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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2017

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-37901

 

COUPA SOFTWARE INCORPORATED

(Exact name of Registrant as specified in its charter)

 

 

Delaware

20-4429448

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

1855 S. Grant Street

San Mateo, CA

94402

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code: (650) 931-3200

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).    Yes      No  

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  (Do not check if a smaller reporting company)

  

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

  

 

 

 

 

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of December 4, 2017, the Registrant had 55,046,494 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 

 

 


 

TABLE OF CONTENTS

 

 

 

 

 

Page

PART I.

 

FINANCIAL INFORMATION

 

 

Item 1.

 

Financial Statements (Unaudited)

 

2

 

 

Condensed Consolidated Balance Sheets

 

2

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

 

3

 

 

Condensed Consolidated Statements of Cash Flows

 

4

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

5

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

17

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

29

Item 4.

 

Controls and Procedures

 

29

 

 

 

 

 

PART II.

 

OTHER INFORMATION

 

 

Item 1.

 

Legal Proceedings

 

30

Item 1A.

 

Risk Factors

 

30

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

49

Item 3.

 

Defaults Upon Senior Securities

 

50

Item 4.

 

Mine Safety Disclosures

 

50

Item 5.

 

Other Information

 

50

Item 6.

 

Exhibits

 

50

 

 

Exhibit Index

 

51

 

 

Signatures

 

52

 

 

 

 

 

 

 

 

i


 

NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical facts contained in this report, including statements regarding our future results of operations and financial position, customer lifetime value, strategy and plans, market size and opportunity, competitive position, industry environment, potential growth opportunities, product capabilities and our expectations for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “design,” “intend,” “expect,” “could,” “plan,” “potential,” “predict,” “seek,” “should,” “would” or the negative version of these words and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short- and long-term business operations and objectives, and financial needs. The forward-looking statements are contained principally in “Management’s Discussion and Analysis of Financial Condition and Result of Operations” and “Risk Factors.”

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or to changes in our expectations.

 

 

1


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

COUPA SOFTWARE INCORPORATED

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(unaudited)

 

 

 

October 31,

 

 

January 31,

 

 

 

2017

 

 

2017

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

219,298

 

 

$

201,721

 

Accounts receivable, net of allowances

 

 

32,958

 

 

 

47,614

 

Prepaid expenses and other current assets

 

 

9,774

 

 

 

9,150

 

Deferred commissions, current portion

 

 

3,087

 

 

 

3,091

 

Total current assets

 

 

265,117

 

 

 

261,576

 

Property and equipment, net

 

 

5,209

 

 

 

4,642

 

Deferred commissions, net of current portion

 

 

2,848

 

 

 

2,895

 

Goodwill

 

 

37,146

 

 

 

6,306

 

Intangible assets, net

 

 

17,229

 

 

 

5,848

 

Other assets

 

 

4,033

 

 

 

2,597

 

Total assets

 

$

331,582

 

 

$

283,864

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,715

 

 

$

1,175

 

Accrued expenses and other current liabilities

 

 

26,721

 

 

 

17,490

 

Deferred revenue, current portion

 

 

96,510

 

 

 

89,872

 

Total current liabilities

 

 

124,946

 

 

 

108,537

 

Deferred revenue, net of current portion

 

 

1,132

 

 

 

968

 

Other liabilities

 

 

4,461

 

 

 

467

 

Total liabilities

 

 

130,539

 

 

 

109,972

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value per share; 25,000,000 shares authorized

   at October 31, 2017 and January 31, 2017; zero shares issued and outstanding

   at October 31, 2017 and January 31, 2017,  respectively

 

 

-

 

 

 

-

 

Common stock, $0.0001 par value per share; 625,000,000 shares authorized

   at October 31, 2017 and January 31, 2017; 54,733,963 and 50,251,541

   shares issued and outstanding at October 31, 2017 and January 31, 2017,

   respectively

 

 

6

 

 

 

5

 

Additional paid-in capital

 

 

396,795

 

 

 

334,363

 

Accumulated deficit

 

 

(195,758

)

 

 

(160,476

)

Total stockholders’ equity

 

 

201,043

 

 

 

173,892

 

Total liabilities and stockholders’ equity

 

$

331,582

 

 

$

283,864

 

 

See Notes to Condensed Consolidated Financial Statements.

