View Filing Data

Print Document View Excel Document

Investments and Fair Value Measurements - Schedule of Assets Carried at Fair Value (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Assets
Cash equivalents	$ 78,654	$ 4,876
Marketable investments	170,433	241,973
Level 1
Assets
Cash equivalents	62,537	2,179
Marketable investments	48,895	31,940
Level 2
Assets
Cash equivalents	16,117	2,697
Marketable investments	121,538	210,033
Level 3
Assets
Cash equivalents	0	0
Marketable investments	0	0
Certificates of deposit
Assets
Marketable investments	161	162
Certificates of deposit \| Level 1
Assets
Marketable investments	0	0
Certificates of deposit \| Level 2
Assets
Marketable investments	161	162
Certificates of deposit \| Level 3
Assets
Marketable investments	0	0
U.S. treasury
Assets
Marketable investments	48,895	31,940
U.S. treasury \| Level 1
Assets
Marketable investments	48,895	31,940
U.S. treasury \| Level 2
Assets
Marketable investments	0	0
U.S. treasury \| Level 3
Assets
Marketable investments	0	0
U.S. agency securities
Assets
Marketable investments	99,552	177,730
U.S. agency securities \| Level 1
Assets
Marketable investments	0	0
U.S. agency securities \| Level 2
Assets
Marketable investments	99,552	177,730
U.S. agency securities \| Level 3
Assets
Marketable investments	0	0
Commercial paper
Assets
Marketable investments	12,553	15,240
Commercial paper \| Level 1
Assets
Marketable investments	0	0
Commercial paper \| Level 2
Assets
Marketable investments	12,553	15,240
Commercial paper \| Level 3
Assets
Marketable investments	0	0
Municipal bonds
Assets
Marketable investments	6,392	3,015
Municipal bonds \| Level 1
Assets
Marketable investments	0	0
Municipal bonds \| Level 2
Assets
Marketable investments	6,392	3,015
Municipal bonds \| Level 3
Assets
Marketable investments	0	0
Corporate bonds
Assets
Marketable investments	2,880	13,886
Corporate bonds \| Level 1
Assets
Marketable investments	0	0
Corporate bonds \| Level 2
Assets
Marketable investments	2,880	13,886
Corporate bonds \| Level 3
Assets
Marketable investments	0	0
Money market funds
Assets
Cash equivalents	41,038	2,179
Money market funds \| Level 1
Assets
Cash equivalents	41,038	2,179
Money market funds \| Level 2
Assets
Cash equivalents	0	0
Money market funds \| Level 3
Assets
Cash equivalents	0	0
U.S. treasury
Assets
Cash equivalents	21,499
U.S. treasury \| Level 1
Assets
Cash equivalents	21,499
U.S. treasury \| Level 2
Assets
Cash equivalents	0
U.S. treasury \| Level 3
Assets
Cash equivalents	0
Commercial paper
Assets
Cash equivalents		2,697
Commercial paper \| Level 1
Assets
Cash equivalents		0
Commercial paper \| Level 2
Assets
Cash equivalents		2,697
Commercial paper \| Level 3
Assets
Cash equivalents		$ 0
Municipal bonds
Assets
Cash equivalents	15,867
Municipal bonds \| Level 1
Assets
Cash equivalents	0
Municipal bonds \| Level 2
Assets
Cash equivalents	15,867
Municipal bonds \| Level 3
Assets
Cash equivalents	0
Corporate bonds
Assets
Cash equivalents	250
Corporate bonds \| Level 1
Assets
Cash equivalents	0
Corporate bonds \| Level 2
Assets
Cash equivalents	250
Corporate bonds \| Level 3
Assets
Cash equivalents	$ 0

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 155,863	$ 77,976
Marketable investments	170,433	241,973
Accounts receivable, net	39,972	37,655
Prepaid expenses and other current assets	13,396	10,656
Deferred contract acquisition costs	14,317	13,014
Total current assets	393,981	381,274
Property and equipment, net	34,940	33,190
Operating lease right-of-use assets	11,034	8,746
Intangible assets, net	14,543	15,533
Goodwill	11,798	11,798
Other assets	3,316	1,184
Deferred contract acquisition costs — less current portion	34,047	30,655
Total assets	503,659	482,380
Current liabilities:
Accounts payable	8,367	10,156
Accrued and other current liabilities	24,738	18,385
Operating lease liabilities	6,087	5,064
Accrued federal fees	1,754	2,303
Sales tax liabilities	1,723	1,885
Finance lease liabilities	2,812	3,518
Deferred revenue	25,632	24,681
Total current liabilities	71,113	65,992
Convertible senior notes	212,924	209,604
Sales tax liabilities — less current portion	843	838
Operating lease liabilities — less current portion	5,438	4,329
Finance lease liabilities — less current portion	286	809
Other long-term liabilities	6,589	4,350
Total liabilities	297,193	285,922
Commitments and contingencies
Stockholders’ equity:
Common stock	62	61
Additional paid-in capital	368,260	351,870
Accumulated other comprehensive income	1,630	576
Accumulated deficit	(163,486)	(156,049)
Total stockholders’ equity	206,466	196,458
Total liabilities and stockholders’ equity	$ 503,659	$ 482,380

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash flows from operating activities:
Net loss	$ (7,437)	$ (1,924)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	4,970	3,192
Amortization of operating lease right-of-use assets	1,394	1,010
Amortization of premium on marketable investments	177	(421)
Provision for doubtful accounts	255	14
Stock-based compensation	13,794	8,686
Gain on sale of convertible note held for investment	0	(217)
Amortization of debt discount and issuance costs	3,320	3,079
Others	147	(17)
Changes in operating assets and liabilities:
Accounts receivable	(2,620)	(1,046)
Prepaid expenses and other current assets	(2,754)	(1,721)
Deferred contract acquisition costs	(4,695)	(2,471)
Other assets	(2,132)	(7,845)
Accounts payable	(1,121)	552
Accrued and other current liabilities	4,802	7,724
Accrued federal fees and sales tax liability	(707)	(425)
Deferred revenue	3,378	416
Other liabilities	(377)	2,604
Net cash provided by operating activities	10,394	11,190
Cash flows from investing activities:
Purchases of marketable investments	(62,339)	(34,427)
Proceeds from maturities of marketable investments	134,610	39,497
Purchases of property and equipment	(6,045)	(3,985)
Cash paid to acquire substantially all of the assets of Whendu LLC	(100)	0
Proceeds from sale of convertible note held for investment	0	217
Net cash provided by investing activities	66,126	1,302
Cash flows from financing activities:
Proceeds from exercise of common stock options	2,596	982
Payments of finance leases	(1,229)	(1,894)
Net cash provided by (used in) financing activities	1,367	(912)
Net increase in cash and cash equivalents	77,887	11,580
Cash and cash equivalents:
Beginning of period	77,976	81,912
End of period	155,863	93,492
Supplemental disclosures of cash flow data:
Cash paid for interest	82	235
Cash paid for income taxes	109	42
Non-cash investing and financing activities:
Equipment purchased and unpaid at period-end	$ 2,280	$ 1,875

Debt - Schedule of Maturities of Debt (Details) $ in Thousands	Mar. 31, 2020 USD ($)
Debt Disclosure [Abstract]
2023	$ 258,749
Total	$ 258,749

Investments and Fair Value Measurements

3 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

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 March 31, 2020 and December 31, 2019 were as follows (in thousands):



	March 31, 2020
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Certificates of deposit	$	161	$	—	$	—	$	161
U.S. treasury	48,502		393		—		48,895
U.S. agency securities	98,955		597		—		99,552
Commercial paper	12,553		—		—		12,553
Municipal bonds	6,357		35		—		6,392
Corporate bonds	2,880		3		(3)		2,880
Total	$	169,408	$	1,028	$	(3)	$	170,433



	December 31, 2019
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Certificates of deposit	$	161	$	1	$	—	$	162
U.S. treasury	31,933		8		(1)		31,940
U.S. agency securities	177,629		110		(9)		177,730
Commercial paper	15,240		—		—		15,240
Municipal bonds	3,014		1		—		3,015
Corporate bonds	13,876		10		—		13,886
Total	$	241,853	$	130	$	(10)	$	241,973

The following table presents the gross unrealized losses and the fair value for those marketable investments that were in an unrealized loss position for less than 12 months as of March 31, 2020 and December 31, 2019 (in thousands):


	March 31, 2020						December 31, 2019

	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
U.S. treasury	$	—	$	—	$	(1)	$	12,926
U.S. agency securities	—		—		(9)		36,322
Corporate bonds	(3)		1,260		—		251
Total	$	(3)	$	1,260	$	(10)	$	49,499

Although the Company had certain available-for-sale debt securities in an unrealized loss position as of March 31, 2020, no impairment loss was recorded since it did not intend to sell them, did not anticipate a need to sell them, and the decline in fair value was not due to any credit-related factors which it is now required to assess upon adoption of ASU 2016-13.

