Years Ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Stock options | $ | 3.58 | $ | 4.56 | $ | 4.79 | ||||||
RSUs | $ | 6.91 | $ | 8.59 | $ | 8.72 | ||||||
PRSUs | $ | 7.42 | N/A | $ | 9.16 | |||||||
ESPP | $ | 1.92 | $ | 2.03 | $ | 2.46 |
As of December 31, | |||||||||
2016 | 2015 | 2014 | |||||||
Stock options outstanding | 3,209 | 2,655 | 3,701 | ||||||
Restricted stock units outstanding | 2,598 | 2,469 | 1,734 | ||||||
Performance restricted stock units outstanding | 565 | 184 | 362 | ||||||
Shares available for future grant under 2010 Plan | 1,603 | 2,749 | 2,283 | ||||||
Shares available for future issuance under ESPP | 119 | 1,129 | 1,891 | ||||||
Common stock warrants | 15 | 15 | 15 | ||||||
Total | 8,109 | 9,201 | 9,986 |
• | Persuasive evidence of an arrangement exists. The Company generally relies upon sales agreements and customer purchase orders as evidence of an arrangement. |
• | Delivery has occurred. The Company uses the shipping terms of the arrangement or evidence of customer acceptance to verify delivery or performance. |
• | Sales price is fixed or determinable. The Company assesses whether the sales price is fixed or determinable based on the payment terms and whether the sales price is subject to refund or adjustment. Payment terms to customers can range from net 30 to net 120 days. |
• | Collectability is reasonably assured. The Company assesses collectability based primarily on creditworthiness of customers and their payment histories. |
Percentage of Accounts Receivable | Percentage of Revenue | |||||||||
At December 31, | Years Ended December 31, | |||||||||
2016 | 2015 | 2016 | 2015 | 2014 | ||||||
CenturyLink | 28% | 27% | 21% | 22% | 23% | |||||
Windstream | 13% | * | 15% | * | * | |||||
* Less than 10% of total accounts receivable or revenue. |
a. | Accounting for Income Taxes — The primary impact of the adoption was the recognition of excess tax benefits and tax deficiencies through the statement of operations when the awards vest or are settled rather than through paid-in capital. The new guidance eliminates the requirement to delay the recognition of excess tax benefits until it reduces current taxes payable and requires the recognition of excess tax benefits and tax deficiencies in the period they arise. The Company adopted this guidance on a modified retrospective basis beginning on January 1, 2017 and the adoption will have a cumulative-effect adjustment to the beginning balance of deferred tax asset and corresponding valuation allowance as of January 1, 2017. The adoption will have no cumulative-effect adjustment on January 1, 2017 accumulated deficit balance as the Company's net operating loss carryforwards are offset by a full valuation allowance. |
b. | Classification of Excess Tax Benefits on the Statement of Cash Flows — ASU 2016-09 requires all tax-related cash flows resulting from share-based payments to be reported as operating activities on the statement of cash flows, a change from the current requirement to present windfall tax benefits as an inflow from financing activities and an outflow from operating activities. The Company adopted this guidance prospectively beginning on January 1, 2017. |
c. | Forfeitures — The Company has historically recognized stock-based compensation expense net of estimated forfeitures on all unvested awards and elected to continuously do so with the adoption of this new guidance. Hence, the adoption of ASU 2016-09 as it relates to this matter will have no impact to the Company's consolidated financial statements. |
d. | Minimum Statutory Tax Withholding Requirements — ASU 2016-09 allows companies to withhold an amount up to the employees' maximum individual tax rate in the relevant jurisdiction without resulting in liability classification of the award. The Company adopted this guidance using a modified retrospective approach. The adoption will have no impact on the January 1, 2017 accumulated deficit as the Company had no outstanding liability awards that would otherwise qualify for equity classification under this new guidance. |
e. | Classification of Employee Taxes Paid on the Statement of Cash Flows When an Employer Withholds Shares for Tax-Withholding Purposes — ASU 2016-09 clarifies that all cash payments made to taxing authorities on the employees' behalf for withheld shares should be presented as financing activities on the statement of cash flows. The Company has historically presented the taxes paid related to net share settlement of equity awards as a financing activity on the statements of cash flows. Hence, the adoption of ASU 2016-09 as it relates to this matter will have no impact to the Company's consolidated financial statements. |
December 31, 2016 | December 31, 2015 | |||||||
Cash and cash equivalents: | ||||||||
Cash | $ | 34,340 | $ | 13,378 | ||||
Money market funds | 15,020 | 10,248 | ||||||
Commercial paper | 999 | — | ||||||
Total cash and cash equivalents | 50,359 | 23,626 | ||||||
Marketable securities: | ||||||||
Corporate debt securities | 17,272 | 35,799 | ||||||