 

 

2


 

COUPA SOFTWARE INCORPORATED

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except per share amounts)

(unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

October 31,

 

 

October 31,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscription services

 

$

42,795

 

 

$

30,799

 

 

$

118,223

 

 

$

83,954

 

Professional services and other

 

 

4,545

 

 

 

4,643

 

 

 

14,805

 

 

 

11,803

 

Total revenues

 

 

47,340

 

 

 

35,442

 

 

 

133,028

 

 

 

95,757

 

Cost of revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscription services

 

 

9,554

 

 

 

6,346

 

 

 

26,575

 

 

 

18,425

 

Professional services and other

 

 

5,441

 

 

 

5,031

 

 

 

16,865

 

 

 

16,451

 

Total cost of revenues

 

 

14,995

 

 

 

11,377

 

 

 

43,440

 

 

 

34,876

 

Gross profit

 

 

32,345

 

 

 

24,065

 

 

 

89,588

 

 

 

60,881

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

11,409

 

 

 

7,179

 

 

 

31,301

 

 

 

22,225

 

Sales and marketing

 

 

22,402

 

 

 

16,315

 

 

 

66,892

 

 

 

51,403

 

General and administrative

 

 

9,693

 

 

 

6,068

 

 

 

27,300

 

 

 

16,241

 

Total operating expenses

 

 

43,504

 

 

 

29,562

 

 

 

125,493

 

 

 

89,869

 

Loss from operations

 

 

(11,159

)

 

 

(5,497

)

 

 

(35,905

)

 

 

(28,988

)

Other income (expense), net

 

 

120

 

 

 

(986

)

 

 

1,261

 

 

 

(1,509

)

Loss before provision for income taxes

 

 

(11,039

)

 

 

(6,483

)

 

 

(34,644

)

 

 

(30,497

)

Provision for income taxes

 

 

263

 

 

 

211

 

 

 

438

 

 

 

502

 

Net loss and comprehensive loss

 

$

(11,302

)

 

$

(6,694

)

 

$

(35,082

)

 

$

(30,999

)

Net loss per share attributable to common stockholders, basic and

   diluted

 

$

(0.21

)

 

$

(0.36

)

 

$

(0.67

)

 

$

(3.10

)

Weighted-average number of shares used in computing net loss per

   share attributable to common stockholders, basic and diluted

 

 

53,779

 

 

 

18,420

 

 

 

52,388

 

 

 

9,987

 

 

See Notes to Condensed Consolidated Financial Statements.

 

 

3


 

COUPA SOFTWARE INCORPORATED

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Nine Months Ended

 

 

 

October 31,

 

 

 

2017

 

 

2016

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(35,082

)

 

$

(30,999

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

5,557

 

 

 

3,265

 

Amortization of deferred commissions

 

 

2,967

 

 

 

2,976

 

Stock-based compensation

 

 

20,783

 

 

 

5,649

 

Other non-cash items

 

 

202

 

 

 

606

 

Changes in operating assets and liabilities net of effects from acquisitions:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

15,625

 

 

 

3,773

 

Prepaid expenses and other current assets

 

 

(571

)

 

 

(5,483

)

Other assets

 

 

503

 

 

 

(944

)

Deferred commissions

 

 

(2,915

)

 

 

(2,623

)

Accounts payable

 

 

335

 

 

 

202

 

Accrued expenses and other liabilities

 

 

8,408

 

 

 

4,963

 

Deferred revenue

 

 

5,703

 

 

 

8,071

 

Net cash provided by (used in) operating activities

 

 

21,515

 

 

 

(10,544

)

Cash flows from investing activities

 

 

 

 

 

 

 

 

Acquisitions, net of cash acquired

 

 

(39,593

)

 

 

-

 

Purchase of property and equipment

 

 

(3,587

)

 

 

(3,500

)

Increase in restricted cash

 

 

34

 

 

 

-

 

Net cash used in investing activities

 

 

(43,146

)

 

 

(3,500

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock, net of underwriting

   discounts, commissions and offering costs

 

 

22,264

 

 

 

138,189

 

Proceeds from the exercise of common stock options

 

 

10,120

 

 

 

4,100

 

Excess tax benefit from stock-based compensation

 

 

-

 

 

 

52

 

Proceeds from issuance of common stock for employee stock purchase plan

 

 

6,824

 

 

 

-

 

Net cash provided by financing activities

 

 

39,208

 

 

 

142,341

 

Net increase in cash and cash equivalents

 

 

17,577

 

 

 

128,297

 

Cash and cash equivalents at beginning of period

 

 

201,721

 

 

 

92,348

 

Cash and cash equivalents at end of period

 

$

219,298

 

 

$

220,645

 

Supplemental disclosure of cash flow data

 

 

 

 

 

 

 

 

Cash paid for income taxes

 

$

632

 

 

$

118

 

Supplemental disclosure of non-cash investing and financing activities

 

 

 

 

 

 

 

 

Vesting of early exercised stock options

 

$

2,128

 

 

$

389

 

Property and equipment included in accounts payable and accrued expenses and other

   current liabilities

 

$

72

 

 

$

121

 

Conversion of convertible preferred stock to common stock

 

$

-

 

 

$

164,950

 

Offering costs included in accounts payable and accrued expenses and other

   current liabilities

 

$

-

 

 

$

974

 

 

See Notes to Condensed Consolidated Financial Statements.

