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September 30, 2018

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Issuance costs

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Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2018	Oct. 26, 2018
Document and Entity Information [Abstract]
Entity Registrant Name	Five9, Inc.
Trading Symbol	FIVN
Entity Central Index Key	0001288847
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Common Stock, Shares Outstanding		58,771,956

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 79,619	$ 68,947
Marketable investments	200,007	0
Accounts receivable, net	23,903	19,048
Prepaid expenses and other current assets	7,962	4,840
Deferred contract acquisition costs	8,633	0
Total current assets	320,124	92,835
Property and equipment, net	22,909	19,888
Intangible assets, net	724	1,073
Goodwill	11,798	11,798
Other assets	962	2,602
Deferred contract acquisition costs — less current portion	19,599	0
Total assets	376,116	128,196
Current liabilities:
Accounts payable	4,528	4,292
Accrued and other current liabilities	14,144	11,787
Accrued federal fees	1,681	1,151
Sales tax liability	1,322	1,326
Notes payable	0	336
Capital leases	6,909	6,651
Deferred revenue	17,490	13,975
Total current liabilities	46,074	39,518
Convertible senior notes	193,664	0
Revolving line of credit	0	32,594
Sales tax liability — less current portion	884	1,044
Capital leases — less current portion	6,250	7,161
Other long-term liabilities	1,360	1,041
Total liabilities	248,232	81,358
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; 5,000 shares authorized, no shares issued and outstanding at September 30, 2018 and December 31, 2017	0	0
Common stock, $0.001 par value; 450,000 shares authorized, 58,749 shares and 56,632 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively	59	57
Additional paid-in capital	283,055	222,202
Accumulated deficit	(155,230)	(175,421)
Total stockholders’ equity	127,884	46,838
Total liabilities and stockholders’ equity	$ 376,116	$ 128,196

Condensed Consolidated Balance Sheets - Parenthetical - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Preferred Stock, par value (in USD per share)	$ 0.001	$ 0.001
Preferred Stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred Stock, shares issued (in shares)	0	0
Preferred Stock, shares outstanding (in shares)	0	0
Common Stock, par value (in USD per share)	$ 0.001	$ 0.001
Common Stock, shares authorized (in shares)	450,000,000	450,000,000
Common Stock, shares issued (in shares)	58,748,746	56,631,647
Common Stock, shares outstanding (in shares)	58,748,746	56,631,647

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Income Statement [Abstract]
Revenue	$ 65,304	$ 50,081	$ 185,329	$ 144,822
Cost of revenue	26,179	20,497	75,695	60,741
Gross profit	39,125	29,584	109,634	84,081
Operating expenses:
Research and development	9,582	6,689	25,721	20,372
Sales and marketing	17,818	16,502	53,208	49,212
General and administrative	10,746	4,679	29,682	20,384
Total operating expenses	38,146	27,870	108,611	89,968
Income (loss) from operations	979	1,714	1,023	(5,887)
Other income (expense), net:
Interest expense	(3,595)	(865)	(6,783)	(2,635)
Interest income and other	1,352	118	1,956	326
Total other income (expense), net	(2,243)	(747)	(4,827)	(2,309)
Income (loss) before income taxes	(1,264)	967	(3,804)	(8,196)
Provision for income taxes	41	43	150	142
Net income (loss)	$ (1,305)	$ 924	$ (3,954)	$ (8,338)
Net income (loss) per share:
Basic (in USD per share)	$ (0.02)	$ 0.02	$ (0.07)	$ (0.15)
Diluted (in USD per share)	$ (0.02)	$ 0.02	$ (0.07)	$ (0.15)
Shares used in computing net income (loss) per share:
Shares used in computing net income (loss) per share (in shares)	58,454	55,310	57,790	54,579
Shares used in computing net income (loss) per share (in shares)	58,454	59,441	57,790	54,579
Comprehensive Income (Loss):
Net income (loss) and comprehensive income (loss)	$ (1,305)	$ 924	$ (3,954)	$ (8,338)

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Cash flows from operating activities:
Net loss	$ (3,954)	$ (8,338)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	7,436	6,246
Amortization of premium on marketable investments	(317)	0
Provision for doubtful accounts	81	66
Stock-based compensation	20,991	10,703
Reversal of interest and penalties on accrued federal fees	0	(2,133)
Gain on sale of convertible note held for investment	(312)	0
Non-cash adjustment on investment	(40)	(233)
Accretion of interest	44	16
Others	(59)	(50)
Changes in operating assets and liabilities:
Accounts receivable	(4,931)	(3,406)
Prepaid expenses and other current assets	(2,755)	(1,861)
Deferred contract acquisition costs	(5,094)	0
Other assets	68	71
Accounts payable	307	1,409
Accrued and other current liabilities	2,575	1,774
Accrued federal fees and sales tax liability	366	95
Deferred revenue	3,910	3,676
Other liabilities	(75)	131
Net cash provided by operating activities	23,152	8,226
Cash flows from investing activities:
Purchases of marketable investments	(203,953)	0
Proceeds from maturities of marketable investments	4,047	0
Purchases of property and equipment	(4,503)	(1,809)
Proceeds from sale of convertible note held for investment	1,923	0
Net cash used in investing activities	(202,486)	(1,809)
Cash flows from financing activities:
Proceeds from issuance of convertible senior notes, net of issuance costs paid of $8,036	250,714	0
Payments for capped call transactions	(31,412)	0
Proceeds from exercise of common stock options	7,111	3,280
Proceeds from sale of common stock under ESPP	2,884	1,800
Repayments on revolving line of credit	(32,594)	0
Payments of notes payable	(318)	(547)
Payments of capital leases	(6,379)	(5,708)
Net cash provided by (used in) financing activities	190,006	(1,175)
Net increase in cash and cash equivalents	10,672	5,242
Cash and cash equivalents:
Beginning of period	68,947	58,122
End of period	79,619	63,364
Supplemental disclosures of cash flow data:
Cash paid for interest	1,850	2,588
Cash paid for income taxes	151	113
Non-cash investing and financing activities:
Equipment obtained under capital lease	4,981	7,482
Equipment purchased and unpaid at period-end	779	22
Payment on debt issuance cost	8,036
Line of Credit
Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization of debt discount and issuance costs	129	60
Convertible debt
Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization of debt discount and issuance costs	$ 4,782	$ 0

Description of Business and Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Description of Business and Summary of Significant Accounting Policies	Description of Business and Summary of Significant Accounting Policies Five9, Inc. and its wholly-owned subsidiaries (the “Company”) is a provider of cloud software for contact centers. The Company was incorporated in Delaware in 2001 and is headquartered in San Ramon, California. The Company has offices in Europe and Asia, which primarily provide research, development, sales, marketing, and client support services. Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. All intercompany transactions and balances have been eliminated in consolidation. Certain prior period amounts included in the condensed consolidated financial statements have been reclassified to conform to the current period presentation. Use of Estimates The preparation of condensed consolidated financial statements in accordance 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 condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The significant estimates made by management affect revenue, the allowance for doubtful accounts, loss contingencies, including the Company’s accrual for federal fees and sales tax liability, and accrued liabilities. Management periodically evaluates such estimates and they are adjusted prospectively based upon such periodic evaluation. Actual results could differ from those estimates. Cash and Cash Equivalents The Company’s cash and cash equivalents consist of highly liquid investments with maturities of three months or less at the time of purchase. The Company’s cash equivalents consist of investments in money market funds and commercial paper. Marketable Investments The Company’s marketable investments consist of U.S agency securities and government sponsored securities, U.S. treasury securities, certificates of deposit, municipal bonds, corporate bonds and commercial paper. The Company determines the appropriate classification of its investments in marketable investments at the time of purchase and re-evaluates such designation at each balance sheet date. The Company’s marketable investments have been classified and accounted for as available-for-sale. Marketable investments are carried at fair value. Significant Accounting Policies The Company’s significant accounting policies are disclosed in its Annual Report on Form 10-K for the year ended December 31, 2017. Other than the accounting policies discussed in Note 2 related to the adoption of ASC 606, there has been no material change to the Company’s significant accounting policies during the nine months ended September 30, 2018. See Note 2 for the updated accounting policies. Recently Adopted Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2014-09, Revenue from Contracts with Customers: Topic 606, amending revenue recognition guidance and requiring more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 also includes Subtopic 340-40, Other Assets and Deferred Costs - Contracts with Customers, which requires the deferral of incremental costs of obtaining a contract with a customer. The Company adopted ASU 2014-09 and its related amendments (collectively “ASC 606”) effective on January 1, 2018 using the modified retrospective method. See Note 2 for disclosure on the impact of adopting this standard. Recent Accounting Pronouncements Not Yet Effective In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). Under the new guidance, a lessee will be required to recognize assets and liabilities for both finance, or capital, and operating leases with lease terms of more than 12 months. The ASU also will require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. Lessor accounting will remain largely unchanged from current GAAP. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach that includes a number of optional practical expedients that entities may elect to apply. This guidance is effective for the Company beginning in the first quarter of 2019. Early adoption is permitted. The Company, upon adoption of the new guidance, will recognize operating lease liabilities and right-of-use assets for operating lease commitments covered by Topic 842, and the Company’s total assets and total liabilities will increase relative to such amounts prior to adoption. The Company has gathered information and is evaluating the impact this guidance will have on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (ASU 2018-15), which clarifies the accounting for implementation costs in cloud computing arrangements. ASU 2018-15 is effective for the Company in the first quarter of fiscal 2020. Early adoption is permitted. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements. There are several other new accounting pronouncements issued by the FASB, which the Company will adopt. However, the Company does not believe any of those accounting pronouncements will have a material impact on its consolidated financial position, operating results or statements of cash flows.

ASC 606 Adoption Impact and Revenue from Contracts with Customers

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

ASC 606 Adoption Impact and Revenue from Contracts with Customers

ASC 606 Adoption Impact

On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method, applying to all contracts. The Company recognized the cumulative effect of applying the new revenue standard as an adjustment to the opening balance of accumulated deficit at the beginning of 2018. The comparative information has not been restated and continues to be reported under the accounting standards in effect for the period presented, or “ASC 605.” In connection with the adoption of ASC 606, the Company also adopted ASC 340-40, Other Assets and Deferred Costs - Contracts with Customers (“ASC 340-40”), which requires the deferral of incremental costs of obtaining a contract with a customer. Collectively, the Company refers to ASC 606 and ASC 340-40 as the “new standard.”

Adoption of the new standard resulted in changes to our accounting policies for revenue recognition, commissions and deferred commissions as discussed below. The Company recorded a net reduction to opening accumulated deficit of $24.1 million as of January 1, 2018 due to the cumulative impact of adopting the new standard. The primary impact of adopting the new standard related to the deferral of $23.1 million in incremental commission costs of obtaining subscription contracts. Under ASC 605, the Company expensed all commission costs as incurred. Under the new standard, the Company defers all incremental commission costs to obtain the contract, and amortizes these costs over a period of benefit determined to be five years. The remaining $1.0 million impact of adopting the new standard related to revenue being recognized earlier than it would have been under ASC 605.

Practical Expedients and Exemptions

The Company applies a practical expedient that permits the Company to apply ASC 340-40 to a single portfolio of contracts, as they are similar in their characteristics, and the financial statement effects of applying ASC 340-40 to that portfolio would not differ materially from applying it to the individual contracts within that portfolio.

Additionally, the Company has elected the optional exemption which allows for the exclusion of the amounts for remaining performance obligations that are part of contracts with an original expected duration of one year or less.

Impact on Condensed Consolidated Financial Statements

Select condensed consolidated balance sheet line items, which reflects the adoption impact of the new standard, are as follows:



	September 30, 2018
(in thousands)	As Reported			Balances without adoption of ASC 606			Effect of Change Higher (Lower)
Assets:
Accounts receivable, net	$	23,903		$	23,800		$	103
Prepaid expenses and other current assets	7,962			8,042			(80		)
Deferred contract acquisition costs	28,232			—			28,232
Liabilities:
Deferred revenue - current	17,490			19,308			(1,818		)
Shareholders’ Equity:
Accumulated deficit	(155,230		)	(185,303		)	30,073

Select condensed consolidated statement of operations line items, which reflects the adoption of the new standard, are as follows:



	Three Months Ended September 30, 2018
(in thousands, except per share amounts)	As Reported			Balances without adoption of ASC 606			Effect of Change Higher (Lower)
Revenue	$	65,304		$	65,041		$	263
Cost of revenue	26,179			26,040			139
Gross profit	39,125			39,001			124
Sales and marketing	17,818			19,574			(1,756		)
Income (loss) from operations	979			(901		)	1,880
Net income (loss)	(1,305		)	(3,185		)	1,880
Basic and diluted net loss per share	$	(0.02	)	$	(0.05	)	$	0.03



	Nine months ended September 30, 2018
(in thousands, except per share amounts)	As Reported			Balances without adoption of ASC 606			Effect of Change Higher (Lower)
Revenue	$	185,329		$	183,965		$	1,364
Cost of revenue	75,695			75,165			530
Gross profit	109,634			108,800			834
Sales and marketing	53,208			58,302			(5,094		)
Income (loss) from operations	1,023			(4,905		)	5,928
Net income (loss)	(3,954		)	(9,882		)	5,928
Basic and diluted net loss per share	$	(0.07	)	$	(0.17	)	$	0.10

Select condensed consolidated cash flow line items, which reflects the adoption of the new standard, are as follows:



	Nine months ended September 30, 2018
(in thousands)	As Reported			Balances without adoption of ASC 606			Effect of Change Higher (Lower)
Accounts receivable	$	(4,931	)	$	(4,828	)	$	(103	)
Prepaid expenses and other current assets	(2,755		)	(2,835		)	80
Deferred contract acquisition costs	(5,094		)	—			(5,094		)
Deferred revenue	3,910			5,728			(1,818		)
Net cash provided by operating activities	23,152			23,152			—

Changes in Accounting Policies

Revenue Recognition

Revenue is recognized when control of the promised services are transferred to customers in an amount that reflects the consideration that the Company expects to receive in exchange for those services. The Company generates all of its revenue from contracts with customers. In contracts with multiple performance obligations, it identifies each performance obligation and evaluates whether the performance obligations are distinct within the context of the contract at contract inception. Performance obligations that are not distinct at contract inception are combined. The Company allocates the transaction price to each distinct performance obligation proportionately based on the estimated standalone selling price for each performance obligation. The Company then looks to how services are transferred to the customer in order to determine the timing of revenue recognition. Most services provided under the Company’s agreements result in the transfer of control over time.

