Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
The |
Large accelerated filer |
☐ |
☒ | ||||
Non-accelerated filer |
☐ |
Smaller reporting company |
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Emerging growth company |
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37 |
• | our ability to achieve profitability; |
• | our competitive position and the effect of competition in our industry; |
• | our ability to retain and attract new customers; |
• | our ability to penetrate existing markets and develop new markets for our services; |
• | our ability to retain or hire qualified accounting and other personnel; |
• | our ability to successfully integrate acquired businesses, including the online video platform assets of Ooyala, Inc. and certain of its subsidiaries that we acquired during 2019; |
• | our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others; |
• | our ability to maintain the security and reliability of our systems; |
• | our estimates with regard to our future performance and total potential market opportunity; |
• | our expectations regarding the potential impact of the COVID-19 pandemic on our business, operations, and the markets in which we and our partners and customers operate; |
• | our estimates regarding our anticipated results of operations, future revenue, bookings growth, capital requirements and our needs for additional financing; and |
• | our goals and strategies, including those related to revenue and bookings growth. |
ITEM 1. |
FINANCIAL STATEMENTS |
September 30, 2020 |
December 31, 2019 | |||||||
(in thousands, except share and per share data) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ | $ | ||||||
Accounts receivable, net of allowance of $ |
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Prepaid expenses |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use |
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Intangible assets, net |
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Goodwill |
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Other assets |
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Total assets |
$ | $ | ||||||
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
$ | $ | ||||||
Accrued expenses |
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Operating lease liability |
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Deferred revenue |
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Total current liabilities |
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Operating lease liability, net of current portion |
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Debt |
— |
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Other liabilities |
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Total liabilities |
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Commitments and contingencies (Note 10) |
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Stockholders’ equity: |
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Undesignated preferred stock, $ |
— |
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Common stock, $ |
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Additional paid-in capital |
||||||||
Treasury stock, at cost; |
( |
) | ( |
) | ||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
Accumulated deficit |
( |
) | ( |
) | ||||
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
$ | $ | ||||||
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Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
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(in thousands, except share and per share data) |
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Revenue: |
||||||||||||||||
Subscription and support revenue |
$ | $ | $ | $ | ||||||||||||
Professional services and other revenue |
$ | |||||||||||||||
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Total revenue |
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Cost of revenue: |
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Cost of subscription and support revenue |
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Cost of professional services and other revenue |
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Total cost of revenue |
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Gross profit |
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Operating expenses: |
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Research and development |
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Sales and marketing |
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General and administrative |
||||||||||||||||
Merger-related |
— | |||||||||||||||
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Total operating expenses |
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Income (loss) from operations |
( |
) | ( |
) | ( |
) | ||||||||||