Commercial paper | 6,275 | 3,645 | ||||||
U.S. government agency securities | 4,201 | 10,520 | ||||||
Total marketable securities | 27,748 | 49,964 | ||||||
Total cash, cash equivalents and marketable securities | $ | 78,107 | $ | 73,590 |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
Corporate debt securities | $ | 17,279 | $ | 1 | $ | (8 | ) | $ | 17,272 | |||||||
Commercial paper | 6,275 | — | — | 6,275 | ||||||||||||
U.S. government agency securities | 4,200 | 1 | — | 4,201 | ||||||||||||
Total marketable securities | $ | 27,754 | $ | 2 | $ | (8 | ) | $ | 27,748 |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
Corporate debt securities | $ | 35,869 | $ | 2 | $ | (72 | ) | $ | 35,799 | |||||||
Commercial paper | 3,645 | — | — | 3,645 | ||||||||||||
U.S. government agency securities | 10,544 | — | (24 | ) | 10,520 | |||||||||||
Total marketable securities | $ | 50,058 | $ | 2 | $ | (96 | ) | $ | 49,964 |
Amortized Cost | Fair Value | |||||||
Due in 1 year or less | $ | 27,754 | $ | 27,748 |
Period | Minimum Future Lease Payments | |||
2017 | $ | 3,103 | ||
2018 | 2,774 | |||
2019 | 1,061 | |||
2020 | 717 | |||
2021 | 283 | |||
Thereafter | 19 | |||
Total | $ | 7,957 |
Years Ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Balance at beginning of period | $ | 9,564 | $ | 9,553 | $ | 10,856 | ||||||
Provision for warranty and retrofit charged to cost of revenue | 9,898 | 4,661 | 3,394 | |||||||||
Utilization of reserve | (6,816 | ) | (4,115 | ) | (3,328 | ) | ||||||
Adjustments to pre-existing reserve | (432 | ) | (535 | ) | (1,369 | ) | ||||||
Balance at end of period | $ | 12,214 | $ | 9,564 | $ | 9,553 |
Year Ended December 31, 2016 | ||||||||||||
Unrealized Gains and Losses on Available-for-Sale Marketable Securities | Foreign Currency Translation Adjustments | Total | ||||||||||
Balance at beginning of period | $ | (94 | ) | $ | (101 | ) | $ | (195 | ) | |||
Other comprehensive income (loss) | 88 | (549 | ) | (461 | ) | |||||||
Balance at end of period | $ | (6 | ) | $ | (650 | ) | $ | (656 | ) | |||
Year Ended December 31, 2015 | ||||||||||||
Unrealized Gains and Losses on Available-for-Sale Marketable Securities | Foreign Currency Translation Adjustments | Total | ||||||||||
Balance at beginning of period | $ | (58 | ) | $ | 138 | $ | 80 | |||||
Other comprehensive loss | (36 | ) | (239 | ) | (275 | ) | ||||||
Balance at end of period | $ | (94 | ) | $ | (101 | ) | $ | (195 | ) | |||
Year Ended December 31, 2014 | ||||||||||||
Unrealized Gains and Losses on Available-for-Sale Marketable Securities | Foreign Currency Translation Adjustments | Total | ||||||||||
Balance at beginning of period | $ | — | $ | 190 | $ | 190 | ||||||
Other comprehensive loss before | ||||||||||||
reclassification adjustment | (57 | ) | (52 | ) | (109 | ) | ||||||
Reclassification adjustment for realized gains on | ||||||||||||
marketable securities included in net loss | (1 | ) | — | (1 | ) | |||||||
Other comprehensive loss | (58 | ) | (52 | ) | (110 | ) | ||||||
Balance at end of period | $ | (58 | ) | $ | 138 | $ | 80 |
Percentage of Accounts Receivable | Percentage of Revenue | |||||||||
At December 31, | Years Ended December 31, | |||||||||
2016 | 2015 | 2016 | 2015 | 2014 | ||||||
CenturyLink | 28% | 27% | 21% | 22% | 23% | |||||
Windstream | 13% | * | 15% | * | * | |||||
* Less than 10% of total accounts receivable or revenue. |
December 31, 2016 | December 31, 2015 | |||||||
Current: | ||||||||
Product and services | $ | 24,472 | $ | 8,937 | ||||
Extended warranty | 3,382 | 3,187 | ||||||
27,854 | 12,124 | |||||||
Non-current: | ||||||||
Product and services | 22 | 58 | ||||||
Extended warranty | 20,215 | 19,511 | ||||||
20,237 | 19,569 | |||||||
Total deferred revenue | $ | 48,091 | $ | 31,693 |
Years Ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Numerator: | ||||||||||||
Net loss | $ | (27,402 | ) | $ | (26,333 | ) | $ | (20,814 | ) | |||
Denominator: | ||||||||||||
Weighted-average common shares outstanding | 48,730 | 51,489 | 50,808 | |||||||||
Basic and diluted net loss per common share | $ | (0.56 | ) | $ | (0.51 | ) | $ | (0.41 | ) | |||
Potentially dilutive shares, weighted-average | 5,890 | 6,120 | 5,020 |
As of December 31, 2016 | Level 1 | Level 2 | Total | |||||||||
Money market funds | $ | 15,020 | $ | — | $ | 15,020 | ||||||
Corporate debt securities | — | 17,272 | 17,272 | |||||||||
Commercial paper | — | 7,274 | 7,274 | |||||||||
U.S. government agency securities | — | 4,201 | 4,201 | |||||||||
Total | $ | 15,020 | $ | 28,747 | $ | 43,767 |
As of December 31, 2015 | Level 1 | Level 2 | Total | |||||||||
Money market funds | $ | 10,248 | $ | — | $ | 10,248 | ||||||
Corporate debt securities | — | 35,799 | 35,799 | |||||||||
Commercial paper | — | 3,645 | 3,645 | |||||||||
U.S. government agency securities | — | 10,520 | 10,520 | |||||||||
Total | $ | 10,248 | $ | 49,964 | $ | 60,212 |
December 31, 2016 | December 31, 2015 | |||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Net | |||||||||||||||||||
