds from government grants 22  22 
Net cash provided by financing activities 5,197 2,527 17,717 5,332 
Effect of foreign exchange rates on cash 110 (85)215 (177)
Net increase (decrease) in cash and cash equivalents 15,977 (7,761)17,129 (2,838)
Cash and cash equivalents at beginning of period 78,736 65,256 77,584 60,333 
Cash and cash equivalents at end of period $94,713 $57,495 $94,713 $57,495 
Supplemental cash flow disclosure 
Cash paid for interest$422 $435 $886 $868 
Cash paid for income taxes, net of refunds$28 $54 $261 $56 
Supplemental disclosure of noncash investing and financing activities 
Allowance for tenant improvements$ $105 $ $127 
Purchases of property and equipment, accrued but not paid $444 $254 $444 $254 
See accompanying notes.


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1. Organization and Significant Accounting Policies
Workiva Inc., a Delaware corporation, and its wholly-owned subsidiaries (the “Company” or “we” or “us”) is a leading provider of cloud-based solutions for connected reporting and compliance. Our platform, Wdesk, is used by thousands of public and private companies, government agencies and higher-education institutions. Wdesk offers controlled collaboration, data linking, data integrations, granular permissions, process management and a full audit trail. We sell to customers in the areas of: finance and accounting; risk and controls; regulatory reporting; financial close, management and performance reporting; and statutory and corporate tax reporting. Our operational headquarters are located in Ames, Iowa, with additional offices located in the United States, Europe, the Asia-Pacific region and Canada.
We updated our accounting policies on the use of estimates, impairment of long-lived assets and leases as a result of our adopting Financial Accounting Standards Board (FASB) guidance issued in accounting standards codification (ASC) 842, Leases, under the Accounting Standards Update (ASU) 2016-02 (collectively the new lease standard). Otherwise, there have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 20, 2019, that have had a material impact on our condensed consolidated financial statements and related notes.
Basis of Presentation and Principles of Consolidation
The financial information presented in the accompanying unaudited condensed consolidated financial statements has been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and in accordance with rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, the financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The condensed consolidated balance sheet data as of December 31, 2018 was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting primarily of normal recurring accruals, necessary for a fair presentation of our financial position and results of operations. The operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results expected for the full year ending December 31, 2019.
Seasonality has affected our revenue, expenses and cash flows from operations. Revenue from professional services has been higher in the first quarter as many of our customers file their Form 10-K in the first calendar quarter. Sales and marketing expense has been higher in the third quarter due to our annual user conference in September. In addition, the timing of the payments of cash bonuses to employees during the first and fourth calendar quarters may result in some seasonality in operating cash flow. The condensed consolidated financial information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in this report and the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 filed with the SEC on February 20, 2019.
The unaudited condensed consolidated financial statements include the accounts of Workiva Inc. and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Additionally, certain prior period amounts have been reclassified for consistency with the current year presentation. The reclassification of the prior period amounts were not material to the previously reported consolidated financial statements.

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Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and various other assumptions believed to be reasonable. These estimates include, but are not limited to, the allowance for doubtful accounts, the determination of the relative selling prices of our services, the measurement of material rights, health insurance claims incurred but not yet reported, valuation of available-for-sale marketable securities, useful lives of deferred contract costs, intangible assets and property and equipment, income taxes, discount rates used in the valuation of right-of-use assets and lease liabilities, and certain assumptions used in the valuation of equity awards. While these estimates are based on our best knowledge of current events and actions that may affect us in the future, actual results may differ materially from these estimates.
Impairment of Long-Lived Assets
Long-lived assets, such as property, equipment, right-of-use assets and software and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. If circumstances require that a long-lived asset or asset group be tested for possible impairment, we first compare the undiscounted cash flows expected to be generated by that long-lived asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value.
We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use ("ROU") assets, other current liabilities, and operating lease liabilities on our condensed consolidated balance sheets. We currently have no finance leases.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. Our variable lease payments consist of non-lease services related to the lease. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.
We have lease agreements with lease and non-lease components. We have elected to account for these lease and non-lease components as a single lease component. We are also electing not to apply the recognition requirements to short-term leases of 12 months or less and instead will recognize lease payments as expense on a straight-line basis over the lease term.

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Recently Adopted Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board ("FASB") issued guidance codified in ASC 842, Leases, which supersedes the guidance in former ASC 840, Leases, to increase transparency and comparability among organizations by requiring recognition of right-of-use assets and lease liabilities on the balance sheet and disclosure of key information about leasing arrangements (with the exception of short-term leases).
In July 2018, the FASB issued an update (ASU 2018-11) to the existing transition guidance that allows entities to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Effective January 1, 2019, we adopted ASC 842 using this new transition guidance. The comparative information has not been restated and continues to be reported under the accounting standard in effect for those periods.
We have elected to use the package of practical expedients, which allows us to not (1) reassess whether any expired or existing contracts are considered or contain leases; (2) reassess the lease classification for any expired or existing leases; and (3) reassess the initial direct costs for any existing leases. We did not elect the hindsight practical expedient, which permits entities to use hindsight in determining the lease term and assessing impairment.
Adoption of the new standard had a material impact on our condensed consolidated balance sheets. The most significant impacts related to the recognition of right-of-use assets and lease liabilities for operating leases. The adoption of ASC 842 had no impact on our condensed consolidated statements of operations or total cash flows from operations.
The cumulative effect of the changes made to our consolidated January 1, 2019 balance sheet for the adoption of ASC 842 were as follows (in thousands):
As of December 31, 2018Adjustments due to ASC 842 adoptionAs of January 1, 2019
Operating right-of-use asset
$— $15,694 $15,694 
Accrued expenses and other current liabilities 36,353 2,319 38,672 
Other long-term liabilities6,891 (6,007)884 
Operating lease liabilities, non-current
— 19,382 19,382 
In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which clarifies the accounting for implementation costs in cloud computing arrangements. The update will become effective for interim and annual periods beginning after December 15, 2019 and may be adopted either retrospectively or prospectively. Early adoption is permitted. We adopted this standard prospectively effective April 1, 2019. The adoption of this new guidance did not have a material impact on our consolidated financial statements.