Other income (expense), net |
( |
) | ( |
) | ( |
) | ||||||||||
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Income (loss) before income taxes |
( |
) | ( |
) | ( |
) | ||||||||||
Provision for income taxes |
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Net income ( loss) |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||
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Net income (loss) per share—basic and diluted |
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Basic |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||
Diluted |
|
$ |
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$ |
( |
) |
|
$ |
( |
) |
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$ |
( |
) |
Weighted-average shares—basic and diluted |
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Basic |
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Diluted |
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Three Months Ended September 30, |
Nine Months September 30, |
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
|
|
(in thousands) | ||||||||||||||
Net income ( loss) |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||
Other comprehensive income: |
||||||||||||||||
Foreign currency translation adjustments |
( |
) | ( |
) | ||||||||||||
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Comprehensive income (loss) |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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2020 |
2019 |
2020 |
2019 |
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(in thousands, except share data) |
||||||||||||||||
Shares of common stock issued |
||||||||||||||||
Balance, beginning of period |
||||||||||||||||
Common stock issued upon acquisition |
— |
— |
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Issuance of common stock upon exercise of stock options and pursuant to restricted stock units |
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Balance, end of period |
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Shares of treasury stock |
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Balance, beginning of period |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
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Balance, end of period |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
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|||||||||
Par value of common stock issued |
||||||||||||||||
Balance, beginning of period |
$ | $ | $ | $ | ||||||||||||
Common stock issued upon acquisition |
— |
— |
||||||||||||||
Issuance of common stock upon exercise of stock options and pursuant to restricted stock units |
— |
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Balance, end of period |
$ | $ | $ | $ | ||||||||||||
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|||||||||
Value of treasury stock |
||||||||||||||||
Balance, beginning of period |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
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Balance, end of period |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
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|
|||||||||
Additional paid-in capital |
||||||||||||||||
Balance, beginning of period |
$ | $ | $ | $ | ||||||||||||
Common stock issued upon acquisition |
— |
— |
||||||||||||||
Withholding tax on restricted stock units vesting |
( |
) | ( |
) |
( |
) | ( |
) | ||||||||
Issuance of common stock upon exercise of stock options and pursuant to restricted stock units |
||||||||||||||||
Stock-based compensation expense |
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Balance, end of period |
$ | $ | $ | $ | ||||||||||||
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|
|||||||||
Accumulated deficit |
||||||||||||||||
Balance, beginning of period |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Net income (loss ) |
( |
) | ( |
) | ( |
) | ||||||||||
|
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|
|||||||||
Balance, end of period |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
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|
|||||||||
Accumulated other comprehensive loss |
||||||||||||||||
Balance, beginning of period |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Foreign currency translation adjustment |
( |
) | ( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance, end of period |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
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|
|||||||||
Total stockholders’ equity |
$ | $ | $ | $ | ||||||||||||
|
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|
|
Nine Months Ended September 30, |
||||||||
2020 |
2019 |
|||||||
(in thousands) |
||||||||
Operating activities |
||||||||
Net loss |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
||||||||
Stock-based compensation |
||||||||
Provision for reserves on accounts receivable |
