XML 30 R13.htm IDEA: XBRL DOCUMENT
v3.19.1

Revenue | 12 Months Ended
--- | ---
Dec. 31, 2018
Revenue |
Revenue | Note 4 – Revenue As described in Note 1, the Company adopted Topic 606 on January 1, 2018. As a result, the Company has changed its accounting policy for revenue recognition as detailed below. The Company adopted Topic 606 using the modified retrospective method under which the cumulative effect of initially applying Topic 606 was an adjustment to the opening balance of Accumulated Income of $11.9 million, net of tax, as of January 1, 2018. The comparative information has not been adjusted and continues to be reported under Topic 605. The details of the significant changes and quantitative impact of the changes are set out below. Term Licenses For revenues generated from arrangements that included term licenses to our software, the Company previously recognized revenue ratably over the term of the contract when vendor-specific objective evidence (“VSOE”) did not exist for all undelivered elements. Under Topic 606, these licenses are considered licenses of functional intellectual property, which requires recognition at the point in time all of the revenue recognition criteria per Topic 606 are met, which for the Company is generally when the customer is provided access to the software and the license term has commenced. Revenue from the license of software is recorded upon shipment or, if an acceptance period is allowed, at the latter of shipment or customer acceptance. No significant obligations or contingencies exist with regard to delivery, customer acceptance or rights of returns at the time revenue is recognized. We have established a stand-alone selling price (SSP) for all other performance obligations in the contract. Accordingly, the Company now recognizes revenue from these licenses, based on the residual approach due to highly variable pricing, at the beginning of the license period and recognizes the transaction price allocated to the other performance obligations in the contract (typically maintenance and support) over the period in which those performance obligations are satisfied. This is consistent with the method of recognizing revenue for perpetual licenses of intellectual property. Fees paid to third party software providers in term license arrangements are recognized when the term license revenues are recognized. For large-volume transactions, we may negotiate a specific price that is based on the number of users of the software license or quantities of hardware supplied. The per unit prices for large-volume transactions are generally lower than transactions for smaller quantities and the price differences are commonly referred to as volume-purchase discounts. Sales Commissions The Company incurs incremental costs related to commissions, which can be directly tied to obtaining a contract. For commissions earned by sales personnel, the Company previously expensed these amounts when they were earned by the employees. As a result of adopting Topic 606, the Company now capitalizes commissions associated with new customers and amortizes the costs over a period in which the Company is expected to benefit, which can be up to seven years. The amortization is reflected in Sales and Marketing in the statement of operations. For certain contracts, any commission that is subject to a service period, such as continued employment, is expensed as incurred within Sales and Marketing in the statement of operations. Disaggregation of Revenues The following tables present our revenues disaggregated by major products and services, geographical region and timing of revenue recognition. Revenue by major products and services (in thousands)
|  |  | Year ended December 31,
|  | 2018 |  | 2017* |  |  | 2016*
Hardware products |  | $ | 105,560 |  | $ | 105,867 |  | $ | 126,198
Software licenses |  |  | 47,417 |  |  | 41,390 |  |  | 29,859
Subscription |  |  | 15,426 |  |  | 10,296 |  |  | 7,301
Professional services |  |  | 5,743 |  |  | 4,891 |  |  | 4,681
Maintenance, support and other |  |  | 38,134 |  |  | 30,847 |  |  | 24,265
Total Revenue |  | $ | 212,280 |  | $ | 193,291 |  | $ | 192,304
