Total revenue was $151.8 million, up 33% compared to Q1’18.

Subscription revenue was $144.2 million, up 33% compared to Q1’18.

Professional services and other revenue was $7.6 million, up 27% compared to Q1’18.

GAAP operating margin was (6.0%), compared to (9.9%) in Q1’18.

Non-GAAP operating margin was 8.6%, an improvement of approximately 3.7 percentage points from 4.9% in Q1’18.

GAAP operating loss was ($9.0) million, compared to ($11.3) million in Q1’18.

Non-GAAP operating income was $13.0 million, compared to $5.6 million in Q1’18.

GAAP net loss was ($11.1) million, or ($0.27) per basic and diluted share, compared to ($15.4) million, or ($0.41) per basic and diluted share in Q1’18.

Non-GAAP net income was $16.2 million, or $0.40 per basic and $0.36 per diluted share, compared to $6.4 million, or $0.17 per basic and $0.15 per diluted share in Q1’18.

Weighted average basic and diluted shares outstanding for GAAP net loss per share was 40.6 million, compared to 37.8 million basic and diluted shares in Q1’18.

Weighted average basic and diluted shares outstanding for non-GAAP net income per share was 40.6 million and 45.5 million respectively, compared to 37.8 million and 41.0 million, respectively in Q1’18.

The company’s cash, cash equivalents and investments balance was $983.7 million as of March 31, 2019.

During the first quarter, the company generated $30.6 million of free cash flow compared to $17.9 million during Q1’18.

Grew total customers to 60,814 at March 31, 2019 up 35% from March 31, 2018.

Total average subscription revenue per customer was $9,811 during the first quarter of 2019 down 2% compared to Q1’18.

Total revenue is expected to be in the range of $156.5 million to $157.5 million.

Non-GAAP operating income is expected to be in the range of $9.2 million to $10.2 million.

Non-GAAP net income per common share is expected to be in the range of $0.24 to $0.26. This assumes approximately 47.6 million weighted average diluted shares outstanding.

Total revenue is expected to be in the range of $655.5 million to $658.5 million.

Non-GAAP operating income is expected to in be in the range of $50.0 million to $52.0 million.

Non-GAAP net income per common share is expected to be in the range of $1.26 to $1.30. This assumes approximately 47.5 million weighted average diluted shares outstanding.

Assets

Current assets:

Cash and cash equivalents

Short-term investments

Accounts receivable

Deferred commission expense

Restricted cash

Prepaid expenses and other current assets

Total current assets

Long-term investments

Property and equipment, net

Capitalized software development costs, net

Right-of-use assets

Deferred commission expense, net of current portion

Other assets

Intangible assets, net

Goodwill

Total assets

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

Accrued compensation costs

Accrued expenses and other current liabilities

Lease liabilities

Deferred revenue

Total current liabilities

Lease liabilities, net of current portion

Deferred rent, net of current portion

Deferred revenue, net of current portion

Other long-term liabilities

Convertible senior notes

Total liabilities

Stockholders’ equity:

Common stock

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

Revenues:

Subscription

Professional services and other

Total revenue

Cost of revenues:

Subscription

Professional services and other

Total cost of revenues

Gross profit

Operating expenses:

Research and development

Sales and marketing

General and administrative

Total operating expenses

Loss from operations

Other expense:

Interest income

Interest expense

Other expense

Total other expense

Loss before income tax expense

Income tax expense

Net loss

Net loss per share, basic and diluted

Weighted average common shares used in computing basic and diluted net loss per share:

Operating Activities:

Net loss

Adjustments to reconcile net loss to net cash and cash  equivalents provided by operating activities

Depreciation and amortization

Stock-based compensation

Benefit for deferred income taxes

Amortization of debt discount and issuance costs

Accretion of bond discount

Noncash lease expense

Unrealized currency translation

Changes in assets and liabilities

Accounts receivable

Prepaid expenses and other assets

Deferred commission expense

Right-of-use assets

Accounts payable

Accrued expenses and other current liabilities

Lease liabilities

Deferred rent

Deferred revenue

Net cash and cash equivalents provided by operating activities

Investing Activities:

Purchases of investments

Maturities of investments

Purchases of property and equipment

Capitalization of software development costs

Purchases of strategic investments

Net cash and cash equivalents (used in) provided by investing activities

Financing Activities:

Proceeds from common stock offering, net of offering costs paid of $256

Employee taxes paid related to the net share settlement of stock-based awards

Proceeds related to the issuance of common stock under stock plans

Repayments of capital lease obligations

Net cash and cash equivalents provided by financing activities

Effect of exchange rate changes on cash, cash equivalents and restricted cash

Net increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, beginning of period

Cash, cash equivalents and restricted cash, end of period

Reconciliation of non-GAAP operating income and operating margin

(in thousands, except percentages)

March 31,

2019

2018

GAAP operating loss

Stock-based compensation

Amortization of acquired intangible assets

Acquisition related expenses

Non-GAAP operating income

GAAP operating margin

Non-GAAP operating margin

Reconciliation of non-GAAP net income

(in thousands, except per share amounts)

March 31,

2019

2018

GAAP net loss

Stock-based compensation

Amortization of acquired intangibles assets

Acquisition related expenses

Non-cash interest expense for amortization of  debt discount and debt issuance costs

Income tax effects of non-GAAP items

Non-GAAP net income

Non-GAAP net income per share:

Basic

Diluted

Shares used in non-GAAP per share calculations

Basic

Diluted

COS,

Prof.
services

& other

COS,

Prof.
services

& other

(in thousands, except percentages)

2019

2018

GAAP subscription margin

Stock -based compensation

Amortization of acquired intangible assets

Non-GAAP subscription margin

GAAP subscription margin percentage

Non-GAAP subscription margin percentage

(in thousands)

2019

2018

GAAP net cash and cash equivalents provided by operating activities

Purchases of property and equipment

Capitalization of software development costs

Free cash flow

GAAP operating income range

Stock-based compensation

Amortization of acquired intangible assets

Acquisition related expenses

Non-GAAP operating income range

Reconciliation of forecasted non-GAAP net income and non-GAAP

net income per share

(in thousands, except per share amounts)

GAAP net loss range

Stock-based compensation

Amortization of acquired intangible assets

Acquisition related expenses

Non-cash interest expense for amortization of debt discount and debt issuance costs

Income tax effects of non-GAAP items

Non-GAAP net income range

GAAP net income per basic and diluted share

Non-GAAP net income per diluted share

Weighted average common shares used in computing GAAP basic and diluted net loss per share:

Weighted average common shares used in computing non-GAAP diluted net loss per share:

Stock-based compensation is a non-cash expense accounted for in accordance with FASB ASC Topic 718. We believe that the exclusion of stock-based compensation expense allows for financial results that are more indicative of our operational performance and provide for a useful comparison of our operating results to prior periods and to our peer companies because stock-

Expense for the amortization of acquired intangible assets is a non-cash item, and we believe that the exclusion of this amortization expense provides for a useful comparison of our operating results to prior periods and to our peer companies.

Acquisition related expenses, such as transaction costs and retention payments, are expenses that are not necessarily reflective of operational performance during a period. We believe that the exclusion of this these expenses provides for a useful comparison of our operating results to prior periods and to our peer companies.

In May 2017, the Company issued $400 million of convertible notes due in 2022 with a coupon interest rate of 0.25%. The imputed interest rate of the convertible senior notes was approximately 6.95%. This is a result of the debt discount recorded for the conversion feature that is required to be separately accounted for as equity, and debt issuance costs, which reduce the carrying value of the convertible debt instrument. The debt discount is amortized as interest expense together with the issuance costs of the debt. The expense for the amortization of debt discount and debt issuance costs is a non-cash item, and we believe the exclusion of this interest expense provides for a useful comparison of our operating results to prior periods and to our peer companies.

The effects of income taxes on non-GAAP items for current and historical periods is zero due to our history of non-GAAP losses and a full valuation allowance on our U.S. deferred tax assets.