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New Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which amends the current accounting guidance and requires the measurement of all expected losses based on historical experience, current conditions and reasonable and supportable forecasts. For trade receivables, loans, and other financial instruments, we will be required to use a forward-looking expected loss model that reflects probable losses rather than the incurred loss model for recognizing credit losses. The standard will become effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. Application of the amendments is through a cumulative-effect adjustment to retained earnings as of the effective date. We plan to adopt this standard on the effective date and are currently evaluating the impact of this new standard on our consolidated financial statements.
2. Supplemental Consolidated Balance Sheet Information
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
As of June 30, 2019As of December 31, 2018
Accrued vacation $7,947 $6,906 
Accrued commissions 5,372 7,265 
Accrued bonuses 7,337 5,643 
Estimated health insurance claims 1,170 1,100 
ESPP employee contributions 2,797 2,156 
Customer deposits 9,594 7,395 
Operating lease liabilities 2,785 — 
Accrued other liabilities 5,145 5,888 
$42,147 $36,353 

3. Cash Equivalents and Marketable Securities
At June 30, 2019, marketable securities consisted of the following (in thousands):
Amortized Cost
Unrealized Gains
Unrealized Losses
Aggregate Fair Value
Money market funds $71,937 $— $— $71,937 
U.S. treasury debt securities 3,931 5  3,936 
U.S. corporate debt securities 38,833 97 (11)38,919 
$114,701 $102 $(11)$114,792 
Included in cash and cash equivalents $71,937 $— $— $71,937 
Included in marketable securities $42,764 $102 $(11)$42,855 

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At December 31, 2018, marketable securities consisted of the following (in thousands):
Amortized Cost
Unrealized Gains
Unrealized Losses
Aggregate Fair Value
Money market funds $52,068 $— $— $52,068 
Commercial paper 7,448   7,448 
U.S. treasury debt securities 2,494  (1)2,493 
U.S. corporate debt securities 10,890  (67)10,823 
$72,900 $ $(68)$72,832 
Included in cash and cash equivalents $52,068 $— $— $52,068 
Included in marketable securities $20,832 $ $(68)$20,764 
The following table presents gross unrealized losses and fair values for those marketable securities that were in an unrealized loss position as of June 30, 2019, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (in thousands):
As of June 30, 2019
Less than 12 months
12 months or greater
Fair Value
Unrealized Loss
Fair Value
Unrealized Loss
U.S. treasury debt securities $ $ $ $ 
U.S. corporate debt securities 996 (1)3,494 (10)
Total $996 $(1)$3,494 $(10)
We do not believe any of the unrealized losses represented an other-than-temporary impairment based on our evaluation of available evidence, which includes our intent as of June 30, 2019 to hold these investments until the cost basis is recovered.
4. Fair Value Measurements
We determine the fair values of our financial instruments based on the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value assumes that the transaction to sell the asset or transfer the liability occurs in the principal or most advantageous market for the asset or liability and establishes that the fair value of an asset or liability shall be determined based on the assumptions that market participants would use in pricing the asset or liability. The classification of a financial asset or liability within the hierarchy is based upon the lowest level input that is significant to the fair value measurement. The fair value hierarchy prioritizes the inputs into three levels that may be used to measure fair value:
Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 - Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.
Level 3 - Inputs are unobservable inputs based on our assumptions.

Table of Contents
Financial Assets
Cash equivalents primarily consist of AAA-rated money market funds with overnight liquidity and no stated maturities. We classified cash equivalents as Level 1 due to the short-term nature of these instruments and measured the fair value based on quoted prices in active markets for identical assets.
When available, our marketable securities are valued using quoted prices for identical instruments in active markets. If we are unable to value our marketable securities using quoted prices for identical instruments in active markets, we value our investments using broker reports that utilize quoted market prices for comparable instruments. We validate, on a sample basis, the derived prices provided by the brokers by comparing their assessment of the fair values of our investments against the fair values of the portfolio balances of another third-party professional pricing service. As of June 30, 2019, all of our marketable securities were valued using quoted prices for comparable instruments in active markets and are classified as Level 2.
Based on our valuation of our money market funds and marketable securities, we concluded that they are classified in either Level 1 or Level 2, and we have no financial assets measured using Level 3 inputs. The following table presents information about our assets that are measured at fair value on a recurring basis using the above input categories (in thousands):
Fair Value Measurements as of June 30, 2019Fair Value Measurements as of December 31, 2018
Level 1
Level 2
Level 1
Level 2
Money market funds $71,937 $71,937 $ $52,068 $52,068 $ 
Commercial paper    7,448  7,448 
U.S. treasury debt securities 3,936  3,936 2,493  2,493 
U.S. corporate debt securities 38,919  38,919 10,823  10,823 
$114,792 $71,937 $42,855 $72,832 $52,068 $20,764