The contractual maturities of the Company’s marketable investments as of March 31, 2020 and December 31, 2019 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. The Company performs routine procedures such as comparing prices obtained from independent source to ensure that appropriate fair values are recorded.

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



	March 31, 2020
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents
Money market funds	$	41,038	$	—	$	—	$	41,038
U.S. treasury	21,499		—		—		21,499

Municipal bonds	—		15,867		—		15,867
Corporate bonds	—		250		—		250
Total cash equivalents	$	62,537	$	16,117	$	—	$	78,654
Marketable investments
Certificates of deposit	$	—	$	161	$	—	$	161
U.S. treasury	48,895		—		—		48,895
U.S. agency securities	—		99,552		—		99,552
Commercial paper	—		12,553		—		12,553
Municipal bonds	—		6,392		—		6,392
Corporate bonds	—		2,880		—		2,880
Total marketable investments	$	48,895	$	121,538	$	—	$	170,433



	December 31, 2019
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents
Money market funds	$	2,179	$	—	$	—	$	2,179


Commercial paper	—		2,697		—		2,697
Total cash equivalents	$	2,179	$	2,697	$	—	$	4,876
Marketable investments
Certificates of deposit	$	—	$	162	$	—	$	162
U.S. treasury	31,940		—		—		31,940
U.S. agency securities	—		177,730		—		177,730
Commercial paper	—		15,240		—		15,240
Municipal bonds	—		3,015		—		3,015
Corporate bonds	—		13,886		—		13,886
Total marketable investments	$	31,940	$	210,033	$	—	$	241,973

As of March 31, 2020 and December 31, 2019, the estimated fair value of the Company’s outstanding 0.125% convertible senior notes due 2023 was $493.2 million and $437.0 million, respectively. 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 March 31, 2020 and December 31, 2019.

The Company’s other financial instruments’ fair value, including accounts receivable, accounts payable and other current liabilities, approximate its carrying value due to the relatively short maturity of those instruments. The carrying amounts of the Company’s finance leases approximate their fair value, which is the present value of expected future cash payments based on assumptions about current interest rates and the creditworthiness of the Company.

Leases - Weighted Average Remaining Terms and Discount Rates (Details)	Mar. 31, 2020	Dec. 31, 2019
Leases [Abstract]
Weighted average remaining lease term, Operating leases	2 years 8 months 12 days	2 years 8 months 12 days
Weighted average remaining lease term, Finance leases	1 year	1 year 1 month 6 days
Weighted average discount rate, Operating leases (percent)	4.60%	4.70%
Weighted average discount rate, Finance leases (percent)	7.50%	7.50%

Debt - Schedule of Net Carrying Amount of the Liability Component of the Notes (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019	May 31, 2018
Debt Instrument [Line Items]
Principal	$ 258,749
Convertible debt \| Convertible Senior Notes
Debt Instrument [Line Items]
Principal	258,749	$ 258,750
Unamortized debt discount	(41,849)	(44,881)
Unamortized issuance costs	(3,976)	(4,265)	$ (6,000)
Total debt, net carrying value	$ 212,924	$ 209,604

Commitments and Contingencies	3 Months Ended
Commitments and Contingencies	Mar. 31, 2020
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Commitments The Company’s principal commitments consist of future payment obligations under its Notes, finance leases to finance data centers and other computer and networking equipment purchases, operating leases for office facilities, and agreements with third parties to provide co-location hosting, telecommunication usage and equipment maintenance services. These commitments as of December 31, 2019 are disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, and did not change materially during the three months ended March 31, 2020, except for certain hosting and telecommunications agreements. As of March 31, 2020, the Company’s commitment under various hosting and telecommunications agreements totaled $8.1 million for terms ranging up to 36 months. These agreements require the Company to make monthly payments over the service term in exchange for certain network services. As of March 31, 2020, $258.7 million of the Notes were outstanding. The Notes are due May 1, 2023. For more information concerning the Notes, see Note 6. 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, including breach of security, 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 its directors, officers and certain 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. 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.

Leases - Lease Cost and Supplemental Cash Flow (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Leases [Abstract]
Operating lease cost	$ 1,516	$ 1,103
Finance lease cost:
Amortization of right-of-use assets	1,277	1,455
Interest on finance lease liabilities	82	236
Total finance lease cost	1,359	1,691
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash used in operating leases	(1,584)	(1,144)
Financing cash used in finance leases	(1,229)	(1,894)
Right-of-use assets obtained in exchange for operating leases	3,892	0
Right of use assets obtained in exchange for finance leases	$ 0	$ 0

Stockholders' Equity - Capital Structure (Details) - $ / shares	Mar. 31, 2020	Dec. 31, 2019
Equity [Abstract]
Common Stock, shares authorized (in shares)	450,000,000
Common Stock, par value (in USD per share)	$ 0.001
Common Stock, shares issued (in shares)	61,992,081	61,543,634
Common Stock, shares outstanding (in shares)	61,992,081	61,543,634
Preferred Stock, shares authorized (in shares)	5,000,000
Preferred Stock, par value (in USD per share)	$ 0.001
Preferred Stock, shares issued (in shares)	0	0
Preferred Stock, shares outstanding (in shares)	0	0

Acquisition of Whendu LLC (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended	12 Months Ended
	Nov. 30, 2019	Mar. 31, 2020	Dec. 31, 2019
Finite-Lived Intangible Assets [Line Items]
Intangible asset useful lives		3 years 7 months 6 days	3 years 9 months 18 days
Whendu
Finite-Lived Intangible Assets [Line Items]
Purchase price including transaction costs	$ 15,900
Developed technology
Finite-Lived Intangible Assets [Line Items]
Intangible asset useful lives		3 years 7 months 6 days	3 years 10 months 24 days
Developed technology \| Whendu
Finite-Lived Intangible Assets [Line Items]
Purchase price including transaction costs	$ 15,400
Intangible asset useful lives	4 years
Acquired workforce
Finite-Lived Intangible Assets [Line Items]
Intangible asset useful lives		2 years 8 months 12 days	2 years 10 months 24 days
Acquired workforce \| Whendu
Finite-Lived Intangible Assets [Line Items]
Purchase price including transaction costs	$ 500
Intangible asset useful lives	3 years

Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets

The component of intangible assets was as follows (in thousands):



	March 31, 2020													December 31, 2019
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Remaining Amortization period (Years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Remaining Amortization period (Years)
Developed technology	$	17,874	$	(3,741)	$	14,133	3.6	$	17,777	$	(2,690)	$	15,087	3.9
Acquired workforce	470		(60)		410		2.7	467		(21)		446		2.9


Total	$	18,344	$	(3,801)	$	14,543	3.6	$	18,244	$	(2,711)	$	15,533	3.8

Schedule of Expected Future Amortization Expense of Intangible Assets

As of March 31, 2020, the expected future amortization expense for intangible assets was as follows (in thousands):


Period	Expected Future Amortization Expense
2020	$	3,200
2021	4,010
2022	3,990
2023	3,343
Total	$	14,543

Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Acquired Finite-Lived Intangible Assets
Gross Carrying Amount	$ 18,344	$ 18,244
Accumulated Amortization	(3,801)	(2,711)
Total	$ 14,543	$ 15,533
Weighted Average Remaining Amortization period (Years)	3 years 7 months 6 days	3 years 9 months 18 days
Developed technology
Acquired Finite-Lived Intangible Assets
Gross Carrying Amount	$ 17,874	$ 17,777
Accumulated Amortization	(3,741)	(2,690)
Total	$ 14,133	$ 15,087
Weighted Average Remaining Amortization period (Years)	3 years 7 months 6 days	3 years 10 months 24 days
Acquired workforce
Acquired Finite-Lived Intangible Assets
Gross Carrying Amount	$ 470	$ 467
Accumulated Amortization	(60)	(21)
Total	$ 410	$ 446
Weighted Average Remaining Amortization period (Years)	2 years 8 months 12 days	2 years 10 months 24 days

