PEGASYSTEMS INC, 10-Q filed on 07 Nov 18
 | XBRL Documents
v3.10.0.1
Document and Entity Information - shares
 9 Months Ended
Sep. 30, 2018
Nov. 01, 2018
Document Information [Line Items]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Sep. 30, 2018  
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q3  
Trading Symbol PEGA  
Entity Registrant Name PEGASYSTEMS INC.  
Entity Central Index Key 0001013857  
Current Fiscal Year End Date --12-31  
Entity Filer Category Large Accelerated Filer  
Entity Common Stock, Shares Outstanding   78,700,651
Entity Emerging Growth Company false  
Entity Small Business false  
v3.10.0.1
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Sep. 30, 2018
Dec. 31, 2017
Current assets:    
Cash and cash equivalents [1] $ 106,195 $ 162,279
Marketable securities [1] 99,782 61,469
Total cash, cash equivalents, and marketable securities [1] 205,977 223,748
Accounts receivable [1] 150,733 222,735
Unbilled receivables [1] 155,964 158,898
Other current assets [1] 73,464 41,135
Total current assets [1] 586,138 646,516
Long-term unbilled receivables [1] 168,929 160,708
Goodwill [1] 72,897 72,952
Other long-term assets [1] 134,679 131,391
Total assets [1] 962,643 1,011,567
Current liabilities:    
Accounts payable [1] 12,926 17,370
Accrued expenses [1] 39,829 45,508
Accrued compensation and related expenses [1] 71,318 66,040
Deferred revenue [1] 158,178 166,297
Total current liabilities [1] 282,251 295,215
Deferred income tax liabilities [1] 36,166 38,463
Other long-term liabilities [1] 23,371 23,652
Total liabilities [1] 341,788 357,330
Stockholders' equity:    
Preferred stock, 1,000 shares authorized; no shares issued and outstanding [1]
Common stock, 200,000 shares authorized; 78,816 and 78,081 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively [1] 788 781
Additional paid-in capital [1] 135,132 152,097
Retained earnings [1] 496,815 508,051
Accumulated other comprehensive loss [1] (11,880) (6,692)
Total stockholders' equity [1] 620,855 654,237
Total liabilities and stockholders' equity [1] $ 962,643 $ 1,011,567
[1] On January 1, 2018, the Company adopted the ASC 606 revenue recognition standard and has adjusted prior periods to conform. See Note 2. "New Accounting Pronouncements" for additional information.
v3.10.0.1
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares
Sep. 30, 2018
Dec. 31, 2017
Preferred stock, shares authorized [1] 1,000,000 1,000,000
Preferred stock, shares issued [1] 0 0
Preferred stock, shares outstanding [1] 0 0
Common stock, shares authorized [1] 200,000,000 200,000,000
Common stock, shares issued [1] 78,816,000 78,816,000
Common stock, shares outstanding [1] 78,081,000 78,081,000
[1] On January 1, 2018, the Company adopted the ASC 606 revenue recognition standard and has adjusted prior periods to conform. See Note 2. "New Accounting Pronouncements" for additional information.
v3.10.0.1
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Revenue        
Total revenue [1] $ 203,263 $ 190,957 $ 635,224 $ 633,862
Cost of revenue        
Total cost of revenue [1] 74,423 69,731 223,854 205,696
Gross profit [1] 128,840 121,226 411,370 428,166
Operating expenses        
Selling and marketing [1] 87,490 69,363 269,845 214,244
Research and development [1] 46,504 41,031 135,261 121,089
General and administrative [1] 12,104 13,133 38,749 38,174
Total operating expenses [1] 146,098 123,527 443,855 373,507
(Loss) income from operations [1] (17,258) (2,301) (32,485) 54,659
Foreign currency transaction gain (loss) [1] 399 (5,052) 558 (6,549)
Interest income, net [1] 683 140 2,076 547
Other income, net [1]     363 287
(Loss) income before benefit from income taxes [1] (16,176) (7,213) (29,488) 48,944
Benefit from income taxes [1] (8,589) (8,501) (23,692) (9,009)
Net (loss) income [1] $ (7,587) $ 1,288 $ (5,796) $ 57,953
(Loss) earnings per share        
Basic [1] $ (0.10) $ 0.01 $ (0.07) $ 0.75
Diluted [1] $ (0.10) $ 0.01 $ (0.07) $ 0.70
Weighted-average number of common shares outstanding        
Basic [1] 78,700 77,691 78,525 77,258
Diluted [1] 78,700 83,323 78,525 82,717
Cash dividends declared per share [1] $ 0.03 $ 0.03 $ 0.09 $ 0.09
Software license        
Revenue        
Total revenue [1] $ 52,342 $ 53,234 $ 184,899 $ 231,392
Cost of revenue        
Total cost of revenue [1] 1,255 1,276 3,772 3,826
Maintenance        
Revenue        
Total revenue [1] 66,017 61,812 196,448 179,949
Cost of revenue        
Total cost of revenue [1] 6,079 6,716 18,035 20,945
Services        
Revenue        
Total revenue [1] 84,904 75,911 253,877 222,521
Cost of revenue        
Total cost of revenue [1] $ 67,089 $ 61,739 $ 202,047 $ 180,925
[1] On January 1, 2018, the Company adopted the ASC 606 revenue recognition standard and has adjusted prior periods to conform. See Note 2. "New Accounting Pronouncements" for additional information.
v3.10.0.1
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Net (loss) income [1] $ (7,587) $ 1,288 $ (5,796) $ 57,953
Other comprehensive (loss) income, net of tax        
Unrealized (loss) gain on available-for-sale marketable securities, net of tax [1] (162) 22 (277) 148
Foreign currency translation adjustments [1] (1,934) 2,576 (4,911) 8,848
Total other comprehensive (loss) income, net of tax [1] (2,096) 2,598 (5,188) 8,996
Comprehensive (loss) income [1] $ (9,683) $ 3,886 $ (10,984) $ 66,949
[1] On January 1, 2018, the Company adopted the ASC 606 revenue recognition standard and has adjusted prior periods to conform. See Note 2. "New Accounting Pronouncements" for additional information.
v3.10.0.1
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Operating activities:    
Net (loss) income [1] $ (5,796) $ 57,953
Adjustment to reconcile net (loss) income to cash provided by operating activities:    
Change in operating assets and liabilities, net [1] 8,698 (15,455)
Stock-based compensation expense [1] 47,573 39,929
Amortization of intangible assets and depreciation [1] 18,692 18,703
Other non-cash [1] (2,079) 12,796
Cash provided by operating activities [1] 67,088 113,926
Investing activities:    
Purchases of investments [1] (68,177) (25,687)
Proceeds from maturities and called investments [1] 26,456 23,124
Other [1] (7,874) (9,403)
Cash used in investing activities [1] (49,595) (11,966)
Financing activities:    
Dividend payments to shareholders [1] (7,067) (6,941)
Common stock repurchases [1] (64,597) (37,099)
Cash used in financing activities [1] (71,664) (44,040)
Effect of exchange rates on cash and cash equivalents [1] (1,913) 2,054
Net (decrease) increase in cash and cash equivalents [1] (56,084) 59,974
Cash and cash equivalents, beginning of period [1] 162,279 70,594
Cash and cash equivalents, end of period [1] $ 106,195 $ 130,568
[1] On January 1, 2018, the Company adopted the ASC 606 revenue recognition standard and has adjusted prior periods to conform. See Note 2. "New Accounting Pronouncements" for additional information.
v3.10.0.1
BASIS OF PRESENTATION
 9 Months Ended
Sep. 30, 2018
BASIS OF PRESENTATION

1. BASIS OF PRESENTATION

Pegasystems Inc. (together with its subsidiaries, “the Company”) has prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“U.S.”) for complete financial statements and should be read in conjunction with the Company’s audited financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2017.

In the opinion of management, the Company has prepared the accompanying unaudited condensed consolidated financial statements on the same basis as its audited financial statements, and these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented.

The operating results for the interim periods presented are not necessarily indicative of the results expected for the full year 2018.

On January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” using the full retrospective method which required that each prior reporting period presented be adjusted to reflect the application of this ASU. See Note 2. “New Accounting Pronouncements” for additional information.
v3.10.0.1
NEW ACCOUNTING PRONOUNCEMENTS
 9 Months Ended
Sep. 30, 2018
NEW ACCOUNTING PRONOUNCEMENTS

2. NEW ACCOUNTING PRONOUNCEMENTS

Financial instruments

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires measurement and recognition of expected credit losses for financial assets measured at amortized cost, including accounts receivable, upon initial recognition of that financial asset using a forward-looking expected loss model, rather than an incurred loss model. Credit losses relating to available-for-sale debt securities should be recorded through an allowance for credit losses when the fair value is below the amortized cost of the asset, removing the concept of “other-than-temporary” impairments. The effective date for the Company will be January 1, 2020, with early adoption permitted. The Company is currently evaluating the effect this ASU will have on its consolidated financial statements and related disclosures.

Leases

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which requires lessees to record most leases on their balance sheets, recognizing a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. The effective date for the Company will be January 1, 2019, with early adoption permitted. The Company expects that most of its operating lease commitments will be subject to this ASU and recognized as operating lease liabilities and right-of-use assets upon adoption with a material impact to the Company’s balance sheet but an immaterial impact to its results of operations and cash flows. The Company expects to elect the optional transition method to apply the new lease standard prospectively at the adoption date, as opposed to recasting prior reporting periods. As a result, the Company expects to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

ASC 606 and ASC 340-40

On January 1, 2018, the Company adopted the ASC 606 revenue recognition standard and has adjusted prior periods to conform.

The most significant adoption impacts were as follows:

 

  •  

Perpetual licenses with extended payment terms and term licenses - Revenue from perpetual licenses with extended payment terms and term licenses is now recognized when control is transferred to the client, which is defined as the point in time when the client can use and benefit from the license. Previously, the Company recognized revenue over the term of the agreements as payments became due or earlier if prepaid. Any unrecognized license revenue from these arrangements is recognized in the period that control transfers or as a cumulative adjustment to retained earnings as of December 31, 2015. Unbilled receivables in the Company’s unaudited condensed consolidated balance sheets increased significantly upon adoption due to the revenue from term licenses being recognized prior to amounts being due, or prepaid, by clients and perpetual licenses with extended payment terms.

 

  •  

Allocation of future credits and significant discounts - Perpetual or term licenses delivered are a separate performance obligation which now requires the Company to allocate any future credits and discounts to the performance obligations in the arrangement based upon their relative stand-alone selling prices.

 

  •  

Deferred contract costs - Sales incentive programs and other incremental costs to obtain a contract were previously expensed when incurred. ASC 340-40 requires these costs be recognized as an asset when incurred and expensed over the period of expected benefit, which is on average five years. This change primarily impacts the Company’s contracts related to multi-year cloud offerings, maintenance on term and perpetual licenses, and long-term term and perpetual licenses with client usage rights that increase over time.

 

  •  

Taxes - The corresponding effect on tax balances of the above impacts has also been recognized.

For additional information on the Company’s accounting policies as a result of the adoption of ASC 606 and ASC 340-40 see Note 4. “Receivables, Contract Assets, and Deferred Revenue”, Note 5. “Deferred Contract Costs”, and Note 9. “Revenue”.