Core developed technology | $ | 68,964 | $ | (68,151 | ) | $ | 813 | $ | 68,964 | $ | (64,047 | ) | $ | 4,917 | ||||||||||
Customer relationships | 54,740 | (54,740 | ) | — | 54,740 | (53,039 | ) | 1,701 | ||||||||||||||||
Total intangible assets, excluding goodwill | $ | 123,704 | $ | (122,891 | ) | $ | 813 | $ | 123,704 | $ | (117,086 | ) | $ | 6,618 |
Period | Expected Amortization Expense | ||
2017 | $ | 813 |
Years Ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Domestic | $ | (28,931 | ) | $ | (27,674 | ) | $ | (21,495 | ) | |||
Foreign | 1,876 | 1,876 | 1,262 | |||||||||
Loss before provision for income taxes | $ | (27,055 | ) | $ | (25,798 | ) | $ | (20,233 | ) |
Years Ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Current: | ||||||||||||
State | $ | 102 | $ | 90 | $ | 104 | ||||||
Foreign | 673 | 493 | 469 | |||||||||
Current income tax | 775 | 583 | 573 | |||||||||
Deferred: | ||||||||||||
Foreign | (428 | ) | (48 | ) | 8 | |||||||
Deferred income tax | (428 | ) | (48 | ) | 8 | |||||||
Provision for income taxes | $ | 347 | $ | 535 | $ | 581 |
Years Ended December 31, | |||||||||
2016 | 2015 | 2014 | |||||||
Federal statutory rate | 34.0 | % | 34.0 | % | 34.0 | % | |||
State statutory rate | 6.1 | % | 2.6 | % | 2.5 | % | |||
Foreign operations | 0.6 | % | 1.1 | % | (0.1 | )% | |||
R&D tax credits | 6.4 | % | 11.2 | % | 9.2 | % | |||
Foreign income inclusion | (0.7 | )% | (2.4 | )% | (0.3 | )% | |||
Non-deductible stock compensation | (5.1 | )% | (1.9 | )% | (0.9 | )% | |||
Other permanent items | (1.4 | )% | (2.0 | )% | (1.5 | )% | |||
Tax true-up | 21.0 | % | (1.3 | )% | (0.2 | )% | |||
Valuation allowance | (62.2 | )% | (43.4 | )% | (45.6 | )% | |||
Effective tax rate | (1.3 | )% | (2.1 | )% | (2.9 | )% |
As of December 31, | ||||||||
2016 | 2015 | |||||||
Deferred tax assets: | ||||||||
Net operating loss carryforwards | $ | 167,668 | $ | 167,387 | ||||
Tax credit carryforwards | 36,026 | 27,654 | ||||||
Depreciation and amortization | 2,538 | 1,947 | ||||||
Accruals and reserves | 13,462 | 12,427 | ||||||
Deferred revenue | 12,954 | 9,822 | ||||||
Stock-based compensation | 6,159 | 5,198 | ||||||
Other | 1,124 | 528 | ||||||
Gross deferred tax assets | 239,931 | 224,963 | ||||||
Valuation allowance | (239,238 | ) | (222,410 | ) | ||||
Net deferred tax assets | 693 | 2,553 | ||||||
Deferred tax liabilities: | ||||||||
Intangible assets | (157 | ) | (2,229 | ) | ||||
Other | — | (130 | ) | |||||
Gross deferred tax liabilities | (157 | ) | (2,359 | ) | ||||
Net deferred tax assets reflected in balance sheet | $ | 536 | $ | 194 |
Years Ended December 31, | ||||||||
2016 | 2015 | |||||||
Balance at beginning of period | $ | 16,597 | $ | 15,421 | ||||
Additions for tax positions related to prior year | 420 | 56 | ||||||
Reductions for tax positions related to prior year | (145 | ) | (59 | ) | ||||
Additions for tax positions related to current year | 1,477 | 1,179 | ||||||
Balance at end of period | $ | 18,349 | $ | 16,597 |
Amortized Cost | Fair Value | |||||||
Due in 1 year or less | $ | 27,754 | $ | 27,748 |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
Corporate debt securities | $ | 17,279 | $ | 1 | $ | (8 | ) | $ | 17,272 | |||||||
Commercial paper | 6,275 | — | — | 6,275 | ||||||||||||
U.S. government agency securities | 4,200 | 1 | — | 4,201 | ||||||||||||
Total marketable securities | $ | 27,754 | $ | 2 | $ | (8 | ) | $ | 27,748 |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
Corporate debt securities | $ | 35,869 | $ | 2 | $ | (72 | ) | $ | 35,799 | |||||||
Commercial paper | 3,645 | — | — | 3,645 | ||||||||||||
U.S. government agency securities | 10,544 | — | (24 | ) | 10,520 | |||||||||||
Total marketable securities | $ | 50,058 | $ | 2 | $ | (96 | ) | $ | 49,964 |
a. | Accounting for Income Taxes — The primary impact of the adoption was the recognition of excess tax benefits and tax deficiencies through the statement of operations when the awards vest or are settled rather than through paid-in capital. The new guidance eliminates the requirement to delay the recognition of excess tax benefits until it reduces current taxes payable and requires the recognition of excess tax benefits and tax deficiencies in the period they arise. The Company adopted this guidance on a modified retrospective basis beginning on January 1, 2017 and the adoption will have a cumulative-effect adjustment to the beginning balance of deferred tax asset and corresponding valuation allowance as of January 1, 2017. The adoption will have no cumulative-effect adjustment on January 1, 2017 accumulated deficit balance as the Company's net operating loss carryforwards are offset by a full valuation allowance. |
b. | Classification of Excess Tax Benefits on the Statement of Cash Flows — ASU 2016-09 requires all tax-related cash flows resulting from share-based payments to be reported as operating activities on the statement of cash flows, a change from the current requirement to present windfall tax benefits as an inflow from financing activities and an outflow from operating activities. The Company adopted this guidance prospectively beginning on January 1, 2017. |