Leases - Balance Sheet Disclosures (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Leases [Abstract]
Operating lease right-of-use assets	$ 11,034	$ 8,746
Operating lease liabilities	6,087	5,064
Operating lease liabilities — less current portion	5,438	4,329
Total operating lease liabilities	11,525	9,393
Property and equipment, gross	46,611	46,671
Less: accumulated depreciation and amortization	(40,467)	(39,190)
Property and equipment, net	6,144	7,481
Finance lease liabilities	2,812	3,518
Finance lease liabilities — less current portion	286	809
Total finance lease liabilities	$ 3,098	$ 4,327

Financial Statement Components (Tables)

3 Months Ended

Mar. 31, 2020

Financial Statement Components [Abstract]

Schedule of Cash and Cash Equivalents

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


	March 31, 2020		December 31, 2019
Cash	$	77,209	$	73,100
Money market funds	41,038		2,179
U.S. treasury	21,499		—

Commercial paper	—		2,697
Municipal bonds	15,867		—
Corporate bonds	250		—
Total cash and cash equivalents	$	155,863	$	77,976

Schedule of Accounts Receivable

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


	March 31, 2020		December 31, 2019
Trade accounts receivable	$	36,590	$	34,591
Unbilled trade accounts receivable, net of advance client deposits	3,550		3,075
Allowance for doubtful accounts	(168)		(11)
Accounts receivable, net	$	39,972	$	37,655

Changes in Allowance for Doubtful Accounts

The following table presents the change in the allowance for doubtful accounts, including consideration of expected credit losses, for the three months ended March 31, 2020 (in thousands):


	Three Months Ended
	March 31, 2020
Balance, beginning of period	$	(11)
Add: Bad debt expense (excluding expected credit loss portion)	(22)
Add: Bad debt expense (expected credit loss portion)	(233)
Less: Write-offs, net of recoveries (excluding expected credit loss portion)	11
Less: Write-offs, net of recoveries (expected credit loss portion)	87
Balance, end of period	$	(168)

Schedule of Prepaid Expenses and Other Current Assets

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


	March 31, 2020		December 31, 2019
Prepaid expenses	$	8,464	$	4,901
Other current assets	4,309		4,930
Contract assets	623		825
Prepaid expenses and other current assets	$	13,396	$	10,656

Schedule of Property and Equipment

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


	March 31, 2020		December 31, 2019
Computer and network equipment	$	72,025	$	67,378
Computer software	14,902		14,157
Internal-use software development costs	500		500
Furniture and fixtures	2,906		2,918
Leasehold improvements	2,426		2,264
Property and equipment	92,759		87,217
Accumulated depreciation and amortization	(57,819)		(54,027)
Property and equipment, net	$	34,940	$	33,190

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


	March 31, 2020		December 31, 2019
Gross	$	46,611	$	46,671
Less: accumulated depreciation and amortization	(40,467)		(39,190)
Total	$	6,144	$	7,481

Schedule of Accrued and Other Current Liabilities

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


	March 31, 2020		December 31, 2019
Accrued compensation and benefits	$	19,628	$	14,233

Accrued expenses	5,110		4,152
Accrued and other current liabilities	$	24,738	$	18,385

Debt - Schedule of Equity Component of Debt (Details) - Convertible debt - Convertible Senior Notes - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Debt discount for conversion option	$ 63,756	$ 63,756
Issuance costs	(1,998)	(1,998)
Net carrying amount	$ 61,758	$ 61,758

Stockholders' Equity - Stock Option Activity (Details) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($) $ / shares shares
Options Outstanding, Weighted Average Exercise Price [Roll Forward]
Closing market price of common stock (in USD per share)	$ 76.46
Stock options
Options Outstanding [Roll Forward]
Outstanding, beginning balance (in shares) \| shares	2,530
Options granted (weighted average grant date fair value of $33.04 per share) (in shares) \| shares	191
Options exercised (in shares) \| shares	(160)
Options forfeited or expired (in shares) \| shares	(4)
Outstanding, ending balance (in shares) \| shares	2,557
Options Outstanding, Weighted Average Exercise Price [Roll Forward]
Outstanding, beginning balance, weighted average exercise price (in USD per share)	$ 19.38
Options granted, weighted average exercise price (in USD per share)	72.33
Options exercised, weighted average exercise price (in USD per share)	16.20
Options forfeited or expired, weighted average exercise price (in USD per share)	36.70
Outstanding, ending balance, weighted average exercise price (in USD per share)	$ 23.52
Outstanding, ending balance, weighted average remaining contractual life	6 years 1 month 6 days
Outstanding, ending balance, aggregate intrinsic value \| $	$ 135,356
Weighted average grant date fair value, options granted (in USD per share)	$ 33.04

Stockholders' Equity - RSU Activity (Details) - Restricted stock units shares in Thousands	3 Months Ended
	Mar. 31, 2020 $ / shares shares
Number of Shares
Outstanding, beginning balance (in shares) \| shares	2,372
RSUs granted (in shares) \| shares	921
RSUs vested and released (in shares) \| shares	(288)
RSUs forfeited (in shares) \| shares	(43)
Outstanding, ending balance (in shares) \| shares	2,962
Weighted Average Grant Date Fair Value Per Share
Outstanding, beginning balance, weighted-average grant date fair value per share (in USD per share) \| $ / shares	$ 41.32
RSUs granted, weighted average grant date fair value (in USD per share) \| $ / shares	72.17
RSUs vested and released, weighted average grant date fair value (in USD per share) \| $ / shares	32.86
RSUs forfeited, weighted average grant date fair value (in USD per share) \| $ / shares	49.05
Outstanding, ending balance, weighted-average grant date fair value per share (in USD per share) \| $ / shares	$ 51.74

Intangible Assets - Future Amortization Expense (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
2020	$ 3,200
2021	4,010
2022	3,990
2023	3,343
Total	$ 14,543	$ 15,533

Commitments and Contingencies (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Other Commitments [Line Items]
Debt balance	$ 258,749
Hosting and telecommunications agreement
Other Commitments [Line Items]
Total commitments under agreements	$ 8,100
Maximum \| Hosting and telecommunications agreement
Other Commitments [Line Items]
Period for various agreements	36 months
Convertible Senior Notes \| Convertible debt
Other Commitments [Line Items]
Debt balance	$ 258,749	$ 258,750

Acquisition of Whendu LLC	3 Months Ended
Acquisition of Whendu LLC	Mar. 31, 2020
Asset Acquisition [Abstract]
Acquisition of Whendu LLC	Acquisition of Whendu LLC In November 2019, the Company acquired certain assets from Whendu, including its integration platform as a service ("iPaaS") platform, which the Company has determined to be an asset acquisition. The purchase price, including the Company’s transaction costs, was approximately $15.9 million, of which $15.4 million was allocated to the Whendu iPaaS platform and $0.5 million was allocated to an assembled workforce, on a relative fair value basis. The assets will be amortized on a straight-line basis over their useful lives of four and three years, respectively.

Debt - Convertible Senior Notes and Capped Call (Details) $ / shares in Units, shares in Millions	1 Months Ended	3 Months Ended
	May 31, 2018 USD ($) $ / shares	Mar. 31, 2020 USD ($) day conversion_election $ / shares shares	Dec. 31, 2019 USD ($)
Debt Instrument [Line Items]
Conversion price on convertible debt (in USD per share) \| $ / shares		$ 40.82
Convertible debt \| Convertible Senior Notes
Debt Instrument [Line Items]
Stated interest rate on debt (percent)	0.125%	0.125%	0.125%
Proceeds from issuance of debt	$ 250,800,000
Conversion ratio on convertible debt	0.0244978
Conversion price on convertible debt (in USD per share) \| $ / shares		$ 40.82
Number of conversion features triggered \| conversion_election		1
Conversion price per share, requiring conversion of instrument (in USD per share) \| $ / shares		$ 53.07
Multiple of principle amount		$ 1,000
Number of elections satisfied \| conversion_election		1
Sinking fund payment		$ 0
Debt discount for conversion option		$ 63,756,000	$ 63,756,000
Effective interest rate on debt (percent)		6.39%
Payment on debt issuance cost	$ 8,000,000.0
Debt issuance costs	$ 6,000,000.0	$ 3,976,000	$ 4,265,000
Cap price of the Capped Call Transactions (in dollars per share) \| $ / shares	$ 62.80
Number of shares covered in the Capped Call Transactions (shares) \| shares		6.3
Cost of Capped Call Transactions recorded in additional paid in capital		$ 31,400,000
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%
Number of trading days preceding notice of redemption \| day		2
Convertible debt \| Convertible Senior Notes \| Convertible, term one
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 debt \| Convertible Senior Notes \| Convertible, term two
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%
Private placement \| Convertible debt \| Convertible Senior Notes
Debt Instrument [Line Items]
Aggregate principal amount of debt	$ 258,800,000

Net Loss Per Share

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Net Loss Per Share

Basic net loss per share is calculated by dividing net 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. Diluted net loss per share is computed giving effect to all potentially dilutive shares of common stock, including common stock issuable upon exercise of stock options, vesting of restricted stock units and shares of common stock issuable upon conversion of convertible senior notes.