The Company’s revenue consists of subscription services and related usage as well as professional services. The Company charges clients subscription fees, usually billed on a monthly basis, for access to the Company’s Virtual Contact Center, or VCC, solution. The monthly subscription fees are primarily based on the number of agent seats, as well as the specific VCC functionalities and applications deployed by the client. Agent seats are defined as the maximum number of named agents allowed to concurrently access the VCC cloud platform. Clients typically have more named agents than agent seats. Multiple named agents may use an agent seat, though not simultaneously. Substantially all of the Company’s clients purchase both subscriptions and related telephony usage. A small percentage of the Company’s clients subscribe to its platform but purchase telephony usage directly from a wholesale telecommunications service provider. The Company does not sell telephony usage on a stand-alone basis to any client. The related usage fees are based on the volume of minutes used for inbound and outbound client interactions. The Company also offers bundled plans, generally for smaller deployments, whereby the client is charged a single monthly fixed fee per agent seat that includes both subscription and unlimited usage in the contiguous 48 states and, in some cases, Canada. Professional services revenue is derived primarily from VCC implementations, including application configuration, system integration, optimization, education and training services. Clients are not permitted to take possession of the Company’s software.

The Company offers monthly, annual and multiple-year contracts to its clients, generally with 30 days’ notice required for changes in the number of agent seats and sometimes with a minimum number of agent seats required. Larger clients typically choose annual contracts, which generally include an implementation and ramp period of several months. Fixed subscription fees (including bundled plans) are generally billed monthly in advance, while related usage fees are billed in arrears. Support activities include technical assistance for the Company’s solution and upgrades and enhancements to the VCC cloud platform on a when-and-if-available basis, which are not billed separately.

The Company generally requires advance deposits from its clients based on estimated usage when such usage is not billed as part of a bundled plan. Any unused portion of the deposit is refundable to the client upon termination of the arrangement, provided all amounts due have been paid. All fees, except usage deposits, are non-refundable.

Professional services are primarily billed on a fixed-fee basis and are performed by the Company directly or, alternatively, clients may also choose to perform these services themselves or engage their own third-party service providers.

The estimation of variable consideration for each performance obligation requires the Company to make subjective judgments resulting in estimated variable consideration that is included in the transaction fee. This is done to the extent that it is probable, in the Company’s judgment, that a significant reversal in the amount of cumulative revenue recognized under the contract will not occur. The Company estimates the variable consideration in order to allocate the overall transaction fee on a relative stand-alone selling price basis to its multiple performance obligations. This requires the estimate of unit quantities, especially during the initial ramp period of the contract, during which the Company bills under an ‘actual usage’ model for subscription-related services.

The Company recognizes revenue on fixed fee professional services performance obligations based on the proportion of labor hours expended compared to the total hours expected to complete the related performance obligation. The determination of the total labor hours expected to complete the performance obligations involves judgment, influencing the initial stand-alone selling price estimate as well as the timing of professional services revenue recognition, although this is typically resolved in a short time frame.

When a contract with a customer is signed, the Company assesses whether collection of the fees under the arrangement is probable. The Company assesses collection based on a number of factors, including past transaction history and the creditworthiness of the client. The Company maintains a revenue reserve for potential credits to be issued in accordance with service level agreements or for other revenue adjustments.

The revenue recognition standards include guidance relating to any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer and may include, but is not limited to, sales, use, value added and excise taxes. The Company records Universal Service Fund, or USF, contributions and other regulatory costs on a gross basis in its condensed consolidated statements of operations and comprehensive loss and records surcharges and sales, use and excise taxes billed to its clients on a net basis. The cost of gross USF contributions payable to the Universal Service Administrative Company, or USAC, other FCC fund administrators and wholesale carriers is presented as a cost of revenue in the condensed consolidated statements of operations and comprehensive loss. Surcharges and sales, use and excise taxes incurred in excess of amounts billed to the Company’s clients are presented in general and administrative expense in the condensed consolidated statements of operations and comprehensive loss.

Disaggregation of Revenue

The Company disaggregates its revenue by geographic region. See Note 11 for more information.

Contract Balances

The following table provides information about accounts receivable, net, deferred contract acquisition costs, contract assets and contract liabilities from contracts with customers (in thousands):



	September 30, 2018			January 1, 2018
Accounts receivable, net	$	23,903		$	19,151

Deferred contract acquisition costs:
Current	$	8,633		$	7,059
Non-current	19,599			16,079
Total deferred contract acquisition costs	$	28,232		$	23,138

Contract assets and contract liabilities:
Contract assets (included in prepaid expenses and other current assets)	$	688		$	736
Contract liabilities (deferred revenue)	17,490			13,568
Net contract assets (liabilities)	$	(16,802	)	$	(12,832	)

The Company receives payments from customers based upon billing cycles. Invoice payment terms are usually 30 days or less. Accounts receivable are recorded when the right to consideration becomes unconditional.

Deferred contract acquisition costs are recorded when incurred and are amortized over a customer benefit period of five years.

The Company’s contract assets consist of unbilled amounts typically resulting from professional services revenue recognition when it exceeds the total amounts billed to the customer. The Company’s contract liabilities consist of advance payments and billings in excess of revenue recognized.

In the three and nine months ended September 30, 2018, the Company recognized revenue of $1.2 million and $9.3 million, respectively, related to its contract liabilities at January 1, 2018.

Deferred Contract Acquisition Costs

In connection with the adoption of ASC 340-40, the Company capitalizes certain contract acquisition costs consisting primarily of commissions paid when contracts are signed and related incremental fringe benefits. As of January 1, 2018, the date of ASC 340-40 adoption, the Company had $23.1 million capitalized in deferred contract acquisition costs related to contracts where the benefit period had not yet expired. In the three and nine months ended September 30, 2018, amortization from amounts capitalized was $2.2 million and $6.1 million, respectively, and amounts expensed as incurred were $0.5 million and $1.5 million, respectively. As of September 30, 2018, the Company had no impairment loss in relation to costs capitalized.

Remaining Performance Obligations

As of September 30, 2018, the aggregate amount of the total transaction price allocated in contracts with original duration of greater than one year to the remaining performance obligations was $93.4 million. The Company expects to recognize revenue on approximately three-quarters of the remaining performance obligation over the next 24 months, with the balance recognized thereafter. The Company has elected the optional exemption, which allows for the exclusion of the amounts for remaining performance obligations that are part of contracts with an original expected duration of one year or less. Such remaining performance obligations represent unsatisfied or partially unsatisfied performance obligations pursuant to ASC 606.

Investments and Fair Value Measurements

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Investments and Fair Value Measurements [Text Block]

Investments and Fair Value Measurements

Marketable Investments

The Company’s marketable investments have been classified and accounted for as available-for-sale. The Company’s marketable investments as of September 30, 2018 were as follows (in thousands):



	September 30, 2018
	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Certificates of deposit	$	5,318	$	1	$	—		$	5,319
U.S. treasury	1,132		—		—			1,132
U.S. agency securities and government sponsored securities	144,208		—		(173		)	144,035
Commercial paper	3,727		—		—			3,727
Municipal bonds	6,085		—		(9		)	6,076
Corporate bonds	39,753		—		(35		)	39,718
Total	$	200,223	$	1	$	(217	)	$	200,007

The following table presents the gross unrealized losses and the fair value for those marketable investments that were in an unrealized loss position as of September 30, 2018 (in thousands):



	September 30, 2018
	Less than 12 months
	Gross Unrealized Losses			Fair Value
U.S. treasury	$	—		$	1,132
U.S. agency securities and government sponsored securities	(173		)	144,035
Municipal bonds	(9		)	6,076
Corporate bonds	(35		)	39,718
Total	$	(217	)	$	190,961

The contractual maturities of the Company’s marketable investments as of September 30, 2018 were less than one year.

Fair Value Measurements

The Company carries cash equivalents and marketable investments at fair value. Fair value is based on the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 — Observable inputs which include unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than Level 1 inputs, such as quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Unobservable inputs that are supported by little or no market activity and that are based on management’s assumptions, including fair value measurements determined by using pricing models, discounted cash flow methodologies or similar techniques.

The Company determined the fair value of its Level 1 financial instruments, which are traded in active markets, using quoted market prices for identical instruments.

Marketable investments classified within Level 2 of the fair value hierarchy are valued based on other observable inputs, including broker or dealer quotations or alternative pricing sources. When quoted prices in active markets for identical assets or liabilities are not available, the Company relies on non-binding quotes from its investment managers, which are based on proprietary valuation models of independent pricing services. These models generally use inputs such as observable market data, quoted market prices for similar instruments, historical pricing trends of a security as relative to its peers. To validate the fair value determination provided by its investment managers, the Company reviews the pricing movement in the context of overall market trends and trading information from its investment managers. In addition, the Company assesses the inputs and methods used in determining the fair value in order to determine the classification of securities in the fair value hierarchy.

The following table sets forth the Company’s assets measured at fair value by level within the fair value hierarchy (in thousands):



	September 30, 2018
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents
Commercial paper	$	—	$	249	$	—	$	249
Money market funds	20,094		—		—		20,094
Total cash equivalents	$	20,094	$	249	$	—	$	20,343
Marketable investments
Certificates of deposit	—		5,319		—		5,319
U.S. treasury	1,132		—		—		1,132
U.S. agency securities and government sponsored securities	—		144,035		—		144,035
Commercial paper	—		3,727		—		3,727
Municipal bonds	—		6,076		—		6,076
Corporate bonds	—		39,718		—		39,718
Total marketable investments	$	1,132	$	198,875	$	—	$	200,007

	December 31, 2017
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents
Money market funds	$	20,092	$	—	$	—	$	20,092
Other Assets
Embedded conversion option held for investment	$	—	$	—	$	984	$	984

In March 2018, the Company received proceeds of $1.9 million from the conversion and sale of a convertible note with a carrying value of $1.6 million. Proceeds from the sale of the investment totaled $2.1 million. The Company expects to receive the remainder of the proceeds in 2019.

As of September 30, 2018, the estimated fair value of the Company’s outstanding 0.125% convertible senior notes due 2023 was $313.4 million. The fair value was determined based on the quoted price of the convertible senior notes in an inactive market on the last trading day of the reporting period and has been classified as Level 2 in the fair value hierarchy. See Note 6 for further information on the Company’s 0.125% convertible senior notes due 2023.

There were no assets or liabilities measured at fair value on a non-recurring basis as of September 30, 2018.

Financial Statement Components

9 Months Ended

Sep. 30, 2018

Financial Statement Components [Abstract]

Financial Statement Components

Cash and cash equivalents consisted of the following (in thousands):



	September 30, 2018		December 31, 2017
Cash	$	59,276	$	48,855
Commercial paper	249		—
Money market funds	20,094		20,092
Cash and cash equivalents	$	79,619	$	68,947

Accounts receivable, net consisted of the following (in thousands):



	September 30, 2018			December 31, 2017
Trade accounts receivable	$	22,427		$	17,481
Unbilled trade accounts receivable, net of advance client deposits	1,491			1,600
Allowance for doubtful accounts	(15		)	(33		)
Accounts receivable, net	$	23,903		$	19,048

Prepaid expenses and other current assets consisted of the following (in thousands):



	September 30, 2018		December 31, 2017
Prepaid expenses	$	4,961	$	2,437
Other current assets	2,313		2,403
Contract assets	688		—
Prepaid expenses and other current assets	$	7,962	$	4,840

Property and equipment, net consisted of the following (in thousands):



	September 30, 2018			December 31, 2017
Computer and network equipment	$	50,694		$	47,195
Computer software	8,191			6,974
Internal-use software development costs	500			500
Furniture and fixtures	1,479			1,282
Leasehold improvements	804			801
Property and equipment	61,668			56,752
Accumulated depreciation and amortization	(38,759		)	(36,864		)
Property and equipment, net	$	22,909		$	19,888

Depreciation and amortization expense associated with property and equipment was $2.6 million and $7.1 million for the three and nine months ended September 30, 2018, respectively, and $1.8 million and $5.9 million for the three and nine months ended September 30, 2017, respectively.

Property and equipment capitalized under capital lease obligations consist primarily of computer and network equipment and was as follows (in thousands):



	September 30, 2018			December 31, 2017
Gross	$	47,527		$	46,624
Less: accumulated depreciation and amortization	(31,905		)	(30,438		)
Total	$	15,622		$	16,186

Accrued and other current liabilities consisted of the following (in thousands):



	September 30, 2018		December 31, 2017
Accrued compensation and benefits	$	11,787	$	8,657
Accrued expenses	2,357		3,130
Accrued and other current liabilities	$	14,144	$	11,787

Intangible Assets

9 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

The components of intangible assets were as follows (in thousands):



	September 30, 2018							December 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Developed technology	$	2,460	$	(1,741	)	$	719	$	2,460	$	(1,478	)	$	982
Customer relationships	520		(515		)	5		520		(437		)	83
Domain names	50		(50		)	—		50		(42		)	8
Total	$	3,030	$	(2,306	)	$	724	$	3,030	$	(1,957	)	$	1,073

Amortization expense for intangible assets was $0.1 million and $0.3 million for the three and nine months ended September 30, 2018, respectively, and $0.1 million and $0.3 million for the three and nine months ended September 30, 2017, respectively.