 

 

4


 

COUPA SOFTWARE INCORPORATED

Notes to Unaudited Condensed Consolidated Financial Statements

 

Note 1. Organization and Description of Business

Coupa Software Incorporated (the “Company” or “we”) was incorporated in the state of Delaware in 2006. The Company provides a unified, cloud-based spend management platform that provides greater visibility into and control over how companies spend money. The platform enables businesses to achieve savings that drive profitability. The Company is based in San Mateo, California.

 

 

Note 2. Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared using accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended January 31, 2017 filed with the SEC on April 3, 2017 (the “Form 10-K”). The consolidated financial statements include the results of the Company and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated during consolidation.

The condensed consolidated balance sheet as of January 31, 2017, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures including certain notes required by GAAP on an annual reporting basis.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods, but are not necessarily indicative of the results to be expected for the full fiscal year or any other period.

There have been no changes to our significant accounting policies described in the Form 10-K.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, management evaluates its significant estimates including the valuation of accounts receivable, the lives of tangible and intangible assets, stock-based compensation, revenue recognition, the valuation of acquired intangible assets, and provisions for income taxes. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Actual results could differ from those estimates and such differences could be material to the financial position and results of operations.

Concentration of Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents and accounts receivable. Cash deposits may, at times, exceed amounts insured by the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation. The Company has not experienced any losses on its deposits of cash and cash equivalents to date.

Comprehensive Loss

Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. The Company’s comprehensive loss is composed only of net loss.

5


 

Recently Adopted Accounting Pronouncements

In March 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). ASU 2016-09 simplifies several aspects of the accounting for share-based payments, including allowing an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures as they occur and immediate recognition of excess tax benefits in the income statement. The Company adopted ASU 2016-09 in the first quarter of fiscal 2018 and elected to account for forfeitures as they occur in calculating compensation costs. Also as a result of this adoption, the Company recorded a $6.7 million cumulative-effect decrease in accumulated deficit and an offsetting increase in deferred tax assets for previously unrecognized excess tax benefits that existed as of January 31, 2017. The realization of these deferred tax assets is not more likely than not to be achieved, and therefore, the Company recorded a $6.7 million valuation allowance against these deferred tax assets with an offsetting increase in accumulated deficit.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”). ASU 2017-01 narrows the definition of a business and requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in either a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs. This guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company has elected to early adopt this new guidance effective February 1, 2017. The adoption of this standard had no impact on the Company’s historical financial statements.

New Accounting Pronouncements Not Yet Adopted

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”) which provides guidance for revenue recognition. Since the issuance of ASU 2014-09, the FASB has also issued ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, all of which clarify certain aspects of ASU 2014-09. The new standard affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets. The new standard will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. This standard also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. The new standard is effective for public entities for annual reporting periods, and interim periods within those annual reporting periods, beginning after December 15, 2017. The new standard can be applied either retrospectively to each prior reporting period presented (full retrospective approach) or retrospectively as a cumulative-effect adjustment (modified retrospective approach) as of the date of adoption. The Company has elected to adopt this standard effective on February 1, 2018 using a modified retrospective approach. The Company preliminarily believes that the new standard will impact revenue recognized due to the removal of the current limitation on contingent revenue. In addition, commissions accounting under the new standard is expected to be significantly different than the Company’s current capitalization policy. The new standard will result in additional types of costs that will be capitalized and amounts will be amortized over a period longer than the Company’s current policy of amortizing the deferred amounts over the specific revenue contract-terms. The new standard also requires incremental disclosures including information about the remaining transaction price and when the Company expects to recognize revenue. The Company continues to implement control activities related to the new standard, particularly related to evaluating the impact of the standard on the Company’s revenue recognition policies, the determination of average customer life, and the new disclosure requirements. The Company continues to assess the impact the adoption of this guidance will have on its financial position, results of operations, cash flows and disclosures, including monitoring industry trends and additional interpretive guidance and may adjust its interpretation and implementation plan accordingly.

In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. A modified retrospective transition approach is required for lessees with capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact of adopting ASU 2016-02 on its consolidated financial statements.

In October 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory (“ASU 2016-16"). ASU 2016-16 requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The new standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company expects to adopt this standard on February 1, 2018 and is currently evaluating the impact of adopting ASU 2016-16 on its consolidated financial statements.

6


 

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). ASU 2016-18 requires an entity to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows, and an entity will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. This guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company is currently evaluating the impact of adopting ASU 2016-18 on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. ASU 2017-04 also clarifies the requirements for excluding and allocating foreign currency translation adjustments to reporting units related to an entity’s testing of reporting units for goodwill impairment, and clarifies that an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The guidance is effective for annual reporting periods beginning after January 1, 2020 and interim periods within those fiscal years. The Company is currently evaluating the impact of adopting ASC 2017-04 on its consolidated financial statements.