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



	Three Months Ended
	March 31, 2020		March 31, 2019
Net loss	$	(7,437)	$	(1,924)
Weighted-average shares of common stock outstanding	61,705		59,367
Basic and diluted net loss per share	$	(0.12)	$	(0.03)

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
	March 31, 2020	March 31, 2019
Stock options	2,557	3,123
Restricted stock units	2,962	2,969
Convertible senior notes	2,709	1,249

Total	8,228	7,341

The Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread of its Notes. The conversion spread had a dilutive impact during the three months ended March 31, 2020, since the average market price of the Company’s common stock during the period exceeded the initial conversion price of $40.82 per share for the Notes. However, the potential shares of common stock issuable upon the conversion of the Notes were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive.

Revenue (Tables)

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

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):


	March 31, 2020		December 31, 2019
Accounts receivable, net	$	39,972	$	37,655

Deferred contract acquisition costs:
Current	$	14,317	$	13,014
Non-current	34,047		30,655
Total deferred contract acquisition costs	$	48,364	$	43,669

Contract assets and contract liabilities:
Contract assets (included in prepaid expenses and other current assets)	$	623	$	825
Contract liabilities (deferred revenue)	25,632		24,681
Contract liabilities (deferred revenue) (included in other long-term liabilities)	3,978		1,550
Net contract assets (liabilities)	$	(28,987)	$	(25,406)

Income Taxes	3 Months Ended
Income Taxes	Mar. 31, 2020
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes The provision for (benefit from) income taxes for the three months ended March 31, 2020 and 2019 was approximately $69 thousand and $(49) thousand, respectively. The provision for income taxes for the three months ended March 31, 2020 consisted primarily of foreign income taxes, state minimum taxes, as well as a benefit for a true-up to foreign income taxes. The benefit from income taxes for the three months ended March 31, 2019 consisted primarily of foreign income taxes, as well as a benefit for a true-up to foreign income taxes. For the three months ended March 31, 2020 and 2019, the provision (benefit) 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 March 31, 2020 and December 31, 2019. 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 months ended March 31, 2020, there were no material changes to the total amount of unrecognized tax benefits.

Stockholders' Equity - Common Stock Reserved for Future Issuance (Details) shares in Thousands	Mar. 31, 2020 shares
Class of Stock
Common stock reserved for future issuance (in shares)	20,044
Stock options
Class of Stock
Common stock reserved for future issuance (in shares)	2,557
Restricted stock units
Class of Stock
Common stock reserved for future issuance (in shares)	2,962
ESPP
Class of Stock
Common stock reserved for future issuance (in shares)	2,700
2014 Plan
Class of Stock
Common stock reserved for future issuance (in shares)	11,825

Financial Statement Components - Changes in Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Accounts Receivable, Allowance for Credit Loss [Roll Forward]
Balance, beginning of period	$ (11)
Add: Bad debt expense	(255)	$ (14)
Balance, end of period	(168)
Excluding expected credit loss portion
Accounts Receivable, Allowance for Credit Loss [Roll Forward]
Add: Bad debt expense	(22)
Less: Write-offs, net of recoveries	11
Expected credit loss portion
Accounts Receivable, Allowance for Credit Loss [Roll Forward]
Add: Bad debt expense	(233)
Less: Write-offs, net of recoveries	$ 87

Investments and Fair Value Measurements - Schedule of Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Debt Securities, Available-for-sale [Line Items]
Less than 12 months, gross unrealized losses	$ (3)	$ (10)
Less than 12 months, fair value	1,260	49,499
U.S. treasury
Debt Securities, Available-for-sale [Line Items]
Less than 12 months, gross unrealized losses	0	(1)
Less than 12 months, fair value	0	12,926
U.S. agency securities
Debt Securities, Available-for-sale [Line Items]
Less than 12 months, gross unrealized losses	0	(9)
Less than 12 months, fair value	0	36,322
Corporate bonds
Debt Securities, Available-for-sale [Line Items]
Less than 12 months, gross unrealized losses	(3)	0
Less than 12 months, fair value	$ 1,260	$ 251

Financial Statement Components - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Property, Plant and Equipment [Line Items]
Property and equipment	$ 92,759		$ 87,217
Accumulated depreciation and amortization	(57,819)		(54,027)
Property and equipment, net	34,940		33,190
Depreciation expense	3,900	$ 3,100
Computer and network equipment
Property, Plant and Equipment [Line Items]
Computer and network equipment	72,025		67,378
Computer software
Property, Plant and Equipment [Line Items]
Property and equipment	14,902		14,157
Internal-use software development costs
Property, Plant and Equipment [Line Items]
Property and equipment	500		500
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment	2,906		2,918
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment	$ 2,426		$ 2,264

Cover Page - shares	3 Months Ended
Cover Page - shares	Mar. 31, 2020	Apr. 30, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2020
Document Transition Report	false
Entity File Number	001-36383
Entity Registrant Name	Five9, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	94-3394123
Entity Address, Address Line One	Bishop Ranch 8
Entity Address, Address Line Two	4000 Executive Parkway
Entity Address, Address Line Three	Suite 400
Entity Address, City or Town	San Ramon
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94583
City Area Code	925
Local Phone Number	201-2000
Title of 12(b) Security	Common stock, par value $0.001 per share
Trading Symbol	FIVN
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		62,028,900
Entity Central Index Key	0001288847
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Amendment Flag	false

Revenue - Narrative (Details) $ in Millions	3 Months Ended
Revenue - Narrative (Details) $ in Millions	Mar. 31, 2020 USD ($)
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Contract revenue recognized	$ 16.0
Contract acquisition costs
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Amortization period of capitalized contract cost	5 years

Description of Business and Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2020
Accounting Policies [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, 2019. 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.
Reclassification	Certain prior period amounts included in the condensed consolidated financial statements have been reclassified to conform to the current period presentation.
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 and related reserves. Management periodically evaluates such estimates and they are adjusted prospectively based upon such periodic evaluation. Actual results could differ from those estimates.
Recently Adopted Accounting Pronouncements	Recently Adopted Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires measurement and recognition of expected credit losses for financial assets held at amortized cost, including trade receivables. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model that requires the forward-looking information to calculate credit loss estimates. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes will result in more timely recognition of credit losses. The Company adopted ASU 2016-13 using the modified retrospective method on January 1, 2020. The adoption of ASU 2016-13 did not have a material impact on the Company’s consolidated financial position, operating results or cash flows. See Notes 3 and 4 for further information on the impact of this adoption. Recent Accounting Pronouncements Not Yet Effective In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which amends its guidance to simplify the accounting for income taxes by, among other provisions, removing exceptions to certain general principles in Topic 740, Income Taxes. The standard will be effective for the Company beginning in the first quarter of 2021, with early adoption permitted. The Company is currently evaluating the impact that the adoption of ASU 2019-12 will have on its consolidated financial statements. The Company has reviewed or is in the process of evaluating all other issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such accounting pronouncements will cause a material impact on its consolidated financial position, operating results or cash flows.
Receivables	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	Deferred contract acquisition costs are recorded when incurred and are amortized over a customer benefit period of five years.
Revenue	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.

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Income Statement [Abstract]
Revenue	$ 95,088	$ 74,538
Cost of revenue	40,037	30,851
Gross profit	55,051	43,687
Operating expenses:
Research and development	15,189	10,546
Sales and marketing	30,160	21,701
General and administrative	14,658	11,762
Total operating expenses	60,007	44,009
Loss from operations	(4,956)	(322)
Other income (expense), net:
Interest expense	(3,484)	(3,396)
Interest income and other	1,072	1,745
Total other income (expense), net	(2,412)	(1,651)
Loss before income taxes	(7,368)	(1,973)
Provision for (benefit from) income taxes	69	(49)
Net loss	$ (7,437)	$ (1,924)
Net loss per share:
Basic and diluted (in usd per share)	$ (0.12)	$ (0.03)
Shares used in computing net loss per share:
Basic and diluted (in shares)	61,705	59,367
Comprehensive Loss:
Net loss	$ (7,437)	$ (1,924)
Other comprehensive income	1,054	174
Comprehensive loss	$ (6,383)	$ (1,750)

Revenue

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

Revenue

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):


	March 31, 2020		December 31, 2019
Accounts receivable, net	$	39,972	$	37,655

Deferred contract acquisition costs:
Current	$	14,317	$	13,014
Non-current	34,047		30,655
Total deferred contract acquisition costs	$	48,364	$	43,669

Contract assets and contract liabilities:
Contract assets (included in prepaid expenses and other current assets)	$	623	$	825
Contract liabilities (deferred revenue)	25,632		24,681
Contract liabilities (deferred revenue) (included in other long-term liabilities)	3,978		1,550
Net contract assets (liabilities)	$	(28,987)	$	(25,406)

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 months ended March 31, 2020, the Company recognized revenue of $16.0 million related to its contract liabilities at December 31, 2019.