c. | Forfeitures — The Company has historically recognized stock-based compensation expense net of estimated forfeitures on all unvested awards and elected to continuously do so with the adoption of this new guidance. Hence, the adoption of ASU 2016-09 as it relates to this matter will have no impact to the Company's consolidated financial statements. |
d. | Minimum Statutory Tax Withholding Requirements — ASU 2016-09 allows companies to withhold an amount up to the employees' maximum individual tax rate in the relevant jurisdiction without resulting in liability classification of the award. The Company adopted this guidance using a modified retrospective approach. The adoption will have no impact on the January 1, 2017 accumulated deficit as the Company had no outstanding liability awards that would otherwise qualify for equity classification under this new guidance. |
e. | Classification of Employee Taxes Paid on the Statement of Cash Flows When an Employer Withholds Shares for Tax-Withholding Purposes — ASU 2016-09 clarifies that all cash payments made to taxing authorities on the employees' behalf for withheld shares should be presented as financing activities on the statement of cash flows. The Company has historically presented the taxes paid related to net share settlement of equity awards as a financing activity on the statements of cash flows. Hence, the adoption of ASU 2016-09 as it relates to this matter will have no impact to the Company's consolidated financial statements. |
December 31, 2016 | December 31, 2015 | |||||||
Test equipment | $ | 43,580 | $ | 39,035 | ||||
Computer equipment and purchased software | 30,306 | 27,736 | ||||||
Furniture and fixtures | 2,831 | 1,833 | ||||||
Leasehold improvements | 6,898 | 6,554 | ||||||
Total | 83,615 | 75,158 | ||||||
Accumulated depreciation and amortization | (65,631 | ) | (58,009 | ) | ||||
Property and equipment, net | $ | 17,984 | $ | 17,149 |
Fiscal Year 2016 Quarter Ended | ||||||||||||||||
March 26 | June 25 | September 24 | December 31 | |||||||||||||
Revenue | $ | 98,375 | $ | 107,425 | $ | 121,187 | $ | 131,800 | ||||||||
Gross profit | 45,482 | 50,006 | 53,544 | 52,186 | ||||||||||||
Operating income (loss) | (10,738 | ) | (5,881 | ) | 735 | (12,235 | ) | |||||||||
Net income (loss) | (10,729 | ) | (5,826 | ) | 636 | (11,483 | ) | |||||||||
Net income (loss) per common share, basic | $ | (0.22 | ) | $ | (0.12 | ) | $ | 0.01 | $ | (0.23 | ) | |||||
Net income (loss) per common share, diluted | $ | (0.22 | ) | $ | (0.12 | ) | $ | 0.01 | $ | (0.23 | ) | |||||
Fiscal Year 2015 Quarter Ended | ||||||||||||||||
March 28 | June 27 | September 26 | December 31 | |||||||||||||
Revenue | $ | 91,038 | $ | 99,129 | $ | 112,297 | $ | 104,999 | ||||||||
Gross profit | 42,490 | 48,289 | 53,113 | 46,537 | ||||||||||||
Operating income (loss) | (11,887 | ) | (5,765 | ) | 877 | (9,735 | ) | |||||||||
Net income (loss) | (11,930 | ) | (5,779 | ) | 922 | (9,546 | ) | |||||||||
Net income (loss) per common share, basic | $ | (0.23 | ) | $ | (0.11 | ) | $ | 0.02 | $ | (0.19 | ) | |||||
Net income (loss) per common share, diluted | $ | (0.23 | ) | $ | (0.11 | ) | $ | 0.02 | $ | (0.19 | ) |
• | Persuasive evidence of an arrangement exists. The Company generally relies upon sales agreements and customer purchase orders as evidence of an arrangement. |
• | Delivery has occurred. The Company uses the shipping terms of the arrangement or evidence of customer acceptance to verify delivery or performance. |
• | Sales price is fixed or determinable. The Company assesses whether the sales price is fixed or determinable based on the payment terms and whether the sales price is subject to refund or adjustment. Payment terms to customers can range from net 30 to net 120 days. |
• | Collectability is reasonably assured. The Company assesses collectability based primarily on creditworthiness of customers and their payment histories. |
December 31, 2016 | December 31, 2015 | |||||||
Accounts receivable | $ | 52,792 | $ | 48,319 | ||||
Allowance for doubtful accounts | (518 | ) | (501 | ) | ||||
Product return reserve | (938 | ) | (663 | ) | ||||
Accounts receivable, net | $ | 51,336 | $ | 47,155 |
December 31, 2016 | December 31, 2015 | |||||||
Advance customer payments | $ | 20,726 | $ | 1,094 | ||||
Accrued compensation and related benefits | 19,541 | 13,809 | ||||||
Accrued warranty and retrofit | 12,214 | 9,564 | ||||||
Accrued professional and consulting fees | 8,205 | 2,813 | ||||||
Accrued customer rebates | 1,931 | 784 | ||||||
Accrued excess and obsolete inventory at contract manufacturers | 1,327 | 1,011 | ||||||
Accrued freight | 1,198 | 486 | ||||||
Accrued insurance | 804 | — | ||||||
Accrued non-income related taxes | 699 | 905 | ||||||
Accrued business travel expenses | 463 | 580 | ||||||
Accrued rent | 421 | 381 | ||||||
Accrued hosting services | 240 | 466 | ||||||
Income taxes payable | 231 | 322 | ||||||
Accrued other | 1,715 | 3,297 | ||||||
Total accrued liabilities | $ | 69,715 | $ | 35,512 |