 

 

Note 3. Business Combination

 

On May 3, 2017, the Company acquired substantially all of the issued and outstanding capital stock held by shareholders of Trade Extensions TradeExt AB (“Trade Extensions”), a Swedish corporation. The acquisition enabled the Company to broaden its cloud platform for business spend, particularly in the area of strategic sourcing.

 

The acquisition was accounted for as a business combination and, accordingly, the total fair value of purchase consideration was allocated to the tangible and intangible assets acquired and liabilities assumed based on their fair values on the acquisition date. Upon the closing of the acquisition, the Company paid aggregate consideration of approximately $40.9 million in cash, of which $7.2 million is being held in escrow for 18 months after the transaction closing date. In addition, approximately $4.1 million in the form of 148,476 shares of the Company’s common stock was issued to certain key employees of Trade Extensions, which stock is subject to service vesting conditions including continued employment with the Company and were unvested at October 31, 2017. The value assigned to the common stock issued will be recorded as post-acquisition compensation expense and has been excluded from the purchase consideration.

 

The major classes of assets and liabilities to which we have allocated the fair value of purchase consideration were as follows: (in thousands):

 

 

May 3, 2017

 

Cash and cash equivalents

$

2,016

 

Accounts receivable

 

1,172

 

Intangible assets

 

12,960

 

Other assets

 

2,086

 

Goodwill

 

30,840

 

Accounts payable and other liabilities

 

(8,125

)

Total consideration

$

40,949

 

 

7


 

Other assets includes indemnification assets totaling $1.4 million due to assumed liability for which the seller is responsible.  The goodwill recognized was primarily attributed to increased synergies that are expected to be achieved from the integration of Trade Extensions and is not expected to be deductible for income tax purposes.  The Company determined the fair values of intangible assets acquired with the assistance of third party valuation consultants. Based on this valuation, the intangible assets acquired are (in thousands):

 

 

Fair Value

 

 

Weighted

Average Amortization

Period

(in Years)

Developed technology

$

9,700

 

 

7

Customer relationships

 

3,100

 

 

5

Trademarks

 

160

 

 

1

Total intangible assets

$

12,960

 

 

 

 

The Company incurred costs related to this acquisition of approximately $526,000 for the nine months ended October 31, 2017. All acquisition related costs were expensed as incurred and have been recorded in general and administrative expenses in the accompanying condensed consolidated statements of operations.

 

The revenue and earnings of Trade Extensions have been included in the Company’s results since the acquisition date and are not material to the Company’s consolidated financial results. Pro forma results of operations for this acquisition have not been presented as the financial impact to the Company’s condensed consolidated financial statements would be immaterial.

   

Note 4. Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Subsequent changes in fair value of these financial assets and liabilities are recognized in earnings or other comprehensive income when they occur. When determining the fair value measurements for assets and liabilities which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurement or assumptions that market participants would use in pricing the assets or liabilities, such as inherent risk, transfer restrictions and credit risk.

The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

 

Level 1 - Quoted prices in active markets for identical assets or liabilities.

 

Level 2 - Observable inputs other than quoted price in active markets for identical assets or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially full term of assets or liabilities.

 

Level 3 - Inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the assets or liabilities.

The following table summarizes the Company’s fair value hierarchy for its financial assets measured at fair value on a recurring basis (in thousands):

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

October 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds (1)

 

$

206,152

 

 

$

-

 

 

$

-

 

 

$

206,152

 

January 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds (1)

 

$

178,245

 

 

$

-

 

 

$

-

 

 

$

178,245

 

 

(1)  Included in cash and cash equivalents.

 

 

8


 

Note 5. Property and Equipment

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

 

 

 

October 31,

 

 

January 31,

 

 

 

2017

 

 

2017

 

Furniture and equipment

 

$

1,660

 

 

$

1,415

 

Software development costs

 

 

15,843

 

 

 

12,376

 

Leasehold improvements

 

 

554

 

 

 

458

 

Construction in progress

 

 

92

 

 

 

-

 

Gross property and equipment

 

 

18,149

 

 

 

14,249

 

Less: accumulated depreciation and amortization

 

 

(12,940

)

 

 

(9,607

)

Total property and equipment, net

 

$

5,209

 

 

$

4,642

 

 

Depreciation and amortization expense related to property and equipment, excluding software development costs, was approximately $140,000 and $110,000 for the three months ended October 31, 2017 and 2016, respectively, and $379,000 and $312,000 for the nine months ended October 31, 2017 and 2016, respectively.

 

Amortization expense related to software development costs was approximately $932,000 and $1.0 million for the three months ended October 31, 2017 and 2016, respectively, and $3.0 million and $2.7 million for the nine months ended October 31, 2017 and 2016, respectively.

 

 

Note 6. Goodwill and Other Intangible Assets

Goodwill

The following table represents the changes in goodwill (in thousands):

 

Balance at January 31, 2017

 

$

6,306

 

Additions from acquisition

 

 

30,840

 

Balance at October 31, 2017

 

$

37,146

 

 

The increase in goodwill is due to the acquisition of Trade Extensions as discussed in Note 3.