||||||||
Changes in assets and liabilities: |
||||||||
Accounts receivable |
( |
) | ( |
) | ||||
Prepaid expenses and other current assets |
( |
) | ||||||
Other assets |
( |
) | ( |
) | ||||
Accounts payable |
||||||||
Accrued expenses |
||||||||
Operating leases |
( |
) | ( |
) | ||||
Deferred revenue |
||||||||
|
|
|
|
|||||
Net cash provided by operating activities |
||||||||
Investing activities |
||||||||
Purchases of property and equipment |
( |
) | ( |
) | ||||
Cash paid for acquisition, net of cash acquired |
— | ( |
) | |||||
Capitalized internal-use software costs |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Net cash used in investing activities |
( |
) | ( |
) | ||||
Financing activities |
||||||||
Proceeds from exercise of stock options |
||||||||
Proceeds from debt |
— |
|||||||
Debt paydown |
( |
) | — |
|||||
Other financing activities |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Net cash provided by financing activities |
||||||||
Effect of exchange rate changes on cash and cash equivalents |
( |
) | ||||||
|
|
|
|
|||||
Net increase (decrease) in cash and cash equivalents |
( |
) | ||||||
Cash and cash equivalents at beginning of period |
||||||||
|
|
|
|
|||||
Cash and cash equivalents at end of period |
$ | $ | ||||||
|
|
|
|
|||||
Supplemental disclosure of non-cash investing activities |
||||||||
Fair value of shares issued for acquisition of a business |
$ | — | $ | |||||
Supplemental disclosure of cash flow information |
||||||||
Cash paid for operating lease liabilities |
$ | $ | ||||||
|
|
|
|
Accounts Receivable, net |
Contract Assets (current) |
Deferred Revenue (current) |
Deferred Revenue (non- current) |
Total Deferred Revenue |
||||||||||||||||
Balance at December 31, 2019 |
$ | $ | $ | $ | $ | |||||||||||||||
Balance at September 30, 2020 |
September 30, 2020 |
||||||||||||||||
Description |
Contracted Maturity |
Cost |
Fair Market Value |
Balance Per Balance Sheet |
||||||||||||
Cash |
Demand | $ | $ | $ | ||||||||||||
Money market funds |
Demand | |||||||||||||||
|
|
|
|
|
|
|||||||||||
Total cash and cash equivalents |
$ | $ | $ | |||||||||||||
|
|
|
|
|
|
December 31, 2019 |
||||||||||||||||
Description |
Contracted Maturity |
Cost |
Fair Market Value |
Balance Per Balance Sheet |
||||||||||||
Cash |
Demand | $ | $ | $ | ||||||||||||
Money market funds |
Demand | |||||||||||||||
Total cash and cash equivalents |
$ | $ | $ | |||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
Options |
||||||||||||||||
Restricted stock units |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
Expected life in years |
||||||||||||||||
Risk-free interest rate |
% | % | % | % | ||||||||||||
Volatility |
% | % | % | % | ||||||||||||
Dividend yield |
— |
— |
Three Months Ended September 30, |
Nine September 30, |
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
Stock-based compensation: |
||||||||||||||||
Cost of subscription and support revenue |
$ | $ | $ | $ | ||||||||||||
Cost of professional services and other revenue |
||||||||||||||||
Research and development |
||||||||||||||||
Sales and marketing |
||||||||||||||||
General and administrative |
||||||||||||||||
$ | $ | $ | $ | |||||||||||||
Number of Shares |
Weighted-Average Exercise Price |
Weighted-Average Remaining Contractual Term (In Years) |
Aggregate Intrinsic Value (1) |
|||||||||||||
Outstanding at December 31, 2019 |
$ | |||||||||||||||
Granted |
||||||||||||||||
Exercised |
( |
) | $ | |||||||||||||
Canceled |
( |
) | ||||||||||||||
Outstanding at September 30, 2020 |
$ | $ | ||||||||||||||
Exercisable at September 30, 2020 |
$ | $ | ||||||||||||||
(1) | The aggregate intrinsic value was calculated based on the positive difference between the fair value of the Company’s common stock on September 30, 2020 of $ |
Shares |
Weighted Average Grant Date Fair Value |
|||||||
Unvested at December 31, 2019 |
$ | |||||||
Granted |
||||||||
Vested and issued |
( |
) | ||||||
Canceled |
( |
) | ||||||
Unvested at September 30, 2020 |
$ | |||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
Revenue: |
||||||||||||||||
North America |
$ | $ | $ | $ | ||||||||||||
Europe |
||||||||||||||||
Japan |
||||||||||||||||
Asia Pacific |
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Other |
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|
|
|
|
|
|
|
|
|||||||||
Total revenue |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
Allowance for Credit Losses |
||||
(in thousands) | ||||
Balance as of December 31, 2019 |
$ | |||
Current provision for credit losses |
||||
Write-offs against allowance |
( |
) | ||
Recoveries |
||||
Balance as of September 30, 2020 |
$ | |||
|
|
ITEM 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
• | Number of Customers customers on month-to-month contracts and pay-as-you-go contracts), our customers on month-to-month contracts and pay-as-you-go contracts. |