Revenue by location of customer for the years ended December 31, 2018, 2017, and 2016 (in thousands)
|  | EMEA |  | Americas |  | APAC |  | Total |
Total Revenue: |  |  |  |  |  |  |  |  |  |  |  |  |
2018 |  | $ | 103,293 |  | $ | 54,979 |  | $ | 54,008 |  | $ | 212,280 |
2017* |  | $ | 92,859 |  | $ | 52,981 |  | $ | 47,451 |  | $ | 193,291 |
2016* |  | $ | 95,897 |  | $ | 33,204 |  | $ | 63,203 |  | $ | 192,304 |
Percent of Total: |  |  |  |  |  |  |  |  |  |  |  |  |
2018 |  |  | 49 | % |  | 26 | % |  | 25 | % |  | 100 | %
2017* |  |  | 48 | % |  | 27 | % |  | 25 | % |  | 100 | %
2016* |  |  | 50 | % |  | 17 | % |  | 33 | % |  | 100 | %
*Prior period amounts are presented under ASC 605 and ASC 985-605. Timing of revenue recognition (in thousands)
|  | Year ended
|  | December 31, 2018
Products and Licenses transferred at a point in time |  | $ | 152,977
Services transferred over time |  |  | 59,303
Total Revenue |  | $ | 212,280
Impacts on Financial Statements The following tables summarize the impacts of adopting Topic 606 on the Company’s consolidated financial statements as of December 31, 2018 and for the year ended December 31, 2018. Balance Sheet (in thousands)
| December 31, 2018
| As Reported |  | Adjustments |  | Balances without the adoption of Topic 606
ASSETS |  |  |  |  |  |  |  |
Current assets |  |  |  |  |  |  |  |
Accounts receivable, net of allowance | $ | 59,631 |  | $ | (331) |  | $ | 59,300
Contract asset |  | 7,962 |  |  | (7,962) |  |  | —
Other current assets |  | 5,705 |  |  | (703) |  |  | 5,002
Total current assets |  | 191,956 |  |  | (8,996) |  |  | 182,960
Deferred income taxes |  | 5,601 |  |  | 587 |  |  | 6,188
Contract asset - non-current |  | 3,316 |  |  | (3,316) |  |  | —
Other assets |  | 8,400 |  |  | (289) |  |  | 8,111
Total assets | $ | 352,826 |  | $ | (12,014) |  | $ | 340,812
LIABILITIES AND STOCKHOLDERS' EQUITY |  |  |  |  |  |  |  |
Current liabilities |  |  |  |  |  |  |  |
Deferred revenue | $ | 33,633 |  | $ | 3,019 |  | $ | 36,652
Short-term income taxes payable |  | 6,905 |  |  | (1,209) |  |  | 5,696
Other accrued expenses |  | 9,323 |  |  | (116) |  |  | 9,207
Total current liabilities |  | 72,357 |  |  | 1,694 |  |  | 74,051
Deferred revenue - non-current |  | 10,672 |  |  | 3,391 |  |  | 14,063
Deferred income taxes |  | 2,661 |  |  | (424) |  |  | 2,237
Total liabilities |  | 100,385 |  |  | 4,661 |  |  | 105,046
Stockholders' equity |  |  |  |  |  |  |  |
Accumulated income |  | 172,378 |  |  | (16,675) |  |  | 155,703
Total stockholders' equity |  | 252,441 |  |  | (16,675) |  |  | 235,766
Total liabilities and stockholders' equity | $ | 352,826 |  | $ | (12,014) |  | $ | 340,812
Statement of Operations (in thousands)
|  | Twelve months ended December 31, 2018
|  | As Reported |  | Adjustments |  | Balances without the adoption of Topic 606
Revenue |  |  |  |  |  |  |  |  |
Product and license |  | $ | 152,977 |  | $ | 2,365 |  | $ | 155,342
Services and other |  |  | 59,303 |  |  | (5,772) |  |  | 53,531
Total revenue |  |  | 212,280 |  |  | (3,407) |  |  | 208,873
Cost of goods sold |  |  |  |  |  |  |  |  |
Product and license |  |  | 50,706 |  |  | 605 |  |  | 51,311
Services and other |  |  | 14,107 |  |  | — |  |  | 14,107
Total Cost of goods sold |  |  | 64,813 |  |  | 605 |  |  | 65,418
Gross profit |  |  | 147,467 |  |  | (4,012) |  |  | 143,455
Operating Costs |  |  |  |  |  |  |  |  |
Sales and marketing |  |  | 63,805 |  |  | 1,108 |  |  | 64,913
Total operating costs |  |  | 147,443 |  |  | 1,108 |  |  | 148,551
Operating income (loss) |  |  | 24 |  |  | (5,120) |  |  | (5,096)
Income (loss) before taxes |  |  | 3,553 |  |  | (5,120) |  |  | (1,567)
Provision (benefit) for income taxes |  |  | (293) |  |  | (365) |  |  | (658)
Net income (loss) |  | $ | 3,846 |  | $ | (4,755) |  | $ | (909)
Basic EPS |  | $ | 0.10 |  |  |  |  | $ | (0.02)
Diluted EPS |  | $ | 0.10 |  |  |  |  | $ | (0.02)
The adoption of Topic 606 did not impact total operating, investing or financing cash flows in the statement of cash flows. Contract balances
|  |  |  |  |  | January 1, |  | December 31,
|  |  |  |  |  | 2018 |  | 2018