Year Ended December 31, 2016 | ||||||||||||
Unrealized Gains and Losses on Available-for-Sale Marketable Securities | Foreign Currency Translation Adjustments | Total | ||||||||||
Balance at beginning of period | $ | (94 | ) | $ | (101 | ) | $ | (195 | ) | |||
Other comprehensive income (loss) | 88 | (549 | ) | (461 | ) | |||||||
Balance at end of period | $ | (6 | ) | $ | (650 | ) | $ | (656 | ) | |||
Year Ended December 31, 2015 | ||||||||||||
Unrealized Gains and Losses on Available-for-Sale Marketable Securities | Foreign Currency Translation Adjustments | Total | ||||||||||
Balance at beginning of period | $ | (58 | ) | $ | 138 | $ | 80 | |||||
Other comprehensive loss | (36 | ) | (239 | ) | (275 | ) | ||||||
Balance at end of period | $ | (94 | ) | $ | (101 | ) | $ | (195 | ) | |||
Year Ended December 31, 2014 | ||||||||||||
Unrealized Gains and Losses on Available-for-Sale Marketable Securities | Foreign Currency Translation Adjustments | Total | ||||||||||
Balance at beginning of period | $ | — | $ | 190 | $ | 190 | ||||||
Other comprehensive loss before | ||||||||||||
reclassification adjustment | (57 | ) | (52 | ) | (109 | ) | ||||||
Reclassification adjustment for realized gains on | ||||||||||||
marketable securities included in net loss | (1 | ) | — | (1 | ) | |||||||
Other comprehensive loss | (58 | ) | (52 | ) | (110 | ) | ||||||
Balance at end of period | $ | (58 | ) | $ | 138 | $ | 80 |
December 31, 2016 | December 31, 2015 | |||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Net | |||||||||||||||||||
Core developed technology | $ | 68,964 | $ | (68,151 | ) | $ | 813 | $ | 68,964 | $ | (64,047 | ) | $ | 4,917 | ||||||||||
Customer relationships | 54,740 | (54,740 | ) | — | 54,740 | (53,039 | ) | 1,701 | ||||||||||||||||
Total intangible assets, excluding goodwill | $ | 123,704 | $ | (122,891 | ) | $ | 813 | $ | 123,704 | $ | (117,086 | ) | $ | 6,618 |
December 31, 2016 | December 31, 2015 | |||||||
Cash and cash equivalents: | ||||||||
Cash | $ | 34,340 | $ | 13,378 | ||||
Money market funds | 15,020 | 10,248 | ||||||
Commercial paper | 999 | — | ||||||
Total cash and cash equivalents | 50,359 | 23,626 | ||||||
Marketable securities: | ||||||||
Corporate debt securities | 17,272 | 35,799 | ||||||
Commercial paper | 6,275 | 3,645 | ||||||
U.S. government agency securities | 4,201 | 10,520 | ||||||
Total marketable securities | 27,748 | 49,964 | ||||||
Total cash, cash equivalents and marketable securities | $ | 78,107 | $ | 73,590 |
Years Ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Current: | ||||||||||||
State | $ | 102 | $ | 90 | $ | 104 | ||||||
Foreign | 673 | 493 | 469 | |||||||||
Current income tax | 775 | 583 | 573 | |||||||||
Deferred: | ||||||||||||
Foreign | (428 | ) | (48 | ) | 8 | |||||||
Deferred income tax | (428 | ) | (48 | ) | 8 | |||||||
Provision for income taxes | $ | 347 | $ | 535 | $ | 581 |
As of December 31, | ||||||||
2016 | 2015 | |||||||
Deferred tax assets: | ||||||||
Net operating loss carryforwards | $ | 167,668 | $ | 167,387 | ||||
Tax credit carryforwards | 36,026 | 27,654 | ||||||
Depreciation and amortization | 2,538 | 1,947 | ||||||
Accruals and reserves | 13,462 | 12,427 | ||||||
Deferred revenue | 12,954 | 9,822 | ||||||
Stock-based compensation | 6,159 | 5,198 | ||||||
Other | 1,124 | 528 | ||||||
Gross deferred tax assets | 239,931 | 224,963 | ||||||
Valuation allowance | (239,238 | ) | (222,410 | ) | ||||
Net deferred tax assets | 693 | 2,553 | ||||||
Deferred tax liabilities: | ||||||||
Intangible assets | (157 | ) | (2,229 | ) | ||||
Other | — | (130 | ) | |||||
Gross deferred tax liabilities | (157 | ) | (2,359 | ) | ||||
Net deferred tax assets reflected in balance sheet | $ | 536 | $ | 194 |
Years Ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Numerator: | ||||||||||||
Net loss | $ | (27,402 | ) | $ | (26,333 | ) | $ | (20,814 | ) | |||
Denominator: | ||||||||||||
Weighted-average common shares outstanding | 48,730 | 51,489 | 50,808 | |||||||||
Basic and diluted net loss per common share | $ | (0.56 | ) | $ | (0.51 | ) | $ | (0.41 | ) | |||
Potentially dilutive shares, weighted-average | 5,890 | 6,120 | 5,020 |
Years Ended December 31, | |||||||||
2016 | 2015 | 2014 | |||||||
Federal statutory rate | 34.0 | % | 34.0 | % | 34.0 | % | |||
State statutory rate | 6.1 | % | 2.6 | % | 2.5 | % | |||
Foreign operations | 0.6 | % | 1.1 | % | (0.1 | )% | |||
R&D tax credits | 6.4 | % | 11.2 | % | 9.2 | % | |||
Foreign income inclusion | (0.7 | )% | (2.4 | )% | (0.3 | )% | |||
Non-deductible stock compensation | (5.1 | )% | (1.9 | )% | (0.9 | )% | |||
Other permanent items | (1.4 | )% | (2.0 | )% | (1.5 | )% | |||
Tax true-up | 21.0 | % | (1.3 | )% | (0.2 | )% | |||
Valuation allowance | (62.2 | )% | (43.4 | )% | (45.6 | )% | |||
Effective tax rate | (1.3 | )% | (2.1 | )% | (2.9 | )% |
As of December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
United States | $ | 15,321 | $ | 15,362 | $ | 17,852 | ||||||
China | 2,663 | 1,787 | 2,292 | |||||||||
Total | $ | 17,984 | $ | 17,149 | $ | 20,144 |
