0001628280-20-001963 | 10-K | XBRL Viewer

Print Document View Excel Document

The Company and Summary of Significant Accounting Policies (Details) £ in Millions	3 Months Ended			12 Months Ended
	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2019 GBP (£)	Dec. 31, 2019 GBP (£)	Dec. 31, 2019 USD ($)	Dec. 31, 2019 GBP (£) segment	Dec. 31, 2018 USD ($) customer	Dec. 31, 2017 USD ($)	Dec. 31, 2019 USD ($)	Jan. 01, 2018 USD ($)	Jan. 01, 2017 USD ($)
The company and qualitative disclosure about market risk [Line Items]
Number of operating segments (in segment)					1		1
Payments to Acquire Investments						$ 625,000
Retained earnings								$ 27,964,000		$ 23,194,000
Capitalized Computer Software, Gross			$ 400,000					1,300,000	$ 400,000	1,000,000.0
Capitalized Computer Software, Unamortized								1,200,000		2,000,000.0
General and administrative						40,765,000		39,049,000	35,334,000
Cost of revenues						69,517,000		66,185,000	51,580,000
Research and development						68,239,000		53,255,000	42,816,000
Sales and marketing						70,833,000		70,039,000	63,855,000
Goodwill and Intangible Assets
Finite-lived intangible asset, useful life				3 years
Software Development Costs
Capitalized software development costs									0
Cost of intangible assets								26,844,000		27,743,000
Accumulated amortization of intangible assets								4,907,000		10,988,000
Derivative Financial Instruments
Derivative, notional amount \| £				£ 4.8	£ 4.8		£ 4.8
Total foreign exchange loss, net						(354,000)		(577,000)	(355,000)
Advertising Expenses
Advertising expense						74,000		87,000	482,000
Income Taxes
Tax Cuts and Jobs Act of 2017, Provisional income tax expense (benefit)			10,400,000
Noncurrent deferred tax assets								26,387,000		18,830,000
Provision for (benefit from) income taxes						$ 10,647,000		(1,836,000)	(1,062,000)
Restricted cash								1,200,000		1,200,000
Operating Lease, Right-of-Use Asset								$ 0		40,551,000
Operating lease, liability										51,678,000
Minimum
Property Equipment, Net
Property, plant and equipment, useful life				3 years
Goodwill and Intangible Assets
Finite-lived intangible asset, useful life				3 years
Maximum
Property Equipment, Net
Property, plant and equipment, useful life				5 years
Goodwill and Intangible Assets
Finite-lived intangible asset, useful life				14 years
Scanner appliances
Property Equipment, Net
Property, plant and equipment, useful life				3 years
Customer concentration risk \| Accounts receivable
Concentration of Credit Risk
Concentration risk, number of customers \| customer								0
Accounting Standards Update 2016-09
Income Taxes
Cumulative effect adjustment												$ 7,745,000
Accounting Standards Update 2016-09 \| Retained earnings
Income Taxes
Cumulative effect adjustment												$ 7,745,000
Accounting Standards Update 2014-09
Income Taxes
Cumulative effect adjustment											$ 2,711,000
Accounting Standards Update 2014-09 \| Retained earnings
Income Taxes
Cumulative effect adjustment											$ 2,711,000
Deferred Compensation, Share-based Payments [Member]
The company and qualitative disclosure about market risk [Line Items]
Capitalized Computer Software, Gross			$ 0					$ 200,000	$ 0	$ 200,000
privately-held companies [Member] \| Preferred Stock
The company and qualitative disclosure about market risk [Line Items]
Payments to Acquire Investments		$ 600,000						$ 2,500,000
privately-held companies [Member] \| Convertible Debt Securities [Member]
The company and qualitative disclosure about market risk [Line Items]
Payments to Acquire Investments	$ 600,000

Consolidated Balance Sheets - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 87,559,000	$ 41,026,000
Marketable Securities, Current	211,331,000	248,140,000
Accounts receivable, net of allowance of $702 and $769 at December 31, 2016 and 2015, respectively	78,034,000	75,825,000
Prepaid expenses and other current assets	18,692,000	13,974,000
Total current assets	395,616,000	378,965,000
Marketable Securities, Noncurrent	119,508,000	76,710,000
Property and equipment, net	60,579,000	61,442,000
Deferred tax assets, net	18,830,000	26,387,000
Intangible assets, net	16,795,000	21,976,000
Goodwill	7,447,000	7,225,000
Restricted cash	1,200,000	1,200,000
Other noncurrent assets	15,082,000	11,775,000
Total assets	675,608,000	585,680,000
Operating Lease, Right-of-Use Asset	40,551,000	0
Current liabilities:
Accounts payable	848,000	5,588,000
Accrued liabilities	22,784,000	26,695,000
Total current liabilities	223,467,000	196,907,000
Contract with Customer, Liability, Noncurrent	20,935,000	20,423,000
Other noncurrent liabilities	388,000	10,361,000
Commitments and contingencies (Note 6)
Operating Lease, Liability, Noncurrent	44,015,000	0
Total liabilities	288,805,000	227,691,000
Stockholders’ equity:
Preferred stock: $0.001 par value; 20,000,000 shares authorized, no shares issued and outstanding at December 31, 2016 and 2015	0	0
Common stock, $0.001 par value; 1,000,000,000 shares authorized, 35,841,001 and 34,414,631 shares issued and outstanding at December 31, 2016 and 2015, respectively	39,000	39,000
Additional paid-in capital	362,408,000	330,572,000
Accumulated other comprehensive loss	1,162,000	(586,000)
Accumulated deficit	23,194,000	27,964,000
Total stockholders’ equity	386,803,000	357,989,000
Total liabilities and stockholders’ equity	675,608,000	585,680,000
Contract with Customer, Liability, Current	$ 192,172,000	$ 164,624,000

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Statement of Comprehensive Income [Abstract]
Net income	$ 69,336	$ 57,304	$ 40,440
Other Comprehensive Income (Loss), Securities, Available-for-sale, Adjustment, before Reclassification Adjustments, after Tax	1,367	(261)
Change in net unrealized loss on investments, net of tax			(462)
Reclassification adjustment for net loss realized and included in net income, net of tax effects of $0 in fiscal years 2019, 2018 and 2017.	0	289	44
Total change in unrealized gain (loss) on marketable securities, net of taxes	1,367	28	(418)
Other comprehensive income (loss), net of tax	1,748	(12)	(418)
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification and Tax	515	(40)	0
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, after Tax	134	0	0
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), after Reclassification and Tax	381	(40)	0
Comprehensive income	$ 71,084	$ 57,292	$ 40,022

Business Combination - Schedule of consideration allocation (Details) - USD ($)	Jan. 10, 2019	Oct. 16, 2018	Apr. 01, 2018	Nov. 28, 2017	Aug. 29, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Business Acquisition [Line Items]
Goodwill						$ 7,447,000	$ 7,225,000	$ 1,549
Adya
Business Acquisition [Line Items]
Purchase Consideration	$ 1,000,000
Net Tangible Assets Acquired/ (liabilities assumed)	0
Purchased Intangible Assets	900,000
Goodwill	100,000
Deferred Tax Liability	$ 0
1Mobility
Business Acquisition [Line Items]
Purchase Consideration			$ 4,000,000
Net Tangible Assets Acquired/ (liabilities assumed)			0
Purchased Intangible Assets			3,700,000
Goodwill			300,000
Deferred Tax Liability			$ 0
Layered Insight
Business Acquisition [Line Items]
Purchase Consideration		$ 13,434,000
Net Tangible Assets Acquired/ (liabilities assumed)		80,000
Purchased Intangible Assets		9,600,000
Goodwill		5,498,000
Deferred Tax Liability		$ 1,500,000
Nevis
Business Acquisition [Line Items]
Purchase Consideration					$ 5,753,000
Net Tangible Assets Acquired/ (liabilities assumed)					14,000
Purchased Intangible Assets					5,156,000
Goodwill					583,000
Deferred Tax Liability					$ 0
NetWatcher
Business Acquisition [Line Items]
Purchase Consideration				$ 7,729,000
Net Tangible Assets Acquired/ (liabilities assumed)				80,000
Purchased Intangible Assets				7,000,000
Goodwill				649,000
Deferred Tax Liability				$ 0

Income Taxes (Provision For (Benefit From) Income Taxes) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Current
Federal	$ (90)	$ (90)	$ 22
State	646	62	23
Foreign	3,000	1,988	1,471
Total current provision	3,556	1,960	1,516
Deferred
Federal	7,085	(3,449)	(1,650)
State	447	21	(996)
Foreign	(441)	(368)	68
Total deferred provision (benefit)	7,091	(3,796)	(2,578)
Provision for (benefit from) income taxes	$ 10,647	$ (1,836)	$ (1,062)