Remaining Performance Obligations

As of March 31, 2020, 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 $154.1 million. The Company expects to recognize revenue on approximately four-fifths 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.

Financial Statement Components - Schedule of Accounts Receivable (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Accounts Receivable [Line Items]
Allowance for doubtful accounts	$ (168)	$ (11)
Accounts receivable, net	39,972	37,655
Trade accounts receivable
Accounts Receivable [Line Items]
Trade accounts receivable	36,590	34,591
Unbilled trade accounts receivable, net of advance client deposits
Accounts Receivable [Line Items]
Trade accounts receivable	$ 3,550	$ 3,075

Debt (Tables)

3 Months Ended

Mar. 31, 2020

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 was as follows (in thousands):


	March 31, 2020		December 31, 2019
Principal	$	258,749	$	258,750
Unamortized debt discount	(41,849)		(44,881)
Unamortized issuance costs	(3,976)		(4,265)
Net carrying amount	$	212,924	$	209,604

There was no change to net carrying amount of the equity component of the Notes since it continued to meet the conditions for equity classification as presented below (in thousands):


	March 31, 2020		December 31, 2019
Debt discount for conversion option	$	63,756	$	63,756
Issuance costs	(1,998)		(1,998)
Net carrying amount	$	61,758	$	61,758

Schedule of Interest Expense Related to the Notes

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


	Three Months Ended
	March 31, 2020		March 31, 2019
Contractual interest expense	$	81	$	81
Amortization of debt discount	3,032		2,810
Amortization of issuance costs	288		269
Total interest expense	$	3,401	$	3,160

Schedule of Maturities of Debt

Maturity of the Company’s outstanding debt as of March 31, 2020 was as follows (in thousands):


Period	Amount to Mature


2023	$	258,749
Total	$	258,749

Investments and Fair Value Measurements - Schedule of Marketable Investments (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Debt Securities, Available-for-sale [Line Items]
Cost	$ 169,408	$ 241,853
Gross Unrealized Gains	1,028	130
Gross Unrealized Losses	(3)	(10)
Fair Value	170,433	241,973
Certificates of deposit
Debt Securities, Available-for-sale [Line Items]
Cost	161	161
Gross Unrealized Gains	0	1
Gross Unrealized Losses	0	0
Fair Value	161	162
U.S. treasury
Debt Securities, Available-for-sale [Line Items]
Cost	48,502	31,933
Gross Unrealized Gains	393	8
Gross Unrealized Losses	0	(1)
Fair Value	48,895	31,940
U.S. agency securities
Debt Securities, Available-for-sale [Line Items]
Cost	98,955	177,629
Gross Unrealized Gains	597	110
Gross Unrealized Losses	0	(9)
Fair Value	99,552	177,730
Commercial paper
Debt Securities, Available-for-sale [Line Items]
Cost	12,553	15,240
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	12,553	15,240
Municipal bonds
Debt Securities, Available-for-sale [Line Items]
Cost	6,357	3,014
Gross Unrealized Gains	35	1
Gross Unrealized Losses	0	0
Fair Value	6,392	3,015
Corporate bonds
Debt Securities, Available-for-sale [Line Items]
Cost	2,880	13,876
Gross Unrealized Gains	3	10
Gross Unrealized Losses	(3)	0
Fair Value	$ 2,880	$ 13,886

Leases

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

Leases

The Company has leases for offices, data centers and computer and networking equipment that expire at various dates through 2024. The Company’s leases have remaining terms of one to five years, some of the leases include a Company option to extend the leases for up to three to five years, and some of the leases include the option to terminate the leases upon 30-days notice.

The components of lease expenses were as follows (in thousands):


	Three Months Ended
	March 31, 2020		March 31, 2019
Operating lease cost	$	1,516	$	1,103
Finance lease cost:
Amortization of right-of-use assets	$	1,277	$	1,455
Interest on finance lease liabilities	82		236
Total finance lease cost	$	1,359	$	1,691

Supplemental cash flow information related to leases was as follows (in thousands):


	Three Months Ended
	March 31, 2020		March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash used in operating leases	$	(1,584)	$	(1,144)
Financing cash used in finance leases	(1,229)		(1,894)
Right of use assets obtained in exchange for lease obligations:
Operating leases	3,892		—
Finance leases	—		—

Supplemental balance sheet information related to leases was as follows (in thousands):


	March 31, 2020		December 31, 2019
Operating leases
Operating lease right-of-use assets	$	11,034	$	8,746

Operating lease liabilities	$	6,087	$	5,064
Operating lease liabilities — less current portion	5,438		4,329
Total operating lease liabilities	$	11,525	$	9,393
Finance leases
Property and equipment, gross	$	46,611	$	46,671
Less: accumulated depreciation and amortization	(40,467)		(39,190)
Property and equipment, net	$	6,144	$	7,481
Finance lease liabilities:
Finance leases	$	2,812	$	3,518
Finance lease liabilities — less current portion	286		809
Total finance lease liabilities	$	3,098	$	4,327

Weighted average remaining terms were as follows (in years):


	March 31, 2020	December 31, 2019
Weighted average remaining lease term
Operating leases	2.7	2.7
Finance leases	1.0	1.1

Weighted average discount rates were as follows:


	March 31, 2020		December 31, 2019
Weighted average discount rate
Operating leases	4.6	%	4.7	%
Finance leases	7.5	%	7.5	%

Maturities of lease liabilities were as follows (in thousands):


Year Ending December 31,	Operating Leases		Finance Leases
2020	$	4,810	$	2,515
2021	3,298		757
2022	2,264		—
2023	1,218		—
2024	660		—
Total future minimum lease payments	12,250		3,272
Less: imputed interest	(725)		(174)
Total	$	11,525	$	3,098

Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Schedule of Common Stock Reserved for Future Issuance

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


						March 31, 2020
Stock options outstanding						2,557
Restricted stock units outstanding						2,962
Shares available for future grant under 2014 Plan						11,825
Shares available for future issuance under ESPP						2,700

Total shares of common stock reserved						20,044

Schedule of Stock Option Activity

A summary of the Company’s stock option activity during the three months ended March 31, 2020 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, 2019	2,530	$	19.38
Options granted (weighted average grant date fair value of $33.04 per share)	191	72.33
Options exercised	(160)	16.20
Options forfeited or expired	(4)	36.70
Outstanding as of March 31, 2020	2,557	$	23.52	6.1	$	135,356

Schedule of RSU Activity

A summary of the Company’s restricted stock unit, or RSU, activity during the three months ended March 31, 2020 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, 2019	2,372	$	41.32
RSUs granted	921	72.17
RSUs vested and released	(288)	32.86
RSUs forfeited	(43)	49.05
Outstanding as of March 31, 2020	2,962	$	51.74

Schedule of Stock-based Compensation Expense

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



	Three Months Ended
	March 31, 2020		March 31, 2019
Cost of revenue	$	1,989	$	1,229
Research and development	2,806		1,470
Sales and marketing	4,106		2,249
General and administrative	4,893		3,738
Total stock-based compensation	$	13,794	$	8,686

Schedule of Unrecognized Compensation Expense

As of March 31, 2020, unrecognized stock-based compensation expense 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	$	17,959	$	144,678	$	471
Weighted-average amortization period	3.0 years		3.2 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
	March 31, 2020		March 31, 2019
Expected term (years)	6.0		6.0
Volatility	47	%	46	%
Risk-free interest rate	1.2	%	2.5	%
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.