Other Intangible Assets

The following table summarizes the other intangible asset balances (in thousands):

 

 

 

As of

 

 

 

October 31,

2017

 

 

January 31,

2017

 

 

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

Carrying

Amount

 

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

Carrying

Amount

 

Developed technology

 

$

17,085

 

 

$

(3,385

)

 

 

13,700

 

 

$

7,210

 

 

$

(1,393

)

 

 

5,817

 

Customer relationships

 

 

3,174

 

 

 

(376

)

 

 

2,798

 

 

 

74

 

 

 

(43

)

 

 

31

 

Trademarks

 

 

160

 

 

 

(79

)

 

 

81

 

 

 

-

 

 

 

-

 

 

 

-

 

In-process research and development

 

 

650

 

 

 

-

 

 

 

650

 

 

 

-

 

 

 

-

 

 

 

-

 

Total other intangible assets

 

$

21,069

 

 

$

(3,840

)

 

$

17,229

 

 

$

7,284

 

 

$

(1,436

)

 

$

5,848

 

 

Amortization expense related to other intangible assets was approximately $942,000 and $212,000 for the three months ended October 31, 2017 and 2016, respectively, and $2.4 million and $644,000 for the nine months ended October 31, 2017 and 2016, respectively.

 

9


 

As of October 31, 2017, the future amortization expense of other intangible assets is as follows (in thousands):

 

Year Ending January 31,

 

 

 

 

2018 (remaining three months)

 

$

870

 

2019

 

 

3,221

 

2020

 

 

3,111

 

2021

 

 

3,092

 

2022

 

 

2,996

 

Thereafter

 

 

3,289

 

Total

 

$

16,579

 

 

 

Note 7. Common Stock and Stockholders’ Equity

Common Stock

Each share of common stock has the right to one vote. The holders of the common stock are also entitled to receive dividends whenever funds are legally available and when declared by the board of directors of the Company (the “Board of Directors”), subject to the prior rights of holders of all classes of stock outstanding having priority rights as to dividends. No dividends have been declared or paid since inception.

Preferred Stock 

As of October 31, 2017, the Company had authorized 25,000,000 shares of preferred stock, par value $0.0001, of which no shares were issued and outstanding.

2016 Equity Incentive Plan

The 2016 Equity Incentive Plan (the “2016 Plan”) was approved by the Company’s stockholders in September 2016. The 2016 Plan provides for the grant of incentive stock options, nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights and performance cash awards. Awards could be granted under the 2016 Plan beginning on the effective date of the registration statement, October 5, 2016. The 2016 Plan replaced the Company’s 2006 Stock Plan; however, awards outstanding under the 2006 Stock Plan will continue to be governed by their existing terms.

As of October 31, 2017, the Company had 5,257,646 shares of its common stock available for future issuance under the 2016 Plan. The number of shares reserved for issuance under the 2016 Plan will automatically increase on the first day of each fiscal year during the term of the 2016 Plan by a number of shares equal to 5% of its outstanding shares of common stock on the last day of the prior fiscal year. The number and class of shares reserved under the Company’s 2016 Plan will be adjusted in the event of a stock split, stock dividend or other changes in its capitalization.

The following table summarizes stock option activity under the Company’s 2006 Stock Plan and the 2016 Plan during the nine months ended October 31, 2017 (aggregate intrinsic value in thousands):

 

 

 

Options Outstanding

 

 

 

Outstanding

Stock

Options

 

 

Weighted-

Average

Exercise

Price

 

 

Weighted-

Average

Remaining

Contractual Life

(in Years)

 

 

Aggregate

Intrinsic

Value

 

Balance at January 31, 2017

 

 

13,016,402

 

 

$

5.60

 

 

 

7.92

 

 

$

265,542

 

Option grants

 

 

443,182

 

 

$

24.35

 

 

 

 

 

 

 

 

 

Options exercised

 

 

(2,734,127

)

 

$

3.70

 

 

 

 

 

 

 

 

 

Options forfeited

 

 

(691,959

)

 

$

6.68

 

 

 

 

 

 

 

 

 

Balance at October 31, 2017

 

 

10,033,498

 

 

$

6.88

 

 

 

7.44

 

 

$

279,670

 

Exercisable at October 31, 2017

 

 

5,839,757

 

 

$

4.80

 

 

 

6.81

 

 

$

174,902

 

 

The options exercisable as of October 31, 2017 include options that are exercisable prior to vesting. The aggregate intrinsic value of options vested and exercisable as of October 31, 2017 is calculated based on the difference between the exercise price and the fair value of the Company’s common stock as of October 31, 2017. The aggregate intrinsic value of exercised options was

10


 

$24.9 million and $5.8 million for the three months ended October 31, 2017 and 2016, respectively, and $69.4 million and $8.0 million for the nine months ended October 31, 2017 and 2016, respectively, and is calculated based on the difference between the exercise price and the fair value of the Company’s common stock as of the exercise date.