The impact of the adoption of ASC 606 and ASC 340-40 on the Company’s unaudited condensed consolidated balance sheet and unaudited condensed consolidated statement of operations is:

 

     December 31, 2017  
(in thousands)        Previously reported                    Adjustments                          As adjusted            

Assets

         

Accounts receivable, unbilled receivables, and contract assets

    $ 248,331       $ 134,216       $ 382,547   

Long-term unbilled receivables

      —         160,708         160,708   

Deferred income taxes

      57,127         (42,887)        14,240   

Deferred contract costs

      —         37,924         37,924   

Other assets(1)

      416,148         —         416,148   
  

 

 

     

 

 

     

 

 

  

Total assets

    $ 721,606       $ 289,961       $ 1,011,567   
  

 

 

     

 

 

     

 

 

  

Liabilities and stockholders’ equity

         

Deferred revenue

    $ 195,073       $ (28,776)      $ 166,297   

Long-term deferred revenue

      6,591         (2,885)        3,706   

Deferred income tax liabilities

      —         38,463         38,463   

Other liabilities(2)

      148,864         —         148,864   
  

 

 

     

 

 

     

 

 

  

Total liabilities

      350,528         6,802         357,330   

Foreign currency translation adjustments

      (3,494)        (2,966)        (6,460)  

Retained earnings

      221,926         286,125         508,051   

Other equity(3)

      152,646         —         152,646   
  

 

 

     

 

 

     

 

 

  

Total stockholders’ equity

      371,078         283,159         654,237   
  

 

 

     

 

 

     

 

 

  

Total liabilities and stockholders’ equity

    $         721,606       $         289,961       $         1,011,567   
  

 

 

     

 

 

     

 

 

  

 

  (1) 

Includes cash, cash equivalents, marketable securities, income taxes receivable, other current assets, property and equipment, intangible assets, goodwill, and other long-term assets (as reflected in the consolidated balance sheets in the Annual Report on Form 10-K for the year ended December 31, 2017).
  (2) 

Includes accounts payable, accrued expenses, accrued compensation and related expenses, income taxes payable, and other long-term liabilities (as reflected in the consolidated balance sheets in the Annual Report on Form 10-K for the year ended December 31, 2017).
  (3)

Includes common stock, additional paid-in capital, and net unrealized loss on available-for-sale marketable securities (as reflected in the consolidated balance sheets in the Annual Report on Form 10-K for the year ended December 31, 2017).

 

     September 30, 2017  
     Three Months Ended      Nine Months Ended  
(in thousands, except per share amounts)      Previously  
Reported		        Adjustments          As Adjusted          Previously  
Reported		        Adjustments          As Adjusted    

Revenue:

                  

 Software license

    $ 41,793       $ 11,441       $ 53,234       $ 195,220       $ 36,172       $ 231,392   

 Maintenance

      62,204         (392)        61,812         180,759         (810)        179,949   

 Services

      75,818         93         75,911         225,063         (2,542)        222,521   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

  Total revenue

      179,815         11,142         190,957         601,042         32,820         633,862   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Cost of revenue:

                  

 Software license

      1,276         —          1,276         3,826         —          3,826   

 Maintenance

      6,716         —          6,716         20,945         —          20,945   

 Services

      61,739         —          61,739         180,925         —          180,925   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

  Total cost of revenue

      69,731         —          69,731         205,696         —          205,696   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Gross profit

      110,084         11,142         121,226         395,346         32,820         428,166   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Operating expenses:

                  

 Selling and marketing

      70,209         (846)        69,363         217,384         (3,140)        214,244   

 Research and development

      41,031         —          41,031         121,089         —          121,089   

 General and administrative

      13,133         —          13,133         38,174         —          38,174   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 Total operating expenses

      124,373         (846)        123,527         376,647         (3,140)        373,507   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

(Loss) income from operations

      (14,289)        11,988         (2,301)        18,699         35,960         54,659   

Foreign currency transaction loss

      (552)        (4,500)        (5,052)        (793)        (5,756)        (6,549)  

Interest income, net

      144         (4)        140         470         77         547   

Other income, net

      —          —          —          287         —          287   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

(Loss) income before benefit from income taxes

      (14,697)        7,484         (7,213)        18,663         30,281         48,944   

Benefit from income taxes

      (12,885)        4,384         (8,501)        (17,952)        8,943         (9,009)  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

  Net (loss) income

    $ (1,812)      $ 3,100       $ 1,288       $ 36,615       $ 21,338       $ 57,953   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

(Loss) earnings per share:

                  

 Basic

    $ (0.03)         $ 0.01       $ 0.47          $ 0.75   
  

 

 

        

 

 

     

 

 

        

 

 

  

 Diluted

    $ (0.03)         $ 0.01       $ 0.44          $ 0.70   
  

 

 

        

 

 

     

 

 

        

 

 

  

Weighted-average number of common shares outstanding:

                  

 Basic

      77,691            77,691         77,258            77,258   

 Diluted

      77,691            83,323         82,717            82,717   

Adoption of ASC 606 and ASC 340-40 did not change the Company’s total cash provided by or used in operating, financing, or investing activities in the Company’s unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2017.
v3.10.0.1
MARKETABLE SECURITIES
 9 Months Ended
Sep. 30, 2018
MARKETABLE SECURITIES

3. MARKETABLE SECURITIES

 

     September 30, 2018  
(in thousands)        Amortized Cost              Unrealized Gains              Unrealized Losses                  Fair Value          

Municipal bonds

    $ 46,633       $ —       $ (267)      $ 46,366   

Corporate bonds

      53,738         1         (323)        53,416   
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 100,371       $ 1       $ (590)      $ 99,782   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

     December 31, 2017  
(in thousands)        Amortized Cost              Unrealized Gains              Unrealized Losses                  Fair Value          

Municipal bonds

    $ 32,996       $ —       $ (148)      $ 32,848   

Corporate bonds

      28,757         1         (137)        28,621   
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 61,753       $ 1       $ (285)      $ 61,469   
  

 

 

     

 

 

     

 

 

     

 

 

  

As of September 30, 2018, the Company did not hold any investments with unrealized losses that are considered to be other-than-temporary.

 

As of September 30, 2018, remaining maturities of marketable securities ranged from October 2018 to August 2021, with a weighted-average remaining maturity of approximately 1.5 years.
v3.10.0.1
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE
 9 Months Ended
Sep. 30, 2018
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE

4. RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE

Receivables

 

(in thousands)            September 30,        
2018		              December 31,        
2017		  

Accounts receivable

    $ 150,733       $ 222,735   

Unbilled receivables

      155,964         158,898   

Long-term unbilled receivables

      168,929         160,708   
  

 

 

     

 

 

  
   $                         475,626       $                         542,341   
  

 

 

     

 

 

  

Unbilled receivables are the amounts due from clients where the only condition to the right of payment is the passage of time. As of September 30, 2018 and December 31, 2017, the allowance for doubtful accounts was not material.

Unbilled receivables are expected to be billed in the future as follows:

 

(Dollars in thousands)            September 30,        
2018		  

1 Year or Less

    $         155,964                     48%   

1-2 Years

      89,177         27%   

2-5 Years

      79,752         25%   
  

 

 

     

 

 

  
   $ 324,893         100%   
  

 

 

     

 

 

  

Contract assets and deferred revenue

 

(in thousands)            September 30,        
2018		              December 31,        
2017		  

Contract assets(1)

    $ 2,888       $ 914   

Long-term contract assets(2)

      1,581         —   
  

 

 

     

 

 

  
   $ 4,469       $ 914   
  

 

 

     

 

 

  

Deferred revenue

    $ 158,178       $ 166,297   

Long-term deferred revenue(3)

      5,840         3,706   
  

 

 

     

 

 

  
   $ 164,018       $ 170,003   
  

 

 

     

 

 

  

  (1) Included in other current assets.

  (2) Included in other long-term assets.

  (3) Included in other long-term liabilities.

Contract assets are amounts under client contracts where revenue recognized exceeds the amount billed to the client and the right to payment is subject to conditions other than the passage of time, such as the completion of a related performance obligation. Deferred revenue consists of billings and payments received in advance of revenue recognition. Contract assets and deferred revenue are netted at the contract level for each reporting period.

The change in deferred revenue in the nine months ended September 30, 2018 was primarily due to $225.1 million of revenue recognized, excluding the impact of netting contract assets and deferred revenue at the contract level, during the period that was included in deferred revenue at December 31, 2017, partially offset by new billings in advance of revenue recognition.

Major clients

No client represented 10% or more of the Company’s total receivables as of September 30, 2018 or December 31, 2017.
v3.10.0.1
DEFERRED CONTRACT COSTS
 9 Months Ended
Sep. 30, 2018
DEFERRED CONTRACT COSTS

5. DEFERRED CONTRACT COSTS

The Company recognizes an asset for the incremental costs of obtaining a contract with a client if the Company expects the benefit of those costs to be longer than one year. Deferred costs are amortized on a straight-line basis over the benefit period, which is on average five years.

 

(in thousands)        September 30,    
2018		          December 31,    
2017		  

Deferred contract costs(1)

    $                         50,799        $                         37,924    

  (1) Included in other long-term assets.

 

Amortization of deferred contract costs was as follows:

 

                 Three Months Ended        
September 30,		              Nine Months Ended        
September 30,		  
(in thousands)          2018                  2017                  2018                  2017        

Amortization of deferred contract costs(1)

    $             4,208       $             3,034       $             11,806       $             8,529   

  (1) Included in selling and marketing expenses.
v3.10.0.1
GOODWILL AND OTHER INTANGIBLE ASSETS
 9 Months Ended
Sep. 30, 2018
GOODWILL AND OTHER INTANGIBLE ASSETS

6. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The change in the carrying amount of goodwill was as follows:

 

(in thousands)               Nine Months Ended             
September 30,		  
  2018  

Balance as of January 1,

   $ 72,952   

Currency translation adjustments

     (55)  
 

 

 

  

Balance as of September 30,

   $ 72,897   
 

 

 

  

Intangibles

Intangible assets are recorded at cost and amortized using the straight-line method over their estimated useful lives as follows:

 

          September 30, 2018  
(in thousands)           Useful Lives             Cost     Accumulated
Amortization		     Net Book Value(1)  

Client-related intangibles

     4-10 years      $                 63,136      $                 (49,633)      $                 13,503   

Technology

     3-10 years        58,942        (49,067)        9,875   

Other

     1-5 years        5,361        (5,361)        —   
   

 

 

    

 

 

    

 

 

  
    $               127,439      $               (104,061)      $                 23,378   
   

 

 

    

 

 

    

 

 

  

  (1) Included in other long-term assets.

 

          December 31, 2017  
(in thousands)           Useful Lives             Cost     Accumulated
Amortization		     Net Book Value(1)  

Client-related intangibles

     4-10 years      $                 63,164      $                 (44,835)      $                 18,329   

Technology

     3-10 years        58,942        (45,372)        13,570   

Other

     1-5 years        5,361        (5,361)        —   
   

 

 

    

 

 

    

 

 

  
    $               127,467      $                 (95,568)      $                 31,899   
   

 

 

    

 

 

    

 

 

  

  (1) Included in other long-term assets.

Amortization of intangible assets was as follows:

 

                 Three Months Ended             
September 30,		                  Nine Months Ended             
September 30,		  
(in thousands)    2018      2017      2018      2017  

Cost of revenue

    $                 1,232       $                 1,232       $                 3,695       $                 3,871   

Selling and marketing

      1,603         1,873         4,813         5,608   
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 2,835       $ 3,105       $ 8,508       $ 9,479   
  

 

 

     

 

 

     

 

 

     

 

 

  

 
v3.10.0.1
ACCRUED EXPENSES
 9 Months Ended
Sep. 30, 2018
ACCRUED EXPENSES

7. ACCRUED EXPENSES

 

(in thousands)    September 30,
2018		      December 31,
2017		  

Outside professional services

    $ 11,638       $ 14,468   

Income and other taxes

      3,971         7,420   

Marketing and sales program expenses

      4,623         6,444   

Dividends payable

      2,365         2,344   

Employee-related expenses

      5,212         4,065   

Other

      12,020         10,767   
  

 

 

     

 

 

  
   $                     39,829       $                     45,508   
  

 

 

     

 

 

  
v3.10.0.1
FAIR VALUE MEASUREMENTS
 9 Months Ended
Sep. 30, 2018
FAIR VALUE MEASUREMENTS

8. FAIR VALUE MEASUREMENTS

Assets and liabilities measured at fair value on a recurring basis

The Company records its cash equivalents, marketable securities, and investments in privately-held companies at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants based on assumptions that market participants would use in pricing an asset or liability.