As of September 30, 2018, the expected future amortization expense for intangible assets was as follows (in thousands):



Period	Expected Future Amortization Expense
2018	$	93
2019	351
2020	280
Total	$	724

Debt

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Debt

0.125% Convertible Senior Notes and Capped Call

In May 2018, the Company issued $225.0 million aggregate principal amount of 0.125% convertible senior notes due May 1, 2023 in a private offering and an additional $33.75 million aggregate principal amount of such notes pursuant to the exercise in full of the over-allotment option of the initial purchasers (collectively the “Notes”). The Notes are the Company’s senior unsecured obligations and bear interest at a fixed rate of 0.125% per annum, payable semiannually in arrears on May 1 and November 1 of each year, beginning on November 1, 2018. The total net proceeds from the offering, after deducting initial purchase discounts and estimated debt issuance costs, were approximately $250.7 million.

Each $1,000 principal amount of the Notes is initially convertible into 24.4978 shares of our common stock (the “Conversion Option”) which is equivalent to an initial conversion price of approximately $40.82 per share of common stock, subject to adjustment upon the occurrence of specified events. The Notes are convertible, in multiples of $1,000 principal amount, at the option of the holders at any time prior to the close of business on the business day immediately preceding November 1, 2022, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on September 30, 2018 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “Measurement Period”) in which the trading price (as defined in the indenture governing the Notes) per $1,000 principal amount of Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate in effect on each such trading day; (3) if the Company calls any or all of the Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On or after November 1, 2022 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their Notes, in multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances.

Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election. If the Company undergoes a fundamental change (as defined in the indenture governing the Notes), subject to certain conditions, holders may require the Company to repurchase for cash all or any portion of their Notes, in principal amounts of $1,000 or a multiple thereof, at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. In addition, following certain corporate events that occur prior to the maturity date or if the Company issues a notice of redemption, it will, under certain circumstances, increase the conversion rate for holders who elect to convert their Notes in connection with such corporate event or during the relevant redemption period.

During the nine months ended September 30, 2018, the conditions allowing holders of the Notes to convert were not met. The Notes were therefore not convertible during the nine months ended September 30, 2018 and were classified as long-term debt.

The Company may not redeem the Notes prior to May 5, 2021. The Company may redeem for cash all or any portion of the Notes, at its option, on or after May 5, 2021 if the last reported sale price of its common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending not more than two trading days immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. No sinking fund is provided for the Notes.

The Notes are the Company’s senior unsecured obligations and will rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment to any of the Company’s unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.

In accounting for the transaction, the Notes were separated into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that does not have an associated conversion feature. The carrying amount of the equity component representing the conversion option was $63.8 million and was determined by deducting the fair value of the liability component from the par value of the Notes. The equity component was recorded in additional paid-in-capital and is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount (the “Debt Discount”) is being amortized to interest expense over the contractual term of the Notes at an effective interest rate of 6.39%.

In accounting for the debt issuance cost of $8.1 million related to the Notes, the Company allocated the total amount incurred to the liability and equity components of the Notes based on their relative values. Issuance costs attributable to the liability component were $6.1 million and are being amortized to interest expense using the effective interest method over the contractual term of the Notes. Issuance costs attributable to the equity component were netted with the equity component in additional paid-in-capital.

The net carrying amount of the liability component of the Notes is as follows (in thousands):



	September 30, 2018
Principal	$	258,750
Unamortized debt discount	(59,392		)
Unamortized issuance costs	(5,694		)
Net carrying amount	$	193,664

The net carrying amount of the equity component of the Notes is as follows (in thousands):

Interest expense related to the Notes is as follows (in thousands):



	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018
Contractual interest expense	$	81	$	129
Amortization of debt discount	2,782		4,364
Amortization of issuance costs	267		418
Total interest expense	$	3,130	$	4,911

In connection with the pricing of the Notes, the Company entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain financial institutions. The Capped Call Transactions are expected generally to reduce the potential dilution to the Company’s common stock upon any conversion of the Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap based on the cap price. The initial cap price of the Capped Call Transactions is $62.80 per share, and is subject to certain adjustments under the terms of the Capped Call Transactions. The Capped Call Transactions cover, subject to anti-dilution adjustments, approximately 6.3 million shares of the Company’s common stock. For accounting purposes, the Capped Call Transactions are separate transactions, and not part of the terms of the Notes. As these transactions meet certain accounting criteria, the Capped Call Transactions are recorded in stockholders’ equity and are not accounted for as derivatives. The cost of $31.4 million incurred in connection with the Capped Call Transactions was recorded as a reduction to additional paid-in capital.

The net impact to the Company’s stockholders’ equity, included in additional paid-in capital, relating to the issuance of the Notes is as follows (in thousands):

2016 Loan and Security Agreement

In August 2016, the Company entered into a loan and security agreement, or the 2016 Loan and Security Agreement, with the lenders party thereto and City National Bank, as agent for such lenders. The 2016 Loan and Security Agreement provided for a revolving line of credit, of up to $50.0 million and was scheduled to mature on August 1, 2019. The revolving line of credit bore a variable interest rate equal to the prime rate plus 0.50%, subject to a 0.25% increase if the Company’s adjusted EBITDA was negative at the end of any fiscal quarter. The Company was also required to pay a commitment fee equal to 0.25% of the unused portion of the revolving line of credit as well as an anniversary fee of $31,250 on each of August 1, 2017 and 2018. The obligations of the Company under the 2016 Loan and Security Agreement were guaranteed by its subsidiary, Five9 Acquisition LLC, and were secured by a first priority lien on substantially all of the assets of the Company and Five9 Acquisition LLC. In May 2018, the Company paid off the then outstanding principal balance of the revolving line of credit and on July 1, 2018, the Company terminated the 2016 Loan and Security Agreement.

FCC Civil Penalty

In June 2015, the Company entered into a consent decree with the Federal Communications Commission, or FCC, Enforcement Bureau, in which the Company agreed to pay a civil penalty of $2.0 million to the U.S. Treasury in twelve equal quarterly installments starting in July 2015 without interest. As a result, the Company discounted the $2.0 million liability, which was accrued in the third quarter of 2014 for the then tentative civil penalty, to its then present value of $1.7 million at an annual interest rate of 12.75% to reflect the imputed interest and reclassified this discounted liability from ‘Accrued federal fees’ to ‘Notes payable.’ The $0.3 million discount was recorded as a reduction to general and administrative expense in the three months ended June 30, 2015 and was recognized as interest expense over the payment term of the civil penalty. As of September 30, 2018, the Company did not have any outstanding obligations under the civil penalty. As of December 31, 2017, the outstanding civil penalty payable was $0.3 million, of which the net carrying value was $0.3 million, and was included as ‘Notes payable’ in the accompanying condensed consolidated balance sheet.

The Company’s outstanding debt is summarized as follows (in thousands):



	September 30, 2018		December 31, 2017
Note payable - FCC civil penalty, gross	$	—	$	333
Less: discount	—		(7		)
Note payable, net carrying value	—		326
Convertible senior notes	193,664		—
Revolving line of credit	—		32,594
Interest accretion under 2016 line of credit	—		10
Total debt, net carrying value	$	193,664	$	32,930
Less: current portion of debt *	$	—	$	336
Total debt, less current portion **	$	193,664	$	32,594


* Included in ‘Notes payable’ in the condensed consolidated balance sheet as of December 31, 2017.
** Included in ‘Convertible senior notes’ and ‘Revolving line of credit’ as of September 30, 2018 and December 31, 2017, respectively, in the condensed consolidated balance sheets.

Maturity of the Company’s outstanding debt as of September 30, 2018 is as follows (in thousands):



Period	Amount to Mature
2023	$	258,750
Total	$	258,750

Stockholders' Equity

9 Months Ended

Sep. 30, 2018

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Capital Structure

The Company is authorized to issue 450,000,000 shares of common stock with a par value of $0.001 per share. As of September 30, 2018 and December 31, 2017, the Company had 58,748,746 and 56,631,647 shares of common stock issued and outstanding, respectively.

The Company is also authorized to designate and issue up to 5,000,000 shares of preferred stock with a par value of $0.001 per share in one or more series without stockholder approval and to fix the rights, preferences, privileges and restrictions thereof. As of September 30, 2018 and December 31, 2017, the Company had no shares of preferred stock issued and outstanding.

Warrants

As of December 31, 2017, the Company had outstanding warrants to purchase 13,013 shares of common stock with a weighted-average exercise price of $5.76 per share. These warrants were exercised in the third quarter of 2018. As of September 30, 2018, the Company had no warrants outstanding.

Common Stock Reserved for Future Issuance

Shares of common stock reserved for future issuance related to outstanding equity awards, common stock warrants, and employee equity incentive plans were as follows (in thousands):



		September 30, 2018
Stock options outstanding		3,051
Restricted stock units outstanding		2,408
Shares available for future grant under 2014 Plan		8,784
Shares available for future issuance under ESPP		1,801
Total shares of common stock reserved		16,044

Equity Incentive Plans

Prior to the Company’s initial public offering (“IPO”), the Company granted stock options under its Amended and Restated 2004 Equity Incentive Plan, as amended (the “2004 Plan”).

In March 2014, the Company’s board of directors and stockholders approved the 2014 Equity Incentive Plan (“2014 Plan”) and 5,300,000 shares of common stock were reserved for issuance under the 2014 Plan. In addition, on the first day of each year beginning in 2015 and ending in 2024, the 2014 Plan provides for an annual automatic increase to the shares reserved for issuance in an amount equal to 5% of the total number of shares outstanding on December 31st of the preceding calendar year or a lesser number as determined by the Company’s board of directors. Pursuant to the automatic annual increase, 2,831,582 additional shares were reserved under the 2014 Plan on January 1, 2018.

No further grants were made under the 2004 Plan once the 2014 Plan became effective on April 3, 2014. Upon the effectiveness of the 2014 Plan, all shares reserved for future issuance under the 2004 Plan became available for issuance under the 2014 Plan. After the IPO, any forfeited or expired shares that would have otherwise returned to the 2004 Plan instead return to the 2014 Plan.

The 2004 Plan and the 2014 Plan are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

Stock Options

A summary of the Company’s stock option activity during the nine months ended September 30, 2018 is as follows (in thousands, except years and per share data):



	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2017	4,047		$	8.00
Options granted (weighted average grant date fair value of $14.19 per share)	282		30.48
Options exercised	(1,172	)	6.01
Options forfeited or expired	(106	)	18.02
Outstanding as of September 30, 2018	3,051		$	10.50	6.1	$	101,257

The Company has computed the aggregate intrinsic value amounts disclosed in the above table based on the difference between the exercise price of the options and the closing market price of the Company’s common stock of $43.69 per share as of September 30, 2018 for all in-the-money stock options outstanding.

Restricted Stock Units

A summary of the Company’s restricted stock unit (“RSU”) activity during the nine months ended September 30, 2018 is as follows (in thousands, except per share data):



	Number of Shares		Weighted Average Grant Date Fair Value Per Share
Outstanding as of December 31, 2017	2,033		$	12.81
RSUs granted	1,375		30.98
RSUs vested and released	(803	)	12.66
RSUs forfeited	(197	)	17.84
Outstanding as of September 30, 2018	2,408		$	22.82

Employee Stock Purchase Plan

The Company’s 2014 Employee Stock Purchase Plan (“ESPP”) became effective on April 3, 2014 and is described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The number of shares of common stock originally reserved for issuance under the ESPP was 880,000 shares, which increases automatically each year, beginning on January 1, 2015 and continuing through January 1, 2024, by the lesser of (i) 1% of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year; (ii) 1,000,000 shares of common stock (subject to adjustment to reflect any split or combination of the Company’s common stock); or (iii) such lesser number as determined by the Company’s board of directors. Pursuant to the automatic annual increase, 566,316 additional shares were reserved under the ESPP on January 1, 2018.

During the nine months ended September 30, 2018, 136,321 shares were purchased on May 15, 2018 at a price of $21.16 per share under the ESPP.

Stock-Based Compensation

Stock-based compensation expenses were as follows (in thousands):



	Three Months Ended				Nine Months Ended
	September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
Cost of revenue	$	860	$	599	$	2,391	$	1,608
Research and development¹	2,352		797		4,293		2,235
Sales and marketing	1,613		1,084		4,560		3,236
General and administrative	4,044		1,240		9,747		3,624
Total stock-based compensation	$	8,869	$	3,720	$	20,991	$	10,703


(1)	Includes an incremental stock-based compensation cost due to modification of certain stock-based awards of a former executive of the Company in the third quarter of 2018.

As of September 30, 2018, unrecognized stock-based compensation expenses by award type and their expected weighted-average recognition periods are summarized in the following table (in thousands, except years).



	Stock Option		RSU		ESPP
Unrecognized stock-based compensation expense	$	9,004	$	51,586	$	224
Weighted-average amortization period	2.5 years		2.9 years		0.1 years

The Company recognizes stock-based compensation expense that is calculated based upon awards that have vested, reduced for actual forfeitures. All stock-based compensation for equity awards granted to employees and non-employee directors is measured based on the grant date fair value of the award.

The weighted-average assumptions used to value stock options granted during the periods presented were as follows:



Stock Options	Three Months Ended				Nine Months Ended
	September 30, 2018		September 30, 2017		September 30, 2018	September 30, 2017
Expected term (years)	6.1		6.1		6.0	6.2
Volatility	44	%	53	%	45%	49%
Risk-free interest rate	2.8	%	2.0	%	2.7%	2.0%
Dividend yield ⁽¹⁾	—		—		—	—


(1)	The Company has not paid, and does not anticipate paying, cash dividends on its shares of common stock. Accordingly, the expected dividend yield is zero.