Geographical Information

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

Geographical Information

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



	Three Months Ended
	March 31, 2020		March 31, 2019
United States	$	87,431	$	68,883
International	7,657		5,655
Total revenue	$	95,088	$	74,538

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



	March 31, 2020		December 31, 2019
United States	$	30,469	$	29,246
International	4,471		3,944
Property and equipment, net	$	34,940	$	33,190

Investments and Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

Schedule of Marketable Investments



	March 31, 2020
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Certificates of deposit	$	161	$	—	$	—	$	161
U.S. treasury	48,502		393		—		48,895
U.S. agency securities	98,955		597		—		99,552
Commercial paper	12,553		—		—		12,553
Municipal bonds	6,357		35		—		6,392
Corporate bonds	2,880		3		(3)		2,880
Total	$	169,408	$	1,028	$	(3)	$	170,433



	December 31, 2019
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Certificates of deposit	$	161	$	1	$	—	$	162
U.S. treasury	31,933		8		(1)		31,940
U.S. agency securities	177,629		110		(9)		177,730
Commercial paper	15,240		—		—		15,240
Municipal bonds	3,014		1		—		3,015
Corporate bonds	13,876		10		—		13,886
Total	$	241,853	$	130	$	(10)	$	241,973

Schedule of Gross Unrealized Losses and Fair Value of Marketable Investments


	March 31, 2020						December 31, 2019

	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
U.S. treasury	$	—	$	—	$	(1)	$	12,926
U.S. agency securities	—		—		(9)		36,322
Corporate bonds	(3)		1,260		—		251
Total	$	(3)	$	1,260	$	(10)	$	49,499

Schedule of Assets Carried at Fair Value

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



	March 31, 2020
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents
Money market funds	$	41,038	$	—	$	—	$	41,038
U.S. treasury	21,499		—		—		21,499

Municipal bonds	—		15,867		—		15,867
Corporate bonds	—		250		—		250
Total cash equivalents	$	62,537	$	16,117	$	—	$	78,654
Marketable investments
Certificates of deposit	$	—	$	161	$	—	$	161
U.S. treasury	48,895		—		—		48,895
U.S. agency securities	—		99,552		—		99,552
Commercial paper	—		12,553		—		12,553
Municipal bonds	—		6,392		—		6,392
Corporate bonds	—		2,880		—		2,880
Total marketable investments	$	48,895	$	121,538	$	—	$	170,433



	December 31, 2019
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents
Money market funds	$	2,179	$	—	$	—	$	2,179


Commercial paper	—		2,697		—		2,697
Total cash equivalents	$	2,179	$	2,697	$	—	$	4,876
Marketable investments
Certificates of deposit	$	—	$	162	$	—	$	162
U.S. treasury	31,940		—		—		31,940
U.S. agency securities	—		177,730		—		177,730
Commercial paper	—		15,240		—		15,240
Municipal bonds	—		3,015		—		3,015
Corporate bonds	—		13,886		—		13,886
Total marketable investments	$	31,940	$	210,033	$	—	$	241,973

Consolidated Statement of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit
Balance at Dec. 31, 2018	$ 142,748	$ 59	$ 294,279	$ (93)	$ (151,497)
Balance (in shares) at Dec. 31, 2018		59,210
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon exercise of stock options	982	$ 1	981
Issuance of common stock upon exercise of stock options (in shares)		216
Issuance of common stock upon vesting of restricted stock units	0	$ 0
Issuance of common stock upon vesting of restricted stock units (in shares)		211
Stock-based compensation	8,686		8,686
Other comprehensive income	174			174
Net loss	(1,924)				(1,924)
Balance at Mar. 31, 2019	150,666	$ 60	303,946	81	(153,421)
Balance (in shares) at Mar. 31, 2019		59,637
Balance at Dec. 31, 2019	196,458	$ 61	351,870	576	(156,049)
Balance (in shares) at Dec. 31, 2019		61,544
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon exercise of stock options	2,597	$ 1	2,596
Issuance of common stock upon exercise of stock options (in shares)		160
Issuance of common stock upon vesting of restricted stock units	0	$ 0
Issuance of common stock upon vesting of restricted stock units (in shares)		288
Stock-based compensation	13,794		13,794
Other comprehensive income	1,054			1,054
Net loss	(7,437)				(7,437)
Balance at Mar. 31, 2020	$ 206,466	$ 62	$ 368,260	$ 1,630	$ (163,486)
Balance (in shares) at Mar. 31, 2020		61,992

Stockholders' Equity - Valuation Assumptions (Details) - Stock options	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Class of Stock
Expected term (years)	6 years	6 years
Volatility (percent)	47.00%	46.00%
Risk-free interest rate (percent)	1.20%	2.50%
Dividend yield (percent)	0.00%	0.00%

Subsequent Event (Details) $ in Millions	Apr. 01, 2020 USD ($)
Subsequent Event \| Virtual Observer, formerly known as Coordinated Systems, Inc.
Subsequent Event [Line Items]
Cash consideration paid	$ 32

Subsequent Event	3 Months Ended
Subsequent Event	Mar. 31, 2020
Subsequent Events [Abstract]
Subsequent Event	Subsequent EventOn April 1, 2020, the Company completed its acquisition of all of the outstanding shares of Virtual Observer, formerly known as Coordinated Systems, Inc., for cash consideration of $32 million, subject to adjustment, pursuant to a stock purchase agreement by and among the Company and Robert H. Hutcheon, David R. Brower and Daniel J. McGrail dated January 15, 2020. This acquisition, which is expected to be accounted for as a business combination, is intended to expand the Company's portfolio to include a cloud-based and integrated Workforce Optimization ("WFO") offering as a complement to its ongoing strategic partnerships with leading WFO providers.

Net Loss Per Share - Antidilutive Securities Excluded from Computation of Diluted Net Loss Per Share (Details) - $ / shares shares in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share
Anti-dilutive securities excluded from calculation of diluted net loss per share (shares)	8,228	7,341
Conversion price on convertible debt (in USD per share)	$ 40.82
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share
Anti-dilutive securities excluded from calculation of diluted net loss per share (shares)	2,557	3,123
Restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share
Anti-dilutive securities excluded from calculation of diluted net loss per share (shares)	2,962	2,969
Convertible senior notes
Antidilutive Securities Excluded from Computation of Earnings Per Share
Anti-dilutive securities excluded from calculation of diluted net loss per share (shares)	2,709	1,249

Geographical Information (Tables)

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

Schedule of Revenues and Property and Equipment by Geographic Region

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



	Three Months Ended
	March 31, 2020		March 31, 2019
United States	$	87,431	$	68,883
International	7,657		5,655
Total revenue	$	95,088	$	74,538

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



	March 31, 2020		December 31, 2019
United States	$	30,469	$	29,246
International	4,471		3,944
Property and equipment, net	$	34,940	$	33,190

Financial Statement Components

3 Months Ended

Mar. 31, 2020

Financial Statement Components [Abstract]

Financial Statement Components

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


	March 31, 2020		December 31, 2019
Cash	$	77,209	$	73,100
Money market funds	41,038		2,179
U.S. treasury	21,499		—

Commercial paper	—		2,697
Municipal bonds	15,867		—
Corporate bonds	250		—
Total cash and cash equivalents	$	155,863	$	77,976

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


	March 31, 2020		December 31, 2019
Trade accounts receivable	$	36,590	$	34,591
Unbilled trade accounts receivable, net of advance client deposits	3,550		3,075
Allowance for doubtful accounts	(168)		(11)
Accounts receivable, net	$	39,972	$	37,655

The Company's adoption of ASU 2016-13 on January 1, 2020 required it to shift from an incurred loss impairment model to an expected credit loss model which requires it to consider historical loss rates and expectations of forward-looking losses to estimate its allowance for doubtful accounts on its trade accounts receivables, unbilled accounts receivables and contract assets. The adoption of this new standard resulted in an increase to the allowance for doubtful accounts reserve of $233 thousand during the three months ended March 31, 2020. The following table presents the change in the allowance for doubtful accounts, including consideration of expected credit losses, for the three months ended March 31, 2020 (in thousands):


	Three Months Ended
	March 31, 2020
Balance, beginning of period	$	(11)
Add: Bad debt expense (excluding expected credit loss portion)	(22)
Add: Bad debt expense (expected credit loss portion)	(233)
Less: Write-offs, net of recoveries (excluding expected credit loss portion)	11
Less: Write-offs, net of recoveries (expected credit loss portion)	87
Balance, end of period	$	(168)

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


	March 31, 2020		December 31, 2019
Prepaid expenses	$	8,464	$	4,901
Other current assets	4,309		4,930
Contract assets	623		825
Prepaid expenses and other current assets	$	13,396	$	10,656

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


	March 31, 2020		December 31, 2019
Computer and network equipment	$	72,025	$	67,378
Computer software	14,902		14,157
Internal-use software development costs	500		500
Furniture and fixtures	2,906		2,918
Leasehold improvements	2,426		2,264
Property and equipment	92,759		87,217
Accumulated depreciation and amortization	(57,819)		(54,027)
Property and equipment, net	$	34,940	$	33,190

Depreciation and amortization expense associated with property and equipment was $3.9 million and $3.1 million for the three months ended March 31, 2020 and 2019, respectively.