As a basis for classifying the fair value measurements, a three-tier fair value hierarchy, which classifies the fair value measurements based on the inputs used in measuring fair value, was established as follows:

 

  •  

Level 1 - observable inputs such as quoted prices in active markets for identical assets or liabilities;

 

  •  

Level 2 - significant other inputs that are observable either directly or indirectly; and

 

  •  

Level 3 - significant unobservable inputs on which there is little or no market data, which require the Company to develop its own assumptions. This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.

The Company’s cash equivalents are composed of money market funds and time deposits, which are classified within Level 1 and Level 2, respectively, in the fair value hierarchy. The Company’s marketable securities, which are classified within Level 2 of the fair value hierarchy are valued based on a market approach using quoted prices, when available, or matrix pricing compiled by third party pricing vendors, using observable market inputs such as interest rates, yield curves, and credit risk. The Company’s investments in privately-held companies are classified within Level 3 of the fair value hierarchy and are valued using model-based techniques, including option pricing models and discounted cash flow models.

If applicable, the Company will recognize transfers into and out of levels within the fair value hierarchy at the end of the reporting period in which the actual event or change in circumstance occurs. There were no transfers between levels during the nine months ended September 30, 2018.

The Company’s assets and liabilities measured at fair value on a recurring basis were as follows:

 

     September 30, 2018  
(in thousands)            Level 1                      Level 2                      Level 3                      Total          

Cash equivalents

    $                     10,212        $                     15,212        $                     —        $                     25,424    

Marketable securities:

            

Municipal bonds

    $ —        $ 46,366        $ —        $ 46,366    

Corporate bonds

      —          53,416          —          53,416    
  

 

 

     

 

 

     

 

 

     

 

 

  

Total marketable securities

    $ —        $ 99,782        $ —        $ 99,782    

Investments in privately-held companies(1)

    $ —        $ —        $ 2,890        $ 2,890    

  (1) Included in other long-term assets.

 

     December 31, 2017  
(in thousands)            Level 1                      Level 2                      Level 3                      Total          

Cash equivalents

    $             2,720        $             40,051        $             —        $             42,771    

Marketable securities:

                   

Municipal bonds

    $ —        $ 32,848        $ —        $ 32,848    

Corporate bonds

      —          28,621          —          28,621    
  

 

 

     

 

 

     

 

 

     

 

 

  

Total marketable securities

    $ —        $ 61,469        $ —        $ 61,469    

Investments in privately-held companies(1)

    $ —        $ —        $ 1,030        $ 1,030    

  (1) Included in other long-term assets.

For certain other financial instruments, including accounts receivable and accounts payable, the carrying value approximates fair value due to the relatively short maturity of these items.

Assets measured at fair value on a nonrecurring basis

Assets recorded at fair value on a nonrecurring basis, including property and equipment and intangible assets, are recognized at fair value when they are impaired. During the nine months ended September 30, 2018 and 2017, the Company did not recognize any impairments of its assets recorded at fair value on a nonrecurring basis.
v3.10.0.1
REVENUE
 9 Months Ended
Sep. 30, 2018
REVENUE

9. REVENUE

Revenue policy

The Company’s revenue is primarily derived from:

 

  •  

Software license revenue is primarily derived from sales of the Company’s Pega Platform and software applications.

 

  •  

Maintenance revenue includes revenue from client support including software upgrades on a when and-if available basis, telephone support, and bug fixes or patches.

 

  •  

Services revenue is primarily derived from cloud revenue, which is sales of the Company’s hosted Pega Platform and software applications, and consulting revenue, which is primarily related to new license implementations.

Contracts with multiple performance obligations

The Company’s license and cloud arrangements often contain multiple performance obligations. For contracts with multiple performance obligations, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative stand-alone selling price basis. If the transaction price contains discounts or the Company expects to provide a future price concession, these elements are considered when determining the transaction price prior to allocation. Variable fees within the transaction price are estimated and recognized in revenue as the Company satisfies each performance obligation to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable fee is resolved. If the contract grants the client the option to acquire additional products or services, the Company assesses whether any discount on the included products and services is in excess of levels normally available to similar clients and, if so, accounts for that discount as an additional performance obligation.

Software licenses

The Company has concluded that its software licenses are distinct performance obligations, as the client can benefit from the software on its own. Software license revenue is typically recognized at a point in time when control is transferred to the client, which is defined as the point in time when the client can use and benefit from the license. The software license is delivered before related services are provided and is functional without services, updates, and technical support.

Stand-alone selling price for software licenses is determined using the residual approach. The Company utilizes the residual approach as license performance obligations are sold for a broad range of amounts (the selling price is highly variable) and a stand-alone selling price is not discernible from past transactions or other observable evidence. Periodically, the Company reevaluates whether the residual approach is appropriate for its license performance obligations when sold with other performance obligations. If the standalone selling price analysis illustrates that software license performance obligations are no longer highly variable, the Company will utilize the relative allocation method for such arrangements.

 

Term license fees are usually payable in advance on a monthly, quarterly, or annual basis over the term of the license agreement, which is typically three to five years and may be renewed for additional terms at the client’s option. Perpetual license fees are usually payable when the contract is executed.

Maintenance

Maintenance contracts entitle clients to receive technical support and software updates, on a when and if available basis, during the term of the maintenance contract. Technical support and software updates are considered distinct services but accounted for as a single performance obligation, as they each constitute a series of distinct services that are substantially the same and have the same pattern of transfer to the client. Maintenance revenue is recognized over time on a straight-line basis over the contract period.

The maintenance performance obligation is priced as a percentage of the selling price of the related software license, which is highly variable. The Company determined the standalone selling price based on this pricing relationship, which has remained constant within a narrow range, and observable data from standalone sales of maintenance, along with all other observable data.

Maintenance fees are usually payable in advance on a monthly, quarterly, or annual basis over the term of the agreement.

Services

Services revenue is comprised of consulting, including software license implementations, training, reimbursable expenses, and cloud, which is derived from sales of the Company’s hosted Pega Platform and software application environments. The Company has concluded that most services are distinct performance obligations. Consulting may be provided on a stand-alone basis or bundled with other performance obligations.

 

  •  

The stand-alone selling price for time and materials consulting is determined by observable prices in similar transactions without multiple performance obligations and recognized as revenue as the services are performed. Fees for time and materials consulting contracts are usually payable shortly after the service is provided.

 

  •  

The stand-alone selling price for fixed price consulting is based on the estimated hours versus actual hours in similar geographies and for similar contract sizes. Revenue for fixed price consulting is recognized over time as the services are provided. Fees for fixed price consulting are usually payable as contract milestones are achieved.

 

  •  

The stand-alone selling price of cloud sales of production environments is determined based on the residual approach when sold with other performance obligations and is recognized over the term of the service. The Company utilizes the residual approach as cloud performance obligations are sold for a broad range of amounts (the selling price is highly variable) and a stand-alone selling price is not discernible from past transactions or other observable evidence. Cloud fees for production environments are usually payable in advance on a monthly, quarterly, or annual basis over the term of the service.

 

  •  

The stand-alone selling price for cloud sales of development and testing environments is developed using observable prices in similar transactions without multiple performance obligations and is recognized over the term of the service. Cloud fees for development and testing environments are usually payable in advance on a monthly, quarterly, or annual basis over the term of the service.

Contract modifications

The Company enters into amendments to previously executed contracts which constitute contract modifications. The Company assesses each of these contract modifications to determine:

 

  1.

if the additional products and services are distinct from the products and services in the original arrangement, and

 

  2.

if the amount of consideration expected for the added products and services reflects the stand-alone selling price of those products and services.

A contract modification meeting both criteria is accounted for as a separate contract. A contract modification not meeting both criteria is considered a change to the original contract and is accounted for on either:

 

  1.

a prospective basis as a termination of the existing contract and the creation of a new contract; or

 

  2.

a cumulative catch-up basis.

 

Geographic revenue

 

     Three Months Ended
September 30,		      Nine Months Ended
September 30,		  
(Dollars in thousands)    2018      2017      2018      2017  

U.S.

    $ 103,075        51%      $ 105,059        55%      $ 327,409        51%      $ 376,819        59%  

Other Americas

      10,424        5%        9,307        5%        37,766        6%        32,890        5%  

United Kingdom (“U.K.”)

      19,277        9%        18,537        10%        68,450        11%        67,403        11%  

Europe (excluding U.K.), Middle East, and Africa

      42,254        21%        31,109        16%        101,150        16%        81,557        13%  

Asia-Pacific

      28,233        14%        26,945        14%        100,449        16%        75,193        12%  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total revenue

    $       203,263              100%      $       190,957                100%      $       635,224              100%      $         633,862              100%  
  

 

 

     

 

 

     

 

 

     

 

 

  

Revenue streams

 

     Three Months Ended
September 30,		      Nine Months Ended
September 30,		  
(in thousands)                2018                              2017                              2018                              2017              

Perpetual license

    $         20,276       $         12,623       $         56,829       $         81,819   

Term license

      32,066         40,611         128,070         149,573   
  

 

 

     

 

 

     

 

 

     

 

 

  

Revenue recognized at a point in time

      52,342         53,234         184,899         231,392   

Maintenance

      66,017         61,812         196,448         179,949   

Cloud

      22,184         13,280         57,967         36,207   

Consulting

      62,720         62,631         195,910         186,314   
  

 

 

     

 

 

     

 

 

     

 

 

  

Revenue recognized over time

      150,921         137,723         450,325         402,470   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total revenue

    $ 203,263       $ 190,957       $ 635,224       $ 633,862   
  

 

 

     

 

 

     

 

 

     

 

 

  
     Three Months Ended
September 30,		      Nine Months Ended
September 30,		  
(in thousands)                2018                              2017                              2018                              2017          

Term license

    $         32,066       $         40,611       $         128,070       $         149,573   

Cloud

      22,184         13,280         57,967         36,207   

Maintenance

      66,017         61,812         196,448         179,949   
  

 

 

     

 

 

     

 

 

     

 

 

  

Subscription(1)

      120,267         115,703         382,485         365,729   

Perpetual license

      20,276         12,623         56,829         81,819   

Consulting

      62,720         62,631         195,910         186,314   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total revenue

    $ 203,263       $ 190,957       $ 635,224       $ 633,862   
  

 

 

     

 

 

     

 

 

     

 

 

  

  (1) Subscription revenue reflects client arrangements (term license, cloud, and maintenance) which may be subject to a renewal.

During the nine months ended September 30, 2018 and 2017, there were no material changes in the Company’s estimate of variable fees.

Remaining performance obligations (formerly reported as “committed not yet recognized revenue”)

Revenue for the remaining performance obligations on existing contracts is expected to be recognized in the future as follows:

 

     September 30, 2018  
(Dollars in thousands)    Perpetual license      Term license      Maintenance      Cloud      Consulting      Total  

1 year or less

    $ 25,343       $ 44,283       $ 140,591       $ 88,529       $ 14,107       $ 312,853                     60%   

1-2 years

      6,490         10,063         8,877         70,815         1,830         98,075         19%   

2-3 years

      360         1,598         2,586         54,646         449         59,639         11%   

Greater than 3 years

      1,306         218         1,079         49,110         50         51,763         10%   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
   $         33,499       $         56,162       $         153,133       $         263,100       $         16,436       $         522,330         100%   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

Major clients

Clients accounting for 10% or more of the Company’s total revenue were as follows:

 

                 Three Months Ended             
September 30,		                  Nine Months Ended             
September 30,		  
(in thousands)    2018      2017      2018      2017  

Total revenue

    $           203,263         $           190,957         $ 635,224      $ 633,862  

Client A

      10%        10%        *        *  

  *Client accounted for less than 10% of total revenue.
v3.10.0.1
STOCK-BASED COMPENSATION
 9 Months Ended
Sep. 30, 2018
STOCK-BASED COMPENSATION

10. STOCK-BASED COMPENSATION

Expense

 

                     Three Months Ended                 
September 30,		                      Nine Months Ended                 
September 30,		  
(in thousands)    2018      2017      2018      2017  

Cost of revenues

    $ 4,319        $ 3,613        $ 12,277        $ 10,913    

Selling and marketing

      6,198          3,976          16,895          11,482    

Research and development

      3,917          3,420          11,356          10,306    

General and administrative

      1,974          2,480          7,045          7,228    
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 16,408        $ 13,489        $ 47,573        $ 39,929    
  

 

 

     

 

 

     

 

 

     

 

 

  

Income tax benefit

    $           (3,555)       $           (4,129)       $           (10,037)       $           (12,231)   

The Company recognizes stock-based compensation using the accelerated recognition method, treating each vesting tranche as if it were an individual grant. As of September 30, 2018, the Company had, net of estimated forfeitures, $74.2 million of unrecognized stock-based compensation expense, related to all unvested restricted stock units (“RSUs”) and stock options, which was expected to be recognized over a weighted-average period of 2.2 years.