Net Loss Per Share

9 Months Ended

Sep. 30, 2018

Earnings Per Share [Abstract]

Net Loss Per Share

Net Income (Loss) Per Share

Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period, and excludes any dilutive effects of employee stock-based awards and warrants. Diluted net income (loss) per share is computed giving effect to all potentially dilutive common shares, including common stock issuable upon exercise of stock options and warrants and vesting of restricted stock units.

The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data):



	Three Months Ended					Nine Months Ended
	September 30, 2018			September 30, 2017		September 30, 2018			September 30, 2017
Net income (loss)	$	(1,305	)	$	924	$	(3,954	)	$	(8,338	)
Weighted-average shares of common stock outstanding	58,454			55,310		57,790			54,579
Basic net income (loss) per share	$	(0.02	)	$	0.02	$	(0.07	)	$	(0.15	)

Net income (loss)	$	(1,305	)	$	924	$	(3,954	)	$	(8,338	)
Weighted-average shares of common stock outstanding	58,454			55,310		57,790			54,579
Effect of dilutive shares	—			4,131		—			—
Weighted average shares of common stock outstanding	58,454			59,441		57,790			54,579
Diluted net income (loss) per share	$	(0.02	)	$	0.02	$	(0.07	)	$	(0.15	)

The following securities were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive (in thousands):



	Three Months Ended		Nine Months Ended
	September 30, 2018	September 30, 2017	September 30, 2018	September 30, 2017
Stock options	3,051	471	3,051	4,597
Restricted stock units	2,408	29	2,408	2,133
Common stock warrants	—	—	—	13
Total	5,459	500	5,459	6,743

The Company may settle the conversions of the Notes in cash, shares of the Company’s common stock or any combination thereof at its election. The maximum number of shares of the Company’s common stock issuable at the conversion price of $40.82 per share is expected to be 6.3 million shares. However, the Capped Call Transactions are expected to reduce the potential dilution of the Company’s common stock upon any conversion of Notes and/or offset the cash payments the Company is required to make in excess of the principal amount of the Notes. Under the Capped Call Transactions, the number of shares of common stock issuable at the conversion price of $62.80 is expected to be 4.1 million shares. For more information on the Notes and the Capped Call Transactions, see Note 6.

Income Taxes	9 Months Ended
Income Taxes	Sep. 30, 2018
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes The provision for income taxes for the three and nine months ended September 30, 2018 was approximately $41 thousand and $150 thousand, respectively. The provision for income taxes for the three and nine months ended September 30, 2017 was approximately $43 thousand and $142 thousand, respectively. The provision for income taxes consisted primarily of foreign income taxes. For the three and nine months ended September 30, 2018 and 2017, the provision for income taxes differed from the statutory amount primarily due to the Company realizing no benefit for current year losses due to maintaining a full valuation allowance against its domestic net deferred tax assets. The realization of tax benefits of deferred tax assets is dependent upon future levels of taxable income, of an appropriate character, in the periods the items are expected to be deductible or taxable. Based on the available objective evidence, the Company does not believe it is more likely than not that the net deferred tax assets will be realizable. Accordingly, the Company has provided a full valuation allowance against the domestic net deferred tax assets as of September 30, 2018 and December 31, 2017. The Company intends to maintain the remaining valuation allowance until sufficient positive evidence exists to support a reversal of, or decrease in, the valuation allowance. During the three and nine months ended September 30, 2018, there were no material changes to the total amount of unrecognized tax benefits.

Commitments and Contingencies	9 Months Ended
Commitments and Contingencies	Sep. 30, 2018
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Commitments The Company’s principal commitments consist of future payment obligations under capital leases to finance data centers and other computer and networking equipment purchases, debt agreements (see Note 6), operating lease agreements for office space, research and development, and sales and marketing facilities, and agreements with third parties to provide co-location hosting, telecommunication usage and equipment maintenance services. These commitments as of December 31, 2017 are disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, and did not change materially during the nine months ended September 30, 2018 except for the issuance of the Notes, the repayment of borrowings under the 2016 Loan and Security Agreement, the acquisition of certain additional data center and network equipment and software under multiple capital leases, and certain hosting and telecommunications agreements. As of September 30, 2018, the total minimum future payment commitments under these capital leases added during the nine months ended September 30, 2018 were approximately $6.3 million, of which $0.7 million is due during the remainder of 2018, with the remaining $5.6 million due in 2019 to 2021. As of September 30, 2018, $258.8 million of the Notes were outstanding. The Notes are due May 1, 2023. For more information concerning the Notes, see Note 6. During the nine months ended September 30, 2018, the Company entered into or renewed various hosting and telecommunications agreements for terms of 12 to 36 months commencing on various dates in 2018. These agreements require the Company to make monthly payments over the service term in exchange for certain network services. The Company’s total minimum future payment commitments under these agreements are $2.9 million. Universal Services Fund Liability During the third quarter of 2012, the Company determined that based on its business activities, it is classified as a telecommunications service provider for regulatory purposes and it should make direct contributions to the federal USF and related funds based on revenues it receives from the resale of interstate and international telecommunications services. In order to comply with the obligation to make direct contributions, the Company made a voluntary self-disclosure to the FCC Enforcement Bureau and registered with the USAC, which is charged by the FCC with administering the USF. The Company filed exemption certificates with its wholesale telecommunications service providers in order to eliminate its obligation to reimburse such wholesale telecommunications service providers for their USF contributions calculated on services sold to the Company. In April 2013, the Company began remitting required contributions on a prospective basis directly to USAC. The Company’s registration with USAC subjects it to assessments for unpaid USF contributions, as well as interest thereon and civil penalties, due to its late registration and past failure to recognize its obligation as a USF contributor and as an international carrier. The Company is required to pay assessments for periods prior to the Company’s registration. As of December 31, 2012, the total past due USF contribution being imposed by USAC and accrued by the Company for the period from 2003 through 2012 was $8.1 million, of which $4.7 million was undisputed and $3.4 million was disputed. The Company subsequently updated its filings and increased the liability related to 2008 through 2012 by $0.5 million, arriving at a new total of $3.9 million in disputed liability. In July 2013, the Company and USAC agreed to a financing arrangement for $4.1 million of the undisputed $4.7 million of the unpaid USF contributions whereby the Company issued to USAC a promissory note payable in the principal amount of the $4.1 million and paid off the remaining undisputed $0.6 million. The Company had fully paid the promissory note as of January 2017. In January 2017, the FCC’s Wireline Competition Bureau ruled in the Company’s favor with respect to most of the disputed amount. In September 2017, USAC issued a credit to the Company reflecting the FCC’s ruling for the $3.1 million of the $3.9 million in disputed liability. In addition, USAC reversed the interest and penalties related to the disputed liability of $3.1 million. The remaining $0.8 million in dispute involves USAC’s assessment of liability for the period of 2003 through 2007, which was prior to the five year window during which the Company was required to maintain financial records for USF contribution purposes. The Company filed a Request for Review (a form of appeal) of this disputed amount with the FCC’s Wireline Competition Bureau in 2013, which remains pending. If the Request for Review is not resolved in the Company’s favor, it is possible that the Company will be held to the back assessments of $0.8 million, which includes interest and penalties on that amount. As of September 30, 2018, the accrued liability on the remaining disputed assessments, including interest and penalties for the period of 2003 through 2007, was $0.8 million offset by $0.7 million in other USF credits. State and Local Taxes and Surcharges In April 2012, the Company commenced collecting and remitting sales taxes on sales of subscription services in all the U.S. states in which it determined it was obligated to do so. During the first quarter of 2015, the Company conducted an updated sales tax review of the taxability of sales of its subscription services. As a result, the Company determined that it may be obligated to collect and remit sales taxes on such sales in four additional states. Based on its best estimate of the probable sales tax liability in those four states relating to its sales of subscription services during the period 2011 through 2014, during the three months ended March 31, 2015, the Company recorded a general and administrative expense of $0.6 million to accrue for such taxes. During 2013, the Company analyzed its activities and determined it may be obligated to collect and remit various state and local taxes and surcharges on its usage-based fees. The Company had not remitted state and local taxes on usage-based fees in any of the periods prior to 2014 and therefore accrued a sales tax liability for this contingency. In January 2014, the Company commenced paying such taxes and surcharges to certain state authorities. In June 2014, the Company commenced collecting state and local taxes or surcharges on usage-based fees from its clients on a current basis and remitting such taxes to the applicable U.S. state taxing authorities. As of September 30, 2018 and December 31, 2017, the Company had accrued liabilities of $1.3 million and $1.5 million, respectively, for such contingent sales taxes and surcharges that were not being collected from its clients but may be imposed by various taxing authorities, of which $0.2 million and $0.4 million, respectively, were included in current “Sales tax liability” on the condensed consolidated balance sheets, and the remaining were included in non-current “Sales tax liability” on the condensed consolidated balance sheets. The Company’s estimate of the probable loss incurred under this contingency is based on its analysis of the source location of its usage-based fees and the regulations and rules in each tax jurisdiction. Legal Matters The Company is involved in various legal and regulatory matters arising in the normal course of business. In management’s opinion, resolution of these matters is not expected to have a material impact on the Company’s consolidated results of operations, cash flows, or its financial position. However, due to the uncertain nature of legal matters, an unfavorable resolution of a matter could materially affect the Company’s future consolidated results of operations, cash flows or financial position in a particular period. The Company expenses legal fees as incurred. Indemnification Agreements In the ordinary course of business, the Company enters into agreements of varying scope and terms pursuant to which it agrees to indemnify clients, vendors, lessors, business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided by the Company or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with directors and certain officers and employees that will require it, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. Other than as described below, no demands have been made upon the Company to provide indemnification under such agreements and there are no claims that it is aware of that could have a material effect on the consolidated balance sheet, consolidated statement of operations and comprehensive loss, or consolidated statements of cash flows. On October 27, 2016, the Company received notice from Lance Fried, a former officer and director of Face It, Corp., of his claim for indemnification by the Company (as successor in interest to Face It), and for advancement of all legal fees and expenses he incurs in connection with the defense of a lawsuit captioned Melcher, et al. v. Five9, Inc., et al., No. 16-cv-02440, in the U.S. District Court for the Southern District of California. In the lawsuit, plaintiff Carl Melcher, a purported former stockholder of Face It, and his related investment entity Melcher Family Limited Partnership, allege that Face It repurchased the plaintiffs’ stock in September 2013 before the Company acquired Face It, and that in connection with the repurchase, Fried made material misstatements or omissions to Melcher, by failing to disclose that Face It allegedly was in concurrent discussions about a potential sale of the company to the Company. The lawsuit alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, as well as various claims under state law and common law. To date, the Company has advanced Mr. Fried $62 thousand in connection with this claim. However, the Company disputes that Mr. Fried is entitled to advancement in connection with the Melcher litigation. On January 9, 2018, Mr. Fried initiated an arbitration against the Company in which he alleged that the Company breached advancement obligations to him. On June 11, 2018, the arbitrator ordered the Company to advance the fees Mr. Fried incurs (and has already incurred) in connection with the defense of the Melcher litigation. After the arbitrator’s order, the Company has advanced $0.5 million to date. Regardless of the arbitrator’s order, Mr. Fried is required to reimburse the Company for any amounts advanced to him if it is ultimately determined that Mr. Fried is not entitled to indemnification in connection with the Melcher litigation. In addition, the Company believes that it has indemnification rights against the former stockholders of Face It (including Mr. Fried) for all losses that are incurred by the Company in connection with the Melcher litigation, including without limitation, amounts incurred to indemnify or advance the legal fees and expenses of Mr. Fried pursuant to his indemnification claim against the Company. The Company has asserted claims in arbitration against both Mr. Fried and the representative of the former Face It stockholders to recoup these losses. These claims are stayed pending the resolution of the Melcher litigation.

Geographical Information

9 Months Ended

Sep. 30, 2018

Segment Reporting [Abstract]

Geographical Information

The following table is a summary of revenues by geographic region based on client billing address and has been estimated based on the amounts billed to clients during the periods presented (in thousands):



	Three Months Ended				Nine Months Ended
	September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
United States	$	60,315	$	46,897	$	172,376	$	136,085
International	4,989		3,184		12,953		8,737
Total revenue	$	65,304	$	50,081	$	185,329	$	144,822

The following table summarizes total property and equipment, net in the respective locations (in thousands):



	September 30, 2018		December 31, 2017
United States	$	20,976	$	17,949
International	1,933		1,939
Property and equipment, net	$	22,909	$	19,888

