2019 Q1 Form 10-Q Financial Statement

#000158080819000008 Filed on May 08, 2019

View on sec.gov

Income Statement

Concept 2019 Q1 2018 Q1
Revenue $50.29M $49.18M
YoY Change 2.25% -18.42%
Cost Of Revenue $12.25M $11.88M
YoY Change 3.08% -19.39%
Gross Profit $38.04M $37.30M
YoY Change 1.99% -24.18%
Gross Profit Margin 75.64% 75.84%
Selling, General & Admin $32.84M $38.50M
YoY Change -14.69% 13.53%
% of Gross Profit 86.33% 103.21%
Research & Development $16.17M $18.80M
YoY Change -14.0% 10.3%
% of Gross Profit 42.5% 50.4%
Depreciation & Amortization $2.447M $2.134M
YoY Change 14.67% 18.56%
% of Gross Profit 6.43% 5.72%
Operating Expenses $49.01M $57.30M
YoY Change -14.47% 12.45%
Operating Profit -$10.97M -$20.00M
YoY Change -45.15% 1035.49%
Interest Expense $155.0K $33.00K
YoY Change 369.7% -25.0%
% of Operating Profit
Other Income/Expense, Net -$788.0K $533.0K
YoY Change -247.84% -33.21%
Pretax Income -$11.76M -$19.46M
YoY Change -39.6% 1921.08%
Income Tax $500.0K $200.0K
% Of Pretax Income
Net Earnings -$12.27M -$19.67M
YoY Change -37.61% 1371.2%
Net Earnings / Revenue -24.4% -39.99%
Basic Earnings Per Share -$0.16 -$0.27
Diluted Earnings Per Share -$0.16 -$0.27
COMMON SHARES
Basic Shares Outstanding 74.81M shares
Diluted Shares Outstanding 74.81M shares

Balance Sheet

Concept 2019 Q1 2018 Q1
SHORT-TERM ASSETS
Cash & Short-Term Investments $122.8M $130.7M
YoY Change -6.04% 12.48%
Cash & Equivalents $33.97M $46.96M
Short-Term Investments $88.80M $83.70M
Other Short-Term Assets $17.10M $14.40M
YoY Change 18.75% 132.26%
Inventory $20.95M $16.19M
Prepaid Expenses $6.675M
Receivables $44.80M $53.97M
Other Receivables $0.00 $0.00
Total Short-Term Assets $205.6M $209.0M
YoY Change -1.62% 4.12%
LONG-TERM ASSETS
Property, Plant & Equipment $7.676M $9.634M
YoY Change -20.32% 18.48%
Goodwill $1.307M $1.307M
YoY Change 0.0% 0.54%
Intangibles $3.387M $4.829M
YoY Change -29.86%
Long-Term Investments
YoY Change
Other Assets $13.99M $7.229M
YoY Change 93.51% 58.22%
Total Long-Term Assets $26.36M $23.00M
YoY Change 14.61% 13.41%
TOTAL ASSETS
Total Short-Term Assets $205.6M $209.0M
Total Long-Term Assets $26.36M $23.00M
Total Assets $232.0M $232.0M
YoY Change -0.01% 4.97%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $8.136M $7.632M
YoY Change 6.6% -10.44%
Accrued Expenses $25.44M $25.49M
YoY Change -0.22% -14.71%
Deferred Revenue $62.53M $59.36M
YoY Change 5.34%
Short-Term Debt $0.00 $0.00
YoY Change
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities $96.10M $98.86M
YoY Change -2.79% 1.72%
LONG-TERM LIABILITIES
Long-Term Debt $0.00 $0.00
YoY Change
Other Long-Term Liabilities $3.062M $884.0K
YoY Change 246.38% -3.07%
Total Long-Term Liabilities $3.062M $884.0K
YoY Change 246.38% -3.07%
TOTAL LIABILITIES
Total Short-Term Liabilities $96.10M $98.86M
Total Long-Term Liabilities $3.062M $884.0K
Total Liabilities $135.2M $131.6M
YoY Change 2.71% -0.6%
SHAREHOLDERS EQUITY
Retained Earnings -$284.5M -$264.3M
YoY Change 7.65% 7.06%
Common Stock $1.000K $1.000K
YoY Change 0.0% 0.0%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $101.7M $100.4M
YoY Change
Total Liabilities & Shareholders Equity $232.0M $232.0M
YoY Change -0.01% 4.97%