As of December 31, 2016 | Level 1 | Level 2 | Total | |||||||||
Money market funds | $ | 15,020 | $ | — | $ | 15,020 | ||||||
Corporate debt securities | — | 17,272 | 17,272 | |||||||||
Commercial paper | — | 7,274 | 7,274 | |||||||||
U.S. government agency securities | — | 4,201 | 4,201 | |||||||||
Total | $ | 15,020 | $ | 28,747 | $ | 43,767 |
As of December 31, 2015 | Level 1 | Level 2 | Total | |||||||||
Money market funds | $ | 10,248 | $ | — | $ | 10,248 | ||||||
Corporate debt securities | — | 35,799 | 35,799 | |||||||||
Commercial paper | — | 3,645 | 3,645 | |||||||||
U.S. government agency securities | — | 10,520 | 10,520 | |||||||||
Total | $ | 10,248 | $ | 49,964 | $ | 60,212 |
Period | Minimum Future Lease Payments | |||
2017 | $ | 3,103 | ||
2018 | 2,774 | |||
2019 | 1,061 | |||
2020 | 717 | |||
2021 | 283 | |||
Thereafter | 19 | |||
Total | $ | 7,957 |
Years Ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Domestic | $ | (28,931 | ) | $ | (27,674 | ) | $ | (21,495 | ) | |||
Foreign | 1,876 | 1,876 | 1,262 | |||||||||
Loss before provision for income taxes | $ | (27,055 | ) | $ | (25,798 | ) | $ | (20,233 | ) |
December 31, 2016 | December 31, 2015 | |||||||
Raw materials | $ | 1,827 | $ | 2,209 | ||||
Finished goods | 42,718 | 45,458 | ||||||
Total inventory | $ | 44,545 | $ | 47,667 |
Years Ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Balance at beginning of period | $ | 9,564 | $ | 9,553 | $ | 10,856 | ||||||
Provision for warranty and retrofit charged to cost of revenue | 9,898 | 4,661 | 3,394 | |||||||||
Utilization of reserve | (6,816 | ) | (4,115 | ) | (3,328 | ) | ||||||
Adjustments to pre-existing reserve | (432 | ) | (535 | ) | (1,369 | ) | ||||||
Balance at end of period | $ | 12,214 | $ | 9,564 | $ | 9,553 |
Fiscal Year 2016 Quarter Ended | ||||||||||||||||
March 26 | June 25 | September 24 | December 31 | |||||||||||||
Revenue | $ | 98,375 | $ | 107,425 | $ | 121,187 | $ | 131,800 | ||||||||
Gross profit | 45,482 | 50,006 | 53,544 | 52,186 | ||||||||||||
Operating income (loss) | (10,738 | ) | (5,881 | ) | 735 | (12,235 | ) | |||||||||
Net income (loss) | (10,729 | ) | (5,826 | ) | 636 | (11,483 | ) | |||||||||
Net income (loss) per common share, basic | $ | (0.22 | ) | $ | (0.12 | ) | $ | 0.01 | $ | (0.23 | ) | |||||
Net income (loss) per common share, diluted | $ | (0.22 | ) | $ | (0.12 | ) | $ | 0.01 | $ | (0.23 | ) | |||||
Fiscal Year 2015 Quarter Ended | ||||||||||||||||
March 28 | June 27 | September 26 | December 31 | |||||||||||||
Revenue | $ | 91,038 | $ | 99,129 | $ | 112,297 | $ | 104,999 | ||||||||
Gross profit | 42,490 | 48,289 | 53,113 | 46,537 | ||||||||||||
Operating income (loss) | (11,887 | ) | (5,765 | ) | 877 | (9,735 | ) | |||||||||
Net income (loss) | (11,930 | ) | (5,779 | ) | 922 | (9,546 | ) | |||||||||
Net income (loss) per common share, basic | $ | (0.23 | ) | $ | (0.11 | ) | $ | 0.02 | $ | (0.19 | ) | |||||
Net income (loss) per common share, diluted | $ | (0.23 | ) | $ | (0.11 | ) | $ | 0.02 | $ | (0.19 | ) |
Years Ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
United States | $ | 415,629 | $ | 360,077 | $ | 352,458 | ||||||
Caribbean | 12,934 | 13,358 | 18,725 | |||||||||
Canada | 9,064 | 10,198 | 9,995 | |||||||||
Europe | 6,334 | 11,090 | 5,948 | |||||||||
Other | 14,826 | 12,740 | 14,101 | |||||||||
Total | $ | 458,787 | $ | 407,463 | $ | 401,227 |
Weighted- | |||||||||||||
Average | |||||||||||||
Weighted- | Remaining | ||||||||||||
Average | Contractual | Aggregate | |||||||||||
Number of | Exercise Price | Life | Intrinsic | ||||||||||
Stock Options | Shares | Per Share | (in years) | Value (1) | |||||||||
Outstanding as of December 31, 2015 | 2,655 | $ | 11.81 | ||||||||||
Granted | 680 | 6.96 | |||||||||||
Exercised | (3 | ) | 5.77 | ||||||||||
Forfeited | (3 | ) | 7.97 | ||||||||||
Expired | (120 | ) | 29.31 | ||||||||||
Outstanding as of December 31, 2016 | 3,209 | $ | 10.14 | 6.3 | $ | 703 | |||||||
Vested and expected to vest as of December 31, 2016 | 3,113 | $ | 10.23 | 6.1 | $ | 652 | |||||||
Options exercisable as of December 31, 2016 | 2,125 | $ | 11.47 | 4.9 | $ | 201 | |||||||
(1) Amounts represent the difference between the exercise price and the fair market value of common stock at December 31, 2016 for all in the money options outstanding. |
Years Ended December 31, | |||||||||
ESPP | 2016 | 2015 | 2014 | ||||||
Expected volatility | 46 | % | 46 | % | 45 | % | |||
Expected life (years) | 0.52 | 0.46 | 0.50 | ||||||
Expected dividend yield | — | — | — | ||||||
Risk-free interest rate | 0.47 | % | 0.18 | % | 0.07 | % |
Years Ended December 31, | |||||||||
Stock Options | 2016 | 2015 | 2014 | ||||||
Expected volatility | 53 | % | 52 | % | 52 | % | |||
Expected life (years) | 6.25 | 6.25 | 6.21 | ||||||
Expected dividend yield | — | — | — | ||||||
Risk-free interest rate | 1.60 | % | 1.56 | % | 1.87 | % |
RSUs | PRSUs | |||||||||||||
Weighted- | Weighted- | |||||||||||||
Average | Average | |||||||||||||
Grant Date | Grant Date | |||||||||||||
Number of | Fair Value | Number of | Fair Value | |||||||||||
Shares | Per Share | Shares | Per Share | |||||||||||
Outstanding at December 31, 2015 | 2,469 | $ | 8.64 | 184 | $ | 9.21 | ||||||||
Granted | 1,287 | 6.91 | 550 | 7.42 | ||||||||||
Vested | (919 | ) | 8.46 | (45 | ) | 11.71 | ||||||||
Canceled | (239 | ) | 8.45 | (124 | ) | 8.09 | ||||||||
Outstanding at December 31, 2016 | 2,598 | $ | 7.86 | 565 | $ | 7.51 |
Expiration Date | Exercise Price Per Share | Number of Warrants Outstanding | ||||
September 4, 2017 | $ | 19.56 | 15 |
As of December 31, 2016 | ||||||||||||||||
Stock Option | RSU | PRSU | ESPP | |||||||||||||
Unrecognized stock-based compensation expense | $ | 3,661 | $ | 13,380 | $ | 1,328 | $ | 721 | ||||||||
Weighted-average amortization period (in years) | 2.9 | 2.5 | 0.9 | 0.4 |
Balance at Beginning of Year | Additions Charged to Costs or Expenses or Revenue | Deductions and Write Offs | Balance at End of Year | |||||||||||||
Year Ended December 31, 2016 | ||||||||||||||||
Allowance for doubtful accounts | $ | 501 | $ | 232 | $ | (215 | ) | $ | 518 | |||||||
Product return reserve | 663 | 3,679 | (3,404 | ) | 938 | |||||||||||
Year Ended December 31, 2015 | ||||||||||||||||
Allowance for doubtful accounts | $ | 241 | $ | 405 | $ | (145 | ) | $ | 501 | |||||||
Product return reserve | 508 | 4,224 | (4,069 | ) | 663 | |||||||||||
Year Ended December 31, 2014 | ||||||||||||||||
Allowance for doubtful accounts | $ | 358 | $ | 154 | $ | (271 | ) | $ | 241 | |||||||
Product return reserve | 764 | 4,805 | (5,061 | ) | 508 |
Period | Expected Amortization Expense | ||
2017 | $ | 813 |
Percentage of Accounts Receivable | Percentage of Revenue | |||||||||
At December 31, | Years Ended December 31, | |||||||||
2016 | 2015 | 2016 | 2015 | 2014 | ||||||
CenturyLink | 28% | 27% | 21% | 22% | 23% | |||||
Windstream | 13% | * | 15% | * | * | |||||
* Less than 10% of total accounts receivable or revenue. |
Years Ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
United States | $ | 415,629 | $ | 360,077 | $ | 352,458 | ||||||
Caribbean | 12,934 | 13,358 | 18,725 | |||||||||
Canada | 9,064 | 10,198 | 9,995 | |||||||||
Europe | 6,334 | 11,090 | 5,948 | |||||||||
Other | 14,826 | 12,740 | 14,101 | |||||||||
Total | $ | 458,787 | $ | 407,463 | $ | 401,227 |
As of December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
United States | $ | 15,321 | $ | 15,362 | $ | 17,852 | ||||||
China | 2,663 | 1,787 | 2,292 | |||||||||
Total | $ | 17,984 | $ | 17,149 | $ | 20,144 |
Weighted- | |||||||||||||
Average | |||||||||||||
Weighted- | Remaining | ||||||||||||
Average | Contractual | Aggregate | |||||||||||
Number of | Exercise Price | Life | Intrinsic | ||||||||||
Stock Options | Shares | Per Share | (in years) | Value (1) | |||||||||
Outstanding as of December 31, 2015 | 2,655 | $ | 11.81 | ||||||||||
Granted | 680 | 6.96 | |||||||||||
Exercised | (3 | ) | 5.77 | ||||||||||
Forfeited | (3 | ) | 7.97 | ||||||||||
Expired | (120 | ) | 29.31 | ||||||||||
Outstanding as of December 31, 2016 | 3,209 | $ | 10.14 | 6.3 | $ | 703 | |||||||
Vested and expected to vest as of December 31, 2016 | 3,113 | $ | 10.23 | 6.1 | $ | 652 | |||||||
Options exercisable as of December 31, 2016 | 2,125 | $ | 11.47 | 4.9 | $ | 201 | |||||||
(1) Amounts represent the difference between the exercise price and the fair market value of common stock at December 31, 2016 for all in the money options outstanding. |
RSUs | PRSUs | |||||||||||||
Weighted- | Weighted- | |||||||||||||
Average | Average | |||||||||||||
Grant Date | Grant Date | |||||||||||||
Number of | Fair Value | Number of | Fair Value | |||||||||||
Shares | Per Share | Shares | Per Share | |||||||||||
Outstanding at December 31, 2015 | 2,469 | $ | 8.64 | 184 | $ | 9.21 | ||||||||
Granted | 1,287 | 6.91 | 550 | 7.42 | ||||||||||
Vested | (919 | ) | 8.46 | (45 | ) | 11.71 | ||||||||
Canceled | (239 | ) | 8.45 | (124 | ) | 8.09 | ||||||||
Outstanding at December 31, 2016 | 2,598 | $ | 7.86 | 565 | $ | 7.51 |
Years Ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Stock options | $ | 3.58 | $ | 4.56 | $ | 4.79 | ||||||
RSUs | $ | 6.91 | $ | 8.59 | $ | 8.72 | ||||||
PRSUs | $ | 7.42 | N/A | $ | 9.16 | |||||||
ESPP | $ | 1.92 | $ | 2.03 | $ | 2.46 |
(i) | Expected volatility of the Company's common stock - The Company computes its expected volatility assumption based on a blended volatility (50% historical volatility and 50% implied volatility from traded options on the Company's common stock). The selection of a blended volatility assumption was based upon the Company's assessment that a blended volatility is more representative of the Company's future stock price trend as it weighs the historical volatility with the future implied volatility. |
(ii) | Expected life of the option award - Represents the weighted-average period that the stock options are expected to remain outstanding. The Company's computation of expected life utilizes the simplified method in accordance with Staff Accounting Bulletin No. 110 (\"SAB 110\") due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. The mid-point between the vesting date and the expiration date is used as the expected term under this method. |