Description of Business and Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. All intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates	Use of Estimates The preparation of condensed consolidated financial statements in accordance 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 condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The significant estimates made by management affect revenue, the allowance for doubtful accounts, loss contingencies, including the Company’s accrual for federal fees and sales tax liability, and accrued liabilities. Management periodically evaluates such estimates and they are adjusted prospectively based upon such periodic evaluation. Actual results could differ from those estimates.
Cash and Cash Equivalents	Cash and Cash Equivalents The Company’s cash and cash equivalents consist of highly liquid investments with maturities of three months or less at the time of purchase. The Company’s cash equivalents consist of investments in money market funds and commercial paper.
Marketable Investments	Marketable Investments The Company’s marketable investments consist of U.S agency securities and government sponsored securities, U.S. treasury securities, certificates of deposit, municipal bonds, corporate bonds and commercial paper. The Company determines the appropriate classification of its investments in marketable investments at the time of purchase and re-evaluates such designation at each balance sheet date. The Company’s marketable investments have been classified and accounted for as available-for-sale. Marketable investments are carried at fair value.
Recently Adopted Accounting Pronouncements and Recent Accounting Pronouncements Not Yet Effective	Recently Adopted Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2014-09, Revenue from Contracts with Customers: Topic 606, amending revenue recognition guidance and requiring more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 also includes Subtopic 340-40, Other Assets and Deferred Costs - Contracts with Customers, which requires the deferral of incremental costs of obtaining a contract with a customer. The Company adopted ASU 2014-09 and its related amendments (collectively “ASC 606”) effective on January 1, 2018 using the modified retrospective method. See Note 2 for disclosure on the impact of adopting this standard. Recent Accounting Pronouncements Not Yet Effective In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). Under the new guidance, a lessee will be required to recognize assets and liabilities for both finance, or capital, and operating leases with lease terms of more than 12 months. The ASU also will require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. Lessor accounting will remain largely unchanged from current GAAP. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach that includes a number of optional practical expedients that entities may elect to apply. This guidance is effective for the Company beginning in the first quarter of 2019. Early adoption is permitted. The Company, upon adoption of the new guidance, will recognize operating lease liabilities and right-of-use assets for operating lease commitments covered by Topic 842, and the Company’s total assets and total liabilities will increase relative to such amounts prior to adoption. The Company has gathered information and is evaluating the impact this guidance will have on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (ASU 2018-15), which clarifies the accounting for implementation costs in cloud computing arrangements. ASU 2018-15 is effective for the Company in the first quarter of fiscal 2020. Early adoption is permitted. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements. There are several other new accounting pronouncements issued by the FASB, which the Company will adopt. However, the Company does not believe any of those accounting pronouncements will have a material impact on its consolidated financial position, operating results or statements of cash flows.
Accounts Receivable	The Company receives payments from customers based upon billing cycles. Invoice payment terms are usually 30 days or less. Accounts receivable are recorded when the right to consideration becomes unconditional.
Revenue Recognition	The Company receives payments from customers based upon billing cycles. Invoice payment terms are usually 30 days or less. Accounts receivable are recorded when the right to consideration becomes unconditional. Revenue Recognition Revenue is recognized when control of the promised services are transferred to customers in an amount that reflects the consideration that the Company expects to receive in exchange for those services. The Company generates all of its revenue from contracts with customers. In contracts with multiple performance obligations, it identifies each performance obligation and evaluates whether the performance obligations are distinct within the context of the contract at contract inception. Performance obligations that are not distinct at contract inception are combined. The Company allocates the transaction price to each distinct performance obligation proportionately based on the estimated standalone selling price for each performance obligation. The Company then looks to how services are transferred to the customer in order to determine the timing of revenue recognition. Most services provided under the Company’s agreements result in the transfer of control over time. The Company’s revenue consists of subscription services and related usage as well as professional services. The Company charges clients subscription fees, usually billed on a monthly basis, for access to the Company’s Virtual Contact Center, or VCC, solution. The monthly subscription fees are primarily based on the number of agent seats, as well as the specific VCC functionalities and applications deployed by the client. Agent seats are defined as the maximum number of named agents allowed to concurrently access the VCC cloud platform. Clients typically have more named agents than agent seats. Multiple named agents may use an agent seat, though not simultaneously. Substantially all of the Company’s clients purchase both subscriptions and related telephony usage. A small percentage of the Company’s clients subscribe to its platform but purchase telephony usage directly from a wholesale telecommunications service provider. The Company does not sell telephony usage on a stand-alone basis to any client. The related usage fees are based on the volume of minutes used for inbound and outbound client interactions. The Company also offers bundled plans, generally for smaller deployments, whereby the client is charged a single monthly fixed fee per agent seat that includes both subscription and unlimited usage in the contiguous 48 states and, in some cases, Canada. Professional services revenue is derived primarily from VCC implementations, including application configuration, system integration, optimization, education and training services. Clients are not permitted to take possession of the Company’s software. The Company offers monthly, annual and multiple-year contracts to its clients, generally with 30 days’ notice required for changes in the number of agent seats and sometimes with a minimum number of agent seats required. Larger clients typically choose annual contracts, which generally include an implementation and ramp period of several months. Fixed subscription fees (including bundled plans) are generally billed monthly in advance, while related usage fees are billed in arrears. Support activities include technical assistance for the Company’s solution and upgrades and enhancements to the VCC cloud platform on a when-and-if-available basis, which are not billed separately. The Company generally requires advance deposits from its clients based on estimated usage when such usage is not billed as part of a bundled plan. Any unused portion of the deposit is refundable to the client upon termination of the arrangement, provided all amounts due have been paid. All fees, except usage deposits, are non-refundable. Professional services are primarily billed on a fixed-fee basis and are performed by the Company directly or, alternatively, clients may also choose to perform these services themselves or engage their own third-party service providers. The estimation of variable consideration for each performance obligation requires the Company to make subjective judgments resulting in estimated variable consideration that is included in the transaction fee. This is done to the extent that it is probable, in the Company’s judgment, that a significant reversal in the amount of cumulative revenue recognized under the contract will not occur. The Company estimates the variable consideration in order to allocate the overall transaction fee on a relative stand-alone selling price basis to its multiple performance obligations. This requires the estimate of unit quantities, especially during the initial ramp period of the contract, during which the Company bills under an ‘actual usage’ model for subscription-related services. The Company recognizes revenue on fixed fee professional services performance obligations based on the proportion of labor hours expended compared to the total hours expected to complete the related performance obligation. The determination of the total labor hours expected to complete the performance obligations involves judgment, influencing the initial stand-alone selling price estimate as well as the timing of professional services revenue recognition, although this is typically resolved in a short time frame. When a contract with a customer is signed, the Company assesses whether collection of the fees under the arrangement is probable. The Company assesses collection based on a number of factors, including past transaction history and the creditworthiness of the client. The Company maintains a revenue reserve for potential credits to be issued in accordance with service level agreements or for other revenue adjustments. The revenue recognition standards include guidance relating to any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer and may include, but is not limited to, sales, use, value added and excise taxes. The Company records Universal Service Fund, or USF, contributions and other regulatory costs on a gross basis in its condensed consolidated statements of operations and comprehensive loss and records surcharges and sales, use and excise taxes billed to its clients on a net basis. The cost of gross USF contributions payable to the Universal Service Administrative Company, or USAC, other FCC fund administrators and wholesale carriers is presented as a cost of revenue in the condensed consolidated statements of operations and comprehensive loss. Surcharges and sales, use and excise taxes incurred in excess of amounts billed to the Company’s clients are presented in general and administrative expense in the condensed consolidated statements of operations and comprehensive loss. The Company receives payments from customers based upon billing cycles. Invoice payment terms are usually 30 days or less. Accounts receivable are recorded when the right to consideration becomes unconditional. Deferred contract acquisition costs are recorded when incurred and are amortized over a customer benefit period of five years. The Company’s contract assets consist of unbilled amounts typically resulting from professional services revenue recognition when it exceeds the total amounts billed to the customer. The Company’s contract liabilities consist of advance payments and billings in excess of revenue recognized.
Deferred Contract Acquisition Costs	Deferred contract acquisition costs are recorded when incurred and are amortized over a customer benefit period of five years. In connection with the adoption of ASC 340-40, the Company capitalizes certain contract acquisition costs consisting primarily of commissions paid when contracts are signed and related incremental fringe benefits.

- Definition

Disclosure of accounting policy for trade and other accounts receivable, and finance, loan and lease receivables, including those classified as held for investment and held for sale. This disclosure may include (1) the basis at which such receivables are carried in the entity's statements of financial position (2) how the level of the valuation allowance for receivables is determined (3) when impairments, charge-offs or recoveries are recognized for such receivables (4) the treatment of origination fees and costs, including the amortization method for net deferred fees or costs (5) the treatment of any premiums or discounts or unearned income (6) the entity's income recognition policies for such receivables, including those that are impaired, past due or placed on nonaccrual status and (7) the treatment of foreclosures or repossessions (8) the nature and amount of any guarantees to repurchase receivables.

+ References + Details

ASC 606 Adoption Impact and Revenue from Contracts with Customers (Tables)

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

Schedule of Impacts from New Accounting Pronouncements

Select condensed consolidated balance sheet line items, which reflects the adoption impact of the new standard, are as follows:



	September 30, 2018
(in thousands)	As Reported			Balances without adoption of ASC 606			Effect of Change Higher (Lower)
Assets:
Accounts receivable, net	$	23,903		$	23,800		$	103
Prepaid expenses and other current assets	7,962			8,042			(80		)
Deferred contract acquisition costs	28,232			—			28,232
Liabilities:
Deferred revenue - current	17,490			19,308			(1,818		)
Shareholders’ Equity:
Accumulated deficit	(155,230		)	(185,303		)	30,073

Select condensed consolidated statement of operations line items, which reflects the adoption of the new standard, are as follows:



	Three Months Ended September 30, 2018
(in thousands, except per share amounts)	As Reported			Balances without adoption of ASC 606			Effect of Change Higher (Lower)
Revenue	$	65,304		$	65,041		$	263
Cost of revenue	26,179			26,040			139
Gross profit	39,125			39,001			124
Sales and marketing	17,818			19,574			(1,756		)
Income (loss) from operations	979			(901		)	1,880
Net income (loss)	(1,305		)	(3,185		)	1,880
Basic and diluted net loss per share	$	(0.02	)	$	(0.05	)	$	0.03



	Nine months ended September 30, 2018
(in thousands, except per share amounts)	As Reported			Balances without adoption of ASC 606			Effect of Change Higher (Lower)
Revenue	$	185,329		$	183,965		$	1,364
Cost of revenue	75,695			75,165			530
Gross profit	109,634			108,800			834
Sales and marketing	53,208			58,302			(5,094		)
Income (loss) from operations	1,023			(4,905		)	5,928
Net income (loss)	(3,954		)	(9,882		)	5,928
Basic and diluted net loss per share	$	(0.07	)	$	(0.17	)	$	0.10

Select condensed consolidated cash flow line items, which reflects the adoption of the new standard, are as follows:



	Nine months ended September 30, 2018
(in thousands)	As Reported			Balances without adoption of ASC 606			Effect of Change Higher (Lower)
Accounts receivable	$	(4,931	)	$	(4,828	)	$	(103	)
Prepaid expenses and other current assets	(2,755		)	(2,835		)	80
Deferred contract acquisition costs	(5,094		)	—			(5,094		)
Deferred revenue	3,910			5,728			(1,818		)
Net cash provided by operating activities	23,152			23,152			—

Schedule of Contract with Customer, Asset and Liability

The following table provides information about accounts receivable, net, deferred contract acquisition costs, contract assets and contract liabilities from contracts with customers (in thousands):



	September 30, 2018			January 1, 2018
Accounts receivable, net	$	23,903		$	19,151

Deferred contract acquisition costs:
Current	$	8,633		$	7,059
Non-current	19,599			16,079
Total deferred contract acquisition costs	$	28,232		$	23,138

Contract assets and contract liabilities:
Contract assets (included in prepaid expenses and other current assets)	$	688		$	736
Contract liabilities (deferred revenue)	17,490			13,568
Net contract assets (liabilities)	$	(16,802	)	$	(12,832	)

Investments and Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Schedule of Marketable Investments

The Company’s marketable investments have been classified and accounted for as available-for-sale. The Company’s marketable investments as of September 30, 2018 were as follows (in thousands):



	September 30, 2018
	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Certificates of deposit	$	5,318	$	1	$	—		$	5,319
U.S. treasury	1,132		—		—			1,132
U.S. agency securities and government sponsored securities	144,208		—		(173		)	144,035
Commercial paper	3,727		—		—			3,727
Municipal bonds	6,085		—		(9		)	6,076
Corporate bonds	39,753		—		(35		)	39,718
Total	$	200,223	$	1	$	(217	)	$	200,007

Schedule of Gross Unrealized Losses and Fair Value of Marketable Investments

The following table presents the gross unrealized losses and the fair value for those marketable investments that were in an unrealized loss position as of September 30, 2018 (in thousands):



	September 30, 2018
	Less than 12 months
	Gross Unrealized Losses			Fair Value
U.S. treasury	$	—		$	1,132
U.S. agency securities and government sponsored securities	(173		)	144,035
Municipal bonds	(9		)	6,076
Corporate bonds	(35		)	39,718
Total	$	(217	)	$	190,961

Schedule of Assets Carried at Fair Value

The following table sets forth the Company’s assets measured at fair value by level within the fair value hierarchy (in thousands):



	September 30, 2018
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents
Commercial paper	$	—	$	249	$	—	$	249
Money market funds	20,094		—		—		20,094
Total cash equivalents	$	20,094	$	249	$	—	$	20,343
Marketable investments
Certificates of deposit	—		5,319		—		5,319
U.S. treasury	1,132		—		—		1,132
U.S. agency securities and government sponsored securities	—		144,035		—		144,035
Commercial paper	—		3,727		—		3,727
Municipal bonds	—		6,076		—		6,076
Corporate bonds	—		39,718		—		39,718
Total marketable investments	$	1,132	$	198,875	$	—	$	200,007

	December 31, 2017
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents
Money market funds	$	20,092	$	—	$	—	$	20,092
Other Assets
Embedded conversion option held for investment	$	—	$	—	$	984	$	984

Financial Statement Components (Tables)

9 Months Ended

Sep. 30, 2018

Financial Statement Components [Abstract]

Schedule of Cash and Cash Equivalents

Cash and cash equivalents consisted of the following (in thousands):



	September 30, 2018		December 31, 2017
Cash	$	59,276	$	48,855
Commercial paper	249		—
Money market funds	20,094		20,092
Cash and cash equivalents	$	79,619	$	68,947

Schedule of Accounts Receivable

Accounts receivable, net consisted of the following (in thousands):



	September 30, 2018			December 31, 2017
Trade accounts receivable	$	22,427		$	17,481
Unbilled trade accounts receivable, net of advance client deposits	1,491			1,600
Allowance for doubtful accounts	(15		)	(33		)
Accounts receivable, net	$	23,903		$	19,048

Schedule of Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):



	September 30, 2018		December 31, 2017
Prepaid expenses	$	4,961	$	2,437
Other current assets	2,313		2,403
Contract assets	688		—
Prepaid expenses and other current assets	$	7,962	$	4,840