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit
Balance at Dec. 31, 2016	$ 258,413	$ 36	$ 266,794	$ (156)	$ (8,261)
Balance (in shares) at Dec. 31, 2016		35,841,001
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	40,440				40,440
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent	(418)			(418)
Change in unrealized loss on investments	(418)
Issuance of common stock upon exercise of stock options	$ 31,327	$ 3	31,324
Issuance of common stock upon exercise of stock options (shares)	2,997,095	2,997,095
Issuance of common stock upon vesting of restricted stock units (in shares)		368,367
Taxes from release of the restricted share units	$ (20,924)		(20,924)
Taxes related to net share settlement of equity awards, shares		(608,346)
Stock-based compensation	26,961		26,961
Balance at Dec. 31, 2017	343,544	$ 39	304,155	(574)	39,924
Balance (in shares) at Dec. 31, 2017		38,598,117
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	57,304
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent	(12)
Change in unrealized loss on investments	28
Issuance of common stock upon exercise of stock options	$ 24,053	$ 1	$ 24,052
Issuance of common stock upon exercise of stock options (shares)	1,183,235	1,183,235
Stock Repurchased During Period, Shares		1,088,899	13,064,000
Treasury Stock, Value, Acquired, Cost Method		$ 1
Issuance of common stock upon vesting of restricted stock units (in shares)		525,375
Taxes from release of the restricted share units	$ (14,879)		$ (14,879)
Taxes related to net share settlement of equity awards, shares		(202,794)
Stock-based compensation	30,308		30,308
Balance at Dec. 31, 2018	357,989	$ 39	330,572	(586)	27,964
Balance (in shares) at Dec. 31, 2018		39,015,034
Accumulated deficit	27,964
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	69,336				69,336
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent	1,748			1,748
Change in unrealized loss on investments	1,367
Issuance of common stock upon exercise of stock options	$ 24,831	$ 1	24,830
Issuance of common stock upon exercise of stock options (shares)	901,290	901,290
Stock Repurchased During Period, Shares		(1,026,455)
Treasury Stock, Value, Acquired, Cost Method	$ (86,424)	$ (1)	(12,317)		(74,106)
Issuance of common stock upon vesting of restricted stock units (in shares)		438,892
Taxes from release of the restricted share units	(15,743)		(15,743)
Taxes related to net share settlement of equity awards, shares		(182,489)
Stock-based compensation	35,066		35,066
Balance at Dec. 31, 2019	386,803	$ 39	$ 362,408	$ 1,162	$ 23,194
Balance (in shares) at Dec. 31, 2019		39,146,272
Accumulated deficit	$ 23,194

Stockholders' Equity and Stock-based Compensation (Restricted Stock) (Details) - USD ($) $ / shares in Units, $ in Thousands			12 Months Ended
	Nov. 02, 2019	Dec. 21, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based employee compensation			$ 34,892	$ 30,090	$ 26,961
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted (in shares)			595,985	548,245	1,326,849
Weighted-average grant date fair value (usd per share)			$ 81.59	$ 75.44	$ 42.69
Units vested and released in period (in shares)			438,892	525,375	368,367
Units outstanding and expected to vest (in shares)			1,214,818	1,226,883	1,410,588	587,333
Unrecognized employee compensation cost, period for recognition			2 years 7 months 6 days
Share-based Compensation Award, Tranche Two \| Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	3 years	3 years

Segment Information and Information about Geographic Area (Details) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019 USD ($)	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2019 USD ($) segment	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Segment Reporting Information [Line Items]
Number of operating segments (in segment)									1		1
Revenues	$ 84,664	$ 82,671	$ 78,929	$ 75,343	$ 74,200	$ 71,658	$ 68,153	$ 64,878		$ 321,607		$ 278,889	$ 230,828
Property and equipment, net	60,579				61,442				$ 60,579	60,579	$ 60,579	61,442
United States
Segment Reporting Information [Line Items]
Revenues										206,555		185,887	162,681
Property and equipment, net	46,100				51,587				46,100	46,100	46,100	51,587
Foreign
Segment Reporting Information [Line Items]
Revenues										115,052		93,002	$ 68,147
Property and equipment, net	5,258				4,081				5,258	5,258	5,258	4,081
INDIA [Member]
Segment Reporting Information [Line Items]
Property and equipment, net	$ 9,221				$ 5,774				$ 9,221	$ 9,221	$ 9,221	$ 5,774

Revenue from Contracts with Customers - Revenue by sales channel (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Disaggregation of Revenue [Line Items]
Revenues				$ 230,828
Direct
Disaggregation of Revenue [Line Items]
Revenues	$ 139,908
Partner
Disaggregation of Revenue [Line Items]
Revenues				$ 90,920
ASC 606
Disaggregation of Revenue [Line Items]
Revenues		$ 321,607
ASC 606 \| Direct
Disaggregation of Revenue [Line Items]
Revenues		186,130
ASC 606 \| Partner
Disaggregation of Revenue [Line Items]
Revenues		$ 135,477
Operating Lease Expected Revenue
Disaggregation of Revenue [Line Items]
Revenues			$ 278,889
Operating Lease Expected Revenue \| Direct
Disaggregation of Revenue [Line Items]
Revenues			164,084
Operating Lease Expected Revenue \| Partner
Disaggregation of Revenue [Line Items]
Revenues			$ 114,805

Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies



NOTE 7.	Commitments and Contingencies

Leases

On January 1, 2019, the Company adopted ASU No. 2016-02, “Leases (Topic 842),” which requires leases with durations greater than twelve months to be recognized on the balance sheet. The Company adopted the standard using the current period adjustment method with an effective date of January 1, 2019. Prior year financial statements were not restated under the new standard and, therefore, those amounts are not presented below. For both operating and finance leases, the Company recognizes a right-of-use asset, which represents its right to use the underlying asset for the lease term, and a lease liability, which represents the present value of its obligation to make payments arising over the lease term. The present value of the lease payments is calculated using the incremental borrowing rate for operating and finance leases. The incremental borrowing rate is determined using a portfolio approach based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term.

Where the Company is the lessee, the Company elected to account for non-lease components associated with its leases (e.g., common area maintenance costs) and lease components separately for substantially all of the asset classes. In arrangements where the Company is the lessor, the Company applies the lease and non-lease component practical expedient and the Company accounts for lease components (e.g., customer premise equipment) and non-lease components (e.g., service revenue) as combined components and account for the combined components under the revenue recognition guidance in Topic 606 as the service revenues are the predominant components in the arrangements.

The Company leases property and equipment under finance and operating leases. For leases with terms greater than 12 months, the Company records the related asset and obligation at the present value of lease payments over the term. Many of its leases include rental escalation clauses, renewal options and/or termination options that are factored into the determination of lease payments when appropriate.

When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the leases do not provide a readily determinable implicit rate. Therefore, the Company must estimate an incremental borrowing rate to discount the lease payments based on information available at lease commencement.

The table below presents the lease-related assets and liabilities recorded on the balance sheet.



		December 31
(in thousands)	Classification on the Balance Sheet	2019
Assets
Operating lease assets	Operating lease - right of use asset	$	40,551
Finance lease assets	Property and equipment, net	1,299
Total lease assets		$	41,850

Liabilities
Current
Operating	Operating lease liabilities, current	$	7,663
Finance	Accrued liabilities	124
Noncurrent
Operating	Operating lease liabilities, noncurrent	44,015
Finance	Other noncurrent liabilities	54
Total lease liabilities		$	51,856

The Company leases certain offices, computer equipment and its data center facilities under non-cancelable operating leases for varying periods through 2028. In January 2018, the Company entered into a $3.5 million financing arrangement for data center storage equipment, accounted for as a finance lease, with an implied interest rate of 5%.

During the fourth quarter ended December 31, 2019, the Company entered into a new lease agreement (included in the table above) for a total of approximately 282,000 square feet of office space in Pune, India. On the lease inception date of October 1, 2019, the Company recognized $14.7 million of lease liability and ROU assets, which will be amortized over the non-cancellable lease term through February 2025.

The following are the minimum annual lease payments due under operating leases at December 31, 2019 (in thousands):



	Operating Leases			Finance Leases
	(in thousands)
2020	$	10,603		$	130
2021	9,859			54
2022	8,539			—
2023	8,652			—
2024	8,866			—
2025 and thereafter	15,583			—
Total minimum lease payments	62,102			184
Less: amount representing interest	(10,424		)	(6		)
Present value of minimum payments	51,678			178
Less: lease obligations, current	(7,663		)	(124		)
Lease obligations, noncurrent	$	44,015		$	54

Rent expense was $13.9 million, $9.9 million and $9.6 million for 2019, 2018 and 2017, respectively.

The weighted average remaining lease term and the weighted average discount rate of the Company's leases were as follows:



	December 31, 2019
Weighted average remaining lease term (years)
Operating leases	6.5
Finance leases	1.25
Weighted average discount rates
Operating leases	5.0	%
Finance leases	5.0	%

Purchase Obligation

The Company has entered into agreements to purchase goods and services in the ordinary course of business, primarily through the next 12 months. As of December 31, 2019, these remaining commitments were $25.3 million.

Indemnifications

The Company from time to time enters into certain types of contracts that contingently require it to indemnify various parties against claims from third parties. These contracts primarily relate to (i) the Company's by-laws, under which it must indemnify directors and executive officers, and may indemnify other officers and employees, for liabilities arising out of their relationship, (ii) contracts under which the Company must indemnify directors and certain officers for liabilities arising out of their relationship, and (iii) contracts under which the Company may be required to indemnify customers or resellers from certain liabilities arising from potential infringement of intellectual property rights, as well as potential damages caused by limited product defects. To date, the Company has not incurred and has not recorded any liability in connection with such indemnifications.

The Company maintains director and officer insurance, which may cover certain liabilities arising from its obligation to indemnify its directors.