Receivables, inclusive of trade and unbilled |  |  |  |  |  | $ | 48,217 |  | $ | 59,631
Contract Assets (current and non-current) |  |  |  |  |  | $ | 8,167 |  | $ | 11,278
Contract Liabilities (Deferred Revenue current and non-current) |  |  |  |  |  | $ | 33,752 |  | $ | 44,305
Contract assets relate primarily to multi-year term license arrangements and the remaining contractual billings. These contract assets are transferred to receivables when the right to billing occurs, which is normally over 3-5 years. The contract liabilities primarily relate to the advance consideration received from customers for subscription and maintenance services. Revenue is recognized for these services over time. As a practical expedient, we do not adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised product or service to a customer and when the customer pays for that product or service will be one year or less. We do not typically include extended payment terms in our contracts with customers. From January 1, 2018 through December 31, 2018, the Company’s contract asset balances increased approximately $3.1 million, primarily due to new contracts in which revenue exceeded billings during the period, partially offset by transfers to accounts receivable. Deferred Revenue increased in the same period due to timing of annual renewals and Dealflo acquired deferred revenue of $1.4 million. Transaction price allocated to the remaining performance obligations The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period.
in thousands |  | 2019 |  | 2020 |  | 2021 |  | Beyond 2021 |  | Total
Future revenue related to current unsatisfied performance obligations |  | $ | 7,764 |  | $ | 5,878 |  | $ | 3,788 |  | $ | 9,392 |  | $ | 26,822
The Company applies practical expedients and does not disclose information about remaining performance obligations (a) that have original expected durations of one year or less, or (b) where revenue is recognized as invoiced. Costs of obtaining a contract The Company incurs incremental costs related to commissions, which can be directly tied to obtaining a contract. Under Topic 606, the Company capitalizes commissions associated with certain new contracts and amortizes the costs over a period of benefit based on the transfer of goods or services that we have determined to be up to seven years. The Amortization is reflected in Sales and Marketing in the Statement of Operations. We determined the period of benefit by taking into consideration our customer contracts, our technology and other factors, including customer attrition. Commissions are earned upon receipt of payment by the customer and requires the employee to be a current employee. For contracts with multiple year payment terms, as the commissions that are payable after year 1 are payable based on continued employment, they are expensed when incurred. Commissions and amortization expense are included in Sales and Marketing expenses on the consolidated statements of operations. Applying the practical expedient, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period for the assets that the Company otherwise would have recognized is one year or less. These costs are included in Sales and Marketing expense in the consolidated statement of operations. The following tables provide information related to the capitalized costs and amortization recognized in the period:
in thousands |  |  |  |  |  |  |  |  |  | December 31, 2018
Capitalized costs to obtain contracts, current |  |  |  |  |  |  |  |  | $ | 413
Capitalized costs to obtain contracts, non-current |  |  |  |  |  |  |  |  | $ | 2,150
|  |  |  |  |  |  |  |  |  | Year Ended
in thousands |  |  |  |  |  |  |  |  |  | December 31, 2018
Amortization of capitalized costs to obtain contracts |  |  |  |  |  |  |  |  | $ | 283
Impairments of capitalized costs to obtain contracts |  |  |  |  |  |  |  |  | $ | -

X
- References No definition available. + Details
Name: | us-gaap_RevenueFromContractWithCustomerAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
Name: | us-gaap_RevenueFromContractWithCustomerTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration