Years Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Stock options | $ | 3.19 | $ | 3.58 | $ | 4.56 | ||||||
RSUs | $ | 6.75 | $ | 6.91 | $ | 8.59 | ||||||
PRSUs | N/A | $ | 7.42 | N/A | ||||||||
ESPP | $ | 1.76 | $ | 1.92 | $ | 2.03 | ||||||
Nonqualified ESPP | $ | 6.90 | N/A | N/A |
December 31, | ||||||
2017 | 2016 | |||||
Stock options outstanding | 5,756 | 3,209 | ||||
Restricted stock units outstanding | 1,726 | 2,598 | ||||
Performance restricted stock units outstanding | 150 | 565 | ||||
Shares available for future grant under 2010 Plan | 281 | 1,603 | ||||
Shares available for future issuance under ESPP | 2,456 | 119 | ||||
Shares available for future issuance under Nonqualified ESPP | 551 | — | ||||
Common stock warrants | — | 15 | ||||
10,920 | 8,109 |
• | 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 180 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 | |||||||||
December 31, | Years Ended December 31, | |||||||||
2017 | 2016 | 2017 | 2016 | 2015 | ||||||
CenturyLink | 42% | 28% | 31% | 21% | 22% | |||||
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 had a cumulative-effect adjustment to the beginning balance of deferred tax asset and was fully offset by the corresponding valuation allowance as of January 1, 2017. The adoption had no cumulative-effect adjustment on January 1, 2017 accumulated deficit 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 previous 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. The adoption of ASU 2016-09 as it relates to this matter had no impact to the Company’s consolidated financial statements. |
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 had 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 employee’s 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 had 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 had no impact to the Company’s consolidated financial statements. |
• | For stand-alone purchase orders, while the allocation of revenue to deliverables between products and services may change due to new methodologies under the standard, the Company expects that the impact of this adjustment will not be significant. |
• | For products sold with the Company’s turnkey network improvement projects, the recognition of revenue under current GAAP was often delayed until project completion as a result of the Company not meeting certain recognition criteria. Under the new standard, revenue from these arrangements may be accelerated as revenue on products may be recognized upon delivery and services may be recognized over time as the services are performed. As there were minimal open projects under turnkey arrangements as of December 31, 2017, the impact of this change on the Company’s accumulated deficit is not expected to be significant although it could have a material impact on the timing of revenue recognition in the future. |
• | Revenue from the Company’s Cloud product offerings is not expected to be impacted by the adoption of the new standard. |
• | Under current GAAP, revenue from software licenses is recognized ratably over the term of the related post-contract support (“PCS”) as the Company did not have VSOE for PCS for the licenses sold to date. Under the new standard, revenue allocated to the licenses is expected to be recognized upon delivery while the revenue allocated to PCS is expected to be recognized ratably. The impact of this change was not material to the Company’s accumulated deficit upon adoption as the Company only began selling software licenses in 2017. |
December 31, | ||||||||
2017 | 2016 | |||||||
Cash and cash equivalents: | ||||||||
Cash | $ | 35,999 | $ | 34,340 | ||||
Money market funds | 3,776 | 15,020 | ||||||
Commercial paper | — | 999 | ||||||
Total cash and cash equivalents | 39,775 | 50,359 | ||||||
Marketable securities: | ||||||||
Corporate debt securities | — | 17,272 | ||||||
Commercial paper | — | 6,275 | ||||||
U.S. government agency securities | — | 4,201 | ||||||
Total marketable securities | — | 27,748 | ||||||
Total cash, cash equivalents and marketable securities | $ | 39,775 | $ | 78,107 |
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 |
Year Ending December 31, | Minimum Future Lease Payments | |||
2018 | $ | 2,805 | ||
2019 | 1,094 | |||
2020 | 751 | |||
2021 | 287 | |||
2022 | 19 | |||
Total | $ | 4,956 |
Unrealized Gains and Losses on Available-for-Sale Marketable Securities | Foreign Currency Translation Adjustments | Total | ||||||||||
Balance at December 31, 2015 | (94 | ) | (101 | ) | (195 | ) | ||||||
Other comprehensive income (loss) | 88 | (549 | ) | (461 | ) | |||||||
Balance at December 31, 2016 | (6 | ) | (650 | ) | (656 | ) | ||||||
Other comprehensive income | 6 | 481 | 487 | |||||||||
Balance at December 31, 2017 | $ | — | $ | (169 | ) | $ | (169 | ) |
Percentage of Accounts Receivable | Percentage of Revenue | |||||||||
December 31, | Years Ended December 31, | |||||||||
2017 | 2016 | 2017 | 2016 | 2015 | ||||||
CenturyLink | 42% | 28% | 31% | 21% | 22% | |||||
Windstream | * | 13% | * | 15% | * | |||||
* Less than 10% of total accounts receivable or revenue. |
December 31, | ||||||||
2017 | 2016 | |||||||
Current: | ||||||||
Product and services | $ | 9,125 | $ | 24,472 | ||||
Extended warranty | 3,951 | 3,382 | ||||||
13,076 | 27,854 | |||||||
Non-current: | ||||||||
Product and services | 18 | 22 | ||||||
Extended warranty | 20,627 | 20,215 | ||||||
20,645 | 20,237 | |||||||
$ | 33,721 | $ | 48,091 |
Years Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Numerator: | ||||||||||||
Net loss | $ | (83,032 | ) | $ | (27,402 | ) | $ | (26,333 | ) | |||
Denominator: | ||||||||||||
Weighted-average common shares outstanding | 50,155 | 48,730 | 51,489 | |||||||||
Basic and diluted net loss per common share | $ | (1.66 | ) | $ | (0.56 | ) | $ | (0.51 | ) | |||
Potentially dilutive shares, weighted-average | 3,446 | 5,890 | 6,120 |
As of December 31, 2017 | Level 1 | Level 2 | Total | |||||||||
Money market funds | $ | 3,776 | $ | — | $ | 3,776 | ||||||
Commercial paper | — | — | — | |||||||||
U.S. government agency securities | — | — | — | |||||||||
Total | $ | 3,776 | $ | — | $ | 3,776 |
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 |
Years Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Domestic | $ | (84,387 | ) | $ | (28,931 | ) | $ | (27,674 | ) | |||
Foreign | 2,598 | 1,876 | 1,876 | |||||||||
$ | (81,789 | ) | $ | (27,055 | ) | $ | (25,798 | ) |
Years Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Current: | ||||||||||||
State | $ | 115 | $ | 102 | $ | 90 | ||||||
Foreign | 577 | 673 | 493 | |||||||||
Current income tax | 692 | 775 | 583 | |||||||||
Deferred: | ||||||||||||
Foreign | 551 | (428 | ) | (48 | ) | |||||||
Deferred income tax | 551 | (428 | ) | (48 | ) | |||||||
$ | 1,243 | $ | 347 | $ | 535 |
Years Ended December 31, | |||||||||
2017 | 2016 | 2015 | |||||||
Federal statutory rate | 34.0 | % | 34.0 | % | 34.0 | % | |||
State statutory rate | 4.5 | % | 6.1 | % | 2.6 | % | |||
Foreign operations | 0.5 | % | 0.6 | % | 1.1 | % | |||
R&D tax credits | 2.7 | % | 6.4 | % | 11.2 | % | |||
Foreign income inclusion | (0.1 | )% | (0.7 | )% | (2.4 | )% | |||
Non-deductible stock compensation | (3.7 | )% | (5.1 | )% | (1.9 | )% | |||
Other permanent items | (0.4 | )% | (1.4 | )% | (2.0 | )% | |||
Tax true-up | (1.7 | )% | 21.0 | % | (1.3 | )% | |||
Valuation allowance | 67.3 | % | (62.2 | )% | (43.4 | )% | |||
Tax reform | (104.6 | )% | — | % | — | % | |||
Effective tax rate | (1.5 | )% | (1.3 | )% | (2.1 | )% |
December 31, | ||||||||
2017 | 2016 | |||||||
Deferred tax assets: | ||||||||
Net operating loss carryforwards | $ | 134,731 | $ | 167,668 | ||||
Tax credit carryforwards | 43,095 | 36,026 | ||||||
Depreciation and amortization | 1,892 | 2,538 | ||||||
Accruals and reserves | 7,933 | 13,462 | ||||||
Deferred revenue | 7,928 | 12,954 | ||||||
Stock-based compensation | 3,100 | 6,159 | ||||||
Intangible assets | 64 | — | ||||||
Other | 23 | 1,124 | ||||||
Gross deferred tax assets | 198,766 | 239,931 | ||||||
Valuation allowance | (198,746 | ) | (239,238 | ) | ||||
Net deferred tax assets | 20 | 693 | ||||||
Deferred tax liability - intangible assets | — | (157 | ) | |||||
$ | 20 | $ | 536 |
Years Ended December 31, | ||||||||
2017 | 2016 | |||||||
Balance at beginning of year | $ | 18,349 | $ | 16,597 | ||||
Additions for tax positions related to prior year | — | 420 | ||||||
Reductions for tax positions related to prior year | — | (145 | ) | |||||
Additions for tax positions related to current year | 1,940 | 1,477 | ||||||
Balance at end of year | $ | 20,289 | $ | 18,349 |
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 |
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 had a cumulative-effect adjustment to the beginning balance of deferred tax asset and was fully offset by the corresponding valuation allowance as of January 1, 2017. The adoption had no cumulative-effect adjustment on January 1, 2017 accumulated deficit 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 previous 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. The adoption of ASU 2016-09 as it relates to this matter had no impact to the Company’s consolidated financial statements. |
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 had 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 employee’s 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 had 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 had no impact to the Company’s consolidated financial statements. |
• | For stand-alone purchase orders, while the allocation of revenue to deliverables between products and services may change due to new methodologies under the standard, the Company expects that the impact of this adjustment will not be significant. |
• | For products sold with the Company’s turnkey network improvement projects, the recognition of revenue under current GAAP was often delayed until project completion as a result of the Company not meeting certain recognition criteria. Under the new standard, revenue from these arrangements may be accelerated as revenue on products may be recognized upon delivery and services may be recognized over time as the services are performed. As there were minimal open projects under turnkey arrangements as of December 31, 2017, the impact of this change on the Company’s accumulated deficit is not expected to be significant although it could have a material impact on the timing of revenue recognition in the future. |
• | Revenue from the Company’s Cloud product offerings is not expected to be impacted by the adoption of the new standard. |
• | Under current GAAP, revenue from software licenses is recognized ratably over the term of the related post-contract support (“PCS”) as the Company did not have VSOE for PCS for the licenses sold to date. Under the new standard, revenue allocated to the licenses is expected to be recognized upon delivery while the revenue allocated to PCS is expected to be recognized ratably. The impact of this change was not material to the Company’s accumulated deficit upon adoption as the Company only began selling software licenses in 2017. |
December 31, | ||||||||
2017 | 2016 | |||||||
Test equipment | $ | 39,952 | $ | 43,580 | ||||
Computer equipment and purchased software | 32,175 | 30,306 | ||||||
Furniture and fixtures | 2,714 | 2,831 | ||||||
Leasehold improvements | 6,029 | 6,898 | ||||||
80,870 | 83,615 | |||||||
Accumulated depreciation and amortization | (65,189 | ) | (65,631 | ) | ||||
$ | 15,681 | $ | 17,984 |
Fiscal Year 2017 Quarter Ended | ||||||||||||||||
April 1 | July 1 | September 30 | December 31 | |||||||||||||
Revenue | $ | 117,518 | $ | 126,123 | $ | 128,827 | $ | 137,899 | ||||||||
Gross profit | 34,377 | 43,323 | 44,633 | 50,557 | ||||||||||||
Operating loss | (32,816 | ) | (18,714 | ) | (17,263 | ) | (12,763 | ) | ||||||||
Net loss | (33,325 | ) | (18,988 | ) | (17,853 | ) | (12,866 | ) | ||||||||
Net loss per common share, basic | $ | (0.67 | ) | $ | (0.38 | ) | $ | (0.35 | ) | $ | (0.25 | ) | ||||
Net loss per common share, diluted | $ | (0.67 | ) | $ | (0.38 | ) | $ | (0.35 | ) | $ | (0.25 | ) | ||||
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 | ) |
Severance and Related Benefits | Facilities | Total | ||||||||||
Balance at December 31, 2016 | $ | — | $ | — | $ | — | ||||||
Restructuring charges for the year | 3,807 | 442 | 4,249 | |||||||||
Cash payments | (2,832 | ) | — | (2,832 | ) | |||||||
Balance at December 31, 2017 | $ | 975 | $ | 442 | $ | 1,417 |
• | 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 180 days. |
• | Collectability is reasonably assured. The Company assesses collectability based primarily on creditworthiness of customers and their payment histories. |
December 31, | ||||||||
2017 | 2016 | |||||||
Accounts receivable | $ | 81,793 | $ | 52,792 | ||||
Allowance for doubtful accounts | (579 | ) | (518 | ) | ||||
Product return reserve | (822 | ) | (938 | ) | ||||
$ | 80,392 | $ | 51,336 |
December 31, | ||||||||
2017 | 2016 | |||||||
Accrued compensation and related benefits | $ | 15,563 | $ | 19,541 | ||||
Accrued professional and consulting fees | 9,604 | 8,205 | ||||||
Accrued warranty and retrofit | 8,708 | 12,214 | ||||||
Accrued excess and obsolete inventory at contract manufacturers | 2,430 | 1,327 | ||||||
Accrued non-income related taxes | 1,778 | 699 | ||||||
Accrued restructuring charges | 1,417 | — | ||||||
Accrued business events | 1,272 | — | ||||||
Advance customer payments | 1,050 | 20,726 | ||||||
Accrued insurance | 827 | 804 | ||||||
Accrued freight | 593 | 1,198 | ||||||
Accrued customer rebates | 382 | 1,931 | ||||||
Accrued other | 5,655 | 3,070 | ||||||
$ | 49,279 | $ | 69,715 |
Unrealized Gains and Losses on Available-for-Sale Marketable Securities | Foreign Currency Translation Adjustments | Total | ||||||||||
Balance at December 31, 2015 | (94 | ) | (101 | ) | (195 | ) | ||||||
Other comprehensive income (loss) | 88 | (549 | ) | (461 | ) | |||||||
Balance at December 31, 2016 | (6 | ) | (650 | ) | (656 | ) | ||||||
Other comprehensive income | 6 | 481 | 487 | |||||||||
Balance at December 31, 2017 | $ | — | $ | (169 | ) | $ | (169 | ) |