Stockholders' Equity and Stock-based Compensation (Stock Option Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Outstanding Shares
Beginning balance (in shares)	3,429,309	4,495,891	7,527,680
Granted (in shares)	496,145	366,786	408,225
Exercised (in shares)	(901,290)	(1,183,235)	(2,997,095)
Canceled (in shares)	(157,489)	(250,133)	(442,919)
Ending balance (in shares)	2,866,675	3,429,309	4,495,891	7,527,680
Vested and Expected to vest (in shares)	2,655,987
Exercisable (in shares)	2,099,200
Weighted Average Exercise Price
Weighted average exercise price, beginning balance (in dollars per share)	$ 31.79	$ 25.29	$ 19.25
Weighted average exercise price, granted (in dollars per share)	87.10	79.79	40.82
Weighted average exercise price, exercised (in dollars per share)	27.55	20.33	11.05
Weighted average exercise price, canceled (in dollars per share)	71.04	39.61	33.29
Weighted average exercise price, ending balance (in dollars per share)	40.54	$ 31.79	$ 25.29	$ 19.25
Vested and Expected to vest, weighted average exercise price (in dollars per share)	37.27
Exercisable, Weighted average exercise price (in dollars per share)	$ 28.39
Weighted Average Remaining Contractual Life (Years)
Weighted average remaining contractual life	6 years	6 years 4 months 24 days	6 years 7 months 6 days	6 years
Vested and Expected to vest, weighted average remaining contractual life	5 years 10 months 24 days
Exercisable, weighted average remaining contractual life	5 years 4 months 24 days
Aggregate Intrinsic Value
Aggregate intrinsic value	$ 125,647	$ 149,935	$ 153,129	$ 101,717
Vested and Expected to vest, aggregate intrinsic value	124,592
Exercisable, aggregate intrinsic value	$ 115,916

Schedule II Schedule of Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward]
Balance at Beginning of Year	$ 683	$ 816	$ 702
Charged to Costs and Expenses	247	86	657
Deductions and Other	(345)	(219)	(543)
Balance at End of Year	$ 585	$ 683	$ 816

Goodwill and Intangible Assets, Net (Details) - USD ($)	12 Months Ended
Goodwill and Intangible Assets, Net (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Oct. 16, 2018	Apr. 01, 2018
Schedule of Goodwill and Intangible Assets [Line Items]
Estimated Lives	3 years
Cost	$ 27,743,000	$ 26,844,000
Accumulated Amortization	(10,988,000)	(4,907,000)
Net Book Value	16,755,000	21,936,000
Intangible assets not subject to amortization	40,000	40,000
Total intangible assets, net	16,795,000	21,976,000
Amortization of intangible assets	6,100,000	3,700,000	$ 700,000
Goodwill	$ 7,447,000	$ 7,225,000	$ 1,549
Existing technology
Schedule of Goodwill and Intangible Assets [Line Items]
Estimated Lives	4 years 7 months 6 days	5 years
Weighted Remaining Average Lives	2 years 8 months 12 days	3 years 9 months 18 days
Cost	$ 26,356,000	$ 25,456,000
Accumulated Amortization	(10,066,000)	(4,085,000)
Net Book Value	$ 16,290,000	$ 21,371,000
Patent license
Schedule of Goodwill and Intangible Assets [Line Items]
Estimated Lives	14 years	14 years
Weighted Remaining Average Lives	4 years 8 months 12 days	5 years 10 months 24 days
Cost	$ 1,387,000	$ 1,388,000
Accumulated Amortization	(922,000)	(822,000)
Net Book Value	$ 465,000	$ 565,000
1Mobility
Schedule of Goodwill and Intangible Assets [Line Items]
Purchased Intangible Assets					$ 3,700,000
Goodwill					$ 300,000
Layered Insight
Schedule of Goodwill and Intangible Assets [Line Items]
Purchased Intangible Assets				$ 9,600,000
Goodwill				$ 5,498,000

Stockholders' Equity and Stock-based Compensation (Performance-based Stock Options and Restricted Stock Units) (Details) $ in Thousands		12 Months Ended
	Dec. 21, 2018 shares	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Nov. 02, 2019 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based employee compensation \| $		$ 34,892	$ 30,090	$ 26,961
Restricted Stock Units \| Performance Shares [Member] \| Share-based Compensation Award, Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)	33,089
Restricted Stock Units \| Time-based shared based compensation [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)					48,683
Share-based Compensation Arrangement by Share-based Payment Award, Vesting Period, Number Of Quarterly Periods	16
Restricted Stock Units \| Time-based shared based compensation [Member] \| Share-based Compensation Award, Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)	56,250
Restricted Stock Units \| Share-based Compensation Award, Tranche Three \| Share-based Compensation Award, Tranche Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)	33,088
Stock option \| Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)					123,856
2018 Performance-Based Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based employee compensation \| $		900
2019 Performance-Based Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based employee compensation \| $		$ 300

Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Schedule of Cash and Cash Equivalents, Available-for-sale Securities Reconciliation

The Company's cash and cash equivalents, short-term marketable securities, and long-term marketable securities consist of the following:



	December 31, 2019
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(in thousands)
Cash and cash equivalents:
Cash	$	84,102	$	—	$	—		$	84,102
Money market funds	58		—		—			58
Commercial paper	3,399		—		—			3,399
Total	87,559		—		—			87,559
Short-term marketable securities:
Commercial paper	2,239		—		—			2,239
Corporate bonds	33,048		51		(1		)	33,098
Asset-backed securities	2,438		11		—			2,449
U.S. government agencies	173,364		184		(3		)	173,545
Total	211,089		246		(4		)	211,331

Long-term marketable securities:
Asset-backed securities	40,001		193		(1		)	40,193
U.S. government agencies	46,447		370		—			46,817
Corporate bonds	32,236		262		—			32,498
Total	118,684		825		(1		)	119,508
Total	$	417,332	$	1,071	$	(5	)	$	418,398



	December 31, 2018
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(in thousands)
Cash and cash equivalents:
Cash	$	40,913	$	—	$	—		$	40,913
Money market funds	113		—		—			113
Total	41,026		—		—			41,026
Short-term marketable securities:
Commercial paper	3,237		—		—			3,237
Corporate bonds	30,906		—		(84		)	30,822
Asset-backed securities	10,447		—		(15		)	10,432
U.S. government agencies	203,734		9		(94		)	203,649
Total	248,324		9		(193		)	248,140
Long-term marketable securities:
Asset-backed securities	22,945		10		(28		)	22,927
U.S. government agencies	18,804		—		(53		)	18,751
Corporate bonds	35,322		3		(293		)	35,032
Total	77,071		13		(374		)	76,710
Total	$	366,421	$	22	$	(567	)	$	365,876

Schedule of Assets Measured on Recurring Basis

The following table sets forth by level within the fair value hierarchy the fair value of the Company's cash equivalents and marketable securities measured on a recurring basis:



	December 31, 2019
	Level 1		Level 2		Fair Value
	(in thousands)
Money market funds	$	58	$	—	$	58
Commercial paper	—		5,638		5,638
U.S. government agencies	—		220,362		220,362
Corporate bonds	—		65,596		65,596
Asset-backed securities	—		42,642		42,642
Total	$	58	$	334,238	$	334,296



	December 31, 2018
	Level 1		Level 2		Fair Value
	(in thousands)
Money market funds	$	113	$	—	$	113
Commercial paper	—		3,237		3,237
U.S. government agencies	—		222,400		222,400
Corporate bonds	—		65,854		65,854
Asset-backed securities	—		33,359		33,359
Total	$	113	$	324,850	$	324,963

Schedule of Investments Classified by Contractual Maturity

The following summarizes the fair value of marketable securities classified as available-for-sale debt securities by contractual maturity:



	December 31, 2019
	Mature within One Year		After One Year through Two Years		Over Two Years		Fair Value
	(in thousands)
Commercial paper	$	5,638	$	—	$	—	$	5,638
U.S. government agencies	173,546		46,816				220,362
Corporate bonds	33,098		23,251		9,247		65,596
Asset-backed securities	2,449		15,550		24,643		42,642
Total	$	214,731	$	85,617	$	33,890	$	334,238

Fair Value, by Balance Sheet Grouping [Table Text Block]

The following summarizes derivative financial instruments as of December 31, 2019 and 2018:



	December 31,
	2019			2018
Assets:	(in thousands)
Foreign currency forward contracts designated as cash flow hedge	$	427		$	32
Foreign currency forward contracts not designated as hedging instruments	515			—
Total	$	942		$	32
Liabilities:
Foreign currency forward contracts designated as cash flow hedge	$	(524	)	$	(72	)
Foreign currency forward contracts not designated as hedging instruments	(550		)	(44		)
Total	$	(1,074	)	$	(116	)

Derivative Instruments, Gain (Loss) [Table Text Block]

The following summarizes the gains (losses) recognized in other income (expense), net, on the consolidated statements of operations, from forward contracts and other foreign currency transactions (in thousands):



	Year Ended December 31,
	2019			2018			2017
Net gains (losses) from forward contracts	$	438		$	543		$	(1,665	)
Other foreign currency transaction (losses) gains	(792		)	(1,120		)	1,310
Total foreign exchange loss, net	(354		)	(577		)	(355		)
Other expenses	(253		)	(224		)	(181		)
Other income (expense), net	$	(607	)	$	(801	)	$	(536	)