Schedule of Property and Equipment

Property and equipment, net consisted of the following (in thousands):



	September 30, 2018			December 31, 2017
Computer and network equipment	$	50,694		$	47,195
Computer software	8,191			6,974
Internal-use software development costs	500			500
Furniture and fixtures	1,479			1,282
Leasehold improvements	804			801
Property and equipment	61,668			56,752
Accumulated depreciation and amortization	(38,759		)	(36,864		)
Property and equipment, net	$	22,909		$	19,888

Schedule of Capital Leased Property and Equipment

Property and equipment capitalized under capital lease obligations consist primarily of computer and network equipment and was as follows (in thousands):



	September 30, 2018			December 31, 2017
Gross	$	47,527		$	46,624
Less: accumulated depreciation and amortization	(31,905		)	(30,438		)
Total	$	15,622		$	16,186

Schedule of Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following (in thousands):



	September 30, 2018		December 31, 2017
Accrued compensation and benefits	$	11,787	$	8,657
Accrued expenses	2,357		3,130
Accrued and other current liabilities	$	14,144	$	11,787

Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets

The components of intangible assets were as follows (in thousands):



	September 30, 2018							December 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Developed technology	$	2,460	$	(1,741	)	$	719	$	2,460	$	(1,478	)	$	982
Customer relationships	520		(515		)	5		520		(437		)	83
Domain names	50		(50		)	—		50		(42		)	8
Total	$	3,030	$	(2,306	)	$	724	$	3,030	$	(1,957	)	$	1,073

Schedule of Expected Future Amortization Expense of Intangible Assets

As of September 30, 2018, the expected future amortization expense for intangible assets was as follows (in thousands):



Period	Expected Future Amortization Expense
2018	$	93
2019	351
2020	280
Total	$	724

Debt (Tables)

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Schedule of Net Carrying Amount of Notes and Impact to Additional Paid-in Capital

The net carrying amount of the liability component of the Notes is as follows (in thousands):



	September 30, 2018
Principal	$	258,750
Unamortized debt discount	(59,392		)
Unamortized issuance costs	(5,694		)
Net carrying amount	$	193,664

The net carrying amount of the equity component of the Notes is as follows (in thousands):

The net impact to the Company’s stockholders’ equity, included in additional paid-in capital, relating to the issuance of the Notes is as follows (in thousands):

Schedule of Interest Expense Related to the Notes

Interest expense related to the Notes is as follows (in thousands):



	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018
Contractual interest expense	$	81	$	129
Amortization of debt discount	2,782		4,364
Amortization of issuance costs	267		418
Total interest expense	$	3,130	$	4,911

Schedule of Outstanding Debt

The Company’s outstanding debt is summarized as follows (in thousands):



	September 30, 2018		December 31, 2017
Note payable - FCC civil penalty, gross	$	—	$	333
Less: discount	—		(7		)
Note payable, net carrying value	—		326
Convertible senior notes	193,664		—
Revolving line of credit	—		32,594
Interest accretion under 2016 line of credit	—		10
Total debt, net carrying value	$	193,664	$	32,930
Less: current portion of debt *	$	—	$	336
Total debt, less current portion **	$	193,664	$	32,594


* Included in ‘Notes payable’ in the condensed consolidated balance sheet as of December 31, 2017.
** Included in ‘Convertible senior notes’ and ‘Revolving line of credit’ as of September 30, 2018 and December 31, 2017, respectively, in the condensed consolidated balance sheets.

Schedule of Maturities of Debt

Maturity of the Company’s outstanding debt as of September 30, 2018 is as follows (in thousands):



Period	Amount to Mature
2023	$	258,750
Total	$	258,750

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=114775744&loc=d3e28541-108399

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21506-112644

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=114775744&loc=d3e28551-108399

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21521-112644

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21538-112644

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=75038535&loc=d3e64711-112823

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=114775985&loc=d3e28878-108400

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21475-112644

+ Details

Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2018

Equity [Abstract]

Schedule of Common Stock Reserved for Future Issuance

Shares of common stock reserved for future issuance related to outstanding equity awards, common stock warrants, and employee equity incentive plans were as follows (in thousands):



		September 30, 2018
Stock options outstanding		3,051
Restricted stock units outstanding		2,408
Shares available for future grant under 2014 Plan		8,784
Shares available for future issuance under ESPP		1,801
Total shares of common stock reserved		16,044

Schedule of Stock Option Activity

A summary of the Company’s stock option activity during the nine months ended September 30, 2018 is as follows (in thousands, except years and per share data):



	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2017	4,047		$	8.00
Options granted (weighted average grant date fair value of $14.19 per share)	282		30.48
Options exercised	(1,172	)	6.01
Options forfeited or expired	(106	)	18.02
Outstanding as of September 30, 2018	3,051		$	10.50	6.1	$	101,257

Schedule of RSU Activity

A summary of the Company’s restricted stock unit (“RSU”) activity during the nine months ended September 30, 2018 is as follows (in thousands, except per share data):



	Number of Shares		Weighted Average Grant Date Fair Value Per Share
Outstanding as of December 31, 2017	2,033		$	12.81
RSUs granted	1,375		30.98
RSUs vested and released	(803	)	12.66
RSUs forfeited	(197	)	17.84
Outstanding as of September 30, 2018	2,408		$	22.82

Schedule of Stock-based Compensation Expense

Stock-based compensation expenses were as follows (in thousands):



	Three Months Ended				Nine Months Ended
	September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
Cost of revenue	$	860	$	599	$	2,391	$	1,608
Research and development¹	2,352		797		4,293		2,235
Sales and marketing	1,613		1,084		4,560		3,236
General and administrative	4,044		1,240		9,747		3,624
Total stock-based compensation	$	8,869	$	3,720	$	20,991	$	10,703


(1)	Includes an incremental stock-based compensation cost due to modification of certain stock-based awards of a former executive of the Company in the third quarter of 2018.

Schedule of Unrecognized Compensation Expense



	Stock Option		RSU		ESPP
Unrecognized stock-based compensation expense	$	9,004	$	51,586	$	224
Weighted-average amortization period	2.5 years		2.9 years		0.1 years

Schedule of Valuation Assumptions, Stock Option

The weighted-average assumptions used to value stock options granted during the periods presented were as follows:



Stock Options	Three Months Ended				Nine Months Ended
	September 30, 2018		September 30, 2017		September 30, 2018	September 30, 2017
Expected term (years)	6.1		6.1		6.0	6.2
Volatility	44	%	53	%	45%	49%
Risk-free interest rate	2.8	%	2.0	%	2.7%	2.0%
Dividend yield ⁽¹⁾	—		—		—	—


(1)	The Company has not paid, and does not anticipate paying, cash dividends on its shares of common stock. Accordingly, the expected dividend yield is zero.

Net Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2018

Earnings Per Share [Abstract]

Basic and Diluted Net Loss Per Share

The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data):



	Three Months Ended					Nine Months Ended
	September 30, 2018			September 30, 2017		September 30, 2018			September 30, 2017
Net income (loss)	$	(1,305	)	$	924	$	(3,954	)	$	(8,338	)
Weighted-average shares of common stock outstanding	58,454			55,310		57,790			54,579
Basic net income (loss) per share	$	(0.02	)	$	0.02	$	(0.07	)	$	(0.15	)

Net income (loss)	$	(1,305	)	$	924	$	(3,954	)	$	(8,338	)
Weighted-average shares of common stock outstanding	58,454			55,310		57,790			54,579
Effect of dilutive shares	—			4,131		—			—
Weighted average shares of common stock outstanding	58,454			59,441		57,790			54,579
Diluted net income (loss) per share	$	(0.02	)	$	0.02	$	(0.07	)	$	(0.15	)

Schedule of Antidilutive Securities Excluded from Computation of Net Loss Per Share

The following securities were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive (in thousands):



	Three Months Ended		Nine Months Ended
	September 30, 2018	September 30, 2017	September 30, 2018	September 30, 2017
Stock options	3,051	471	3,051	4,597
Restricted stock units	2,408	29	2,408	2,133
Common stock warrants	—	—	—	13
Total	5,459	500	5,459	6,743

Geographical Information (Tables)

9 Months Ended

Sep. 30, 2018

Segment Reporting [Abstract]

Schedule of Revenues and Property and Equipment by Geographic Region



	Three Months Ended				Nine Months Ended
	September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
United States	$	60,315	$	46,897	$	172,376	$	136,085
International	4,989		3,184		12,953		8,737
Total revenue	$	65,304	$	50,081	$	185,329	$	144,822

The following table summarizes total property and equipment, net in the respective locations (in thousands):



	September 30, 2018		December 31, 2017
United States	$	20,976	$	17,949
International	1,933		1,939
Property and equipment, net	$	22,909	$	19,888

ASC 606 Adoption Impact and Revenue from Contracts with Customers - Narrative (Details) - USD ($)		3 Months Ended	9 Months Ended
	Jan. 01, 2018	Sep. 30, 2018	Sep. 30, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Revenue recognized that was included in the contract liability balance at January 1, 2018		$ 1,200,000	$ 9,300,000
Contract acquisition costs expensed as incurred amount		$ 500,000	$ 1,500,000
Retained Earnings \| ASU 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Impact on opening accumulated deficit from adopting the new accounting standard	$ 24,100,000
Retained Earnings \| ASU 2014-09, timing of revenue recognition
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Impact on opening accumulated deficit from adopting the new accounting standard	1,000,000
Retained Earnings \| ASC 340-40
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Impact on opening accumulated deficit from adopting the new accounting standard	23,100,000
Contract acquisition costs
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Capitalized contract cost amortization period		5 years	5 years
Capitalized contract cost, gross	$ 23,100,000
Amortization of capitalized contract cost		$ 2,200,000	$ 6,100,000
Capitalized contract cost impairment loss			$ 0

ASC 606 Adoption Impact and Revenue from Contracts with Customers - ASC 606 Impact on Condensed Consolidated Balance Sheet (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Jan. 01, 2018	Dec. 31, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Accounts receivable, net	$ 23,903	$ 19,151	$ 19,048
Prepaid expenses and other current assets	7,962		4,840
Deferred contract acquisition costs	28,232	23,138
Deferred revenue	17,490	$ 13,568	13,975
Accumulated deficit	(155,230)		$ (175,421)
Balances without adoption of ASC 606
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Accounts receivable, net	23,800
Prepaid expenses and other current assets	8,042
Deferred contract acquisition costs	0
Deferred revenue	19,308
Accumulated deficit	(185,303)
Effect of Change Higher (Lower) \| ASU 2014-09
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Accounts receivable, net	103
Prepaid expenses and other current assets	(80)
Deferred contract acquisition costs	28,232
Deferred revenue	(1,818)
Accumulated deficit	$ 30,073

ASC 606 Adoption Impact and Revenue from Contracts with Customers - ASC 606 Impact on Condensed Consolidated Statement of Operations (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenue	$ 65,304	$ 50,081	$ 185,329	$ 144,822
Cost of revenue	26,179	20,497	75,695	60,741
Gross profit	39,125	29,584	109,634	84,081
Sales and marketing	17,818	16,502	53,208	49,212
Income (loss) from operations	979	1,714	1,023	(5,887)
Net loss	$ (1,305)	$ 924	$ (3,954)	$ (8,338)
Basic and diluted net loss per share (in USD per share)	$ (0.02)		$ (0.07)
Balances without adoption of ASC 606
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenue	$ 65,041		$ 183,965
Cost of revenue	26,040		75,165
Gross profit	39,001		108,800
Sales and marketing	19,574		58,302
Income (loss) from operations	(901)		(4,905)
Net loss	$ (3,185)		$ (9,882)
Basic and diluted net loss per share (in USD per share)	$ (0.05)		$ (0.17)
Effect of Change Higher (Lower) \| ASU 2014-09
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenue	$ 263		$ 1,364
Cost of revenue	139		530
Gross profit	124		834
Sales and marketing	(1,756)		(5,094)
Income (loss) from operations	1,880		5,928
Net loss	$ 1,880		$ 5,928
Basic and diluted net loss per share (in USD per share)	$ 0.03		$ 0.10

ASC 606 Adoption Impact and Revenue from Contracts with Customers - ASC 606 Impact on Statements of Cash Flows (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Accounts receivable	$ (4,931)	$ (3,406)
Prepaid expenses and other current assets	(2,755)	(1,861)
Deferred contract acquisition costs	(5,094)	0
Deferred revenue	3,910	3,676
Net cash provided by operating activities	23,152	$ 8,226
Balances without adoption of ASC 606
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Accounts receivable	(4,828)
Prepaid expenses and other current assets	(2,835)
Deferred contract acquisition costs	0
Deferred revenue	5,728
Net cash provided by operating activities	23,152
Effect of Change Higher (Lower) \| ASU 2014-09
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Accounts receivable	(103)
Prepaid expenses and other current assets	80
Deferred contract acquisition costs	(5,094)
Deferred revenue	(1,818)
Net cash provided by operating activities	$ 0

ASC 606 Adoption Impact and Revenue from Contracts with Customers - Schedule of Contract Balances (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Jan. 01, 2018	Dec. 31, 2017
Accounts receivable, net
Accounts receivable, net	$ 23,903	$ 19,151	$ 19,048
Deferred contract acquisition costs:
Current	8,633	7,059	0
Non-current	19,599	16,079	0
Total deferred contract acquisition costs	28,232	23,138
Contract assets and contract liabilities:
Contract assets (included in prepaid expenses and other current assets)	688	736	0
Contract liabilities (deferred revenue)	17,490	13,568	$ 13,975
Net contract assets (liabilities)	$ (16,802)	$ (12,832)