Grants

The Company granted the following stock-based compensation awards:

 

                 Nine Months Ended             
September 30,		  
(in thousands)            Shares                     Total Fair Value          

RSUs(1)

      1,117      $ 65,569   

Non-qualified stock options

      1,623      $ 29,372   

 

(1) 

Includes approximately 0.1 million RSUs which were granted in connection with the election by certain employees to receive 50% of their 2018 target incentive compensation under the Company’s Corporate Incentive Compensation Plan in the form of RSUs instead of cash. Stock-based compensation of approximately $8.2 million associated with this RSU grant is expected to be recognized over a one-year period beginning on the grant date.

RSU vestings and stock option exercises

During the nine months ended September 30, 2018, 1.2 million shares of common stock were issued due to stock option exercises and RSU vestings under the Company’s stock-based compensation plans.
v3.10.0.1
INCOME TAXES
 9 Months Ended
Sep. 30, 2018
INCOME TAXES

11. INCOME TAXES

Effective income tax rate

 

     Nine Months Ended
September 30,		  
(Dollars in thousands)            2018                     2017          

Benefit from income taxes

    $ (23,692 )    $ (9,009 ) 

Effective income tax rate

      80 %      (18 )% 

 

During the nine months ended September 30, 2018, the Company’s effective income tax rate changed primarily due to the following factors:

 

  •  

excess tax benefits from stock-based compensation were disproportionately greater than the (loss) income before benefit from income taxes;

 

  •  

a decrease in the estimated annual effective income tax rate primarily due to the reduction of the U.S. statutory federal tax rate from 35% to 21% pursuant to the Tax Reform Act;

 

  •  

an increase in utilization of U.S. research and development tax credits; and

 

  •  

a decrease in uncertain tax provisions as a result of the settlement of a foreign tax audit for 2012 through 2015.

Tax reform act

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“Tax Reform Act”) was enacted into law, which significantly changed U.S. tax law and included many provisions, such as a reduction of the U.S. federal statutory tax rate, a one-time transition tax on deemed repatriation of deferred foreign earnings, and a provision to tax global intangible low-taxed income (“GILTI”) of foreign subsidiaries, a special tax deduction for foreign derived intangible income, and a base erosion anti-abuse tax measure (“BEAT”) that may tax payments between a U.S. corporation and its foreign subsidiaries, among other tax changes.

In the three months ended December 31, 2017, the Company recognized, under SEC Staff Accounting Bulletin No. 118 (“SAB 118”), provisional income taxes, including $20.4 million of income tax expense to re-measure its net deferred tax assets to the 21% enacted rate. Also, during the same period, the Company reduced its provisional income taxes by a $12.6 million income tax benefit as a result of the remeasurement of its net deferred tax liabilities under the retrospective adoption of ASC 606.

The final income tax amounts may differ from those provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions by the Company, additional regulatory guidance that may be issued, and actions the Company may take as a result of the Tax Reform Act.

The Tax Reform Act also provided for a one-time deemed mandatory repatriation of post-1986 undistributed foreign subsidiary earnings and profits through December 31, 2017. However, based on the Company’s provisional analysis performed as of that date, the Company does not expect to be subject to the one-time transition tax due to the Company’s foreign subsidiaries being in a net accumulated deficit position. During the nine months ended September 30, 2018, the Company recognized no material adjustments to these estimates.

The Tax Reform Act provides the following new anti-abuse provisions beginning in 2018:

 

  •  

The GILTI provisions require the Company to include in its U.S. income tax base foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The Company expects that it will be subject to incremental U.S. tax resulting from GILTI inclusions beginning in 2018. As of September 30, 2018, the Company has included an estimate of the effect of its GILTI provisions in its estimated annual effective tax rate. The Company continues to monitor IRS guidance and will update its estimates as guidance is issued.

 

  •  

The BEAT provisions in the Tax Reform Act impose an alternative minimum tax on taxpayers with substantial base-erosion payments. The Company’s preliminary assessment is that the Company will not be subject to the BEAT in 2018. The Company continues to monitor IRS guidance and will update its estimates as guidance is issued.
v3.10.0.1
EARNINGS PER SHARE
 9 Months Ended
Sep. 30, 2018
EARNINGS PER SHARE

12. EARNINGS PER SHARE

Basic earnings per share is computed using the weighted-average number of common shares outstanding during the applicable period. Diluted earnings per share is computed using the weighted-average number of common shares outstanding during the applicable period, plus the dilutive effect of outstanding stock options and RSUs, using the treasury stock method. In periods of loss, all stock options and RSUs are excluded, as their inclusion would be anti-dilutive.

 

The calculation of the basic and diluted earnings per share is as follows:

 

               Three Months Ended          
September 30,		                Nine Months Ended          
September 30,		  
(in thousands, except per share amounts)    2018      2017      2018      2017  

Basic

            

Net (loss) income

    $             (7,587)      $             1,288       $             (5,796)      $             57,953   

Weighted-average common shares outstanding

                  78,700                     77,691                     78,525         77,258   
  

 

 

     

 

 

     

 

 

     

 

 

  

(Loss) earnings per share, basic

    $ (0.10)      $ 0.01       $ (0.07)      $ 0.75   
  

 

 

     

 

 

     

 

 

     

 

 

  
           

Diluted

            

Net (loss) income

    $ (7,587)      $ 1,288       $ (5,796)      $ 57,953   

Weighted-average effect of dilutive securities:

            

Stock options

      —         3,681         —         3,519   

RSUs

      —         1,951         —         1,940   
  

 

 

     

 

 

     

 

 

     

 

 

  

Effect of dilutive securities

      —         5,632         —         5,459   
  

 

 

     

 

 

     

 

 

     

 

 

  

Weighted-average common shares outstanding, assuming dilution

      78,700         83,323         78,525         82,717   
  

 

 

     

 

 

     

 

 

     

 

 

  

(Loss) earnings per share, diluted

    $ (0.10)      $ 0.01       $ (0.07)      $ 0.70   
  

 

 

     

 

 

     

 

 

     

 

 

  
           

Outstanding anti-dilutive stock options and RSUs(1)

      6,119         105         6,380         219   

 

(1) 

Certain outstanding stock options and RSUs were excluded from the computation of diluted earnings per share because they were anti-dilutive in the period presented. These awards may be dilutive in the future.
v3.10.0.1
Accounting Policies (Policies)
 9 Months Ended
Sep. 30, 2018
Deferred Contract Cost

The Company recognizes an asset for the incremental costs of obtaining a contract with a client if the Company expects the benefit of those costs to be longer than one year. Deferred costs are amortized on a straight-line basis over the benefit period, which is on average five years.
Revenue

Revenue policy

The Company’s revenue is primarily derived from:

 

  •  

Software license revenue is primarily derived from sales of the Company’s Pega Platform and software applications.

 

  •  

Maintenance revenue includes revenue from client support including software upgrades on a when and-if available basis, telephone support, and bug fixes or patches.

 

  •  

Services revenue is primarily derived from cloud revenue, which is sales of the Company’s hosted Pega Platform and software applications, and consulting revenue, which is primarily related to new license implementations.

Contracts with multiple performance obligations

The Company’s license and cloud arrangements often contain multiple performance obligations. For contracts with multiple performance obligations, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative stand-alone selling price basis. If the transaction price contains discounts or the Company expects to provide a future price concession, these elements are considered when determining the transaction price prior to allocation. Variable fees within the transaction price are estimated and recognized in revenue as the Company satisfies each performance obligation to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable fee is resolved. If the contract grants the client the option to acquire additional products or services, the Company assesses whether any discount on the included products and services is in excess of levels normally available to similar clients and, if so, accounts for that discount as an additional performance obligation.

Software licenses

The Company has concluded that its software licenses are distinct performance obligations, as the client can benefit from the software on its own. Software license revenue is typically recognized at a point in time when control is transferred to the client, which is defined as the point in time when the client can use and benefit from the license. The software license is delivered before related services are provided and is functional without services, updates, and technical support.

Stand-alone selling price for software licenses is determined using the residual approach. The Company utilizes the residual approach as license performance obligations are sold for a broad range of amounts (the selling price is highly variable) and a stand-alone selling price is not discernible from past transactions or other observable evidence. Periodically, the Company reevaluates whether the residual approach is appropriate for its license performance obligations when sold with other performance obligations. If the standalone selling price analysis illustrates that software license performance obligations are no longer highly variable, the Company will utilize the relative allocation method for such arrangements.

 

Term license fees are usually payable in advance on a monthly, quarterly, or annual basis over the term of the license agreement, which is typically three to five years and may be renewed for additional terms at the client’s option. Perpetual license fees are usually payable when the contract is executed.

Maintenance

Maintenance contracts entitle clients to receive technical support and software updates, on a when and if available basis, during the term of the maintenance contract. Technical support and software updates are considered distinct services but accounted for as a single performance obligation, as they each constitute a series of distinct services that are substantially the same and have the same pattern of transfer to the client. Maintenance revenue is recognized over time on a straight-line basis over the contract period.

The maintenance performance obligation is priced as a percentage of the selling price of the related software license, which is highly variable. The Company determined the standalone selling price based on this pricing relationship, which has remained constant within a narrow range, and observable data from standalone sales of maintenance, along with all other observable data.

Maintenance fees are usually payable in advance on a monthly, quarterly, or annual basis over the term of the agreement.

Services

Services revenue is comprised of consulting, including software license implementations, training, reimbursable expenses, and cloud, which is derived from sales of the Company’s hosted Pega Platform and software application environments. The Company has concluded that most services are distinct performance obligations. Consulting may be provided on a stand-alone basis or bundled with other performance obligations.

 

  •  

The stand-alone selling price for time and materials consulting is determined by observable prices in similar transactions without multiple performance obligations and recognized as revenue as the services are performed. Fees for time and materials consulting contracts are usually payable shortly after the service is provided.

 

  •  

The stand-alone selling price for fixed price consulting is based on the estimated hours versus actual hours in similar geographies and for similar contract sizes. Revenue for fixed price consulting is recognized over time as the services are provided. Fees for fixed price consulting are usually payable as contract milestones are achieved.

 

  •  

The stand-alone selling price of cloud sales of production environments is determined based on the residual approach when sold with other performance obligations and is recognized over the term of the service. The Company utilizes the residual approach as cloud performance obligations are sold for a broad range of amounts (the selling price is highly variable) and a stand-alone selling price is not discernible from past transactions or other observable evidence. Cloud fees for production environments are usually payable in advance on a monthly, quarterly, or annual basis over the term of the service.

 

  •  

The stand-alone selling price for cloud sales of development and testing environments is developed using observable prices in similar transactions without multiple performance obligations and is recognized over the term of the service. Cloud fees for development and testing environments are usually payable in advance on a monthly, quarterly, or annual basis over the term of the service.

Contract modifications

The Company enters into amendments to previously executed contracts which constitute contract modifications. The Company assesses each of these contract modifications to determine:

 

  1.

if the additional products and services are distinct from the products and services in the original arrangement, and

 

  2.

if the amount of consideration expected for the added products and services reflects the stand-alone selling price of those products and services.

A contract modification meeting both criteria is accounted for as a separate contract. A contract modification not meeting both criteria is considered a change to the original contract and is accounted for on either:

 

  1.

a prospective basis as a termination of the existing contract and the creation of a new contract; or

 

  2.

a cumulative catch-up basis.
v3.10.0.1
NEW ACCOUNTING PRONOUNCEMENTS (Tables)
 9 Months Ended
Sep. 30, 2018
Accounting Standards Update 2014-09  
Summary of Impact of Adoption of ASU 606

The impact of the adoption of ASC 606 and ASC 340-40 on the Company’s unaudited condensed consolidated balance sheet and unaudited condensed consolidated statement of operations is:

 

     December 31, 2017  
(in thousands)        Previously reported                    Adjustments                          As adjusted            

Assets

         

Accounts receivable, unbilled receivables, and contract assets

    $ 248,331       $ 134,216       $ 382,547   

Long-term unbilled receivables

      —         160,708         160,708   

Deferred income taxes

      57,127         (42,887)        14,240   

Deferred contract costs

      —         37,924         37,924   

Other assets(1)

      416,148         —         416,148   
  

 

 

     

 

 

     

 

 

  

Total assets

    $ 721,606       $ 289,961       $ 1,011,567   
  

 

 

     

 

 

     

 

 

  

Liabilities and stockholders’ equity

         

Deferred revenue

    $ 195,073       $ (28,776)      $ 166,297   

Long-term deferred revenue

      6,591         (2,885)        3,706   

Deferred income tax liabilities

      —         38,463         38,463   

Other liabilities(2)

      148,864         —         148,864   
  

 

 

     

 

 

     

 

 

  

Total liabilities

      350,528         6,802         357,330   

Foreign currency translation adjustments

      (3,494)        (2,966)        (6,460)  

Retained earnings

      221,926         286,125         508,051   

Other equity(3)

      152,646         —         152,646   
  

 

 

     

 

 

     

 

 

  

Total stockholders’ equity

      371,078         283,159         654,237   
  

 

 

     

 

 

     

 

 

  

Total liabilities and stockholders’ equity

    $         721,606       $         289,961       $         1,011,567   
  

 

 

     

 

 

     

 

 

  

 

  (1) 

Includes cash, cash equivalents, marketable securities, income taxes receivable, other current assets, property and equipment, intangible assets, goodwill, and other long-term assets (as reflected in the consolidated balance sheets in the Annual Report on Form 10-K for the year ended December 31, 2017).
  (2) 

Includes accounts payable, accrued expenses, accrued compensation and related expenses, income taxes payable, and other long-term liabilities (as reflected in the consolidated balance sheets in the Annual Report on Form 10-K for the year ended December 31, 2017).
  (3)

Includes common stock, additional paid-in capital, and net unrealized loss on available-for-sale marketable securities (as reflected in the consolidated balance sheets in the Annual Report on Form 10-K for the year ended December 31, 2017).

 

     September 30, 2017  
     Three Months Ended      Nine Months Ended  
(in thousands, except per share amounts)      Previously  
Reported		        Adjustments          As Adjusted          Previously  
Reported		        Adjustments          As Adjusted    

Revenue:

                  

 Software license

    $ 41,793       $ 11,441       $ 53,234       $ 195,220       $ 36,172       $ 231,392   

 Maintenance

      62,204         (392)        61,812         180,759         (810)        179,949   

 Services

      75,818         93         75,911         225,063         (2,542)        222,521   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

  Total revenue

      179,815         11,142         190,957         601,042         32,820         633,862   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Cost of revenue:

                  

 Software license

      1,276         —          1,276         3,826         —          3,826   

 Maintenance

      6,716         —          6,716         20,945         —          20,945   

 Services

      61,739         —          61,739         180,925         —          180,925   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

  Total cost of revenue

      69,731         —          69,731         205,696         —          205,696   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Gross profit

      110,084         11,142         121,226         395,346         32,820         428,166   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Operating expenses:

                  

 Selling and marketing

      70,209         (846)        69,363         217,384         (3,140)        214,244   

 Research and development

      41,031         —          41,031         121,089         —          121,089   

 General and administrative

      13,133         —          13,133         38,174         —          38,174   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 Total operating expenses

      124,373         (846)        123,527         376,647         (3,140)        373,507   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

(Loss) income from operations

      (14,289)        11,988         (2,301)        18,699         35,960         54,659   

Foreign currency transaction loss

      (552)        (4,500)        (5,052)        (793)        (5,756)        (6,549)  

Interest income, net

      144         (4)        140         470         77         547   

Other income, net

      —          —          —          287         —          287   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

(Loss) income before benefit from income taxes

      (14,697)        7,484         (7,213)        18,663         30,281         48,944   

Benefit from income taxes

      (12,885)        4,384         (8,501)        (17,952)        8,943         (9,009)  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

  Net (loss) income

    $ (1,812)      $ 3,100       $ 1,288       $ 36,615       $ 21,338       $ 57,953   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

(Loss) earnings per share:

                  

 Basic

    $ (0.03)         $ 0.01       $ 0.47          $ 0.75   
  

 

 

        

 

 

     

 

 

        

 

 

  

 Diluted

    $ (0.03)         $ 0.01       $ 0.44          $ 0.70   
  

 

 

        

 

 

     

 

 

        

 

 

  

Weighted-average number of common shares outstanding:

                  

 Basic

      77,691            77,691         77,258            77,258   

 Diluted

      77,691            83,323         82,717            82,717   

v3.10.0.1
MARKETABLE SECURITIES (Tables)
 9 Months Ended
Sep. 30, 2018
Schedule of Marketable Securities
     September 30, 2018  
(in thousands)        Amortized Cost              Unrealized Gains              Unrealized Losses                  Fair Value          

Municipal bonds

    $ 46,633       $ —       $ (267)      $ 46,366   

Corporate bonds

      53,738         1         (323)        53,416   
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 100,371       $ 1       $ (590)      $ 99,782   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

     December 31, 2017  
(in thousands)        Amortized Cost              Unrealized Gains              Unrealized Losses                  Fair Value          

Municipal bonds

    $ 32,996       $ —       $ (148)      $ 32,848   

Corporate bonds

      28,757         1         (137)        28,621   
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 61,753       $ 1       $ (285)      $ 61,469   
  

 

 

     

 

 

     

 

 

     

 

 

  
v3.10.0.1
RECEIVABLES, CONTRACT ASSETS, AND DEFERRED REVENUE (Tables)
 9 Months Ended
Sep. 30, 2018
Summary of Receivable

Receivables

 

(in thousands)            September 30,        
2018		              December 31,        
2017		  

Accounts receivable

    $ 150,733       $ 222,735   

Unbilled receivables

      155,964         158,898   

Long-term unbilled receivables

      168,929         160,708   
  

 

 

     

 

 

  
   $                         475,626       $                         542,341   
  

 

 

     

 

 

  
Summary of Unbilled Receivables

Unbilled receivables are expected to be billed in the future as follows:

 

(Dollars in thousands)            September 30,        
2018		  

1 Year or Less

    $         155,964                     48%   

1-2 Years

      89,177         27%   

2-5 Years

      79,752         25%   
  

 

 

     

 

 

  
   $ 324,893         100%   
  

 

 

     

 

 

  
Summary of Contract Assets and Deferred Revenue

Contract assets and deferred revenue

 

(in thousands)            September 30,        
2018		              December 31,        
2017		  

Contract assets(1)

    $ 2,888       $ 914   

Long-term contract assets(2)

      1,581         —   
  

 

 

     

 

 

  
   $ 4,469       $ 914   
  

 

 

     

 

 

  

Deferred revenue

    $ 158,178       $ 166,297   

Long-term deferred revenue(3)

      5,840         3,706   
  

 

 

     

 

 

  
   $ 164,018       $ 170,003   
  

 

 

     

 

 

  

  (1) Included in other current assets.

  (2) Included in other long-term assets.

  (3) Included in other long-term liabilities.
v3.10.0.1
DEFERRED CONTRACT COSTS (Tables)
 9 Months Ended
Sep. 30, 2018
Schedule of Impairment of Deferred Contract Costs
(in thousands)        September 30,    
2018		          December 31,    
2017		  

Deferred contract costs(1)

    $                         50,799        $                         37,924    

  (1) Included in other long-term assets.
Schedule of amortization of deferred contract costs

Amortization of deferred contract costs was as follows:

 

                 Three Months Ended        
September 30,		              Nine Months Ended        
September 30,		  
(in thousands)          2018                  2017                  2018                  2017        

Amortization of deferred contract costs(1)

    $             4,208       $             3,034       $             11,806       $             8,529   

  (1) Included in selling and marketing expenses.
v3.10.0.1
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)
 9 Months Ended
Sep. 30, 2018
Change in Carrying Amount of Goodwill

The change in the carrying amount of goodwill was as follows:

 

(in thousands)               Nine Months Ended             
September 30,		  
  2018  

Balance as of January 1,

   $ 72,952   

Currency translation adjustments

     (55)  
 

 

 

  

Balance as of September 30,

   $ 72,897   
 

 

 

  
Schedule of Amortizable Intangible Assets

Intangible assets are recorded at cost and amortized using the straight-line method over their estimated useful lives as follows:

 

          September 30, 2018  
(in thousands)           Useful Lives             Cost     Accumulated
Amortization		     Net Book Value(1)  

Client-related intangibles

     4-10 years      $                 63,136      $                 (49,633)      $                 13,503   

Technology

     3-10 years        58,942        (49,067)        9,875   

Other

     1-5 years        5,361        (5,361)        —   
   

 

 

    

 

 

    

 

 

  
    $               127,439      $               (104,061)      $                 23,378   
   

 

 

    

 

 

    

 

 

  

  (1) Included in other long-term assets.

 

          December 31, 2017  
(in thousands)           Useful Lives             Cost     Accumulated
Amortization		     Net Book Value(1)  

Client-related intangibles

     4-10 years      $                 63,164      $                 (44,835)      $                 18,329   

Technology

     3-10 years        58,942        (45,372)        13,570   

Other

     1-5 years        5,361        (5,361)        —   
   

 

 

    

 

 

    

 

 

  
    $               127,467      $                 (95,568)      $                 31,899   
   

 

 

    

 

 

    

 

 

  

  (1) Included in other long-term assets.
Amortization of Intangible Assets

Amortization of intangible assets was as follows:

 

                 Three Months Ended             
September 30,		                  Nine Months Ended             
September 30,		  
(in thousands)    2018      2017      2018      2017  

Cost of revenue

    $                 1,232       $                 1,232       $                 3,695       $                 3,871   

Selling and marketing

      1,603         1,873         4,813         5,608   
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 2,835       $ 3,105       $ 8,508       $ 9,479   
  

 

 

     

 

 

     

 

 

     

 

 

  
v3.10.0.1
ACCRUED EXPENSES (Tables)
 9 Months Ended
Sep. 30, 2018
Schedule of Accrued Expenses
(in thousands)    September 30,
2018		      December 31,
2017		  

Outside professional services

    $ 11,638       $ 14,468   

Income and other taxes

      3,971         7,420   

Marketing and sales program expenses

      4,623         6,444   

Dividends payable

      2,365         2,344   

Employee-related expenses

      5,212         4,065   

Other

      12,020         10,767   
  

 

 

     

 

 

  
   $                     39,829       $                     45,508   
  

 

 

     

 

 

  
v3.10.0.1
FAIR VALUE MEASUREMENTS (Tables)
 9 Months Ended
Sep. 30, 2018
Assets and Liabilities Measured at Fair Value

The Company’s assets and liabilities measured at fair value on a recurring basis were as follows:

 

     September 30, 2018  
(in thousands)            Level 1                      Level 2                      Level 3                      Total          

Cash equivalents

    $                     10,212        $                     15,212        $                     —        $                     25,424    

Marketable securities:

            

Municipal bonds

    $ —        $ 46,366        $ —        $ 46,366    

Corporate bonds

      —          53,416          —          53,416    
  

 

 

     

 

 

     

 

 

     

 

 

  

Total marketable securities

    $ —        $ 99,782        $ —        $ 99,782    

Investments in privately-held companies(1)

    $ —        $ —        $ 2,890        $ 2,890    

  (1) Included in other long-term assets.

 

     December 31, 2017  
(in thousands)            Level 1                      Level 2                      Level 3                      Total          

Cash equivalents

    $             2,720        $             40,051        $             —        $             42,771    

Marketable securities:

                   

Municipal bonds

    $ —        $ 32,848        $ —        $ 32,848    

Corporate bonds

      —          28,621          —          28,621    
  

 

 

     

 

 

     

 

 

     

 

 

  

Total marketable securities

    $ —        $ 61,469        $ —        $ 61,469    

Investments in privately-held companies(1)

    $ —        $ —        $ 1,030        $ 1,030    

  (1) Included in other long-term assets.
v3.10.0.1
REVENUE (Tables)
 9 Months Ended
Sep. 30, 2018
Disaggregation of Revenue

Geographic revenue

 

     Three Months Ended
September 30,		      Nine Months Ended
September 30,		  
(Dollars in thousands)    2018      2017      2018      2017  

U.S.

    $ 103,075        51%      $ 105,059        55%      $ 327,409        51%      $ 376,819        59%  

Other Americas

      10,424        5%        9,307        5%        37,766        6%        32,890        5%  

United Kingdom (“U.K.”)

      19,277        9%        18,537        10%        68,450        11%        67,403        11%  

Europe (excluding U.K.), Middle East, and Africa

      42,254        21%        31,109        16%        101,150        16%        81,557        13%  

Asia-Pacific

      28,233        14%        26,945        14%        100,449        16%        75,193        12%  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total revenue

    $       203,263              100%      $       190,957                100%      $       635,224              100%      $         633,862              100%  
  

 

 

     

 

 

     

 

 

     

 

 

  

Revenue streams

 

     Three Months Ended
September 30,		      Nine Months Ended
September 30,		  
(in thousands)                2018                              2017                              2018                              2017              

Perpetual license

    $         20,276       $         12,623       $         56,829       $         81,819   

Term license

      32,066         40,611         128,070         149,573   
  

 

 

     

 

 

     

 

 

     

 

 

  

Revenue recognized at a point in time

      52,342         53,234         184,899         231,392   

Maintenance

      66,017         61,812         196,448         179,949   

Cloud

      22,184         13,280         57,967         36,207   

Consulting

      62,720         62,631         195,910         186,314   
  

 

 

     

 

 

     

 

 

     

 

 

  

Revenue recognized over time

      150,921         137,723         450,325         402,470   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total revenue

    $ 203,263       $ 190,957       $ 635,224       $ 633,862   
  

 

 

     

 

 

     

 

 

     

 

 

  
     Three Months Ended
September 30,		      Nine Months Ended
September 30,		  
(in thousands)                2018                              2017                              2018                              2017          

Term license

    $         32,066       $         40,611       $         128,070       $         149,573   

Cloud

      22,184         13,280         57,967         36,207   

Maintenance

      66,017         61,812         196,448         179,949   
  

 

 

     

 

 

     

 

 

     

 

 

  

Subscription(1)

      120,267         115,703         382,485         365,729   

Perpetual license

      20,276         12,623         56,829         81,819   

Consulting

      62,720         62,631         195,910         186,314   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total revenue

    $ 203,263       $ 190,957       $ 635,224       $ 633,862   
  

 

 

     

 

 

     

 

 

     

 

 

  

  (1) Subscription revenue reflects client arrangements (term license, cloud, and maintenance) which may be dependent on a renewal for a client to receive continued benefit.
Revenue for Remaining Performance Obligations Expected to be Recognized

Revenue for the remaining performance obligations on existing contracts is expected to be recognized in the future as follows:

 

     September 30, 2018  
(Dollars in thousands)    Perpetual license      Term license      Maintenance      Cloud      Consulting      Total  

1 year or less

    $ 25,343       $ 44,283       $ 140,591       $ 88,529       $ 14,107       $ 312,853                     60%   

1-2 years

      6,490         10,063         8,877         70,815         1,830         98,075         19%   

2-3 years

      360         1,598         2,586         54,646         449         59,639         11%   

Greater than 3 years

      1,306         218         1,079         49,110         50         51,763         10%   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
   $         33,499       $         56,162       $         153,133       $         263,100       $         16,436       $         522,330         100%   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 


 
Total Revenue of Major Clients

Clients accounting for 10% or more of the Company’s total revenue were as follows:

 

                 Three Months Ended             
September 30,		                  Nine Months Ended             
September 30,		  
(in thousands)    2018      2017      2018      2017  

Total revenue

    $           203,263         $           190,957         $ 635,224      $ 633,862  

Client A

      10%        10%        *        *  

  *Client accounted for less than 10% of total revenue.
v3.10.0.1
STOCK-BASED COMPENSATION (Tables)
 9 Months Ended
Sep. 30, 2018
Summary of Stock Based Compensation Expense

Expense

 

                     Three Months Ended                 
September 30,		                      Nine Months Ended                 
September 30,		  
(in thousands)    2018      2017      2018      2017  

Cost of revenues

    $ 4,319        $ 3,613        $ 12,277        $ 10,913    

Selling and marketing

      6,198          3,976          16,895          11,482    

Research and development

      3,917          3,420          11,356          10,306    

General and administrative

      1,974          2,480          7,045          7,228    
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 16,408        $ 13,489        $ 47,573        $ 39,929    
  

 

 

     

 

 

     

 

 

     

 

 

  

Income tax benefit

    $           (3,555)       $           (4,129)       $           (10,037)       $           (12,231)   

Summary of stock based compensation award granted

Grants

The Company granted the following stock-based compensation awards:

 

                 Nine Months Ended             
September 30,		  
(in thousands)            Shares                     Total Fair Value          

RSUs(1)

      1,117      $ 65,569   

Non-qualified stock options

      1,623      $ 29,372   

 

(1) 

Includes approximately 0.1 million RSUs which were granted in connection with the election by certain employees to receive 50% of their 2018 target incentive compensation under the Company’s Corporate Incentive Compensation Plan in the form of RSUs instead of cash. Stock-based compensation of approximately $8.2 million associated with this RSU grant is expected to be recognized over a one-year period beginning on the grant date.
v3.10.0.1
INCOME TAXES (Tables)
 9 Months Ended
Sep. 30, 2018
Summary of Benefit from Income Taxes and Discrete Tax Items

Effective income tax rate

 

     Nine Months Ended
September 30,		  
(Dollars in thousands)            2018                     2017          

Benefit from income taxes

    $ (23,692 )    $ (9,009 ) 

Effective income tax rate

      80 %      (18 )% 
v3.10.0.1
EARNINGS PER SHARE (Tables)
 9 Months Ended
Sep. 30, 2018
Summary of Basic and Diluted Earnings Per Share

The calculation of the basic and diluted earnings per share is as follows:

 

               Three Months Ended          
September 30,		                Nine Months Ended          
September 30,		  
(in thousands, except per share amounts)    2018      2017      2018      2017  

Basic

            

Net (loss) income

    $             (7,587)      $             1,288       $             (5,796)      $             57,953   

Weighted-average common shares outstanding

                  78,700                     77,691                     78,525         77,258   
  

 

 

     

 

 

     

 

 

     

 

 

  

(Loss) earnings per share, basic

    $ (0.10)      $ 0.01       $ (0.07)      $ 0.75   
  

 

 

     

 

 

     

 

 

     

 

 

  
           

Diluted

            

Net (loss) income

    $ (7,587)      $ 1,288       $ (5,796)      $ 57,953   

Weighted-average effect of dilutive securities:

            

Stock options

      —         3,681         —         3,519   

RSUs

      —         1,951         —         1,940   
  

 

 

     

 

 

     

 

 

     

 

 

  

Effect of dilutive securities

      —         5,632         —         5,459   
  

 

 

     

 

 

     

 

 

     

 

 

  

Weighted-average common shares outstanding, assuming dilution

      78,700         83,323         78,525         82,717   
  

 

 

     

 

 

     

 

 

     

 

 

  

(Loss) earnings per share, diluted

    $ (0.10)      $ 0.01       $ (0.07)      $ 0.70   
  

 

 

     

 

 

     

 

 

     

 

 

  
           

Outstanding anti-dilutive stock options and RSUs(1)

      6,119         105         6,380         219   

 

(1) 

Certain outstanding stock options and RSUs were excluded from the computation of diluted earnings per share because they were anti-dilutive in the period presented. These awards may be dilutive in the future.
v3.10.0.1
Summary of Impact of Adoption of ASU 606 (Detail) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Assets          
Accounts receivable, unbilled receivables, and contract assets         $ 382,547
Long-term unbilled receivables [1] $ 168,929   $ 168,929   160,708
Deferred income taxes         14,240
Deferred contract costs         37,924
Other assets [2]         416,148
Total assets [1] 962,643   962,643   1,011,567
Liabilities and stockholders' equity          
Deferred revenue [1] 158,178   158,178   166,297
Long-term deferred revenue [3] 5,840   5,840   3,706
Deferred income tax liabilities [1] 36,166   36,166   38,463
Other liabilities [4]         148,864
Total liabilities [1] 341,788   341,788   357,330
Foreign currency translation adjustments         (6,460)
Retained earnings [1] 496,815   496,815   508,051
Other equity [5]         152,646
Total stockholders' equity [1] 620,855   620,855   654,237
Total liabilities and stockholders' equity [1] 962,643   962,643   1,011,567
Revenue:          
Total revenue [1] 203,263 $ 190,957 635,224 $ 633,862  
Cost of revenue:          
Total cost of revenue [1] 74,423 69,731 223,854 205,696  
Gross profit [1] 128,840 121,226 411,370 428,166  
Operating expenses:          
Selling and marketing [1] 87,490 69,363 269,845 214,244  
Research and development [1] 46,504 41,031 135,261 121,089  
General and administrative [1] 12,104 13,133 38,749 38,174  
Total operating expenses [1] 146,098 123,527 443,855 373,507  
(Loss) income from operations [1] (17,258) (2,301) (32,485) 54,659  
Foreign currency transaction loss [1] 399 (5,052) 558 (6,549)  
Interest income, net [1] 683 140 2,076 547  
Other income, net [1]     363 287  
(Loss) income before benefit from income taxes [1] (16,176) (7,213) (29,488) 48,944  
Benefit from income taxes [1] (8,589) (8,501) (23,692) (9,009)  
Net (loss) income [1] $ (7,587) $ 1,288 $ (5,796) $ 57,953  
(Loss) earnings per share:          
Basic [1] $ (0.10) $ 0.01 $ (0.07) $ 0.75  
Diluted [1] $ (0.10) $ 0.01 $ (0.07) $ 0.70  
Weighted-average number of common shares outstanding:          
Basic [1] 78,700 77,691 78,525 77,258  
Diluted [1] 78,700 83,323 78,525 82,717  
Software license          
Revenue:          
Total revenue [1] $ 52,342 $ 53,234 $ 184,899 $ 231,392  
Cost of revenue:          
Total cost of revenue [1] 1,255 1,276 3,772 3,826  
Maintenance          
Revenue:          
Total revenue [1] 66,017 61,812 196,448 179,949  
Cost of revenue:          
Total cost of revenue [1] 6,079 6,716 18,035 20,945  
Services          
Revenue:          
Total revenue [1] 84,904 75,911 253,877 222,521  
Cost of revenue:          
Total cost of revenue [1] $ 67,089 61,739 $ 202,047 180,925  
Calculated under Revenue Guidance in Effect before Topic 606 [Member] | Accounting Standards Update 2014-09          
Assets          
Accounts receivable, unbilled receivables, and contract assets         248,331
Deferred income taxes         57,127
Other assets [2]         416,148
Total assets         721,606
Liabilities and stockholders' equity          
Deferred revenue         195,073
Long-term deferred revenue         6,591
Other liabilities [4]         148,864
Total liabilities         350,528
Foreign currency translation adjustments         (3,494)
Retained earnings         221,926
Other equity [5]         152,646
Total stockholders' equity         371,078
Total liabilities and stockholders' equity         721,606
Revenue:          
Total revenue   179,815   601,042  
Cost of revenue:          
Total cost of revenue   69,731   205,696  
Gross profit   110,084   395,346  
Operating expenses:          
Selling and marketing   70,209   217,384  
Research and development   41,031   121,089  
General and administrative   13,133   38,174  
Total operating expenses   124,373   376,647  
(Loss) income from operations   (14,289)   18,699  
Foreign currency transaction loss   (552)   (793)  
Interest income, net   144   470  
Other income, net       287  
(Loss) income before benefit from income taxes   (14,697)   18,663  
Benefit from income taxes   (12,885)   (17,952)  
Net (loss) income   $ (1,812)   $ 36,615  
(Loss) earnings per share:          
Basic   $ (0.03)   $ 0.47  
Diluted   $ (0.03)   $ 0.44  
Weighted-average number of common shares outstanding:          
Basic   77,691   77,258  
Diluted   77,691   82,717  
Calculated under Revenue Guidance in Effect before Topic 606 [Member] | Accounting Standards Update 2014-09 | Software license          
Revenue:          
Total revenue   $ 41,793   $ 195,220  
Cost of revenue:          
Total cost of revenue   1,276   3,826  
Calculated under Revenue Guidance in Effect before Topic 606 [Member] | Accounting Standards Update 2014-09 | Maintenance          
Revenue:          
Total revenue   62,204   180,759  
Cost of revenue:          
Total cost of revenue   6,716   20,945  
Calculated under Revenue Guidance in Effect before Topic 606 [Member] | Accounting Standards Update 2014-09 | Services          
Revenue:          
Total revenue   75,818   225,063  
Cost of revenue:          
Total cost of revenue   61,739   180,925  
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09          
Assets          
Accounts receivable, unbilled receivables, and contract assets         134,216
Long-term unbilled receivables         160,708
Deferred income taxes         (42,887)
Deferred contract costs         37,924
Total assets         289,961
Liabilities and stockholders' equity          
Deferred revenue         (28,776)
Long-term deferred revenue         (2,885)
Deferred income tax liabilities         38,463
Total liabilities         6,802
Foreign currency translation adjustments         (2,966)
Retained earnings         286,125
Total stockholders' equity         283,159
Total liabilities and stockholders' equity         $ 289,961
Revenue:          
Total revenue   11,142   32,820  
Cost of revenue:          
Gross profit   11,142   32,820  
Operating expenses:          
Selling and marketing   (846)   (3,140)  
Total operating expenses   (846)   (3,140)  
(Loss) income from operations   11,988   35,960  
Foreign currency transaction loss   (4,500)   (5,756)  
Interest income, net   (4)   77  
(Loss) income before benefit from income taxes   7,484   30,281  
Benefit from income taxes   4,384   8,943  
Net (loss) income   3,100   21,338  
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 | Software license          
Revenue:          
Total revenue   11,441   36,172  
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 | Maintenance          
Revenue:          
Total revenue   (392)   (810)  
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 | Services          
Revenue:          
Total revenue   $ 93   $ (2,542)  
[1] On January 1, 2018, the Company adopted the ASC 606 revenue recognition standard and has adjusted prior periods to conform. See Note 2. "New Accounting Pronouncements" for additional information.
[2] Includes cash, cash equivalents, marketable securities, income taxes receivable, other current assets, property and equipment, intangible assets, goodwill, and other long-term assets (as reflected in the consolidated balance sheets in the Annual Report on Form 10-K for the year ended December 31, 2017)
[3] Included in other long-term liabilities.
[4] Includes accounts payable, accrued expenses, accrued compensation and related expenses, income taxes payable, and other long-term liabilities (as reflected in the consolidated balance sheets in the Annual Report on Form 10-K for the year ended December 31, 2017).
[5] Includes common stock, additional paid-in capital, and net unrealized loss on available-for-sale marketable securities (as reflected in the consolidated balance sheets in the Annual Report on Form 10-K for the year ended December 31, 2017).
v3.10.0.1
Schedule of Marketable Securities (Detail) - USD ($)
$ in Thousands
Sep. 30, 2018
Dec. 31, 2017
Debt Securities, Available-for-sale [Line Items]    
Amortized Cost $ 100,371 $ 61,753
Unrealized Gains 1 1
Unrealized Losses (590) (285)
Fair Value [1] 99,782 61,469
Municipal bonds    
Debt Securities, Available-for-sale [Line Items]    
Amortized Cost 46,633 32,996
Unrealized Losses (267) (148)
Fair Value 46,366 32,848
Corporate bonds    
Debt Securities, Available-for-sale [Line Items]    
Amortized Cost 53,738 28,757
Unrealized Gains 1 1
Unrealized Losses (323) (137)
Fair Value $ 53,416 $ 28,621
[1] On January 1, 2018, the Company adopted the ASC 606 revenue recognition standard and has adjusted prior periods to conform. See Note 2. "New Accounting Pronouncements" for additional information.
v3.10.0.1
Marketable Securities - Additional Information (Detail)
 9 Months Ended
Sep. 30, 2018
Debt Securities, Available-for-sale [Line Items]  
Weighted-average remaining maturity period of marketable debt securities, months 1 year 6 months
Minimum  
Debt Securities, Available-for-sale [Line Items]  
Remaining maturities of marketable debt securities 2018-10
Maximum  
Debt Securities, Available-for-sale [Line Items]  
Remaining maturities of marketable debt securities 2021-08
v3.10.0.1
Summary of Receivable (Detail) - USD ($)
$ in Thousands
Sep. 30, 2018
Dec. 31, 2017
Accounts Receivable and Unbilled Receivable [Line Items]    
Accounts receivable [1] $ 150,733 $ 222,735
Unbilled receivables [1] 155,964 158,898
Long-term unbilled receivables [1] 168,929 160,708
Total receivables $ 475,626 $ 542,341
[1] On January 1, 2018, the Company adopted the ASC 606 revenue recognition standard and has adjusted prior periods to conform. See Note 2. "New Accounting Pronouncements" for additional information.
v3.10.0.1
Summary of Unbilled Receivables (Detail)
$ in Thousands
Sep. 30, 2018
USD ($)
Accounts Receivable and Unbilled Receivable [Line Items]  
1 Year or Less $ 155,964
1-2 Years 89,177
2-5 Years 79,752
Total $ 324,893
Percentage of unbilled receivables, 1 Year or Less 48.00%
Percentage of unbilled receivables, 1-2 Years 27.00%
Percentage of unbilled receivables, 2-5 Years 25.00%
Total percentage of unbilled receivables 100.00%
v3.10.0.1
Summary of Contract Assets and Deferred Revenue (Detail) - USD ($)
$ in Thousands
Sep. 30, 2018
Dec. 31, 2017
Accounts Receivable Net [Line Items]    
Contract assets [1] $ 2,888 $ 914
Long-term contract assets [2] 1,581  
Total contract assets 4,469 914
Deferred revenue [3] 158,178 166,297
Long-term deferred revenue [4] 5,840 3,706
Total deferred revenue $ 164,018 $ 170,003
[1] Included in other current assets.
[2] Included in other long-term assets.
[3] On January 1, 2018, the Company adopted the ASC 606 revenue recognition standard and has adjusted prior periods to conform. See Note 2. "New Accounting Pronouncements" for additional information.
[4] Included in other long-term liabilities.
v3.10.0.1
Receivables, Contract Assets, and Deferred Revenue - Additional Information (Detail)
$ in Millions
 9 Months Ended 12 Months Ended
Sep. 30, 2018
USD ($)
Dec. 31, 2017
Accounts Receivable Net [Line Items]    
Deferred Revenue $ 225.1  
Receivables    
Accounts Receivable Net [Line Items]    
Number Of clients 0 0
Credit Concentration Risk | Receivables | Minimum    
Accounts Receivable Net [Line Items]    
Concentration risk, percentage 10.00% 10.00%
v3.10.0.1
Deferred Contract Costs - Additional Information (Detail)
 9 Months Ended
Sep. 30, 2018
Amortized period 5 years
v3.10.0.1
Schedule of Impairment of Deferred Contract Costs (Detail) - USD ($)
$ in Thousands
Sep. 30, 2018
Dec. 31, 2017
Deferred Contract Cost [Line Items]    
Deferred contract costs [1] $ 50,799 $ 37,924
[1] Included in other long-term assets.
v3.10.0.1
Schedule of Amortization of Deferred Contract Costs (Detail) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Deferred Contract Cost [Line Items]        
Amortization of deferred contract costs [1] $ 4,208 $ 3,034 $ 11,806 $ 8,529
[1] Included in selling and marketing expenses.
v3.10.0.1
Change in Carrying Amount of Goodwill (Detail)
$ in Thousands
 9 Months Ended
Sep. 30, 2018
USD ($)
Goodwill [Line Items]  
Balance as of January 1, $ 72,952 [1]
Currency translation adjustments (55)
Balance as of September 30, $ 72,897 [1]
[1] On January 1, 2018, the Company adopted the ASC 606 revenue recognition standard and has adjusted prior periods to conform. See Note 2. "New Accounting Pronouncements" for additional information.
v3.10.0.1
Schedule of Amortizable Intangible Assets (Detail) - USD ($)
$ in Thousands
 9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Goodwill and Other Intangible Assets [Line Items]    
Cost $ 127,439 $ 127,467
Accumulated Amortization (104,061) (95,568)
Net Book Value [1] 23,378 31,899
Client related intangibles    
Goodwill and Other Intangible Assets [Line Items]    
Cost 63,136 63,164
Accumulated Amortization (49,633) (44,835)
Net Book Value [1] $ 13,503 $ 18,329
Client related intangibles | Minimum    
Goodwill and Other Intangible Assets [Line Items]    
Useful Lives 4 years 4 years
Client related intangibles | Maximum    
Goodwill and Other Intangible Assets [Line Items]    
Useful Lives 10 years 10 years
Technology    
Goodwill and Other Intangible Assets [Line Items]    
Cost $ 58,942 $ 58,942
Accumulated Amortization (49,067) (45,372)
Net Book Value [1] $ 9,875 $ 13,570
Technology | Minimum    
Goodwill and Other Intangible Assets [Line Items]    
Useful Lives 3 years 3 years
Technology | Maximum    
Goodwill and Other Intangible Assets [Line Items]    
Useful Lives 10 years 10 years
Other intangibles    
Goodwill and Other Intangible Assets [Line Items]    
Cost $ 5,361 $ 5,361
Accumulated Amortization $ (5,361) $ (5,361)
Other intangibles | Minimum    
Goodwill and Other Intangible Assets [Line Items]    
Useful Lives 1 year 1 year
Other intangibles | Maximum    
Goodwill and Other Intangible Assets [Line Items]    
Useful Lives 5 years 5 years
[1] Included in other long-term assets.
v3.10.0.1
Amortization of Intangible Assets (Detail) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Acquired Finite-Lived Intangible Assets [Line Items]        
Total amortization expense $ 2,835 $ 3,105 $ 8,508 $ 9,479
Cost of revenue        
Acquired Finite-Lived Intangible Assets [Line Items]        
Total amortization expense 1,232 1,232 3,695 3,871
Selling and marketing        
Acquired Finite-Lived Intangible Assets [Line Items]        
Total amortization expense $ 1,603 $ 1,873 $ 4,813 $ 5,608
v3.10.0.1
Schedule of Accrued Expenses (Detail) - USD ($)
$ in Thousands
Sep. 30, 2018
Dec. 31, 2017
Schedule of Accrued Liabilities [Line Items]    
Outside professional services $ 11,638 $ 14,468
Income and other taxes 3,971 7,420
Marketing and sales program expenses 4,623 6,444
Dividends payable 2,365 2,344
Employee-related expenses 5,212 4,065
Other 12,020 10,767
Total accrued expenses [1] $ 39,829 $ 45,508
[1] On January 1, 2018, the Company adopted the ASC 606 revenue recognition standard and has adjusted prior periods to conform. See Note 2. "New Accounting Pronouncements" for additional information.
v3.10.0.1
Fair Value Measurements - Additional Information (Detail) - USD ($)
 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Amount of transfers between Levels $ 0  
Fair Value, Measurements, Nonrecurring    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Impairments recognized on assets $ 0 $ 0
v3.10.0.1
Assets and Liabilities Measured at Fair Value (Detail) - Fair Value, Measurements, Recurring - USD ($)
$ in Thousands
Sep. 30, 2018
Dec. 31, 2017
Fair Value Assets    
Cash equivalents $ 25,424 $ 42,771
Total marketable securities 99,782 61,469
Municipal bonds    
Fair Value Assets    
Total marketable securities 46,366 32,848
Corporate bonds    
Fair Value Assets    
Total marketable securities 53,416 28,621
Investments in Privately-Held Companies    
Fair Value Assets    
Investments in privately-held companies [1] 2,890 1,030
Level 1    
Fair Value Assets    
Cash equivalents 10,212 2,720
Level 2    
Fair Value Assets    
Cash equivalents 15,212 40,051
Total marketable securities 99,782 61,469
Level 2 | Municipal bonds    
Fair Value Assets    
Total marketable securities 46,366 32,848
Level 2 | Corporate bonds    
Fair Value Assets    
Total marketable securities 53,416 28,621
Level 3 | Investments in Privately-Held Companies    
Fair Value Assets    
Investments in privately-held companies [1] $ 2,890 $ 1,030
[1] Included in other long-term assets.
v3.10.0.1
Revenue - Additional Information (Detail)
 3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Total Revenue        
Revenues [Line Items]        
Concentration risk, percentage 100.00% 100.00% 100.00% 100.00%
Minimum | Total Revenue | Credit Concentration Risk        
Revenues [Line Items]        
Concentration risk, percentage     10.00%  
Software license | Minimum        
Revenues [Line Items]        
Term of Agreement 3 years   3 years  
Software license | Maximum        
Revenues [Line Items]        
Term of Agreement 5 years   5 years  
v3.10.0.1
Disaggregation of Revenue (Detail) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Disaggregation of Revenue [Line Items]        
Total revenue [1] $ 203,263 $ 190,957 $ 635,224 $ 633,862
Revenue recognized at a point in time        
Disaggregation of Revenue [Line Items]        
Total revenue 52,342 53,234 184,899 231,392
Revenue recognized over time        
Disaggregation of Revenue [Line Items]        
Total revenue 150,921 137,723 450,325 402,470
Perpetual License        
Disaggregation of Revenue [Line Items]        
Total revenue 20,276 12,623 56,829 81,819
Term License        
Disaggregation of Revenue [Line Items]        
Total revenue 32,066 40,611 128,070 149,573
Maintenance        
Disaggregation of Revenue [Line Items]        
Total revenue [1] 66,017 61,812 196,448 179,949
Cloud        
Disaggregation of Revenue [Line Items]        
Total revenue 22,184 13,280 57,967 36,207
Consulting        
Disaggregation of Revenue [Line Items]        
Total revenue 62,720 62,631 195,910 186,314
Subscription        
Disaggregation of Revenue [Line Items]        
Total revenue [2] 120,267 115,703 382,485 365,729
United States        
Disaggregation of Revenue [Line Items]        
Total revenue 103,075 105,059 327,409 376,819
Other Americas        
Disaggregation of Revenue [Line Items]        
Total revenue 10,424 9,307 37,766 32,890
United Kingdom (U.K.)        
Disaggregation of Revenue [Line Items]        
Total revenue 19,277 18,537 68,450 67,403
Europe (excluding U.K.), Middle East, and Africa        
Disaggregation of Revenue [Line Items]        
Total revenue 42,254 31,109 101,150 81,557
Asia Pacific        
Disaggregation of Revenue [Line Items]        
Total revenue $ 28,233 $ 26,945 $ 100,449 $ 75,193
Total Revenue        
Disaggregation of Revenue [Line Items]        
Percentage of sale revenue net 100.00% 100.00% 100.00% 100.00%
Total Revenue | United States        
Disaggregation of Revenue [Line Items]        
Percentage of sale revenue net 51.00% 55.00% 51.00% 59.00%
Total Revenue | Other Americas        
Disaggregation of Revenue [Line Items]        
Percentage of sale revenue net 5.00% 5.00% 6.00% 5.00%
Total Revenue | United Kingdom (U.K.)        
Disaggregation of Revenue [Line Items]        
Percentage of sale revenue net 9.00% 10.00% 11.00% 11.00%
Total Revenue | Europe (excluding U.K.), Middle East, and Africa        
Disaggregation of Revenue [Line Items]        
Percentage of sale revenue net 21.00% 16.00% 16.00% 13.00%
Total Revenue | Asia Pacific        
Disaggregation of Revenue [Line Items]        
Percentage of sale revenue net 14.00% 14.00% 16.00% 12.00%
[1] On January 1, 2018, the Company adopted the ASC 606 revenue recognition standard and has adjusted prior periods to conform. See Note 2. "New Accounting Pronouncements" for additional information.
[2] Subscription revenue reflects client arrangements (term license, cloud, and maintenance) which may be subject to a renewal.
v3.10.0.1
Revenue for Remaining Performance Obligations Expected to be Recognized (Detail)
$ in Thousands
Sep. 30, 2018
USD ($)
1 year or less $ 312,853
1-2 years 98,075
2-3 years 59,639
Greater than 3 years 51,763
Total $ 522,330
Percentage of remaining performance obligations,1 year or less 60.00%
Percentage of remaining performance obligations, 1-2 years 19.00%
Percentage of remaining performance obligations, 2-3 years 11.00%
Percentage of remaining performance obligations, Greater than 3 years 10.00%
Total percentage of remaining performance obligations 100.00%
Perpetual License  
1 year or less $ 25,343
1-2 years 6,490
2-3 years 360
Greater than 3 years 1,306
Total 33,499
Term License  
1 year or less 44,283
1-2 years 10,063
2-3 years 1,598
Greater than 3 years 218
Total 56,162
Maintenance  
1 year or less 140,591
1-2 years 8,877
2-3 years 2,586
Greater than 3 years 1,079
Total 153,133
Cloud  
1 year or less 88,529
1-2 years 70,815
2-3 years 54,646
Greater than 3 years 49,110
Total 263,100
Consulting  
1 year or less 14,107
1-2 years 1,830
2-3 years 449
Greater than 3 years 50
Total $ 16,436
v3.10.0.1
Total Revenue of Major Clients (Detail) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Revenue, Major Customer [Line Items]        
Total revenue $ 203,263 $ 190,957 $ 635,224 $ 633,862
Total Revenue        
Revenue, Major Customer [Line Items]        
Concentration risk, percentage 100.00% 100.00% 100.00% 100.00%
Credit Concentration Risk | Total Revenue | Client A        
Revenue, Major Customer [Line Items]        
Concentration risk, percentage 10.00% 10.00%    
v3.10.0.1
Total Revenue of Major Clients (Parenthetical) (Detail) - Total Revenue
 3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Revenue, Major Customer [Line Items]        
Concentration risk, percentage 100.00% 100.00% 100.00% 100.00%
Credit Concentration Risk | Client A        
Revenue, Major Customer [Line Items]        
Concentration risk, percentage 10.00% 10.00%    
Credit Concentration Risk | Client A | Maximum        
Revenue, Major Customer [Line Items]        
Concentration risk, percentage     10.00%  
v3.10.0.1
Summary of Stock Based Compensation Expense (Detail) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Total stock-based compensation before tax $ 16,408 $ 13,489 $ 47,573 [1] $ 39,929 [1]
Income tax benefit (3,555) (4,129) (10,037) (12,231)
Cost of revenue        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Total stock-based compensation before tax 4,319 3,613 12,277 10,913
Selling and marketing        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Total stock-based compensation before tax 6,198 3,976 16,895 11,482
Research and development        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Total stock-based compensation before tax 3,917 3,420 11,356 10,306
General and administrative        
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]        
Total stock-based compensation before tax $ 1,974 $ 2,480 $ 7,045 $ 7,228
[1] On January 1, 2018, the Company adopted the ASC 606 revenue recognition standard and has adjusted prior periods to conform. See Note 2. "New Accounting Pronouncements" for additional information.
v3.10.0.1
Stock-Based Compensation - Additional Information (Detail)
shares in Millions, $ in Millions
 9 Months Ended
Sep. 30, 2018
USD ($)
shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Unrecognized stock-based compensation expense | $ $ 74.2
Weighted-average period of recognition of unrecognized stock-based compensation expense (in years) 2 years 2 months 12 days
Shares issued | shares 1.2
v3.10.0.1
Stock-based compensation - Summary of stock based compensation award granted (Detail) - Employees
$ in Thousands
 9 Months Ended
Sep. 30, 2018
USD ($)
shares
RSUs  
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]  
Number of shares granted, RSUs | shares 1,117 [1]
Fair value of shares granted | $ $ 65,569 [1]
Nonqualified Stock Options  
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]  
Number of shares granted, options | shares 1,623
Fair value of shares granted | $ $ 29,372
[1] Includes approximately 0.1 million RSUs which were granted in connection with the election by certain employees to receive 50% of their 2018 target incentive compensation under the Company's Corporate Incentive Compensation Plan in the form of RSUs instead of cash. Stock-based compensation of approximately $8.2 million associated with this RSU grant is expected to be recognized over a one-year period beginning on the grant date.
v3.10.0.1
Stock-based compensation - Summary of stock based compensation award granted (Parenthetical) (Detail) - RSUs - Employees
shares in Millions, $ in Millions
 9 Months Ended
Sep. 30, 2018
USD ($)
shares
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]  
RSUs granted in connection with the current year's CICP | shares 0.1
Percentage of target incentive compensation eligible to be elected and received by employees in the form of RSUs 50.00%
Restricted stock compensation expense | $ $ 8.2
Total stock-based compensation, period of recognition 1 year
v3.10.0.1
Summary of Benefit from Income Taxes and Discrete Tax Items (Detail) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Income Tax Rate Reconciliation [Line Items]        
Benefit from income taxes [1] $ (8,589) $ (8,501) $ (23,692) $ (9,009)
Effective income tax rate     80.00% (18.00%)
[1] On January 1, 2018, the Company adopted the ASC 606 revenue recognition standard and has adjusted prior periods to conform. See Note 2. "New Accounting Pronouncements" for additional information.
v3.10.0.1
Income Tax - Additional Information (Detail) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended 12 Months Ended
Dec. 31, 2017
Sep. 30, 2018
Dec. 31, 2017
Effective Tax Rate Reconciling Items [Line Items]      
Statutory federal income tax rate   21.00% 35.00%
Tax Cuts and Jobs Act 2017, Incomplete accounting provisional income tax expense (benefit) $ 20.4    
Accounting Standards Update 2014-09      
Effective Tax Rate Reconciling Items [Line Items]      
Tax Cuts and Jobs Act of 2017, Change in Tax Rate, Deferred Tax Liability, Income Tax Benefit $ 12.6    
v3.10.0.1
Summary of Basic and Diluted Earnings Per Share (Detail) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Earning per share reconciliation        
Net (loss) income [1] $ (7,587) $ 1,288 $ (5,796) $ 57,953
Weighted-average common shares outstanding [1] 78,700 77,691 78,525 77,258
(Loss) earnings per share, basic [1] $ (0.10) $ 0.01 $ (0.07) $ 0.75
Net (loss) income [1] $ (7,587) $ 1,288 $ (5,796) $ 57,953
Effect of dilutive securities   5,632   5,459
Weighted-average common shares outstanding, assuming dilution [1] 78,700 83,323 78,525 82,717
(Loss) earnings per share, diluted [1] $ (0.10) $ 0.01 $ (0.07) $ 0.70
Outstanding anti-dilutive stock options and RSUs [2] 6,119 105 6,380 219
Stock Options        
Earning per share reconciliation        
Weighted-average effect of dilutive securities   3,681   3,519
RSUs        
Earning per share reconciliation        
Weighted-average effect of dilutive securities   1,951   1,940
[1] On January 1, 2018, the Company adopted the ASC 606 revenue recognition standard and has adjusted prior periods to conform. See Note 2. "New Accounting Pronouncements" for additional information.
[2] Certain outstanding stock options and RSUs were excluded from the computation of diluted earnings per share because they were anti-dilutive in the period presented. These awards may be dilutive in the future.