December 31, | ||||||||
2017 | 2016 | |||||||
Cash and cash equivalents: | ||||||||
Cash | $ | 35,999 | $ | 34,340 | ||||
Money market funds | 3,776 | 15,020 | ||||||
Commercial paper | — | 999 | ||||||
Total cash and cash equivalents | 39,775 | 50,359 | ||||||
Marketable securities: | ||||||||
Corporate debt securities | — | 17,272 | ||||||
Commercial paper | — | 6,275 | ||||||
U.S. government agency securities | — | 4,201 | ||||||
Total marketable securities | — | 27,748 | ||||||
Total cash, cash equivalents and marketable securities | $ | 39,775 | $ | 78,107 |
Years Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Current: | ||||||||||||
State | $ | 115 | $ | 102 | $ | 90 | ||||||
Foreign | 577 | 673 | 493 | |||||||||
Current income tax | 692 | 775 | 583 | |||||||||
Deferred: | ||||||||||||
Foreign | 551 | (428 | ) | (48 | ) | |||||||
Deferred income tax | 551 | (428 | ) | (48 | ) | |||||||
$ | 1,243 | $ | 347 | $ | 535 |
December 31, | ||||||||
2017 | 2016 | |||||||
Deferred tax assets: | ||||||||
Net operating loss carryforwards | $ | 134,731 | $ | 167,668 | ||||
Tax credit carryforwards | 43,095 | 36,026 | ||||||
Depreciation and amortization | 1,892 | 2,538 | ||||||
Accruals and reserves | 7,933 | 13,462 | ||||||
Deferred revenue | 7,928 | 12,954 | ||||||
Stock-based compensation | 3,100 | 6,159 | ||||||
Intangible assets | 64 | — | ||||||
Other | 23 | 1,124 | ||||||
Gross deferred tax assets | 198,766 | 239,931 | ||||||
Valuation allowance | (198,746 | ) | (239,238 | ) | ||||
Net deferred tax assets | 20 | 693 | ||||||
Deferred tax liability - intangible assets | — | (157 | ) | |||||
$ | 20 | $ | 536 |
Years Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Numerator: | ||||||||||||
Net loss | $ | (83,032 | ) | $ | (27,402 | ) | $ | (26,333 | ) | |||
Denominator: | ||||||||||||
Weighted-average common shares outstanding | 50,155 | 48,730 | 51,489 | |||||||||
Basic and diluted net loss per common share | $ | (1.66 | ) | $ | (0.56 | ) | $ | (0.51 | ) | |||
Potentially dilutive shares, weighted-average | 3,446 | 5,890 | 6,120 |
Years Ended December 31, | |||||||||
2017 | 2016 | 2015 | |||||||
Federal statutory rate | 34.0 | % | 34.0 | % | 34.0 | % | |||
State statutory rate | 4.5 | % | 6.1 | % | 2.6 | % | |||
Foreign operations | 0.5 | % | 0.6 | % | 1.1 | % | |||
R&D tax credits | 2.7 | % | 6.4 | % | 11.2 | % | |||
Foreign income inclusion | (0.1 | )% | (0.7 | )% | (2.4 | )% | |||
Non-deductible stock compensation | (3.7 | )% | (5.1 | )% | (1.9 | )% | |||
Other permanent items | (0.4 | )% | (1.4 | )% | (2.0 | )% | |||
Tax true-up | (1.7 | )% | 21.0 | % | (1.3 | )% | |||
Valuation allowance | 67.3 | % | (62.2 | )% | (43.4 | )% | |||
Tax reform | (104.6 | )% | — | % | — | % | |||
Effective tax rate | (1.5 | )% | (1.3 | )% | (2.1 | )% |
December 31, | ||||||||
2017 | 2016 | |||||||
United States | $ | 13,109 | $ | 15,321 | ||||
China | 2,572 | 2,663 | ||||||
$ | 15,681 | $ | 17,984 |
As of December 31, 2017 | Level 1 | Level 2 | Total | |||||||||
Money market funds | $ | 3,776 | $ | — | $ | 3,776 | ||||||
Commercial paper | — | — | — | |||||||||
U.S. government agency securities | — | — | — | |||||||||
Total | $ | 3,776 | $ | — | $ | 3,776 |
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 |
Year Ending December 31, | Minimum Future Lease Payments | |||
2018 | $ | 2,805 | ||
2019 | 1,094 | |||
2020 | 751 | |||
2021 | 287 | |||
2022 | 19 | |||
Total | $ | 4,956 |
Years Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Domestic | $ | (84,387 | ) | $ | (28,931 | ) | $ | (27,674 | ) | |||