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


	March 31, 2020		December 31, 2019
Gross	$	46,611	$	46,671
Less: accumulated depreciation and amortization	(40,467)		(39,190)
Total	$	6,144	$	7,481

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


	March 31, 2020		December 31, 2019
Accrued compensation and benefits	$	19,628	$	14,233

Accrued expenses	5,110		4,152
Accrued and other current liabilities	$	24,738	$	18,385

Debt

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Debt

0.125% Convertible Senior Notes and Capped Call

In May 2018, the Company issued $258.8 million aggregate principal amount of 0.125% convertible senior notes (“Notes”) due May 1, 2023 in a private offering. 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 $250.8 million.

Each $1,000 principal amount of the Notes is initially convertible into 24.4978 shares of the Company’s 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 ended 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 three months ended March 31, 2020, one of the conversion features of the Notes was triggered as the last reported sale price of the Company’s common stock was greater than $53.07 per share, which represents 130% of the initial conversion price of $40.82 per share, for at least 20 trading days in the period of 30 consecutive trading days ended on March 31, 2020 (the last trading day of the calendar quarter), and therefore, the Notes are convertible, in multiples of $1,000 principal amount, at the option of the Notes holders from April 1, 2020 to June 30, 2020. Whether the Notes will be convertible after June 30, 2020 will depend on the continued satisfaction of this condition or other conversion conditions in the future. The Company received elections to convert a limited number of Notes in the first quarter of 2020. The Company elected to satisfy one election through the payment of cash for an immaterial amount to such Note holder during the first quarter of 2020 and expects to satisfy the remaining elections during the second quarter of 2020 in cash. The Company has the option to settle any future election conversion notices in cash, shares, or a combination of cash and shares.

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 re-measured 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 $8.0 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 $6.0 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 was as follows (in thousands):


	March 31, 2020		December 31, 2019
Principal	$	258,749	$	258,750
Unamortized debt discount	(41,849)		(44,881)
Unamortized issuance costs	(3,976)		(4,265)
Net carrying amount	$	212,924	$	209,604

There was no change to net carrying amount of the equity component of the Notes since it continued to meet the conditions for equity classification as presented below (in thousands):


	March 31, 2020		December 31, 2019
Debt discount for conversion option	$	63,756	$	63,756
Issuance costs	(1,998)		(1,998)
Net carrying amount	$	61,758	$	61,758

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


	Three Months Ended
	March 31, 2020		March 31, 2019
Contractual interest expense	$	81	$	81
Amortization of debt discount	3,032		2,810
Amortization of issuance costs	288		269
Total interest expense	$	3,401	$	3,160

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.

Maturity of the Company’s outstanding debt as of March 31, 2020 was as follows (in thousands):


Period	Amount to Mature


2023	$	258,749
Total	$	258,749

Net Loss Per Share - Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Earnings Per Share [Abstract]
Net loss	$ (7,437)	$ (1,924)
Weighted-average shares of common stock outstanding (in shares)	61,705	59,367
Basic and diluted net loss per share (in usd per share)	$ (0.12)	$ (0.03)

- Definition

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

+ References + Details

Intangible Assets - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		15 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 30, 2020
Acquired Finite-Lived Intangible Assets
Amortization expense related to intangible assets	$ 1,100	$ 88
Whendu
Acquired Finite-Lived Intangible Assets
Amortization expense related to intangible assets			$ 1,000

Leases (Tables)

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

Schedule of lease expenses

The components of lease expenses were as follows (in thousands):


	Three Months Ended
	March 31, 2020		March 31, 2019
Operating lease cost	$	1,516	$	1,103
Finance lease cost:
Amortization of right-of-use assets	$	1,277	$	1,455
Interest on finance lease liabilities	82		236
Total finance lease cost	$	1,359	$	1,691

Supplemental cash flow information related to leases was as follows (in thousands):


	Three Months Ended
	March 31, 2020		March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash used in operating leases	$	(1,584)	$	(1,144)
Financing cash used in finance leases	(1,229)		(1,894)
Right of use assets obtained in exchange for lease obligations:
Operating leases	3,892		—
Finance leases	—		—

Weighted average remaining terms were as follows (in years):


	March 31, 2020	December 31, 2019
Weighted average remaining lease term
Operating leases	2.7	2.7
Finance leases	1.0	1.1

Weighted average discount rates were as follows:


	March 31, 2020		December 31, 2019
Weighted average discount rate
Operating leases	4.6	%	4.7	%
Finance leases	7.5	%	7.5	%

Schedule of balance sheet information related to leases

Supplemental balance sheet information related to leases was as follows (in thousands):


	March 31, 2020		December 31, 2019
Operating leases
Operating lease right-of-use assets	$	11,034	$	8,746

Operating lease liabilities	$	6,087	$	5,064
Operating lease liabilities — less current portion	5,438		4,329
Total operating lease liabilities	$	11,525	$	9,393
Finance leases
Property and equipment, gross	$	46,611	$	46,671
Less: accumulated depreciation and amortization	(40,467)		(39,190)
Property and equipment, net	$	6,144	$	7,481
Finance lease liabilities:
Finance leases	$	2,812	$	3,518
Finance lease liabilities — less current portion	286		809
Total finance lease liabilities	$	3,098	$	4,327

Schedule of operating lease maturities

Maturities of lease liabilities were as follows (in thousands):


Year Ending December 31,	Operating Leases		Finance Leases
2020	$	4,810	$	2,515
2021	3,298		757
2022	2,264		—
2023	1,218		—
2024	660		—
Total future minimum lease payments	12,250		3,272
Less: imputed interest	(725)		(174)
Total	$	11,525	$	3,098

Schedule of finance lease maturities

Maturities of lease liabilities were as follows (in thousands):


Year Ending December 31,	Operating Leases		Finance Leases
2020	$	4,810	$	2,515
2021	3,298		757
2022	2,264		—
2023	1,218		—
2024	660		—
Total future minimum lease payments	12,250		3,272
Less: imputed interest	(725)		(174)
Total	$	11,525	$	3,098

Stockholders' Equity - Stock-based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Stock-based Compensation Expense
Stock-based compensation expense	$ 13,794	$ 8,686
Stock options
Stock-based Compensation Expense
Unrecognized stock-based compensation expense	$ 17,959
Weighted-average amortization period	3 years
Restricted stock units
Stock-based Compensation Expense
Unrecognized stock-based compensation expense	$ 144,678
Weighted-average amortization period	3 years 2 months 12 days
ESPP
Stock-based Compensation Expense
Unrecognized stock-based compensation expense	$ 471
Weighted-average amortization period	1 month 6 days
Cost of revenue
Stock-based Compensation Expense
Stock-based compensation expense	$ 1,989	1,229
Research and development
Stock-based Compensation Expense
Stock-based compensation expense	2,806	1,470
Sales and marketing
Stock-based Compensation Expense
Stock-based compensation expense	4,106	2,249
General and administrative
Stock-based Compensation Expense
Stock-based compensation expense	$ 4,893	$ 3,738

Net Loss Per Share (Tables)

3 Months Ended

Mar. 31, 2020

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
	March 31, 2020		March 31, 2019
Net loss	$	(7,437)	$	(1,924)
Weighted-average shares of common stock outstanding	61,705		59,367
Basic and diluted net loss per share	$	(0.12)	$	(0.03)

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
	March 31, 2020	March 31, 2019
Stock options	2,557	3,123
Restricted stock units	2,962	2,969
Convertible senior notes	2,709	1,249

Total	8,228	7,341

Description of Business and Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2020
Accounting Policies [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, 2019. 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 and related reserves. Management periodically evaluates such estimates and they are adjusted prospectively based upon such periodic evaluation. Actual results could differ from those estimates. 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, 2019. Recently Adopted Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires measurement and recognition of expected credit losses for financial assets held at amortized cost, including trade receivables. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model that requires the forward-looking information to calculate credit loss estimates. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes will result in more timely recognition of credit losses. The Company adopted ASU 2016-13 using the modified retrospective method on January 1, 2020. The adoption of ASU 2016-13 did not have a material impact on the Company’s consolidated financial position, operating results or cash flows. See Notes 3 and 4 for further information on the impact of this adoption. Recent Accounting Pronouncements Not Yet Effective In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which amends its guidance to simplify the accounting for income taxes by, among other provisions, removing exceptions to certain general principles in Topic 740, Income Taxes. The standard will be effective for the Company beginning in the first quarter of 2021, with early adoption permitted. The Company is currently evaluating the impact that the adoption of ASU 2019-12 will have on its consolidated financial statements. The Company has reviewed or is in the process of evaluating all other issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such accounting pronouncements will cause a material impact on its consolidated financial position, operating results or cash flows.