Cashflow Statement

Concept 2019 Q1 2018 Q1
OPERATING ACTIVITIES
Net Income -$12.27M -$19.67M
YoY Change -37.61% 1371.2%
Depreciation, Depletion And Amortization $2.447M $2.134M
YoY Change 14.67% 18.56%
Cash From Operating Activities -$6.058M -$352.0K
YoY Change 1621.02% -164.59%
INVESTING ACTIVITIES
Capital Expenditures $936.0K $1.133M
YoY Change -17.39% 67.11%
Acquisitions
YoY Change
Other Investing Activities -$690.0K $640.0K
YoY Change -207.81% -313.33%
Cash From Investing Activities -$1.621M -$494.0K
YoY Change 228.14% -49.59%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net $1.269M
YoY Change -38.55%
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities $1.025M $1.243M
YoY Change -17.54% -39.07%
NET CHANGE
Cash From Operating Activities -$6.058M -$352.0K
Cash From Investing Activities -$1.621M -$494.0K
Cash From Financing Activities $1.025M $1.243M
Net Change In Cash -$6.654M $397.0K
YoY Change -1776.07% -75.26%
FREE CASH FLOW
Cash From Operating Activities -$6.058M -$352.0K
Capital Expenditures $936.0K $1.133M
Free Cash Flow -$6.994M -$1.485M
YoY Change 370.98% 1016.54%

Facts In Submission

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LesseeOperatingLeaseLiabilityPaymentsRemainderOfFiscalYear
2866000 USD
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LesseeOperatingLeaseLiabilityUndiscountedExcessAmount
220000 USD
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LiabilitiesAndStockholdersEquity
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1243000 USD
CY2019Q1 us-gaap Net Cash Provided By Used In Financing Activities
NetCashProvidedByUsedInFinancingActivities
1025000 USD
CY2018Q1 us-gaap Net Cash Provided By Used In Investing Activities
NetCashProvidedByUsedInInvestingActivities
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CY2019Q1 us-gaap Net Cash Provided By Used In Investing Activities
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NetCashProvidedByUsedInOperatingActivities
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CY2019Q1 us-gaap Net Cash Provided By Used In Operating Activities
NetCashProvidedByUsedInOperatingActivities
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CY2018Q1 us-gaap Net Income Loss
NetIncomeLoss
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CY2019Q1 us-gaap Net Income Loss
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CY2018Q1 us-gaap Net Income Loss Available To Common Stockholders Basic
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-19670000 USD
CY2019Q1 us-gaap Net Income Loss Available To Common Stockholders Basic
NetIncomeLossAvailableToCommonStockholdersBasic
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CY2019Q1 us-gaap Noncurrent Assets
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13126000 USD
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533000 USD
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NoncurrentAssets
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OperatingIncomeLoss
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CY2019Q1 us-gaap Other Assets Miscellaneous Current
OtherAssetsMiscellaneousCurrent
4727000 USD
CY2018Q4 us-gaap Other Assets Noncurrent
OtherAssetsNoncurrent
8620000 USD
CY2019Q1 us-gaap Other Assets Noncurrent
OtherAssetsNoncurrent
13989000 USD
CY2018Q1 us-gaap Other Comprehensive Income Unrealized Holding Gain Loss On Securities Arising During Period Net Of Tax
OtherComprehensiveIncomeUnrealizedHoldingGainLossOnSecuritiesArisingDuringPeriodNetOfTax
-173000 USD
CY2019Q1 us-gaap Other Comprehensive Income Unrealized Holding Gain Loss On Securities Arising During Period Net Of Tax
OtherComprehensiveIncomeUnrealizedHoldingGainLossOnSecuritiesArisingDuringPeriodNetOfTax
240000 USD
CY2018Q4 us-gaap Other Liabilities Noncurrent
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534000 USD
CY2019Q1 us-gaap Other Liabilities Noncurrent
OtherLiabilitiesNoncurrent
3062000 USD
CY2018Q1 us-gaap Other Noncash Income Expense
OtherNoncashIncomeExpense
-389000 USD
CY2019Q1 us-gaap Other Noncash Income Expense
OtherNoncashIncomeExpense
246000 USD
CY2018Q1 us-gaap Payments To Acquire Marketable Securities
PaymentsToAcquireMarketableSecurities
27220000 USD
CY2019Q1 us-gaap Operating Lease Cost
OperatingLeaseCost
893 USD
CY2019Q1 us-gaap Operating Lease Liability
OperatingLeaseLiability
6115000 USD
CY2019Q1 us-gaap Operating Lease Liability Current
OperatingLeaseLiabilityCurrent
3506000 USD
CY2019Q1 us-gaap Operating Lease Liability Noncurrent
OperatingLeaseLiabilityNoncurrent
2609000 USD
CY2019Q1 us-gaap Operating Lease Payments
OperatingLeasePayments
989 USD
CY2019Q1 us-gaap Operating Lease Right Of Use Asset
OperatingLeaseRightOfUseAsset
5450000 USD
CY2019Q1 us-gaap Operating Lease Weighted Average Discount Rate Percent
OperatingLeaseWeightedAverageDiscountRatePercent
0.0341
CY2019Q1 us-gaap Operating Lease Weighted Average Remaining Lease Term1
OperatingLeaseWeightedAverageRemainingLeaseTerm1
P2Y2M
CY2018Q4 us-gaap Other Accrued Liabilities Current
OtherAccruedLiabilitiesCurrent
5553000 USD
CY2019Q1 us-gaap Other Accrued Liabilities Current
OtherAccruedLiabilitiesCurrent
8276000 USD
CY2018Q4 us-gaap Other Assets Miscellaneous Current
OtherAssetsMiscellaneousCurrent
1419000 USD
CY2019Q1 us-gaap Payments To Acquire Marketable Securities
PaymentsToAcquireMarketableSecurities
13859000 USD
CY2018Q1 us-gaap Payments To Acquire Property Plant And Equipment
PaymentsToAcquirePropertyPlantAndEquipment
1133000 USD
CY2019Q1 us-gaap Payments To Acquire Property Plant And Equipment
PaymentsToAcquirePropertyPlantAndEquipment
936000 USD
CY2018Q4 us-gaap Prepaid Expense And Other Assets Current
PrepaidExpenseAndOtherAssetsCurrent
14662000 USD
CY2019Q1 us-gaap Prepaid Expense And Other Assets Current
PrepaidExpenseAndOtherAssetsCurrent
17113000 USD
CY2018Q4 us-gaap Prepaid Expense Current
PrepaidExpenseCurrent
6679000 USD
CY2019Q1 us-gaap Prepaid Expense Current
PrepaidExpenseCurrent
6675000 USD
CY2018Q1 us-gaap Proceeds From Issuance Of Shares Under Incentive And Share Based Compensation Plans Including Stock Options
ProceedsFromIssuanceOfSharesUnderIncentiveAndShareBasedCompensationPlansIncludingStockOptions
1269000 USD
CY2019Q1 us-gaap Proceeds From Issuance Of Shares Under Incentive And Share Based Compensation Plans Including Stock Options
ProceedsFromIssuanceOfSharesUnderIncentiveAndShareBasedCompensationPlansIncludingStockOptions
1027000 USD
CY2018Q1 us-gaap Proceeds From Maturities Prepayments And Calls Of Available For Sale Securities
ProceedsFromMaturitiesPrepaymentsAndCallsOfAvailableForSaleSecurities
17150000 USD
CY2019Q1 us-gaap Proceeds From Maturities Prepayments And Calls Of Available For Sale Securities
ProceedsFromMaturitiesPrepaymentsAndCallsOfAvailableForSaleSecurities
4500000 USD
CY2018Q1 us-gaap Proceeds From Payments For Other Financing Activities
ProceedsFromPaymentsForOtherFinancingActivities
-26000 USD
CY2019Q1 us-gaap Proceeds From Payments For Other Financing Activities
ProceedsFromPaymentsForOtherFinancingActivities
-2000 USD
CY2018Q1 us-gaap Proceeds From Sale Of Available For Sale Securities Debt
ProceedsFromSaleOfAvailableForSaleSecuritiesDebt
10709000 USD
CY2019Q1 us-gaap Proceeds From Sale Of Available For Sale Securities Debt
ProceedsFromSaleOfAvailableForSaleSecuritiesDebt
8674000 USD
CY2018Q4 us-gaap Property Plant And Equipment Gross
PropertyPlantAndEquipmentGross
58851000 USD
CY2019Q1 us-gaap Property Plant And Equipment Gross
PropertyPlantAndEquipmentGross
58831000 USD
CY2018Q4 us-gaap Property Plant And Equipment Net
PropertyPlantAndEquipmentNet
7262000 USD
CY2019Q1 us-gaap Property Plant And Equipment Net
PropertyPlantAndEquipmentNet
7676000 USD
CY2018Q1 us-gaap Property Plant And Equipment Transfers And Changes
PropertyPlantAndEquipmentTransfersAndChanges
561000 USD
CY2019Q1 us-gaap Property Plant And Equipment Transfers And Changes
PropertyPlantAndEquipmentTransfersAndChanges
303000 USD
CY2018Q1 us-gaap Research And Development Expense
ResearchAndDevelopmentExpense
18797000 USD
CY2019Q1 us-gaap Research And Development Expense
ResearchAndDevelopmentExpense
16166000 USD
CY2018Q4 us-gaap Retained Earnings Accumulated Deficit
RetainedEarningsAccumulatedDeficit
-272246000 USD
CY2019Q1 us-gaap Retained Earnings Accumulated Deficit
RetainedEarningsAccumulatedDeficit
-284518000 USD
CY2018Q1 us-gaap Revenue From Contract With Customer Excluding Assessed Tax
RevenueFromContractWithCustomerExcludingAssessedTax
49183000 USD
CY2019Q1 us-gaap Revenue From Contract With Customer Excluding Assessed Tax
RevenueFromContractWithCustomerExcludingAssessedTax
50290000 USD
CY2019Q1 us-gaap Revenue Remaining Performance Obligation
RevenueRemainingPerformanceObligation
98569000 USD
CY2019Q1 us-gaap Revenue Remaining Performance Obligation
RevenueRemainingPerformanceObligation
62528000 USD
CY2019Q1 us-gaap Revenue Remaining Performance Obligation
RevenueRemainingPerformanceObligation
29469000 USD
CY2019Q1 us-gaap Revenue Remaining Performance Obligation
RevenueRemainingPerformanceObligation
6572000 USD
CY2019Q1 us-gaap Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Period1
RevenueRemainingPerformanceObligationExpectedTimingOfSatisfactionPeriod1
P9M
CY2019Q1 us-gaap Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Period1
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P2Y
CY2019Q1 us-gaap Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Period1
RevenueRemainingPerformanceObligationExpectedTimingOfSatisfactionPeriod1
CY2019Q1 us-gaap Right Of Use Asset Obtained In Exchange For Operating Lease Liability
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264000 USD
CY2018Q1 us-gaap Selling And Marketing Expense
SellingAndMarketingExpense
26904000 USD
CY2019Q1 us-gaap Selling And Marketing Expense
SellingAndMarketingExpense
24483000 USD
CY2018Q1 us-gaap Share Based Compensation
ShareBasedCompensation
8151000 USD
CY2019Q1 us-gaap Share Based Compensation
ShareBasedCompensation
3896000 USD
CY2018Q1 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Exercises In Period Total Intrinsic Value
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisesInPeriodTotalIntrinsicValue
1100000 USD
CY2019Q1 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Exercises In Period Total Intrinsic Value
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisesInPeriodTotalIntrinsicValue
1100000 USD
CY2019Q1 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Forfeitures In Period
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsForfeituresInPeriod
47000 shares
CY2019Q1 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Grants In Period Gross
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross
0 shares
CY2019Q1 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Intrinsic Value
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingIntrinsicValue
9498000 USD
CY2018Q4 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Number
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber
4674000 shares
CY2019Q1 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Number
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber
4322000 shares
CY2018Q4 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Weighted Average Exercise Price
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice
5.19
CY2019Q1 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Weighted Average Exercise Price
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice
5.28
CY2019Q1 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Vested And Expected To Vest Exercisable Aggregate Intrinsic Value
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsVestedAndExpectedToVestExercisableAggregateIntrinsicValue
9061000 USD
CY2019Q1 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Vested And Expected To Vest Exercisable Number
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsVestedAndExpectedToVestExercisableNumber
3855000 shares
CY2019Q1 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Vested And Expected To Vest Exercisable Weighted Average Exercise Price
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsVestedAndExpectedToVestExercisableWeightedAverageExercisePrice
5.14
CY2019Q1 us-gaap Share Based Compensation Arrangements By Share Based Payment Award Options Exercises In Period Weighted Average Exercise Price
ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsExercisesInPeriodWeightedAverageExercisePrice
3.36
CY2019Q1 us-gaap Share Based Compensation Arrangements By Share Based Payment Award Options Forfeitures In Period Weighted Average Exercise Price
ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsForfeituresInPeriodWeightedAverageExercisePrice
8.10
CY2019Q1 us-gaap Share Based Compensation Arrangements By Share Based Payment Award Options Grants In Period Weighted Average Exercise Price
ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice
0.00
CY2019Q1 us-gaap Share Price
SharePrice
7.09
CY2019Q1 us-gaap Sharebased Compensation Arrangement By Sharebased Payment Award Options Outstanding Weighted Average Remaining Contractual Term2
SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2
P4Y10M24D
CY2019Q1 us-gaap Sharebased Compensation Arrangement By Sharebased Payment Award Options Vested And Expected To Vest Exercisable Weighted Average Remaining Contractual Term1
SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedAndExpectedToVestExercisableWeightedAverageRemainingContractualTerm1
P4Y5M
CY2019Q1 us-gaap Short Term Lease Cost
ShortTermLeaseCost
137 USD
CY2019Q1 us-gaap Stock Issued During Period Shares Stock Options Exercised
StockIssuedDuringPeriodSharesStockOptionsExercised
305000 shares
CY2018Q1 us-gaap Stockholders Equity
StockholdersEquity
100360000 USD
CY2018Q4 us-gaap Stockholders Equity
StockholdersEquity
103883000 USD
CY2019Q1 us-gaap Stockholders Equity
StockholdersEquity
96774000 USD
CY2018Q4 us-gaap Taxes Payable Current
TaxesPayableCurrent
4455000 USD
CY2019Q1 us-gaap Taxes Payable Current
TaxesPayableCurrent
5555000 USD
CY2018Q4 us-gaap Unrecognized Tax Benefits
UnrecognizedTaxBenefits
4200000 USD
CY2019Q1 us-gaap Unrecognized Tax Benefits
UnrecognizedTaxBenefits
4200000 USD
CY2018Q1 us-gaap Weighted Average Number Of Share Outstanding Basic And Diluted
WeightedAverageNumberOfShareOutstandingBasicAndDiluted
72232000 shares
CY2019Q1 us-gaap Weighted Average Number Of Share Outstanding Basic And Diluted
WeightedAverageNumberOfShareOutstandingBasicAndDiluted
74809000 shares
CY2019Q1 us-gaap Concentration Risk Credit Risk
ConcentrationRiskCreditRisk
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:4px;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">Concentration of Credit Risk and Significant Customers</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Financial instruments that potentially subject us to concentrations of credit risk consist of cash, cash equivalents, marketable securities and accounts receivable. Our cash, cash equivalents and marketable securities are held and invested in high-credit quality financial instruments by recognized financial institutions and are subject to minimum credit risk.<br clear="none"/> <br clear="none"/></font></div><div style="line-height:120%;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Our accounts receivable are&#160;unsecured and represent amounts due to us based on contractual obligations of our customers. We mitigate credit risk in respect to accounts receivable by performing periodic credit evaluations based on a number of factors, including past transaction experience, evaluation of credit history and review of the invoicing terms of the contract. We generally do not require our customers to provide collateral to support accounts receivable.</font></div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;padding-left:0px;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Significant&#160;customers, including distribution channel partners and direct customers, are those which represent 10% or more of our total revenue for each period presented or our gross accounts receivable balance as of each respective balance sheet date. </font></div></div>
CY2019Q1 us-gaap Revenue Recognition Customer Acquisitions
RevenueRecognitionCustomerAcquisitions
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:10px;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In connection with the adoption of ASC 340-40, we capitalize certain contract acquisition costs consisting of incremental sales commissions incurred to obtain customer contracts. Deferred commissions related to product revenues are recognized upon transfer of control to customers. Deferred commissions related to services revenue are recognized as the related performance obligations are met. Deferred commissions that will be recognized during the succeeding 12-month period are recorded as prepaid expenses and other current assets, and the remaining portion is recorded as other non-current assets. Amortization of deferred commissions is included in sales and marketing expense.</font></div></div>
CY2019Q1 us-gaap Use Of Estimates
UseOfEstimates
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:4px;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">Use of Estimates</font></div><div style="line-height:120%;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Those estimates and assumptions affect revenue recognition and deferred revenue, the allowance for doubtful accounts, the sales return reserve, the valuation of inventory, the fair value of marketable securities, contingencies and litigation, accrued liabilities, deferred commissions and the determination of fair value of stock-based compensation. These estimates are based on information available as of the date of the&#160;condensed consolidated financial statements; therefore, actual results could differ from management&#8217;s estimates.</font></div></div>

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