(iii) | Expected dividend yield - Assumption is based on the Company's history of not paying dividends and no future expectations of dividend payouts. |
(iv) | Risk-free interest rate - Based on the U.S. Treasury yield curve in effect at the time of grant with maturities approximating the grant's expected life. |
Years Ended December 31, | |||||||||
Stock Options | 2016 | 2015 | 2014 | ||||||
Expected volatility | 53 | % | 52 | % | 52 | % | |||
Expected life (years) | 6.25 | 6.25 | 6.21 | ||||||
Expected dividend yield | — | — | — | ||||||
Risk-free interest rate | 1.60 | % | 1.56 | % | 1.87 | % |
Years Ended December 31, | |||||||||
ESPP | 2016 | 2015 | 2014 | ||||||
Expected volatility | 46 | % | 46 | % | 45 | % | |||
Expected life (years) | 0.52 | 0.46 | 0.50 | ||||||
Expected dividend yield | — | — | — | ||||||
Risk-free interest rate | 0.47 | % | 0.18 | % | 0.07 | % |
As of December 31, 2016 | ||||||||||||||||
Stock Option | RSU | PRSU | ESPP | |||||||||||||
Unrecognized stock-based compensation expense | $ | 3,661 | $ | 13,380 | $ | 1,328 | $ | 721 | ||||||||
Weighted-average amortization period (in years) | 2.9 | 2.5 | 0.9 | 0.4 |
Expiration Date | Exercise Price Per Share | Number of Warrants Outstanding | ||||
September 4, 2017 | $ | 19.56 | 15 |
As of December 31, | |||||||||
2016 | 2015 | 2014 | |||||||
Stock options outstanding | 3,209 | 2,655 | 3,701 | ||||||
Restricted stock units outstanding | 2,598 | 2,469 | 1,734 | ||||||
Performance restricted stock units outstanding | 565 | 184 | 362 | ||||||
Shares available for future grant under 2010 Plan | 1,603 | 2,749 | 2,283 | ||||||
Shares available for future issuance under ESPP | 119 | 1,129 | 1,891 | ||||||
Common stock warrants | 15 | 15 | 15 | ||||||
Total | 8,109 | 9,201 | 9,986 |
Years Ended December 31, | ||||||||
2016 | 2015 | |||||||
Balance at beginning of period | $ | 16,597 | $ | 15,421 | ||||
Additions for tax positions related to prior year | 420 | 56 | ||||||
Reductions for tax positions related to prior year | (145 | ) | (59 | ) | ||||
Additions for tax positions related to current year | 1,477 | 1,179 | ||||||
Balance at end of period | $ | 18,349 | $ | 16,597 |
December 31, 2016 | December 31, 2015 | |||||||
Accounts receivable | $ | 52,792 | $ | 48,319 | ||||
Allowance for doubtful accounts | (518 | ) | (501 | ) | ||||
Product return reserve | (938 | ) | (663 | ) | ||||
Accounts receivable, net | $ | 51,336 | $ | 47,155 |
Balance at Beginning of Year | Additions Charged to Costs or Expenses or Revenue | Deductions and Write Offs | Balance at End of Year | |||||||||||||
Year Ended December 31, 2016 | ||||||||||||||||
Allowance for doubtful accounts | $ | 501 | $ | 232 | $ | (215 | ) | $ | 518 | |||||||
Product return reserve | 663 | 3,679 | (3,404 | ) | 938 | |||||||||||
Year Ended December 31, 2015 | ||||||||||||||||
Allowance for doubtful accounts | $ | 241 | $ | 405 | $ | (145 | ) | $ | 501 | |||||||
Product return reserve | 508 | 4,224 | (4,069 | ) | 663 | |||||||||||
Year Ended December 31, 2014 | ||||||||||||||||
Allowance for doubtful accounts | $ | 358 | $ | 154 | $ | (271 | ) | $ | 241 | |||||||
Product return reserve | 764 | 4,805 | (5,061 | ) | 508 |
December 31, 2016 | December 31, 2015 | |||||||
Raw materials | $ | 1,827 | $ | 2,209 | ||||
Finished goods | 42,718 | 45,458 | ||||||
Total inventory | $ | 44,545 | $ | 47,667 |
December 31, 2016 | December 31, 2015 | |||||||
Test equipment | $ | 43,580 | $ | 39,035 | ||||
Computer equipment and purchased software | 30,306 | 27,736 | ||||||
Furniture and fixtures | 2,831 | 1,833 | ||||||
Leasehold improvements | 6,898 | 6,554 | ||||||
Total | 83,615 | 75,158 | ||||||
Accumulated depreciation and amortization | (65,631 | ) | (58,009 | ) | ||||
Property and equipment, net | $ | 17,984 | $ | 17,149 |
December 31, 2016 | December 31, 2015 | |||||||
Advance customer payments | $ | 20,726 | $ | 1,094 | ||||
Accrued compensation and related benefits | 19,541 | 13,809 | ||||||
Accrued warranty and retrofit | 12,214 | 9,564 | ||||||
Accrued professional and consulting fees | 8,205 | 2,813 | ||||||
Accrued customer rebates | 1,931 | 784 | ||||||
Accrued excess and obsolete inventory at contract manufacturers | 1,327 | 1,011 | ||||||
Accrued freight | 1,198 | 486 | ||||||
Accrued insurance | 804 | — | ||||||
Accrued non-income related taxes | 699 | 905 | ||||||
Accrued business travel expenses | 463 | 580 | ||||||
Accrued rent | 421 | 381 | ||||||
Accrued hosting services | 240 | 466 | ||||||
Income taxes payable | 231 | 322 | ||||||
Accrued other | 1,715 | 3,297 | ||||||
Total accrued liabilities | $ | 69,715 | $ | 35,512 |
December 31, 2016 | December 31, 2015 | |||||||
Current: | ||||||||
Product and services | $ | 24,472 | $ | 8,937 | ||||
Extended warranty | 3,382 | 3,187 | ||||||
27,854 | 12,124 | |||||||
Non-current: | ||||||||
Product and services | 22 | 58 | ||||||
Extended warranty | 20,215 | 19,511 | ||||||
20,237 | 19,569 | |||||||
Total deferred revenue | $ | 48,091 | $ | 31,693 |