Revenue from Contracts with Customers - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Retained earnings	$ 23,194	$ 27,964
Deferred tax liability	20,735	10,402
Amortization of commissions assets	2,000	1,200
Revenue recognized			$ 230,828
Subscription Revenue
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenue recognized	$ 160,800	$ 141,300

Stockholders' Equity and Stock-based Compensation (Options Outstanding and Vested) (Details) - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Number of shares, outstanding	2,866,675
Weighted average exercise price per share, outstanding (in dollar per share)	$ 40.54
Weighted average remaining contractual life, outstanding	6 years
Number of shares, vested	2,099,200,000
Weighted average exercise price per share, vested (in dollar per share)	$ 28.39
Stock Options
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Weighted average grant date fair value (in dollars per share)	$ 34.02	$ 33.05	$ 18.03
Aggregate grant date fair value	$ 12.2	$ 12.1	$ 7.4
Intrinsic value of options exercised	$ 52.1	$ 71.7	$ 92.1
$1.90 - $1.90
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price range, lower limit (in dollar per share)	$ 4.10
Exercise price range, upper limit (in dollar per share)	$ 13.50
Number of shares, outstanding	297,913
Weighted average exercise price per share, outstanding (in dollar per share)	$ 9.75
Weighted average remaining contractual life, outstanding	2 years 6 months
Number of shares, vested	297,913,000
Weighted average exercise price per share, vested (in dollar per share)	$ 9.75
$2.10 - $2.80
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price range, lower limit (in dollar per share)	13.60
Exercise price range, upper limit (in dollar per share)	$ 25.17
Number of shares, outstanding	351,255
Weighted average exercise price per share, outstanding (in dollar per share)	$ 22.22
Weighted average remaining contractual life, outstanding	4 years 7 months 6 days
Number of shares, vested	347,391,000
Weighted average exercise price per share, vested (in dollar per share)	$ 22.19
$3.80 - $3.80
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price range, lower limit (in dollar per share)	25.56
Exercise price range, upper limit (in dollar per share)	$ 25.56
Number of shares, outstanding	836,635
Weighted average exercise price per share, outstanding (in dollar per share)	$ 25.56
Weighted average remaining contractual life, outstanding	6 years 3 months 18 days
Number of shares, vested	764,382,000
Weighted average exercise price per share, vested (in dollar per share)	$ 25.56
$4.10 - $12.68
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price range, lower limit (in dollar per share)	26.68
Exercise price range, upper limit (in dollar per share)	$ 34.97
Number of shares, outstanding	297,207
Weighted average exercise price per share, outstanding (in dollar per share)	$ 30.98
Weighted average remaining contractual life, outstanding	5 years
Number of shares, vested	287,277,000
Weighted average exercise price per share, vested (in dollar per share)	$ 30.96
$13.50 - $25.17
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price range, lower limit (in dollar per share)	36.25
Exercise price range, upper limit (in dollar per share)	$ 40.68
Number of shares, outstanding	301,532
Weighted average exercise price per share, outstanding (in dollar per share)	$ 38.19
Weighted average remaining contractual life, outstanding	6 years 3 months 18 days
Number of shares, vested	244,236,000
Weighted average exercise price per share, vested (in dollar per share)	$ 38.17
$25.56 - $25.56
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price range, lower limit (in dollar per share)	40.89
Exercise price range, upper limit (in dollar per share)	$ 79.51
Number of shares, outstanding	363,278
Weighted average exercise price per share, outstanding (in dollar per share)	$ 70.50
Weighted average remaining contractual life, outstanding	8 years 6 months
Number of shares, vested	113,388,000
Weighted average exercise price per share, vested (in dollar per share)	$ 61.81
$26.86 - $30.58
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price range, lower limit (in dollar per share)	86.35
Exercise price range, upper limit (in dollar per share)	$ 87.26
Number of shares, outstanding	196,706
Weighted average exercise price per share, outstanding (in dollar per share)	$ 86.69
Weighted average remaining contractual life, outstanding	5 years 6 months
Number of shares, vested	2,770,000
Weighted average exercise price per share, vested (in dollar per share)	$ 87.26
$31.67 - $37.28
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price range, lower limit (in dollar per share)	89.55
Exercise price range, upper limit (in dollar per share)	$ 89.55
Number of shares, outstanding	63,300
Weighted average exercise price per share, outstanding (in dollar per share)	$ 89.55
Weighted average remaining contractual life, outstanding	9 years 7 months 6 days
Number of shares, vested	499,000
Weighted average exercise price per share, vested (in dollar per share)	$ 89.55
$40.68 - $40.89
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price range, lower limit (in dollar per share)	94.45
Exercise price range, upper limit (in dollar per share)	$ 94.45
Number of shares, outstanding	77,425
Weighted average exercise price per share, outstanding (in dollar per share)	$ 94.45
Weighted average remaining contractual life, outstanding	9 years
Number of shares, vested	10,458,000
Weighted average exercise price per share, vested (in dollar per share)	$ 94.45
$52.14 - $52.14
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price range, lower limit (in dollar per share)	95.10
Exercise price range, upper limit (in dollar per share)	$ 95.10
Number of shares, outstanding	81,424
Weighted average exercise price per share, outstanding (in dollar per share)	$ 95.10
Weighted average remaining contractual life, outstanding	8 years 6 months
Number of shares, vested	30,886,000
Weighted average exercise price per share, vested (in dollar per share)	$ 95.10

The Company and Summary of Significant Accounting Policies (Policies)	12 Months Ended
	Dec. 31, 2019
Accounting Policies [Abstract]
Description of Business	Description of Business Qualys, Inc. (the “Company”, "we", "us", "our") was incorporated in the state of Delaware on December 30, 1999. The Company is headquartered in Foster City, California and has wholly-owned subsidiaries throughout the world. The Company is a pioneer and leading provider of cloud-based IT, security and compliance solutions that enable organizations to identify security risks to their IT infrastructures, help protect their IT systems and applications from ever-evolving cyber-attacks and achieve compliance with internal policies and external regulations. The Company’s cloud solutions address the growing security and compliance complexities and risks that are amplified by the dissolving boundaries between internal and external IT infrastructures and web environments, the rapid adoption of cloud computing and the proliferation of geographically dispersed IT assets. Organizations can use the Company’s integrated suite of solutions delivered on its Qualys Cloud Platform to cost-effectively obtain a unified view of their security and compliance posture across globally-distributed IT infrastructures.
Basis of presentation	Basis of Presentation The accompanying consolidated financial statements and footnotes have been prepared in accordance with U.S. GAAP as well as the instructions to Form 10-K and the rules and regulations of SEC. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s consolidated financial position, results of operations and cash flows for the periods presented. The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation.
Use of estimates	Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the consolidated financial statements and the reported results of operations during the reporting period. The Company’s management regularly assesses these estimates, which primarily affect revenue recognition, the valuation of accounts receivable, goodwill and intangible assets, capitalization of internally developed software, stock-based compensation and the provision for income taxes. Actual results could differ from those estimates and such differences may be material to the accompanying consolidated financial statements.
Concentration of credit risk	Concentration of Credit Risk The Company invests its cash and cash equivalents with major financial institutions. Cash balances with any one institution at times may be in excess of federally insured limits. Cash equivalents are invested in high-quality investment grade financial instruments and are diversified. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk. Credit risk with respect to accounts receivable is dispersed due to the large number of customers. Collateral is not required for accounts receivable. As of December 31, 2019 and 2018, no customer or channel partner accounted for more than 10% of the Company's revenues and accounts receivable balance.
Cash, cash equivalents and short-term and long-term investments	Cash, Cash Equivalents, Short-Term and Long-Term Marketable Securities Cash and cash equivalents include cash held in banks, highly liquid money market funds and commercial paper, all with original maturities of three months or less when acquired. The Company’s short-term and long-term marketable securities consist of fixed-income U.S. government agency securities, corporate bonds, asset-backed securities and commercial paper. Management determines the appropriate classification of the Company's investments at the time of purchase and reevaluates such designation at each balance sheet date. The Company classifies its marketable securities as either short-term or long-term based on each instrument's underlying contractual maturity date. Cash equivalents are stated at cost, which approximates fair market value. Short-term and long-term marketable securities are classified as available-for-sale debt securities and are carried at fair value. Unrealized gains and losses in fair value of the available-for-sale debt securities are reported in other comprehensive income (loss). When the available-for- sale debt securities are sold, cost is based on the specific identification method, and the realized gains and losses are included in other income (expense), net in the consolidated statements of operations. Available-for-sale debt securities are reviewed quarterly for impairment that is deemed to be other-than-temporary. An investment is considered other-than-temporarily impaired when its fair value is below its amortized cost and (1) there is an intent to sell the security, (2) it is “more likely than not” that the security will be sold before recovery of its amortized cost basis or (3) the present value of expected cash flows from the investment is not expected to recover the entire amortized cost basis. Declines in value that are considered to be other-than-temporary are recorded in other income (expense), net. Adjustments to amortized cost for the amortization of premiums, the accretion of discounts and Interest and dividends are recorded in interest income as earned.
Accounts receivable	Accounts Receivable Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts represents the Company’s best estimate of the amount of probable credit losses and is determined based on a review of existing accounts receivable by aging category to identify significant customers or invoices with collectability issues. For those invoices not specifically reviewed, the reserve is calculated based on the age of the receivable and historical write-offs. Any change in the assumptions used in analyzing a specific account receivable may result in an additional provision for doubtful accounts being recognized in the period in which the change occurs. When the Company ultimately concludes that a receivable is uncollectible, the balance is written off against the allowance for doubtful accounts. Payments subsequently received on such receivables are credited back to the allowance for doubtful accounts.
Cost method investments	During the fiscal year ended December 31, 2018, the Company invested $2.5 million in preferred stock of a privately-held company. The fair value of the investment is not readily available, and there are no quoted market prices for the investment. The investment is included in other noncurrent assets on the consolidated balance sheets and measured at cost less impairment, adjusted for observable price changes. The investment is assessed for impairment annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company has not received any dividends or other-than-temporary impairment charges related to the investment.
Property and equipment, net	Property and Equipment, net Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range from three to five years. Leasehold improvements are amortized on a straight-line basis over the lesser of the estimated useful life of the asset or the remaining lease term. The Company purchases physical scanner appliances and other computer equipment that are provided to customers on a subscription basis. This equipment is recorded within property and equipment and the depreciation is recorded in cost of revenues over an estimated useful life of three years. Upon retirement or disposal, the cost of assets and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the consolidated statements of operations. Repairs and maintenance that do not extend the life of an asset are expensed as incurred and major improvements are capitalized as property and equipment.
Impairment of long-lived assets	Impairment of Long-Lived Assets The Company evaluates its long-lived assets, which consist of property and equipment, and intangible assets subject to amortization, for indicators of possible impairment when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Impairment exists if the carrying amounts of such assets exceed the estimates of future undiscounted cash flows expected to be generated by such assets. Should an impairment exist, the impairment loss would be measured based on the excess carrying value of the asset over the asset’s estimated fair value. In each of 2019, 2018 and 2017, the Company had no impairment of long-lived assets.
Goodwill and intangible assets	Goodwill and Intangible Assets Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination and is not subject to amortization. Goodwill and other intangible assets with indefinite lives are not amortized, but tested for impairment at least annually or more frequently if certain circumstances indicate a possible impairment may exist. These tests are performed at the reporting unit level. The Company’s operations are organized as one reporting unit. In testing for a potential impairment of goodwill, the Company first performs a qualitative assessment of its reporting unit to determine if it is more likely than not (a more than 50% likelihood) that the fair value of the reporting unit is less than its carrying amount. If the fair value is not considered to be less than the carrying amount, no further evaluation is necessary. The Company performed the annual assessment on December 1, 2019 and 2018 and concluded there was no potential impairment of goodwill. In testing for a potential impairment of intangible assets with indefinite lives that are not subject to amortization, the Company first performs a qualitative assessment to determine if it is more likely than not (a more than 50% likelihood) that the fair value of the indefinite-lived intangible assets is less than the carrying amount. If the fair value is not considered to be less than the carrying amount, no further evaluation is necessary. The Company performs the annual qualitative assessment in the fourth quarter each fiscal year. There were no such impairment losses during 2019, 2018 and 2017.
Software development cost	SoftwareCosts incurred in the development phase are capitalized and amortized over the product’s estimated useful life, which is three years. Capitalized costs include salaries, benefits and stock-based compensation charges for employees that are directly involved in developing its cloud security platform during the post planning and implementation phases. Capitalized costs related to internally developed software under development are treated as construction in progress until the program, feature or functionality is ready for its intended use, at which time amortization commences. These capitalized costs are included in other noncurrent assets on the consolidated balance sheets.
Business combinations	Business Combinations The Company applies the provisions of ASC 805, Business Combinations, in accounting for its acquisitions. It requires the Company to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as any contingent consideration, where applicable, its estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to its consolidated statements of operations.
Derivative financial instruments	Derivative Financial Instruments Derivative financial instruments are utilized by the Company to reduce foreign currency exchange risks. The Company uses foreign currency forward contracts to mitigate the impact of foreign currency fluctuations of certain non-U.S. dollar denominated asset positions, to date primarily cash and accounts receivable (non-designated forward contracts), as well as to manage foreign currency fluctuation risk related to forecasted transactions (designated cash flow hedges). Open contracts are recorded within prepaid expenses and other current assets, other noncurrent assets, accrued liabilities, or other noncurrent liabilities in the consolidated balance sheets. Gains and losses resulting from currency exchange rate movements on non-designated forward contracts are recognized in other income (expense), net. Any gains or losses from derivatives designated as cash flow hedges are first accumulated in AOCI and then reclassified to revenue when the hedged item impacts the consolidated statements of operations.
Share-based compensation	Stock-Based Compensation The Company recognizes the fair value of its employee stock options and restricted stock units (RSUs) over the requisite service periods for those awards ultimately expected to vest. The fair value of each option is estimated on date of grant using the Black-Scholes-Merton option pricing model and the fair value of each RSU is based on the fair value of the Company's stock on the date of grant. Forfeitures are estimated on the date of grant and revised if actual or expected forfeiture activity differs materially from original estimates.
Revenue recognition	Revenue Recognition The Company derives revenues from subscriptions that require customers to pay a fee in order to access the Company’s cloud solutions. Customers generally enter into one-year renewable subscriptions though some customers do enter into subscriptions with longer terms. The subscription fee entitles the customer to an unlimited number of scans for a specified number of networked devices or web applications and, if requested by a customer as part of their subscription, a specified number of physical or virtual scanner appliances. Revenue is recognized when control of these subscription services is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The Company’s physical and virtual scanner appliances are requested by certain customers as part of their subscriptions in order to scan IT infrastructures within their firewalls and do not function without, and are not sold separately from, subscriptions for the Company’s solutions. In some limited cases, the Company also provides certain computer equipment used to extend its Qualys Cloud Platform into its customers’ private cloud environment. Customers are required to return physical scanner appliances and computer equipment if they do not renew their subscriptions. Physical equipment (scanners and private cloud platforms) are accounted for as operating leases under ASC 842. The company used the practical expedient to combine lease and nonlease components as a combined component under ASC 606 due to the software subscription nonlease components being the predominant component of the combined component. Therefore, the Company recognizes revenue for the physical equipment ratably over the related subscription period. The Company determines revenue recognition through the following steps: •Identification of the contract, or contracts, with a customer; •Identification of the performance obligations in the contract; •Determination of the transaction price •Allocation of the transaction price to the performance obligations in the contract; and •Recognition of revenue when, or as, the Company satisfies a performance obligation. At the inception of a customer contract, the Company makes an assessment as to that customer's ability to pay for the services provided. The Company assesses collectability based on a number of factors, including credit worthiness of the customer along with past transaction history. In addition, the Company performs periodic evaluations of its customers’ financial condition. Deferred revenues consist of customer contracts billed or cash received that will be recognized in the future under subscriptions existing at the balance sheet date. The current portion of deferred revenues represents amounts that are expected to be recognized within one year of the balance sheet date. Costs of shipping and handling charges incurred by the Company associated with physical scanner appliances and other computer equipment are included in cost of revenues. Sales taxes and other taxes collected from customers to be remitted to government authorities are excluded from revenues.
Advertising expenses	Advertising Expenses Advertising costs are expensed as incurred and include costs of advertising and promotional materials. The Company incurred advertising costs of $74 thousand, $87 thousand and $482 thousand for 2019, 2018 and 2017, respectively.
Income taxes	Income Taxes The Company provides for the effect of income taxes in its consolidated financial statements using the asset and liability method which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, net operating loss carryovers, and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Income tax expense or benefit is recognized for the amount of taxes payable or refundable for the current year and for deferred tax assets and liabilities for the tax consequences of events that have been recognized in an entity’s financial statements or tax returns. The Company must make significant assumptions, judgments and estimates to determine its current provision for (benefit from) income taxes, its deferred tax assets and liabilities, and any valuation allowance to be recorded against its deferred tax assets. The Company's judgments, assumptions and estimates relating to the current provision for (benefit from) income taxes include the geographic mix and amount of income (loss), its interpretation of current tax laws, and possible outcomes of current and future audits conducted by foreign and domestic tax authorities. The Company's judgments also include anticipating the tax positions the Company will record in the consolidated financial statements before actually preparing and filing the tax returns. The Company's estimates and assumptions may differ from the actual results as reflected on its income tax returns and will record the required adjustments when they are identified or resolved. Changes in the Company's business, tax laws or interpretation of tax laws, and developments in current and future tax audits, could significantly impact the amounts provided for income taxes in the Company's results of operations, financial position, or cash flows. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to tax benefit carry-forwards and to differences between the financial statement amounts of assets and liabilities and their respective tax basis. The Company regularly reviews its deferred tax assets for recoverability and establishes a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized. To make this assessment, the Company takes into account predictions of the amount and category of taxable income from various sources and all available positive and negative evidence about these possible sources of taxable income. The weight given to the potential effect of negative and positive evidence is commensurate with the extent to which the strength of the evidence can be objectively verified. The Company applies a two-step approach to determining the financial statement recognition and measurement of uncertain tax positions. The Company only recognizes an income tax expense or benefit with respect to uncertain tax positions in its financial statements that the Company judges is more likely than not to be sustained solely on its technical merits in a tax audit, including resolution of any related appeals or litigation processes. To make this judgment, the Company must interpret complex and sometimes ambiguous tax laws, regulations and administrative practices. If an income tax position meets the more likely than not recognition threshold, then the Company must measure the amount of the tax benefit to be recognized by determining the largest amount of tax benefit that has a greater than a 50% likelihood of being realized upon effective settlement with a taxing authority that has full knowledge of all of the relevant facts. It is inherently difficult and subjective to estimate such amounts, as this requires the Company to determine the probability of various possible settlement outcomes. To determine if a tax position is effectively settled after a tax examination has been completed, the Company must also estimate the likelihood that another taxing authority could review the respective tax position. The Company must also determine when it is reasonably possible that the amount of unrecognized tax benefits will significantly increase or decrease in the 12 months after each fiscal year-end. These judgments are difficult because a taxing authority may change its behavior as a result of the Company's disclosures in its financial statements. The Company must reevaluate its income tax positions on a quarterly basis to consider factors such as changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition or measurement would result in recognition of a tax benefit or an additional charge to the tax provision. The Company's policy is to recognize interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes.
Comprehensive income (loss)	Comprehensive Income (Loss) Other comprehensive income (loss) consists of unrealized gains (losses) on marketable securities, net of tax, and derivative financial instruments designated as cash flow hedges which are not included in the Company’s net income. Total comprehensive income includes net income and other comprehensive income (loss) and is included in the consolidated statements of comprehensive income.
Foreign currency translation and transactions	Foreign Currency Transactions The Company’s operations are conducted in various countries around the world and the financial statements of its foreign subsidiaries are reported in the U.S. dollar as their respective functional currency. Monetary assets and liabilities denominated in foreign currencies have been re-measured into U.S. dollars using the exchange rates in effect at the balance sheet date, and income and expenses are re-measured at average exchange rates during the period. Foreign currency re-measurement gains and losses and foreign currency transaction gains and losses are recognized in other income (expense), net. The Company recorded total foreign currency transaction losses of $0.4 million, $0.6 million and $0.4 million during 2019, 2018 and 2017, respectively.
Fair value measurement
Net income per share attributable to common stockholders	Net Income Per Share Basic net income per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. All participating securities are excluded from basic weighted average common shares outstanding. Diluted net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period, adjusted for the effects of potentially dilutive common shares, which are comprised of outstanding stock options and RSUs. The dilutive potential common shares are computed using the treasury stock method or the as-if converted method, as applicable. The outstanding stock options and RSUs which would be anti-dilutive are excluded from the computation of diluted net income per common share. Reclassification Reclassification has been made to the shares issued for RSUs and taxes related to net share settlement of equity awards and options in the consolidated statement of stockholders' equity for the fiscal year 2017. The reclassification had no effect on the total number of shares outstanding at the end of each period presented in the consolidated statements of stockholders' equity.
Recent accounting pronouncements	Recently Adopted Accounting Pronouncements In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates (ASU) 2018-13, Disclosure Framework - Changes to the Disclosure requirements for Fair Value Measurement, which adds, modifies and removes certain fair value measurement disclosure requirements. The ASU is effective for the Company for fiscal years beginning after December 15, 2019, including interim periods therein. The Company early adopted the guidance in the fiscal year 2019. The adoption of this ASU did not have a material impact on the Company's consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This ASU expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The Company adopted this guidance as of January 1, 2019. The adoption of this ASU did not have a material impact on the Company's consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (Topic 350). This standard eliminates Step 2 from the goodwill impairment test, instead requiring an entity to recognize a goodwill impairment charge for the amount by which the goodwill carrying amount exceeds the reporting unit’s fair value. This ASU is effective for interim and annual goodwill impairment tests in fiscal years beginning after December 15, 2019 with early adoption permitted. The Company adopted this ASU on a prospective basis during the first quarter of fiscal 2019 and the adoption did not have a material impact on the Company's consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize all leases, including operating leases, on the balance sheet as a lease asset and lease liability, unless the lease is a short-term lease. ASU 2016-02 also requires additional disclosures regarding leasing arrangements. ASU 2016-02 is effective for the Company beginning in the first quarter of fiscal 2019 and early adoption is permitted. In July 2018, the FASB issued ASU 2018-11, Targeted Improvements - Leases (Topic 842). This update provides an optional transition method that allows entities to elect to apply the standard prospectively at its effective date, versus recasting the prior periods presented. If elected, an entity would recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Pursuant to the leasing criteria, most of the Company's leased space and equipment leases will be required to be accounted for as right-of-use assets (ROU) on the balance sheet with offsetting financing obligations. In the statement of operations, what was formerly rent expense for operating leases will be lease expense; and finance leases will be bifurcated into amortization of right-of-use assets and interest on lease liabilities. The Company adopted the ASU utilizing the current period adjustment method on January 1, 2019, and recognized a ROU asset of $30.8 million and a lease liability of $41.6 million on its consolidated financial statements. As of January 1, 2019, $3.9 million of deferred rent and $6.9 million related to tenant improvement allowance was removed upon adoption. As part of this adoption, the Company elected the package of transitional practical expedients to not reassess (1) whether any contracts that existed prior to adoption have or contain leases, (2) the classification of existing leases or (3) initial direct costs for existing leases. The Company also elected to make the accounting policy election for short-term leases, permitting the Company to not apply the recognition requirements of this standard to short-term leases with terms of 12 months or less. Recently Issued Accounting Pronouncements Not Yet Adopted In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. ASU 2019-12 is effective for the Company for fiscal years beginning after December 15, 2020. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company is currently evaluating the impacts of the provisions of ASU 2019-12 on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs related to internal-use software. ASU 2018-15 is effective for the Company beginning in the first quarter of fiscal 2020 and early adoption is permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