• | Recurring Dollar Retention Rate |
• | Average Annual Subscription Revenue Per Premium Customer |
• | Backlog |
Nine Months Ended September 30, |
||||||||
2020 |
2019 |
|||||||
Customers (at period end) |
||||||||
Premium |
2,267 | 2,362 | ||||||
Volume |
1,114 | 1,358 | ||||||
|
|
|
|
|||||
Total customers (at period end) |
3,381 | 3,720 | ||||||
|
|
|
|
|||||
Recurring dollar retention rate |
88 | % | 89 | % | ||||
Average annual subscription revenue per premium customer, excluding Starter edition customers (in thousands) |
$ | 87.3 | $ | 82.0 | ||||
Average annual subscription revenue per premium customer for Starter edition customers only (in thousands) |
$ | 4.5 | $ | 4.6 | ||||
Total backlog, excluding professional services engagements (in millions) |
$ | 144.2 | $ | 125.7 | ||||
Total backlog to be recognized over next 12 months, excluding professional services engagements (in millions) |
$ | 109.6 | $ | 100.6 |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
(in thousands, except share and per share data) |
||||||||||||||||
Revenue: |
||||||||||||||||
Subscription and support revenue |
$ | 46,338 | $ | 45,424 | $ | 136,613 | $ | 129,192 | ||||||||
Professional services and other revenue |
2,746 | 2,010 | 7,050 | 7,660 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenue |
49,084 | 47,434 | 143,663 | 136,852 | ||||||||||||
Cost of revenue: |
||||||||||||||||
Cost of subscription and support revenue |
15,735 | 16,686 | 50,290 | 50,237 | ||||||||||||
Cost of professional services and other revenue |
2,363 | 1,628 | 6,349 | 6,432 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total cost of revenue |
18,098 | 18,314 | 56,639 | 56,669 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit |
30,986 | 29,120 | 87,024 | 80,183 | ||||||||||||
Operating expenses: |
||||||||||||||||
Research and development |
8,215 | 8,127 | 26,199 | 23,150 | ||||||||||||
Sales and marketing |
14,813 | 14,567 | 42,370 | 45,650 | ||||||||||||
General and administrative |
6,694 | 6,245 | 19,633 | 17,485 | ||||||||||||
Merger-related |
— | 2,539 | 5,768 | 8,091 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
29,722 | 31,478 | 93,970 | 94,376 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss from operations |
1,264 | (2,358 | ) | (6,946 | ) | (14,193 | ) | |||||||||
Other income (expense), net |
204 | (441 | ) | (291 | ) | (477 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss before income taxes |
1,468 | (2,799 | ) | (7,237 | ) | (14,670 | ) | |||||||||
Provision for income taxes |
154 | 171 | 597 | 521 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) |
$ | 1,314 | $ | (2,970 | ) | $ | (7,834 | ) | $ | (15,191 | ) | |||||
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) per share—basic and diluted |
||||||||||||||||
Basic |
$ | 0.03 | $ | (0.08 | ) | $ | (0.20 | ) | $ | (0.40 | ) | |||||
Diluted |
$ | 0.03 | $ | (0.08 | ) | $ | (0.20 | ) | $ | (0.40 | ) | |||||
Weighted-average shares—basic and diluted |
||||||||||||||||
Basic |
39,682,337 | 38,564,314 | 39,319,703 | 37,738,739 | ||||||||||||
Diluted |
40,645,982 | 38,564,314 | 39,319,703 | 37,738,739 |
Three Months Ended September 30, |
||||||||||||||||||||||||
2020 |
2019 |
Change |
||||||||||||||||||||||
Revenue by Product Line |
Amount |
Percentage of Revenue |
Amount |
Percentage of Revenue |
Amount |
% |
||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||
Premium |
$ | 48,175 | 98 | % | $ | 46,462 | 98 | % | $ | 1,713 | 4 | % | ||||||||||||
Volume |
909 | 2 | 972 | 2 | (63 | ) | (6 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 49,084 | 100 | % | $ | 47,434 | 100 | % | $ | 1,650 | 3 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
||||||||||||||||||||||||
2020 |
2019 |
Change |
||||||||||||||||||||||
Revenue by Type |
Amount |
Percentage of Revenue |
Amount |
Percentage of Revenue |
Amount |
% |
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(in thousands, except percentages) | ||||||||||||||||||||||||
Subscription and support |
$ | 46,338 | 94 | % | $ | 45,424 | 96 | % | $ | 914 | 2 | % | ||||||||||||
Professional services and other |
2,746 | 6 | 2,010 | 4 | 736 | 37 | ||||||||||||||||||
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Total |
$ | 49,084 | 100 | % | $ | 47,434 | 100 | % | $ | 1,650 | 3 | % | ||||||||||||
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Three Months Ended September 30, |
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2020 |
2019 |
Change |
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Revenue by Geography |
Amount |
Percentage of Revenue |
Amount |
Percentage of Revenue |
Amount |
% |
||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||
North America |
$ | 27,515 | 56 | % | $ | 24,904 | 53 | % | $ | 2,611 | 10 | % | ||||||||||||
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Europe |
8,435 | 17 | 8,178 | 17 | 257 | 3 |