Financial Statement Components - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Financial Statement Components [Abstract]
Prepaid expenses	$ 8,464	$ 4,901
Other current assets	4,309	4,930
Contract assets	623	825
Prepaid expenses and other current assets	$ 13,396	$ 10,656

Revenue - Remaining Performance Obligations (Details) $ in Millions	3 Months Ended
	Mar. 31, 2020 USD ($)
Revenue from Contract with Customer [Abstract]
Performance obligation	$ 154.1
Performance obligation, description of timing	The Company expects to recognize revenue on approximately four-fifths 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
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation expected to be recognized (percent)	80.00%
Performance obligation satisfaction period	24 months

Financial Statement Components - Schedule of Capital Leased Property and Equipment (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Financial Statement Components [Abstract]
Gross	$ 46,611	$ 46,671
Less: accumulated depreciation and amortization	(40,467)	(39,190)
Property and equipment, net	$ 6,144	$ 7,481

Leases - Narrative (Details)	3 Months Ended
Leases - Narrative (Details)	Mar. 31, 2020
Lessee, Lease, Description [Line Items]
Operating lease termination notice, period	30 days
Minimum
Lessee, Lease, Description [Line Items]
Operating lease, term of contract	1 year
Operating lease, extension term	3 years
Maximum
Lessee, Lease, Description [Line Items]
Operating lease, term of contract	5 years
Operating lease, extension term	5 years

Investments and Fair Value Measurements - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	May 31, 2018
Debt Instrument [Line Items]
Impairment loss on available-for-sale debt securities	$ 0
Level 2 \| Convertible debt
Debt Instrument [Line Items]
Fair value of long-term debt	493,200,000	$ 437,000,000.0
Nonrecurring
Debt Instrument [Line Items]
Assets measured at fair value on nonrecurring basis	0	0
Liabilities measured at fair value on nonrecurring basis	$ 0	$ 0
Convertible Senior Notes \| Convertible debt
Debt Instrument [Line Items]
Stated interest rate on debt (percent)	0.125%	0.125%	0.125%

Debt - Schedule of Interest Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Debt Instrument [Line Items]
Interest Expense	$ 3,484	$ 3,396
Convertible Senior Notes \| Convertible debt
Debt Instrument [Line Items]
Contractual interest expense	81	81
Amortization of debt discount	3,032	2,810
Amortization of issuance costs	288	269
Interest Expense	$ 3,401	$ 3,160

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Mar. 31, 2019
Income Tax Disclosure [Abstract]
Provision for (benefit from) income taxes	$ 69	$ (49)

Intangible Assets

3 Months Ended

Mar. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

The component of intangible assets was as follows (in thousands):



	March 31, 2020													December 31, 2019
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Remaining Amortization period (Years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Remaining Amortization period (Years)
Developed technology	$	17,874	$	(3,741)	$	14,133	3.6	$	17,777	$	(2,690)	$	15,087	3.9
Acquired workforce	470		(60)		410		2.7	467		(21)		446		2.9


Total	$	18,344	$	(3,801)	$	14,543	3.6	$	18,244	$	(2,711)	$	15,533	3.8

Amortization expense for intangible assets was $1.1 million and $88 thousand during the three months ended March 31, 2020 and 2019, respectively. The $1.0 million increase in amortization expense was due to the acquisition of certain intangible assets from Whendu LLC ("Whendu") in November 2019.

As of March 31, 2020, the expected future amortization expense for intangible assets was as follows (in thousands):


Period	Expected Future Amortization Expense
2020	$	3,200
2021	4,010
2022	3,990
2023	3,343
Total	$	14,543

Financial Statement Components - Schedule of Cash and Cash Equivalents (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	$ 155,863	$ 77,976
Cash
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	77,209	73,100
Money market funds
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	41,038	2,179
U.S. treasury
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	21,499	0
Commercial paper
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	0	2,697
Municipal bonds
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	15,867	0
Corporate bonds
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	$ 250	$ 0

Leases - Lease Maturities (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Operating Leases
2020	$ 4,810
2021	3,298
2022	2,264
2023	1,218
2024	660
Total future minimum lease payments	12,250
Less: imputed interest	(725)
Total	11,525	$ 9,393
Finance Leases
2020	2,515
2021	757
2022	0
2023	0
2024	0
Total future minimum lease payments	3,272
Less: imputed interest	(174)
Total	$ 3,098	$ 4,327

Geographical Information - Schedule of Revenue and Property and Equipment by Geographic Region (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Revenues from External Customers and Long-Lived Assets
Revenue	$ 95,088	$ 74,538
Property and equipment, net	34,940		$ 33,190
United States
Revenues from External Customers and Long-Lived Assets
Revenue	87,431	68,883
Property and equipment, net	30,469		29,246
International
Revenues from External Customers and Long-Lived Assets
Revenue	7,657	$ 5,655
Property and equipment, net	$ 4,471		$ 3,944

Revenue - Contract Balances (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Revenue from Contract with Customer [Abstract]
Accounts receivable, net	$ 39,972	$ 37,655
Deferred contract acquisition costs, current	14,317	13,014
Deferred contract acquisition costs, non-current	34,047	30,655
Total deferred contract acquisition costs	48,364	43,669
Contract assets (included in prepaid expenses and other current assets)	623	825
Contract liabilities (deferred revenue)	25,632	24,681
Contract liabilities (deferred revenue) (included in other long-term liabilities)	3,978	1,550
Net contract assets (liabilities)	$ (28,987)	$ (25,406)

Stockholders' Equity

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Capital Structure

Common Stock

The Company is authorized to issue 450,000,000 shares of common stock with a par value of $0.001 per share. As of March 31, 2020 and December 31, 2019, the Company had 61,992,081 and 61,543,634 shares of common stock issued and outstanding, respectively.

Preferred Stock

The Company is 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 March 31, 2020 and December 31, 2019, there were no shares of preferred stock issued and outstanding.

Common Stock Reserved for Future Issuance

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


						March 31, 2020
Stock options outstanding						2,557
Restricted stock units outstanding						2,962
Shares available for future grant under 2014 Plan						11,825
Shares available for future issuance under ESPP						2,700

Total shares of common stock reserved						20,044

Stock Options

A summary of the Company’s stock option activity during the three months ended March 31, 2020 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, 2019	2,530	$	19.38
Options granted (weighted average grant date fair value of $33.04 per share)	191	72.33
Options exercised	(160)	16.20
Options forfeited or expired	(4)	36.70
Outstanding as of March 31, 2020	2,557	$	23.52	6.1	$	135,356

The aggregate intrinsic value disclosed in the above table is computed based on the difference between the exercise price of the stock options and the fair market value of the Company’s common stock of $76.46 per share as of March 31, 2020 for all in-the-money stock options outstanding.

Restricted Stock Units

A summary of the Company’s restricted stock unit, or RSU, activity during the three months ended March 31, 2020 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, 2019	2,372	$	41.32
RSUs granted	921	72.17
RSUs vested and released	(288)	32.86
RSUs forfeited	(43)	49.05
Outstanding as of March 31, 2020	2,962	$	51.74

Stock-Based Compensation

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



	Three Months Ended
	March 31, 2020		March 31, 2019
Cost of revenue	$	1,989	$	1,229
Research and development	2,806		1,470
Sales and marketing	4,106		2,249
General and administrative	4,893		3,738
Total stock-based compensation	$	13,794	$	8,686


	Stock Option		RSU		ESPP
Unrecognized stock-based compensation expense	$	17,959	$	144,678	$	471
Weighted-average amortization period	3.0 years		3.2 years		0.1 years

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



Stock Options	Three Months Ended
	March 31, 2020		March 31, 2019
Expected term (years)	6.0		6.0
Volatility	47	%	46	%
Risk-free interest rate	1.2	%	2.5	%
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.

Financial Statement Components - Schedule of Accrued and Other Current Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Financial Statement Components [Abstract]
Accrued compensation and benefits	$ 19,628	$ 14,233
Accrued expenses	5,110	4,152
Accrued and other current liabilities	$ 24,738	$ 18,385