Revenue from Contracts with Customers - Remaining Performance Obligation (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Revenue from Contract with Customer [Abstract]
Revenue, Remaining Performance Obligation, Amount	$ 117,454
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01
Revenue from Contract with Customer [Abstract]
Revenue, Remaining Performance Obligation, Amount	$ 67,055
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
Revenue from Contract with Customer [Abstract]
Revenue, Remaining Performance Obligation, Amount	$ 35,437
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	2 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01
Revenue from Contract with Customer [Abstract]
Revenue, Remaining Performance Obligation, Amount	$ 13,027
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	3 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01
Revenue from Contract with Customer [Abstract]
Revenue, Remaining Performance Obligation, Amount	$ 1,454
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	4 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01
Revenue from Contract with Customer [Abstract]
Revenue, Remaining Performance Obligation, Amount	$ 343
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	5 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01
Revenue from Contract with Customer [Abstract]
Revenue, Remaining Performance Obligation, Amount	$ 138
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	6 years

Goodwill and Intangible Assets, Net - Goodwill Rollforward (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill, beginning balance	$ 7,225,000	$ 1,549
Goodwill acquired	100	5,676
Adjustment	122
Goodwill, ending balance	$ 7,447,000	$ 7,225,000

Commitments and Contingencies (Leases) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Lessee, Lease, Description [Line Items]
Operating Lease, Right-of-Use Asset	$ 40,551	$ 0
Finance Lease, Right-of-Use Asset	1,299
Lease, Right-of-Use Asset	41,850
Operating Lease, Liability, Current	7,663	0
Finance Lease, Liability, Current	124
Operating Lease, Liability, Noncurrent	44,015	$ 0
Finance Lease, Liability, Noncurrent	54
Lease, Liability	51,856
Other Noncurrent Liabilities [Member]
Lessee, Lease, Description [Line Items]
Finance Lease, Liability, Current	$ 124

Revenue from Contracts with Customers - Deferred Revenues (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Revenue from Contract with Customer [Abstract]
Revenue, Remaining Performance Obligation, Amount	$ 117,454
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01
Revenue from Contract with Customer [Abstract]
Revenue, Remaining Performance Obligation, Amount	67,055
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
Revenue from Contract with Customer [Abstract]
Revenue, Remaining Performance Obligation, Amount	35,437
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01
Revenue from Contract with Customer [Abstract]
Revenue, Remaining Performance Obligation, Amount	13,027
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01
Revenue from Contract with Customer [Abstract]
Revenue, Remaining Performance Obligation, Amount	1,454
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01
Revenue from Contract with Customer [Abstract]
Revenue, Remaining Performance Obligation, Amount	343
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01
Revenue from Contract with Customer [Abstract]
Revenue, Remaining Performance Obligation, Amount	$ 138

Stockholders' Equity and Stock-based Compensation (Plan Information) (Details) - shares		12 Months Ended
	Sep. 26, 2012	Dec. 31, 2019
2012 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)		13,741,931
Shares available for future grants under an equity incentive plan		5,243,730
2012 Equity Incentive Plan \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration period	10 years
2012 Equity Incentive Plan \| Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	4 years
Term of award	10 years
2000 Equity Incentive Plan \| Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period		4 years
Term of award		10 years
Number of shares available for issuance (in shares)		0
2000 Equity Incentive Plan \| Stock Options \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award strike price as a percentage of market value		85.00%
Increase of Number of Shares Option \| 2012 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity incentive plan annual increase (in shares)	3,050,000
Increase of Percentage of Shares Outstanding Option \| 2012 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity incentive plan, annual increase, percent of shares outstanding	5.00%

Income Taxes (Income Before Provision for (Benefit From) Income Taxes) (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income (Loss) from Continuing Operations
Domestic									$ 72,124	$ 50,010	$ 34,914
Foreign									7,859	5,458	4,464
Income before income taxes	$ 21,302	$ 24,335	$ 18,509	$ 15,837	$ 14,805	$ 19,233	$ 11,779	$ 9,651	$ 79,983	$ 55,468	$ 39,378

Income Taxes

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes



NOTE 10.	Income Taxes

The Company’s geographical breakdown of income before income taxes is as follows:



	Year Ended December 31,
	2019		2018		2017
	(in thousands)
Domestic	$	72,124	$	50,010	$	34,914
Foreign	7,859		5,458		4,464
Income before income taxes	$	79,983	$	55,468	$	39,378

The provision for (benefit from) income taxes consists of the following:



	Year Ended December 31,
	2019			2018			2017
	(in thousands)
Current
Federal	$	(90	)	$	(90	)	$	22
State	646			62			23
Foreign	3,000			1,988			1,471
Total current provision	3,556			1,960			1,516
Deferred
Federal	7,085			(3,449		)	(1,650		)
State	447			21			(996		)
Foreign	(441		)	(368		)	68
Total deferred (benefit) provision	7,091			(3,796		)	(2,578		)
Total provision for (benefit from) provision for income taxes	$	10,647		$	(1,836	)	$	(1,062	)

The reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows:



	Year Ended December 31,
	2019		2018		2017
Federal statutory rate	21.0	%	21.0	%	35.0	%
State taxes	1.5		(1.9	)	(2.1	)
Stock-based compensation	(7.2	)	(20.4	)	(58.1	)
Foreign source income	0.1		(0.2	)	(0.2	)
Change in valuation allowance	1.1		4.4		2.8
Federal rate adjustment (due to 2017 Tax Act)	—		—		26.4
Federal and state research and development credit	(3.7	)	(6.7	)	(5.3	)
Other	0.4		0.5		(1.2	)
Provision for (benefit from) income taxes	13.2	%	(3.3	)%	(2.7	)%

On December 22, 2017, the Tax Cuts and Jobs Act (the “2017 Tax Act”) was enacted into law. The new legislation contains several key tax provisions that impact the Company, including the reduction of the corporate income tax rate from 35% to 21% effective January 1, 2018. The new legislation also includes a variety of other changes, such as a one-time repatriation tax on accumulated foreign earnings (transition tax), acceleration of business asset expensing, and reduction in the amount of executive pay that could qualify as a tax deduction, among others. The Company recognized a provisional income tax expense of $10.4 million in the fourth quarter of 2017, from the re-measurement of certain deferred tax assets and liabilities as a result of the reduction of the federal tax rate, which was included as a component of the income tax provision on its consolidated statement of income. The Company completed its analysis of the impacts of the 2017 Tax Act in the fourth quarter of 2018 with no material change to its provisional estimate.

Deferred Income Taxes

Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of the Company’s deferred tax assets and liabilities are as follows:



	December 31,
	2019			2018
	(in thousands)
Deferred tax assets
Net operating loss carryforwards	$	1,325		$	11,250
Research and development credit carryforwards	20,182			16,901
Foreign tax credit carryforwards	2,586			2,209
Accrued liabilities	1,109			4,180
Deferred revenues	4,843			4,200
Lease Liability	13,187			—
Intangible assets	327			—
Stock-based compensation	5,942			6,975
Other	158			174
Gross deferred tax assets	49,659			45,889
Valuation allowance	(10,094		)	(9,100		)
Net deferred tax assets	39,565			36,789
Deferred tax liabilities
Fixed assets	(8,097		)	(8,160		)
ROU Asset	(10,496		)	—
Deferred commissions	(2,142		)	(1,458		)
Intangible assets	—			(784		)
Total deferred tax liabilities	(20,735		)	(10,402		)
Net deferred tax assets	$	18,830		$	26,387

The realization of deferred tax assets is dependent upon the generation of sufficient taxable income of the appropriate character in future periods. The Company regularly assesses the ability to realize its deferred tax assets and establishes a valuation allowance if it is more-likely than-not that some portion, or all, of the deferred tax assets will not be realized. The Company weighs all available positive and negative evidence, including its earnings history and results of recent operations, scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies. Due to the weight of objectively verifiable negative evidence, it is more-likely-than-not that its California deferred tax assets will not be realized as of December 31, 2019. Additionally, due to a lack of sufficient future income of the appropriate character, certain U.S. federal and state deferred tax assets are not more-likely-than-not to be realized. Accordingly, the Company has recorded a valuation allowance of $10.1 million against such deferred tax assets. The valuation allowance increased by $1.0 million and $3.3 million during the years ended December 31, 2019 and 2018, respectively.

At December 31, 2019, the Company had federal and state net operating loss carryforwards of approximately $5.0 million and $2.1 million, respectively, available to reduce federal and state taxable income. Federal net operating losses do not expire but the net operating loss deduction is limited to 80% of taxable income. The state net operating losses begin to expire in 2030. Utilization of the Company’s net operating loss carryforwards may be subject to an annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration of the net operating loss carryforwards before utilization. As of December 31, 2019, the Company had $14.6 million of federal and $13.2 million of state research and development credit carryforwards, respectively. Federal research and development credits begin to expire in 2022. State research and development credits do not expire. As of December 31, 2019, the Company had foreign tax credit carryforwards of $2.6 million which begin to expire in 2024.

The following table summarizes the activity related to the Company’s unrecognized tax benefits (in thousands):



	Year Ended December 31,
		2019			2018			2017

Unrecognized tax benefits beginning balance		$	6,406		$	5,112		$	4,071
Gross increase for tax positions of prior years		—			279			66
Gross decrease for tax positions of prior years		(12		)	(227		)	—
Gross increase for tax positions of current year		1,384			1,399			1,101
Lapse of statute of limitations		—			(157		)	(126		)
Total unrecognized tax benefits		$	7,778		$	6,406		$	5,112

The unrecognized tax benefits, if recognized, would impact the income tax provision by $4.2 million, $3.5 million and $2.8 million as of December 31, 2019, 2018 and 2017, respectively. The remaining amount would be offset by the reversal of related deferred tax assets which are subject to a full valuation allowance. As of December 31, 2019, the Company does not believe that its estimates, as otherwise provided for, on such tax positions will significantly increase or decrease within the next twelve months. The Company has elected to include interest and penalties as a component of income tax expense. The amounts were not material for 2019, 2018 and 2017.

The Company files income tax returns in the United States, including various state jurisdictions. The Company’s subsidiaries file tax returns in various foreign jurisdictions. The tax years 2001 through 2018 remain open to examination by the major taxing jurisdictions in which the Company is subject to tax. The Company is also currently subject to tax audits in various jurisdictions. The Company believes that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company's tax audits are resolved in a manner inconsistent with its expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs. Although timing of resolution and/or closure of audits is not certain, the Company believes it is reasonably possible that its gross unrecognized tax benefits could increase or decrease in the next 12 months.

U.S. income tax has not been recognized on the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that is indefinitely reinvested outside the United States. A determination of the unrecognized deferred tax liability related to this basis difference is not practicable because of the complexities of the calculation.

Revenue from Contracts with Customers - Accounts Receivable, Net (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Revenue from Contract with Customer [Abstract]
Allowance for doubtful accounts receivable	$ (683)	$ (816)
Total accounts receivable, net	$ 78,034	$ 75,825

Business Combination (Notes)

12 Months Ended

Dec. 31, 2019

Business Combinations [Abstract]

Business Combination

Business Combinations

The following table summarizes the purchase price allocation of the business acquisitions during the fiscal years 2019, 2018 and 2017 based on estimated fair values of the acquired assets as of the acquisition date (in thousands);



Acquiree	Acquisition Date	Purchase Consideration		Net Tangible Assets Acquired/ (liabilities assumed)		Purchased Intangible Assets		Goodwill		Deferred Tax Liability
Adya	January 10,2019	$	1,000	$	—	$	900	$	100	$	—
Layered Insight	October 16, 2018	$	13,434	$	80	$	9,600	$	5,498	$	1,500
1Mobility	April 1, 2018	$	4,000	$	—	$	3,700	$	300	$	—
NetWatcher	November 28, 2017	$	7,729	$	80	$	7,000	$	649	$	—
Nevis	August 29, 2017	$	5,753	$	14	$	5,156	$	583	$	—

On January 10, 2019, the Company acquired the assets of Adya, an India-based company. The acquisition included a cloud application management platform, which enables security and compliance audits of SaaS applications. Total purchase consideration included $0.2 million of deferred consideration due 18 months from the closing date of the acquisition, subject to potential adjustment from possible indemnity claims. The acquired intangible assets relating to Adya's developed technology are being amortized over the estimated useful lives of approximately four years. Goodwill arising from the Adya acquisition is deductible for tax purposes over 15 years.