 

The weighted-average grant date fair value of options granted was $13.76 and $6.16 per share for the three months ended October 31, 2017 and 2016, respectively. The weighted-average grant date fair value of options granted was $11.26 and $4.48 per share for the nine months ended October 31, 2017 and 2016, respectively.

       

During the three months ended October 31, 2017 and 2016, zero and 31,250 options were granted to non-employees. During the nine months ended October 31, 2017 and 2016, zero and 83,500 options were granted to non-employees, respectively.

      

Early Exercises of Stock Options

Certain option grants under the 2006 Stock Plan are allowed to be exercised prior to vesting. The unvested shares of common stock exercised are subject to the Company’s right to repurchase at the lower of the original exercise price or the fair market value of the share at the time the repurchase right is exercised. Early exercises of options are not deemed to be substantive exercises for accounting purposes and accordingly, amounts received for early exercises are initially recorded in accrued expenses and other current liabilities and reclassified to additional paid-in capital as the underlying shares vest. At October 31, 2017, the Company had $425,000 recorded in accrued expenses and other current liabilities related to early exercises of stock options, and the related number of unvested shares subject to repurchase was 66,830.

Restricted Stock Units (“RSUs”)

The following table summarizes the activity related to the Company’s RSUs:

 

 

 

Number of

RSUs

Outstanding

 

 

Weighted-Average

Grant Date

Fair Value

 

Awarded and unvested at January 31, 2017

 

 

77,883

 

 

$

18.38

 

Awards granted

 

 

2,187,046

 

 

$

26.21

 

Awards vested

 

 

(171,734

)

 

$

23.29

 

Awards forfeited

 

 

(130,180

)

 

$

22.03

 

Awarded and unvested at October 31, 2017

 

 

1,963,015

 

 

$

26.43

 

 

2016 Employee Stock Purchase Plan

The Board of Directors adopted the 2016 Employee Stock Purchase Plan (the “ESPP”) in September 2016 and it has been approved by our stockholders. The ESPP allows eligible employees to purchase shares of common stock through payroll deductions and is intended to qualify under Section 423 of the Internal Revenue Code.

As of Ocober 31, 2017, the Company had 880,441 shares of its common stock available for future issuance under the ESPP. The number of shares reserved for issuance under the ESPP will automatically increase on the first day of each fiscal year during the term of the ESPP by a number of shares equal to the least of (i) 1% of its outstanding shares of common stock on the last day of the prior fiscal year, (ii) 1,250,000 shares or (iii) a lesser number of shares determined by the Board of Directors. The number and class of shares reserved under the ESPP will be adjusted in the event of a stock split, stock dividend or other changes in its capitalization.

Each offering period will last a number of months determined by the administrator, up to a maximum of 27 months. The initial offering period began on the effective date of the Company’s initial public offering, October 5, 2016, and ends on September 15, 2018, and new 24 month offering periods will begin on each March 16 and September 16 thereafter. Currently each offering period consists of four consecutive purchase periods, of approximately six months duration, at the end of which payroll contributions are used to purchase shares of the Company’s common stock. Participants may purchase the Company’s common stock through payroll deductions, up to a maximum of 15% of their eligible compensation. Participants may withdraw from the ESPP and receive a refund of their accumulated payroll contributions at any time prior to a purchase date. Unless changed by the administrator, the purchase price for each share of common stock purchased under the ESPP will be the lower of (i) 85% of the fair market value per share on the first day of the applicable offering period (or, in the case of the initial offering period, the price at which one share of common stock is offered to the public in its initial public offering) or (ii) 85% of the fair market value per share on the applicable purchase date.

11


 

As of October 31, 2017, 441,124 shares of common stock were purchased under the ESPP. The Company selected the Black-Scholes option-pricing model as the method for determining the estimated fair value for the Company’s ESPP. As of October 31, 2017, total unrecognized compensation cost related to the ESPP was $6.4 million which will be amortized over a weighted-average period of 1.07 years.

Market-based Options

 

In September 2016, the Board of Directors granted 544,127 stock options to the Chief Executive Officer (the “2016 CEO Grant”) under the 2006 Equity Plan with an exercise price of $13.04 per share. The 2016 CEO Grant is eligible to vest based on the achievement of stock price appreciation targets after the consummation of the initial public offering, as well as continuous service over a four-year period following the grant date. The fair value of the 2016 CEO Grant was determined using a Monte Carlo simulation approach. The Company amortizes the fair value of the option award using the graded-vesting method.