Foreign | 2,598 | 1,876 | 1,876 | |||||||||
$ | (81,789 | ) | $ | (27,055 | ) | $ | (25,798 | ) |
December 31, | ||||||||
2017 | 2016 | |||||||
Raw materials | $ | 1,211 | $ | 1,827 | ||||
Finished goods | 30,318 | 42,718 | ||||||
$ | 31,529 | $ | 44,545 |
Years Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Balance at beginning of period | $ | 12,214 | $ | 9,564 | $ | 9,553 | ||||||
Provision for warranty and retrofit charged to cost of revenue | 8,720 | 9,898 | 4,661 | |||||||||
Utilization of reserve | (12,226 | ) | (6,816 | ) | (4,115 | ) | ||||||
Adjustments to pre-existing reserve | — | (432 | ) | (535 | ) | |||||||
Balance at end of period | $ | 8,708 | $ | 12,214 | $ | 9,564 |
Fiscal Year 2017 Quarter Ended | ||||||||||||||||
April 1 | July 1 | September 30 | December 31 | |||||||||||||
Revenue | $ | 117,518 | $ | 126,123 | $ | 128,827 | $ | 137,899 | ||||||||
Gross profit | 34,377 | 43,323 | 44,633 | 50,557 | ||||||||||||
Operating loss | (32,816 | ) | (18,714 | ) | (17,263 | ) | (12,763 | ) | ||||||||
Net loss | (33,325 | ) | (18,988 | ) | (17,853 | ) | (12,866 | ) | ||||||||
Net loss per common share, basic | $ | (0.67 | ) | $ | (0.38 | ) | $ | (0.35 | ) | $ | (0.25 | ) | ||||
Net loss per common share, diluted | $ | (0.67 | ) | $ | (0.38 | ) | $ | (0.35 | ) | $ | (0.25 | ) | ||||
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 | ) |
Severance and Related Benefits | Facilities | Total | ||||||||||
Balance at December 31, 2016 | $ | — | $ | — | $ | — | ||||||
Restructuring charges for the year | 3,807 | 442 | 4,249 | |||||||||
Cash payments | (2,832 | ) | — | (2,832 | ) | |||||||
Balance at December 31, 2017 | $ | 975 | $ | 442 | $ | 1,417 |
Years Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
United States | $ | 452,956 | $ | 415,629 | $ | 360,077 | ||||||
Caribbean | 9,853 | 12,934 | 13,358 | |||||||||
Canada | 13,105 | 9,064 | 10,198 | |||||||||
Europe | 6,575 | 6,334 | 11,090 | |||||||||
Other | 27,878 | 14,826 | 12,740 | |||||||||
$ | 510,367 | $ | 458,787 | $ | 407,463 |
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, 2016 | 3,209 | $ | 10.14 | ||||||||||
Granted | 3,527 | 6.31 | |||||||||||
Exercised | (11 | ) | 5.68 | ||||||||||
Forfeited | (13 | ) | 8.38 | ||||||||||
Expired | (956 | ) | 12.72 | ||||||||||
Outstanding as of December 31, 2017 | 5,756 | $ | 7.38 | 7.1 | $ | 328 | |||||||
Vested and expected to vest as of December 31, 2017 | 2,857 | $ | 8.39 | 8.1 | $ | 295 | |||||||
Options exercisable as of December 31, 2017 | 1,753 | $ | 9.46 | 5.6 | $ | 34 | |||||||
(1) Amounts represent the difference between the exercise price and the fair market value of common stock at December 31, 2017 of $5.95 per share for all in the money options outstanding. |
Years Ended December 31, | |||||||||
ESPP | 2017 | 2016 | 2015 | ||||||
Expected volatility | 45 | % | 46 | % | 46 | % | |||
Expected life (years) | 0.49 | 0.52 | 0.46 | ||||||
Expected dividend yield | — | — | — | ||||||
Risk-free interest rate | 1.24 | % | 0.47 | % | 0.18 | % |
Years Ended December 31, | |||||||||
Stock Options | 2017 | 2016 | 2015 | ||||||
Expected volatility | 52 | % | 53 | % | 52 | % | |||
Expected life (years) | 5.88 | 6.25 | 6.25 | ||||||
Expected dividend yield | — | — | — | ||||||
Risk-free interest rate | 2.10 | % | 1.60 | % | 1.56 | % |
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, 2016 | 2,598 | $ | 7.86 | 565 | $ | 7.51 | ||||||||
Granted | 505 | 6.75 | — | — | ||||||||||
Vested | (1,072 | ) | 7.92 | (325 | ) | 7.42 | ||||||||
Canceled | (305 | ) | 7.70 | (90 | ) | 8.01 | ||||||||
Outstanding at December 31, 2017 | 1,726 | $ | 7.53 | 150 | $ | 7.42 |
December 31, 2017 | ||||||||||||||||
Stock Option | RSU | PRSU | ESPP Plans | |||||||||||||
Unrecognized stock-based compensation expense | $ | 3,766 | $ | 8,431 | $ | 222 | $ | 1,689 | ||||||||
Weighted-average amortization period (in years) | 2.8 | 1.9 | 0.7 | 0.7 |
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, 2017 | ||||||||||||||||
Allowance for doubtful accounts | $ | 518 | $ | 103 | $ | (42 | ) | $ | 579 | |||||||
Product return reserve | 938 | 3,682 | (3,798 | ) | 822 | |||||||||||
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 |
Percentage of Accounts Receivable | Percentage of Revenue | |||||||||
December 31, | Years Ended December 31, | |||||||||
2017 | 2016 | 2017 | 2016 | 2015 | ||||||
CenturyLink | 42% | 28% | 31% | 21% | 22% | |||||
Windstream | * | 13% | * | 15% | * | |||||
* Less than 10% of total accounts receivable or revenue. |
Years Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
United States | $ | 452,956 | $ | 415,629 | $ | 360,077 | ||||||
Caribbean | 9,853 | 12,934 | 13,358 | |||||||||
Canada | 13,105 | 9,064 | 10,198 | |||||||||
Europe | 6,575 | 6,334 | 11,090 | |||||||||
Other | 27,878 | 14,826 | 12,740 | |||||||||
$ | 510,367 | $ | 458,787 | $ | 407,463 |
December 31, | ||||||||
2017 | 2016 | |||||||
United States | $ | 13,109 | $ | 15,321 | ||||
China | 2,572 | 2,663 | ||||||
$ | 15,681 | $ | 17,984 |
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, 2016 | 3,209 | $ | 10.14 | ||||||||||
Granted | 3,527 | 6.31 | |||||||||||
Exercised | (11 | ) | 5.68 | ||||||||||
Forfeited | (13 | ) | 8.38 | ||||||||||
Expired | (956 | ) | 12.72 | ||||||||||
Outstanding as of December 31, 2017 | 5,756 | $ | 7.38 | 7.1 | $ | 328 | |||||||
Vested and expected to vest as of December 31, 2017 | 2,857 | $ | 8.39 | 8.1 | $ | 295 | |||||||
Options exercisable as of December 31, 2017 | 1,753 | $ | 9.46 | 5.6 | $ | 34 | |||||||
(1) Amounts represent the difference between the exercise price and the fair market value of common stock at December 31, 2017 of $5.95 per share 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, 2016 | 2,598 | $ | 7.86 | 565 | $ | 7.51 | ||||||||
Granted | 505 | 6.75 | — | — | ||||||||||
Vested | (1,072 | ) | 7.92 | (325 | ) | 7.42 | ||||||||
Canceled | (305 | ) | 7.70 | (90 | ) | 8.01 | ||||||||
Outstanding at December 31, 2017 | 1,726 | $ | 7.53 | 150 | $ | 7.42 |
Years Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Stock options | $ | 3.19 | $ | 3.58 | $ | 4.56 | ||||||
RSUs | $ | 6.75 | $ | 6.91 | $ | 8.59 | ||||||
PRSUs | N/A | $ | 7.42 | N/A | ||||||||
ESPP | $ | 1.76 | $ | 1.92 | $ | 2.03 | ||||||
Nonqualified ESPP | $ | 6.90 | N/A | N/A |
(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 | 2017 | 2016 | 2015 | ||||||
Expected volatility | 52 | % | 53 | % | 52 | % | |||
Expected life (years) | 5.88 | 6.25 | 6.25 | ||||||
Expected dividend yield | — | — | — | ||||||
Risk-free interest rate | 2.10 | % | 1.60 | % | 1.56 | % |
Years Ended December 31, | |||||||||
ESPP | 2017 | 2016 | 2015 | ||||||
Expected volatility | 45 | % | 46 | % | 46 | % | |||
Expected life (years) | 0.49 | 0.52 | 0.46 | ||||||
Expected dividend yield | — | — | — | ||||||
Risk-free interest rate | 1.24 | % | 0.47 | % | 0.18 | % |
December 31, 2017 | ||||||||||||||||
Stock Option | RSU | PRSU | ESPP Plans | |||||||||||||
Unrecognized stock-based compensation expense | $ | 3,766 | $ | 8,431 | $ | 222 | $ | 1,689 | ||||||||
Weighted-average amortization period (in years) | 2.8 | 1.9 | 0.7 | 0.7 |
December 31, | ||||||
2017 | 2016 | |||||
Stock options outstanding | 5,756 | 3,209 | ||||
Restricted stock units outstanding | 1,726 | 2,598 | ||||
Performance restricted stock units outstanding | 150 | 565 | ||||
Shares available for future grant under 2010 Plan | 281 | 1,603 | ||||
Shares available for future issuance under ESPP | 2,456 | 119 | ||||
Shares available for future issuance under Nonqualified ESPP | 551 | — | ||||
Common stock warrants | — | 15 | ||||
10,920 | 8,109 |
Years Ended December 31, | ||||||||
2017 | 2016 | |||||||
Balance at beginning of year | $ | 18,349 | $ | 16,597 | ||||
Additions for tax positions related to prior year | — | 420 | ||||||
Reductions for tax positions related to prior year | — | (145 | ) | |||||
Additions for tax positions related to current year | 1,940 | 1,477 | ||||||
Balance at end of year | $ | 20,289 | $ | 18,349 |
December 31, | ||||||||
2017 | 2016 | |||||||
Accounts receivable | $ | 81,793 | $ | 52,792 | ||||
Allowance for doubtful accounts | (579 | ) | (518 | ) | ||||
Product return reserve | (822 | ) | (938 | ) | ||||
$ | 80,392 | $ | 51,336 |
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, 2017 | ||||||||||||||||
Allowance for doubtful accounts | $ | 518 | $ | 103 | $ | (42 | ) | $ | 579 | |||||||
Product return reserve | 938 | 3,682 | (3,798 | ) | 822 | |||||||||||
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 |
December 31, | ||||||||
2017 | 2016 | |||||||
Raw materials | $ | 1,211 | $ | 1,827 | ||||
Finished goods | 30,318 | 42,718 | ||||||
$ | 31,529 | $ | 44,545 |
December 31, | ||||||||
2017 | 2016 | |||||||
Test equipment | $ | 39,952 | $ | 43,580 | ||||
Computer equipment and purchased software | 32,175 | 30,306 | ||||||
Furniture and fixtures | 2,714 | 2,831 | ||||||
Leasehold improvements | 6,029 | 6,898 | ||||||
80,870 | 83,615 | |||||||
Accumulated depreciation and amortization | (65,189 | ) | (65,631 | ) | ||||
$ | 15,681 | $ | 17,984 |
December 31, | ||||||||
2017 | 2016 | |||||||
Accrued compensation and related benefits | $ | 15,563 | $ | 19,541 | ||||
Accrued professional and consulting fees | 9,604 | 8,205 | ||||||
Accrued warranty and retrofit | 8,708 | 12,214 | ||||||
Accrued excess and obsolete inventory at contract manufacturers | 2,430 | 1,327 | ||||||
Accrued non-income related taxes | 1,778 | 699 | ||||||
Accrued restructuring charges | 1,417 | — | ||||||
Accrued business events | 1,272 | — | ||||||
Advance customer payments | 1,050 | 20,726 | ||||||
Accrued insurance | 827 | 804 | ||||||
Accrued freight | 593 | 1,198 | ||||||
Accrued customer rebates | 382 | 1,931 | ||||||
Accrued other | 5,655 | 3,070 | ||||||
$ | 49,279 | $ | 69,715 |
Years Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Balance at beginning of period | $ | 12,214 | $ | 9,564 | $ | 9,553 | ||||||
Provision for warranty and retrofit charged to cost of revenue | 8,720 | 9,898 | 4,661 | |||||||||
Utilization of reserve | (12,226 | ) | (6,816 | ) | (4,115 | ) | ||||||
Adjustments to pre-existing reserve | — | (432 | ) | (535 | ) | |||||||
Balance at end of period | $ | 8,708 | $ | 12,214 | $ | 9,564 |
December 31, | ||||||||
2017 | 2016 | |||||||
Current: | ||||||||
Product and services | $ | 9,125 | $ | 24,472 | ||||
Extended warranty | 3,951 | 3,382 | ||||||
13,076 | 27,854 | |||||||
Non-current: | ||||||||
Product and services | 18 | 22 | ||||||
Extended warranty | 20,627 | 20,215 | ||||||
20,645 | 20,237 | |||||||
$ | 33,721 | $ | 48,091 |