ASC 606 Adoption Impact and Revenue from Contracts with Customers - Remaining Performance Obligations (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-10-01 $ in Millions	Sep. 30, 2018 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligations	$ 93.4
Percentage of remaining performance obligations expected to be recognized over the next 24 months	75.00%
Remaining performance obligations recognition period	2 years

Investments and Fair Value Measurements - Schedule of Marketable Investments (Details) $ in Thousands	Sep. 30, 2018 USD ($)
Debt Securities, Available-for-sale [Line Items]
Cost	$ 200,223
Gross Unrealized Gains	1
Gross Unrealized Losses	(217)
Fair Value	200,007
Certificates of deposit
Debt Securities, Available-for-sale [Line Items]
Cost	5,318
Gross Unrealized Gains	1
Gross Unrealized Losses	0
Fair Value	5,319
U.S. treasury
Debt Securities, Available-for-sale [Line Items]
Cost	1,132
Gross Unrealized Gains	0
Gross Unrealized Losses	0
Fair Value	1,132
U.S. agency securities and government sponsored securities
Debt Securities, Available-for-sale [Line Items]
Cost	144,208
Gross Unrealized Gains	0
Gross Unrealized Losses	(173)
Fair Value	144,035
Commercial paper
Debt Securities, Available-for-sale [Line Items]
Cost	3,727
Gross Unrealized Gains	0
Gross Unrealized Losses	0
Fair Value	3,727
Commercial paper
Debt Securities, Available-for-sale [Line Items]
Cost	6,085
Gross Unrealized Gains	0
Gross Unrealized Losses	(9)
Fair Value	6,076
Corporate bonds
Debt Securities, Available-for-sale [Line Items]
Cost	39,753
Gross Unrealized Gains	0
Gross Unrealized Losses	(35)
Fair Value	$ 39,718

Investments and Fair Value Measurements - Schedule of Continuous Unrealized Loss Position (Details) $ in Thousands	Sep. 30, 2018 USD ($)
Debt Securities, Available-for-sale [Line Items]
Less than 12 months, gross unrealized losses	$ (217)
Less than 12 months, fair value	190,961
U.S. treasury
Debt Securities, Available-for-sale [Line Items]
Less than 12 months, gross unrealized losses	0
Less than 12 months, fair value	1,132
U.S. agency securities and government sponsored securities
Debt Securities, Available-for-sale [Line Items]
Less than 12 months, gross unrealized losses	(173)
Less than 12 months, fair value	144,035
Commercial paper
Debt Securities, Available-for-sale [Line Items]
Less than 12 months, gross unrealized losses	(9)
Less than 12 months, fair value	6,076
Corporate bonds
Debt Securities, Available-for-sale [Line Items]
Less than 12 months, gross unrealized losses	(35)
Less than 12 months, fair value	$ 39,718

Investments and Fair Value Measurements - Schedule of Assets Carried at Fair Value (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Assets
Cash equivalents	$ 20,343
Marketable investments	200,007
Level 1
Assets
Cash equivalents	20,094
Marketable investments	1,132
Level 2
Assets
Cash equivalents	249
Marketable investments	198,875
Level 3
Assets
Cash equivalents	0
Marketable investments	0
Embedded conversion option held for investment
Assets
Other Assets		$ 984
Embedded conversion option held for investment \| Level 1
Assets
Other Assets		0
Embedded conversion option held for investment \| Level 2
Assets
Other Assets		0
Embedded conversion option held for investment \| Level 3
Assets
Other Assets		984
Certificates of deposit
Assets
Marketable investments	5,319
Certificates of deposit \| Level 1
Assets
Marketable investments	0
Certificates of deposit \| Level 2
Assets
Marketable investments	5,319
Certificates of deposit \| Level 3
Assets
Marketable investments	0
U.S. treasury
Assets
Marketable investments	1,132
U.S. treasury \| Level 1
Assets
Marketable investments	1,132
U.S. treasury \| Level 2
Assets
Marketable investments	0
U.S. treasury \| Level 3
Assets
Marketable investments	0
U.S. agency securities and government sponsored securities
Assets
Marketable investments	144,035
U.S. agency securities and government sponsored securities \| Level 1
Assets
Marketable investments	0
U.S. agency securities and government sponsored securities \| Level 2
Assets
Marketable investments	144,035
U.S. agency securities and government sponsored securities \| Level 3
Assets
Marketable investments	0
Commercial paper
Assets
Marketable investments	3,727
Commercial paper \| Level 1
Assets
Marketable investments	0
Commercial paper \| Level 2
Assets
Marketable investments	3,727
Commercial paper \| Level 3
Assets
Marketable investments	0
Commercial paper
Assets
Marketable investments	6,076
Commercial paper \| Level 1
Assets
Marketable investments	0
Commercial paper \| Level 2
Assets
Marketable investments	6,076
Commercial paper \| Level 3
Assets
Marketable investments	0
Corporate bonds
Assets
Marketable investments	39,718
Corporate bonds \| Level 1
Assets
Marketable investments	0
Corporate bonds \| Level 2
Assets
Marketable investments	39,718
Corporate bonds \| Level 3
Assets
Marketable investments	0
Commercial paper
Assets
Cash equivalents	249
Commercial paper \| Level 1
Assets
Cash equivalents	0
Commercial paper \| Level 2
Assets
Cash equivalents	249
Commercial paper \| Level 3
Assets
Cash equivalents	0
Money market funds
Assets
Cash equivalents	20,094	20,092
Money market funds \| Level 1
Assets
Cash equivalents	20,094	20,092
Money market funds \| Level 2
Assets
Cash equivalents	0	0
Money market funds \| Level 3
Assets
Cash equivalents	$ 0	$ 0

Investments and Fair Value Measurements - Narrative (Details) - USD ($)	1 Months Ended	9 Months Ended
	Mar. 31, 2018	Sep. 30, 2018	Sep. 30, 2017
Fair Value Disclosures [Abstract]
Proceeds from sale of convertible note held for investment	$ 1,900,000	$ 1,923,000	$ 0
Carrying value of convertible notes sold	1,600,000
Total proceeds from sale of convertible notes receivable	$ 2,100,000
Level 2 \| Convertible debt
Debt Instrument [Line Items]
Fair value of long-term debt		313,400,000
Nonrecurring
Debt Instrument [Line Items]
Assets measured at fair value on nonrecurring basis		0
Liabilities measured at fair value on nonrecurring basis		$ 0

Financial Statement Components - Schedule of Cash and Cash Equivalents (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017	Dec. 31, 2016
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	$ 79,619	$ 68,947	$ 63,364	$ 58,122
Cash
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	59,276	48,855
Commercial paper
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	249	0
Money market funds
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	$ 20,094	$ 20,092

Financial Statement Components - Schedule of Accounts Receivable (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Jan. 01, 2018	Dec. 31, 2017
Accounts Receivable [Line Items]
Allowance for doubtful accounts	$ (15)		$ (33)
Accounts receivable, net	23,903	$ 19,151	19,048
Trade accounts receivable
Accounts Receivable [Line Items]
Trade accounts receivable	22,427		17,481
Unbilled trade accounts receivable, net of advance client deposits
Accounts Receivable [Line Items]
Trade accounts receivable	$ 1,491		$ 1,600

Financial Statement Components - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Jan. 01, 2018	Dec. 31, 2017
Financial Statement Components [Abstract]
Prepaid expenses	$ 4,961		$ 2,437
Other current assets	2,313		2,403
Contract assets	688	$ 736	0
Prepaid expenses and other current assets	$ 7,962		$ 4,840

Financial Statement Components - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Property and equipment	$ 61,668		$ 61,668		$ 56,752
Accumulated depreciation and amortization	(38,759)		(38,759)		(36,864)
Property and equipment, net	22,909		22,909		19,888
Depreciation expense	2,600	$ 1,800	7,100	$ 5,900
Computer and network equipment
Property, Plant and Equipment [Line Items]
Property and equipment	50,694		50,694		47,195
Computer software
Property, Plant and Equipment [Line Items]
Property and equipment	8,191		8,191		6,974
Internal-use software development costs
Property, Plant and Equipment [Line Items]
Property and equipment	500		500		500
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment	1,479		1,479		1,282
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment	$ 804		$ 804		$ 801

Financial Statement Components - Schedule of Capital Leased Property and Equipment (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Financial Statement Components [Abstract]
Gross	$ 47,527	$ 46,624
Less: accumulated depreciation and amortization	(31,905)	(30,438)
Total	$ 15,622	$ 16,186

Financial Statement Components - Schedule of Accrued and Other Current Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Financial Statement Components [Abstract]
Accrued compensation and benefits	$ 11,787	$ 8,657
Accrued expenses	2,357	3,130
Accrued and other current liabilities	$ 14,144	$ 11,787

Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Acquired Finite-Lived Intangible Assets
Gross Carrying Amount	$ 3,030	$ 3,030
Accumulated Amortization	(2,306)	(1,957)
Total	724	1,073
Developed technology
Acquired Finite-Lived Intangible Assets
Gross Carrying Amount	2,460	2,460
Accumulated Amortization	(1,741)	(1,478)
Total	719	982
Customer relationships
Acquired Finite-Lived Intangible Assets
Gross Carrying Amount	520	520
Accumulated Amortization	(515)	(437)
Total	5	83
Domain names
Acquired Finite-Lived Intangible Assets
Gross Carrying Amount	50	50
Accumulated Amortization	(50)	(42)
Total	$ 0	$ 8

Intangible Assets - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Amortization expense related to intangible assets	$ 0.1	$ 0.1	$ 0.3	$ 0.3

Intangible Assets - Schedule of Expected Future Amortization Expense of Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
2018	$ 93
2019	351
2020	280
Total	$ 724	$ 1,073

Debt - Convertible Senior Notes and Capped Call (Details) $ / shares in Units, shares in Millions	1 Months Ended	9 Months Ended
	May 31, 2018 USD ($) day $ / shares	Sep. 30, 2018 USD ($) $ / shares shares
Debt Instrument [Line Items]
Conversion price on convertible debt (in USD per share) \| $ / shares		$ 40.82
Payment on debt issuance cost		$ 8,036,000
Convertible debt \| Convertible Senior Notes
Debt Instrument [Line Items]
Stated interest rate on debt	0.125%
Proceeds from issuance of debt	$ 250,700,000
Conversion ratio on convertible debt	0.0244978
Conversion price on convertible debt (in USD per share) \| $ / shares	$ 40.82
Sinking fund payment	$ 0
Conversion option		63,756,000
Effective interest rate on debt	6.39%
Payment on debt issuance cost	$ 8,100,000
Debt issuance costs	$ 6,100,000	$ 5,694,000
Cap price of the Capped Call Transactions (in dollars per share) \| $ / shares	$ 62.80
Number of shares covered in the Capped Call Transactions \| shares		6.3
Cost of Capped Call Transactions recorded in additional paid in capital		$ 31,412,000
Convertible debt \| Convertible Senior Notes \| Fundamental change event
Debt Instrument [Line Items]
Debt redemption price as percentage of principal amount	100.00%
Convertible debt \| Convertible Senior Notes \| On or after May 5, 2021
Debt Instrument [Line Items]
Number of trading days \| day	20
Number of consecutive trading days \| day	30
Threshold percentage of stock price trigger	130.00%
Debt redemption price as percentage of principal amount	100.00%
Private placement \| Convertible debt \| Convertible Senior Notes
Debt Instrument [Line Items]
Aggregate principal amount of debt	$ 225,000,000.0
Over-allotment option \| Convertible debt \| Convertible Senior Notes
Debt Instrument [Line Items]
Aggregate principal amount of debt	$ 33,750,000
Convertible, term one \| Convertible debt \| Convertible Senior Notes
Debt Instrument [Line Items]
Number of trading days \| day	20
Number of consecutive trading days \| day	30
Threshold percentage of stock price trigger	130.00%
Convertible, term two \| Convertible debt \| Convertible Senior Notes
Debt Instrument [Line Items]
Number of trading days \| day	5
Number of consecutive trading days \| day	5
Threshold percentage of stock price trigger	98.00%

Debt - Schedule of Net Carrying Amount of the Liability Component of the Notes (Details) - USD ($) $ in Thousands	Sep. 30, 2018	May 31, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Principal	$ 258,750
Total debt, net carrying value	193,664		$ 32,930
Convertible debt
Debt Instrument [Line Items]
Principal	193,664		$ 0
Convertible debt \| Convertible Senior Notes
Debt Instrument [Line Items]
Principal	258,750
Debt Instrument, Unamortized Discount	(59,392)
Unamortized issuance costs	(5,694)	$ (6,100)
Total debt, net carrying value	$ 193,664

Debt - Schedule of Net Carrying Amount of Equity Component of the Notes (Details) - Convertible debt - Convertible Senior Notes $ in Thousands	Sep. 30, 2018 USD ($)
Debt Instrument [Line Items]
Conversion option	$ 63,756
Issuance costs	(1,998)
Net carrying amount	$ 61,758

Debt - Schedule of Interest Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Debt Instrument [Line Items]
Interest Expense	$ 3,595	$ 865	$ 6,783	$ 2,635
Convertible Senior Notes \| Convertible debt
Debt Instrument [Line Items]
Contractual interest expense	81		129
Amortization of debt discount	2,782		4,364
Amortization of issuance costs	267		418
Interest Expense	$ 3,130		$ 4,911

Debt - Schedule of Equity Component of Debt (Details) - Convertible debt - Convertible Senior Notes $ in Thousands	9 Months Ended
	Sep. 30, 2018 USD ($)
Debt Instrument [Line Items]
Conversion option	$ 63,756
Payments for capped call transactions	(31,412)
Issuance costs	1,998
Adjustments to Additional Paid in Capital, Equity Component of Convertible Debt	$ 30,346