 

Stock-based compensation expense recognized for market-based awards was approximately $356,000 and $158,000 for the three months ended October 31, 2017 and 2016, respectively, and $1.3 million and $158,000 for the nine months ended October 31, 2017 and 2016, respectively. As of October 31, 2017, two of the three performance-based milestones were achieved, resulting in 103,157 shares being vested and exercisable.

Stock-based Compensation

The Company’s total stock-based compensation expense as of the dates indicated was as follows (in thousands):

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

October 31,

 

 

October 31,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscription services

 

$

585

 

 

$

150

 

 

$

1,469

 

 

$

415

 

Professional services and other

 

 

685

 

 

 

155

 

 

 

1,965

 

 

 

399

 

Research and development

 

 

1,999

 

 

 

357

 

 

 

4,798

 

 

 

982

 

Sales and marketing

 

 

2,212

 

 

 

937

 

 

 

6,152

 

 

 

1,848

 

General and administrative

 

 

2,386

 

 

 

785

 

 

 

6,399

 

 

 

2,005

 

Total

 

$

7,867

 

 

$

2,384

 

 

$

20,783

 

 

$

5,649

 

 

Stock-based compensation capitalized in capitalized software development costs was approximately $340,000 at October 31, 2017.

 

Of the total stock-based compensation expense, costs recognized for options granted to non-employees were immaterial for all periods presented.

As of October 31, 2017 there was approximately $21.8 million of total unrecognized compensation cost related to unvested stock options granted to employees and non-employee service providers under the 2006 Stock Plan and 2016 Equity Incentive Plan. This unrecognized compensation cost is expected to be recognized over an estimated weighted-average amortization period of approximately 2.21 years.

As of October 31, 2017 there was approximately $48.3 million of total unrecognized compensation cost related to unvested restricted stock units granted to employees under the 2016 Equity Incentive Plan. This unrecognized compensation cost is expected to be recognized over an estimated weighted-average amortization period of approximately 3.43 years.

12


 

The fair values of the Company’s stock options granted during the three and nine months ended October 31, 2017 and 2016 were estimated using the following assumptions:

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

October 31,

 

October 31,

 

 

2017

 

2016

 

2017

 

2016

Employee Stock Options:

 

 

 

 

 

 

 

 

Expected term (in years)

 

6

 

6

 

6

 

6

Volatility

 

46%

 

48%

 

46%

 

48%

Risk-free interest rate

 

1.88%

 

1.27% - 1.33%

 

1.88% - 2.20%

 

1.27% - 1.55%

Dividend yield

 

-

 

-

 

-

 

-

Employee Stock Purchase Plan:

 

 

 

 

 

 

 

 

Expected term (in years)

 

0.5 - 2.0

 

0.4 - 1.9

 

0.5 - 2.0

 

0.4 - 1.9

Volatility

 

37.30% - 40.88%

 

48%

 

37.30% - 42.61%

 

48%

Risk-free interest rate

 

1.17% - 1.39%

 

0.48% - 0.81%

 

0.89% - 1.39%

 

0.48% - 0.81%

Dividend yield

 

-

 

-

 

-

 

-

Market Based Award

 

 

 

 

 

 

 

 

Expected term (in years)

 

-

 

10

 

-

 

10

Volatility

 

-

 

48%

 

-

 

48%

Risk-free interest rate

 

-

 

1.61%

 

-

 

1.61%

Dividend yield

 

-

 

-

 

-

 

-

 

These assumptions and estimates are as follows:

 

Fair Value of Common Stock. Prior to the initial public offering in October 2016, the fair value of the shares of common stock underlying stock options was established by the Board of Directors, which was responsible for these estimates, and was based in part upon a valuation provided by a third-party valuation firm. Because there had been no public market for the Company’s common stock prior to the initial public offering, the Board of Directors considered this independent valuation and other factors, including, but not limited to, revenue growth, the current status of the technical and commercial success of its operations, its financial condition, the stage of development and competition to establish the fair value of the Company’s common stock at the time of grant of the option. After the initial public offering, the Company used the publicly quoted price as reported on the Nasdaq Global Select Market as the fair value of its common stock.

 

Expected Term. The expected term represents the weighted-average period that the stock options are expected to remain outstanding. To determine the expected term, the Company generally applies the simplified approach in which the expected term of an award is presumed to be the mid-point between the vesting date and the expiration date of the award as the Company does not have sufficient historical exercise data to provide a reasonable basis for an estimate of expected term.

 

Risk-Free Interest Rate. The Company bases the risk-free interest rate on the yields of U.S. Treasury securities with maturities approximately equal to the term of employee stock option awards.

 

Expected Volatility. As the Company does not have an extensive trading history for its common stock, the expected volatility for its common stock has been estimated by taking the historic price volatility for industry peers based on daily price observations over a period equivalent to the expected term of the stock option awards. Industry peers consist of several public companies in its industry.

 

 

Note 8. Commitments and Contingencies

Commitments

The Company leases office space under non-cancelable operating leases with various expiration dates through April 2024. Rent expense, which is being recognized on a straight-line basis over the lease term, was approximately $1.5 million and $927,000 for the three months ended October 31, 2017 and 2016, respectively, and $4.0 million and $2.9 million for the nine months ended October 31, 2017 and 2016, respectively. The difference between the lease payments made and the lease expense recognized to date using the straight-line method is recorded as a liability and included within accrued expenses and other current liabilities in the accompanying consolidated balance sheet.

13


 

Future minimum lease payments required under these agreements as of October 31, 2017 are as follows (in thousands):

 

Year Ending January 31,

 

 

 

 

2018 (remaining three months)

 

$

1,319

 

2019

 

 

5,717

 

2020

 

 

5,845

 

2021

 

 

5,679

 

2022

 

 

5,704

 

Thereafter

 

 

11,407

 

Total

 

$

35,671

 

 

Contingencies

The Company may become involved in legal proceedings or be subject to claims arising in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these ordinary course matters will not have a material adverse effect on the Company’s business, operating results, financial condition or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.

Warranties and Indemnifications

The Company’s cloud-based software platform and applications are typically warranted against material decreases in functionality and to perform in a manner consistent with industry standards and in accordance with the Company’s on-line documentation under normal use and circumstances.

The Company includes service level commitments to its customers, typically regarding certain levels of uptime reliability and performance. If the Company fails to meet those levels, customers can receive credits and in some cases, terminate their relationship with the Company. To date, the Company has not incurred any material costs as a result of such commitments.

The Company generally agrees to defend and indemnify its customers against legal claims that the Company’s platform infringes certain patents, copyrights or other intellectual property rights of third parties. To date, the Company has not been required to make any payment resulting from such infringement claims and has not recorded any related liabilities.

 

 

Note 9. Income Taxes

The Company is subject to federal and various state income taxes in the United States as well as income taxes in foreign jurisdictions in which it conducts business. Earnings from non-U.S. activities are subject to local country income tax. The Company does not provide for federal income taxes on the undistributed earnings of its foreign subsidiaries as such earnings are reinvested indefinitely.

The Company recorded a tax provision of approximately $263,000 and $211,000 for the three months ended October 31, 2017 and 2016, respectively. The Company recorded a tax provision of approximately $438,000 and $502,000 for the nine months ended October 31, 2017 and 2016, respectively, representing effective tax rates of (1.26)% and (1.67)% respectively. The increase in the provision for income taxes during the three months ended October 31, 2017 compared to the three months ended October 31, 2016, was primarily due to an increase in the provision for foreign taxes. The decrease in the provision for income taxes during the nine months ended October 31, 2017 compared to the nine months ended October 31, 2016, was primarily due to tax benefits from excess stock-based compensation deductions in foreign jurisdictions, partially offset by an increase in the provision for foreign taxes.

The difference between the U.S. federal statutory tax rate of 34% and the Company’s effective tax rate in all periods presented is primarily due to a full valuation allowance related to the Company’s U.S. and Canada deferred tax assets offset by foreign tax expense on the Company’s profitable foreign operations.

The Company's material income tax jurisdictions are the United States (federal) and California. As a result of net operating loss carryforwards, the Company is subject to audits for tax years 2006 and forward for federal purposes and 2009 and forward for California purposes. There are tax years which remain subject to examination in various other state and foreign jurisdictions that are not material to the Company's financial statements.

 

 

14


 

Note 10. Net Loss per Share Attributable to Common Stockholders

Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities as they do not share in losses. During periods when the Company is in a net loss position, basic net loss per share attributable to common stockholders is the same as diluted net loss per share attributable to common stockholders as the effects of potentially dilutive securities are antidilutive given the net loss of the Company.

The following table sets forth the computation of the basic and diluted net loss per share attributable to common stockholders during the three and nine months ended October 31, 2017 and 2016 (in thousands, except per share amounts):

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

October 31,

 

 

October 31,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to common stockholders

 

$

(11,302

)

 

$

(6,694

)

 

$

(35,082

)

 

$

(30,999

)

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding

 

 

53,779

 

 

 

18,420

 

 

 

52,388

 

 

 

9,987

 

Net loss per share attributable to common

   stockholders, basic and diluted

 

$

(0.21

)

 

$

(0.36

)

 

$

(0.67

)

 

$

(3.10

)

 

Since the Company was in a loss position for all periods presented, basic net loss per share attributable to common stockholders is the same as diluted net loss per share for all periods as the inclusion of all potential common shares outstanding would have been anti-dilutive. Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:

 

 

 

As of October 31,

 

 

 

2017

 

 

2016

 

Options to purchase common stock

 

 

10,033,498

 

 

 

13,194,772

 

RSUs

 

 

1,963,015

 

 

 

32,422

 

Unvested common shares subject to repurchase

 

 

257,215

 

 

 

322,473

 

Shares committed under the ESPP

 

 

69,633