Debt - 2016 Loan and Security Agreement (Details) - Line of Credit - Loan and Security Agreement 2016 - Revolving Credit Facility	Aug. 01, 2016 USD ($)
Line of Credit Facility [Line Items]
Credit facility, maximum borrowing capacity	$ 50,000,000
Unused line of credit capacity fee	0.25%
First and second anniversary fee for line of credit	$ 31,250
Prime Rate
Line of Credit Facility [Line Items]
Debt instrument, basis spread	0.50%
Percentage increase in interest rate if adjusted EBITDA is negative at the end of the quarter	0.25%

Debt - FCC Civil Penalty (Details) $ in Thousands	1 Months Ended
Debt - FCC Civil Penalty (Details) $ in Thousands	Jun. 30, 2015 USD ($) payment	Sep. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)	Sep. 30, 2014 USD ($)
Debt Instrument [Line Items]
Principal		$ 258,750
Total debt, net carrying value		193,664	$ 32,930
FCC Civil Penalty
Debt Instrument [Line Items]
Accrued civil penalty liability				$ 2,000
Notes Payable
Debt Instrument [Line Items]
Principal		0	333
Discount on debt		0	7
Total debt, net carrying value		$ 0	326
Notes Payable \| FCC Civil Penalty
Debt Instrument [Line Items]
Principal	$ 2,000		300
Debt instrument, number of quarterly payments \| payment	12
Debt instrument, stated interest rate	12.75%
Discount on debt	$ 300
Total debt, net carrying value	$ 1,700		$ 300

Debt - Schedule of Outstanding Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Principal	$ 258,750
Total debt, net carrying value	193,664	$ 32,930
Less: current portion of debt	0	336
Total debt, less current portion	193,664	32,594
Notes Payable
Debt Instrument [Line Items]
Principal	0	333
Less: discount	0	(7)
Total debt, net carrying value	0	326
Convertible debt
Debt Instrument [Line Items]
Principal	193,664	0
Line of Credit
Debt Instrument [Line Items]
Principal	0	32,594
Interest accretion under 2016 line of credit	$ 0	$ 10

Debt - Schedule of Maturities of Debt (Details) $ in Thousands	Sep. 30, 2018 USD ($)
Debt Disclosure [Abstract]
2023	$ 258,750
Total	$ 258,750

Stockholders' Equity - Capital Structure (Details) - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Equity [Abstract]
Common Stock, shares authorized (in shares)	450,000,000	450,000,000
Common Stock, par value (in USD per share)	$ 0.001	$ 0.001
Common Stock, shares issued (in shares)	58,748,746	56,631,647
Common Stock, shares outstanding (in shares)	58,748,746	56,631,647
Preferred Stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred Stock, par value (in USD per share)	$ 0.001	$ 0.001
Preferred Stock, shares issued (in shares)	0	0
Preferred Stock, shares outstanding (in shares)	0	0

Stockholders' Equity - Warrants (Details) - Common Stock - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Class of Warrant or Right
Warrants outstanding (in shares)	0	13,013
Outstanding warrants exercise price, weighted-average (in USD per share)		$ 5.76

Stockholders' Equity - Common Stock Reserved for Future Issuance (Details) shares in Thousands	Sep. 30, 2018 shares
Class of Stock
Common stock reserved for future issuance (in shares)	16,044
Stock options
Class of Stock
Common stock reserved for future issuance (in shares)	3,051
Restricted stock units
Class of Stock
Common stock reserved for future issuance (in shares)	2,408
ESPP
Class of Stock
Common stock reserved for future issuance (in shares)	1,801
2014 Plan
Class of Stock
Common stock reserved for future issuance (in shares)	8,784

Stockholders' Equity - Equity Incentive Plans (Details) - 2014 Plan - shares	Jan. 01, 2018	Mar. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award
Number of shares authorized for issuance		5,300,000
Automatic annual increase in common stock reserved for issuance, percentage		5.00%
Automatic annual increase in common stock reserved for issuance, shares	2,831,582

Stockholders' Equity - Stock Option Activity (Details) $ / shares in Units, shares in Thousands, $ in Thousands	9 Months Ended
	Sep. 30, 2018 USD ($) $ / shares shares
Options Outstanding, Weighted Average Exercise Price [Roll Forward]
Closing market price of common stock (in USD per share)	$ 43.69
Stock options
Options Outstanding [Roll Forward]
Outstanding, beginning balance (in shares) \| shares	4,047
Options granted (weighted average grant date fair value of $14.14 per share) (in shares) \| shares	282
Options exercised (in shares) \| shares	(1,172)
Options forfeited or expired (in shares) \| shares	(106)
Outstanding, ending balance (in shares) \| shares	3,051
Options Outstanding, Weighted Average Exercise Price [Roll Forward]
Outstanding, beginning balance, weighted average exercise price (in USD per share)	$ 8.00
Options granted, weighted average exercise price (in USD per share)	30.48
Options exercised, weighted average exercise price (in USD per share)	6.01
Options forfeited or expired, weighted average exercise price (in USD per share)	18.02
Outstanding, ending balance, weighted average exercise price (in USD per share)	$ 10.50
Outstanding, ending balance, weighted average remaining contractual life	6 years 1 month 6 days
Outstanding, ending balance, aggregate intrinsic value \| $	$ 101,257
Weighted average grant date fair value, options granted (in USD per share)	$ 14.19

Stockholders' Equity - RSU Activity (Details) - Restricted stock units shares in Thousands	9 Months Ended
	Sep. 30, 2018 $ / shares shares
Number of Shares
Outstanding, beginning balance (in shares) \| shares	2,033
RSUs granted (in shares) \| shares	1,375
RSUs vested and released (in shares) \| shares	(803)
RSUs forfeited (in shares) \| shares	(197)
Outstanding, ending balance (in shares) \| shares	2,408
Weighted Average Grant Date Fair Value Per Share
Outstanding, beginning balance, weighted-average grant date fair value per share (in USD per share) \| $ / shares	$ 12.81
RSUs granted, weighted average grant date fair value (in USD per share) \| $ / shares	30.98
RSUs vested and released, weighted average grant date fair value (in USD per share) \| $ / shares	12.66
RSUs forfeited, weighted average grant date fair value (in USD per share) \| $ / shares	17.84
Outstanding, ending balance, weighted-average grant date fair value per share (in USD per share) \| $ / shares	$ 22.82

Stockholders' Equity - ESPP (Details) - ESPP - $ / shares	9 Months Ended
	Sep. 30, 2018	Jan. 01, 2018	Apr. 03, 2014
Share-based Compensation Arrangement by Share-based Payment Award
Common stock reserved for future issuance (in shares)			880,000
Automatic annual increase in common stock reserved for issuance, percentage			1.00%
Maximum annual increase of shares reserved			1,000,000
Automatic annual increase in common stock reserved for issuance, shares		566,316
Purchases made under the ESPP	136,321
Weighted-average price per share	$ 21.16

Stockholders' Equity - Stock-based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Stock-based Compensation Expense
Stock-based compensation expense	$ 8,869	$ 3,720	$ 20,991	$ 10,703
Cost of revenue
Stock-based Compensation Expense
Stock-based compensation expense	860	599	2,391	1,608
Research and development1
Stock-based Compensation Expense
Stock-based compensation expense	2,352	797	4,293	2,235
Sales and marketing
Stock-based Compensation Expense
Stock-based compensation expense	1,613	1,084	4,560	3,236
General and administrative
Stock-based Compensation Expense
Stock-based compensation expense	4,044	$ 1,240	9,747	$ 3,624
Stock options
Stock-based Compensation Expense
Unrecognized stock-based compensation expense	9,004		$ 9,004
Weighted-average amortization period			2 years 6 months
Restricted stock units
Stock-based Compensation Expense
Unrecognized stock-based compensation expense	51,586		$ 51,586
Weighted-average amortization period			2 years 10 months 24 days
ESPP
Stock-based Compensation Expense
Unrecognized stock-based compensation expense	$ 224		$ 224
Weighted-average amortization period			1 month 16 days

Stockholders' Equity - Valuation Assumptions (Details) - Stock options	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Class of Stock
Expected term (years)	6 years 1 month 6 days	6 years 1 month 6 days	6 years	6 years 2 months 12 days
Volatility	44.00%	53.00%	45.00%	49.00%
Risk-free interest rate	2.80%	2.00%	2.70%	2.00%
Dividend yield	0.00%	0.00%	0.00%	0.00%

Net Loss Per Share - Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Earnings Per Share [Abstract]
Net loss	$ (1,305)	$ 924	$ (3,954)	$ (8,338)
Weighted-average shares of common stock outstanding (in shares)	58,454	55,310	57,790	54,579
Basic net income (loss) per share (in USD per share)	$ (0.02)	$ 0.02	$ (0.07)	$ (0.15)
Effect of dilutive shares	0	4,131	0	0
Weighted average shares of common stock outstanding (in shares)	58,454	59,441	57,790	54,579
Diluted net income (loss) per share (in USD per share)	$ (0.02)	$ 0.02	$ (0.07)	$ (0.15)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

+ References

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+ Details

- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

+ References

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+ Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Net Loss Per Share - Antidilutive Securities Excluded from Computation of Diluted Net Loss Per Share (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Antidilutive Securities Excluded from Computation of Earnings Per Share
Anti-dilutive securities excluded from calculation of diluted net loss per share	5,459	500	5,459	6,743
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share
Anti-dilutive securities excluded from calculation of diluted net loss per share	3,051	471	3,051	4,597
Restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share
Anti-dilutive securities excluded from calculation of diluted net loss per share	2,408	29	2,408	2,133
Common stock warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share
Anti-dilutive securities excluded from calculation of diluted net loss per share	0	0	0	13

Net Loss Per Share - Narrative (Details) - $ / shares shares in Millions	1 Months Ended
	May 31, 2018	Sep. 30, 2018
Debt Conversion [Line Items]
Conversion price on convertible debt (in USD per share)		$ 40.82
Convertible Senior Notes \| Convertible debt
Debt Conversion [Line Items]
Conversion price on convertible debt (in USD per share)	$ 40.82
Number of shares covered in the Capped Call Transactions		6.3
Cap price of the Capped Call Transactions (in dollars per share)	$ 62.80
Number of shares expected to be issued at conversion price under Capped Call Transactions		4.1

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Income Tax Disclosure [Abstract]
Provision for income taxes	$ 41	$ 43	$ 150	$ 142

Commitments and Contingencies - Commitments (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Other Commitments [Line Items]
Debt balance	$ 258,750
Capital lease obligations
Other Commitments [Line Items]
Capital lease future payment obligations incurred	6,300
Capital lease future minimum payments, remainder of 2018	700
Capital lease future minimum payments, due after 2018	5,600
Hosting and telecommunications agreement
Other Commitments [Line Items]
Total minimum future payment commitments for various agreements added during the quarter	$ 2,900
Minimum \| Hosting and telecommunications agreement
Other Commitments [Line Items]
Period for various agreements	12 months
Maximum \| Hosting and telecommunications agreement
Other Commitments [Line Items]
Period for various agreements	36 months
Convertible debt
Other Commitments [Line Items]
Debt balance	$ 193,664	$ 0
Convertible Senior Notes \| Convertible debt
Other Commitments [Line Items]
Debt balance	$ 258,750

Commitments and Contingencies - Universal Services Fund Liability (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended	9 Months Ended
	Jul. 31, 2013	Mar. 31, 2013	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017	Dec. 31, 2012
Loss Contingencies [Line Items]
Accrued federal fees			$ 1,681		$ 1,151
Increase (decrease) in accrual federal fees			0	$ (2,133)
Principal			258,750
2003 through 2012 \| USF obligations
Loss Contingencies [Line Items]
Accrued federal fees						$ 8,100
2003 through 2012 \| Undisputed portion \| USF obligations
Loss Contingencies [Line Items]
Accrued federal fees						4,700
Payments	$ 600
2003 through 2012 \| Disputed portion \| USF obligations
Loss Contingencies [Line Items]
Accrued federal fees		$ 3,900				$ 3,400
Disputed liability related to the reversal of interest and penalties				3,100
USF credits				3,100
Year 2003 To Year 2007 \| Disputed portion \| USF obligations
Loss Contingencies [Line Items]
Accrued federal fees			800	$ 800
2008 through 2012 \| Disputed portion \| USF obligations
Loss Contingencies [Line Items]
Increase (decrease) in accrual federal fees		$ 500
Promissory Note \| USF obligations
Loss Contingencies [Line Items]
Principal	$ 4,100
Universal Services Fund
Loss Contingencies [Line Items]
USF credits			$ 700

Commitments and Contingencies - State and Local Taxes and Surcharges (Details) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Mar. 31, 2015 USD ($) state	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Dec. 31, 2017 USD ($)
Loss Contingencies [Line Items]
General and administrative	$ 10,746	$ 4,679		$ 29,682	$ 20,384
Accrued sales tax liability, current	1,322			1,322		$ 1,326
Contingent sales tax liabilities
Loss Contingencies [Line Items]
Number of states with sales taxes liability \| state			4
General and administrative			$ 600
Sales tax liability	1,300			1,300		1,500
Accrued sales tax liability, current	$ 200			$ 200		$ 400

Commitments and Contingencies - Legal Matters (Details) - Indemnification Agreement $ in Thousands	4 Months Ended
	Sep. 30, 2018 USD ($)
Loss Contingencies [Line Items]
Estimate of possible loss	$ 62
Advancement of legal fees	$ 500

Geographical Information - Schedule of Revenue and Property and Equipment by Geographic Region (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Revenues from External Customers and Long-Lived Assets
Revenue	$ 65,304	$ 50,081	$ 185,329	$ 144,822
Property and equipment, net	22,909		22,909		$ 19,888
United States
Revenues from External Customers and Long-Lived Assets
Revenue	60,315	46,897	172,376	136,085
Property and equipment, net	20,976		20,976		17,949
International
Revenues from External Customers and Long-Lived Assets
Revenue	4,989	$ 3,184	12,953	$ 8,737
Property and equipment, net	$ 1,933		$ 1,933		$ 1,939