On October 16, 2018, the Company completed the acquisition of Layered Insight, a pioneer and global leader in container native application protection, providing accurate insight into container images, adaptive analysis of running containers, and automated enforcement of the container environment. Of the total consideration, $1.6 million was paid during the fiscal year ended December 31, 2019 based on the terms and conditions of the purchase agreement. All consideration was paid in cash. The Company also paid additional $4.0 million as the acquired business had achieved certain integration milestones for the annual period ending December 31, 2019. In addition, the Company initially recorded $1.5 million of the contingent consideration related to revenue milestone payments in accrued liabilities of the consolidated balance sheet as of December 31, 2018. The entire amount was reversed during the fiscal year 2019 as the revenue milestone was not met. The acquired intangible asset relating to Layered Insight's developed technology is amortized over the estimated useful life of approximately four years. Goodwill arising from the Layered Insight acquisition is not deductible for tax purposes.

On April 1, 2018, the Company acquired the assets of 1Mobility, a Singapore-based company. The acquisition allowed the Company to provide enterprises of all sizes with the ability to create and continuously update an inventory of mobile devices on all versions of Android, iOS and Windows Mobile in their environment; and to continuously assess their security and

compliance posture, while quarantining devices that were compromised or out-of-compliance. Of the total purchase consideration, $0.6 million was paid during the fiscal year ended December 31, 2019 based on the terms and conditions of the purchase agreement. The acquired intangible assets relating to 1Mobility's developed technology is being amortized over the estimated useful lives of approximately four years. Goodwill arising from the 1Mobility acquisition is deductible for tax purposes over 15 years.

In 2017, the Company purchased certain assets of Nevis Networks (India) Private Limited (Nevis) and Defensative, LLC (NetWatcher). The Nevis acquisition accelerated the Company's development of network security solutions for detection and awareness of external intrusions to computer networks. The NetWatcher acquisition expanded the Company's threat protection and management capabilities and added new offerings to managed security service providers. Of the total consideration, $1.0 million was paid during the fiscal year ended December 31, 2019 based on the terms and conditions of the purchase agreement. Purchased intangible assets represented the fair value of purchased technology from the Company's acquisitions of Nevis and NetWatcher. Goodwill generated from these acquisitions was primarily related to the acquired workforce, expected improvements in technology performance and additional product functionality. The intangible assets have a useful life of 5 years. Goodwill is deductible for tax purposes over 15 years.

Pro forma financial information for these acquisitions in the fiscal years 2019, 2018 and 2017 was not presented because the acquisitions were not material to the Company's consolidated financial statements, either individually or in aggregate.

Quarterly Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenues
Revenues	$ 84,664	$ 82,671	$ 78,929	$ 75,343	$ 74,200	$ 71,658	$ 68,153	$ 64,878	$ 321,607	$ 278,889	$ 230,828
Cost of revenues									69,517	66,185	51,580
Gross profit									252,090	212,704	179,248
Operating expenses:
Research and development									68,239	53,255	42,816
Sales and marketing									70,833	70,039	63,855
General and administrative									40,765	39,049	35,334
Total operating expenses									179,837	162,343	142,005
Income from operations	19,545	22,549	16,108	14,051	12,943	18,117	10,895	8,406	72,253	50,361	37,243
Other income (expense), net	1,757	1,786	2,401	1,786	1,862	1,116	884	1,245	7,730	5,107	2,135
Income before income taxes	21,302	24,335	18,509	15,837	14,805	19,233	11,779	9,651	79,983	55,468	39,378
Provision for (benefit from) income taxes									10,647	(1,836)	(1,062)
Net income	$ 20,664	$ 19,174	$ 16,232	$ 13,266	$ 14,400	$ 23,469	$ 10,293	$ 9,142	$ 69,336	$ 57,304	$ 40,440
Earnings Per Share [Abstract]
Basic (in usd per share)	$ 0.53	$ 0.49	$ 0.41	$ 0.34	$ 0.37	$ 0.60	$ 0.26	$ 0.24	$ 1.77	$ 1.47	$ 1.08
Diluted (usd per share)	$ 0.50	$ 0.47	$ 0.39	$ 0.32	$ 0.35	$ 0.56	$ 0.24	$ 0.22	$ 1.68	$ 1.37	$ 1.01

Quarterly Financial Information (Unaudited)

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Information (Unaudited)



NOTE 13.	Selected Quarterly Financial Information (Unaudited)

The following table shows a summary of the Company's quarterly financial information for each of the quarters in the two-year period ended December 31, 2019:



	Three Months Ended
	Dec. 31, 2019		Sep. 30, 2019		Jun. 30, 2019		Mar. 31, 2019		Dec. 31, 2018		Sep. 30, 2018		Jun. 30, 2018		Mar. 31, 2018
	(unaudited)
	(in thousands, except per share data)
Revenues	$	84,664	$	82,671	$	78,929	$	75,343	$	74,200	$	71,658	$	68,153	$	64,878
Income from operations	19,545		22,549		16,108		14,051		12,943		18,117		10,895		8,406
Other income (expense), net	1,757		1,786		2,401		1,786		1,862		1,116		884		1,245
Income before income taxes	21,302		24,335		18,509		15,837		14,805		19,233		11,779		9,651
Net income	$	20,664	$	19,174	$	16,232	$	13,266	$	14,400	$	23,469	$	10,293	$	9,142
Net income per share:
Basic	$	0.53	$	0.49	$	0.41	$	0.34	$	0.37	$	0.60	$	0.26	$	0.24
Diluted	$	0.50	$	0.47	$	0.39	$	0.32	$	0.35	$	0.56	$	0.24	$	0.22

Goodwill and Intangible Assets, Net

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure



NOTE 6.	Goodwill and Intangible Assets, Net

Intangible assets consist primarily of developed technology and patent licenses in business combinations. Acquired intangibles are amortized on a straight-line basis over the respective estimated useful lives of the assets.

The carrying values of intangible assets as of December 31, 2019 are as follows (in thousands, except for years):



					December 31,
					2019
	Weighted Average Lives (Years)	Weighted Remaining Average Lives (Years)	Cost		Accumulated Amortization			Net Book Value
Developed technology	4.6	2.7	$	26,356	$	(10,066	)	$	16,290
Patent licenses	14.0	4.7	1,387		(922		)	465
Total intangibles subject to amortization			$	27,743	$	(10,988	)	16,755
Intangible assets not subject to amortization								40
Total intangible assets, net								$	16,795



					December 31,
					2018
	Weighted Average Lives (Years)	Weighted Remaining Average Lives (Years)	Cost		Accumulated Amortization			Net Book Value
Developed technology	5.0	3.8	$	25,456	$	(4,085	)	$	21,371
Patent licenses	14.0	5.9	1,388		(822		)	565
Total intangibles subject to amortization			$	26,844	$	(4,907	)	21,936
Intangible assets not subject to amortization								40
Total intangible assets, net								$	21,976

Intangible assets amortization expenses were $6.1 million, $3.7 million and $0.7 million for 2019, 2018 and 2017 respectively, which were recorded in cost of revenues in the consolidated statements of operations.

As of December 31, 2019, the Company expects amortization expense in future periods to be as follows (in thousands):



2020	$	6,081
2021	6,081
2022	4,427
2023	100
2024	66
2025 and thereafter	—
Total expected future amortization expense	$	16,755

Goodwill, which is not subject to amortization, totaled $7.4 million and $7.2 million as of December 31, 2019, and 2018, respectively.

Changes in the carrying amount of goodwill for the years ended December 31, 2019, 2018 and 2017 were as follows (in thousands):



	Amount
Balance as of December 31, 2017	$	1,549
Goodwill acquired	5,676
Balance as of December 31, 2018	7,225
Goodwill acquired	100
Adjustment	122
Balance as of December 31, 2019	$	7,447

Income Taxes (Unrecognized Tax Benefits) (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Unrecognized tax benefits beginning balance	$ 6,406	$ 6,406	$ 5,112	$ 4,071
Gross increase for tax positions of prior years		0	279	66
Gross decrease for tax positions of prior years		(12)	(227)	0
Gross increase for tax positions of current year	$ 1,399	1,384		1,101
Lapse of statute of limitations		0	(157)	(126)
Total unrecognized tax benefits		$ 7,778	$ 6,406	$ 5,112

Goodwill and Intangible Assets, Net (Future Amortization) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]
2017	$ 6,081
2018	6,081
2019	4,427
2020	100
2021	66
2021 and thereafter	0
Net Book Value	$ 16,755	$ 21,936

Fair Value of Financial Instruments (Fair Value Hierarchy) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Assets, Fair Value Disclosure [Abstract]
Debt Securities, Available-for-sale	$ 334,238
Recurring Basis \| Fair Value
Assets, Fair Value Disclosure [Abstract]
Debt Securities, Available-for-sale	334,296	$ 324,963
Level 1 \| Recurring Basis
Assets, Fair Value Disclosure [Abstract]
Debt Securities, Available-for-sale	58	113
Level 2 \| Recurring Basis
Assets, Fair Value Disclosure [Abstract]
Debt Securities, Available-for-sale	334,238	324,850
Commercial paper
Assets, Fair Value Disclosure [Abstract]
Debt Securities, Available-for-sale	5,638
Commercial paper \| Recurring Basis \| Fair Value
Assets, Fair Value Disclosure [Abstract]
Debt Securities, Available-for-sale	5,638	3,237
Commercial paper \| Level 1 \| Recurring Basis
Assets, Fair Value Disclosure [Abstract]
Debt Securities, Available-for-sale	0	0
Commercial paper \| Level 2 \| Recurring Basis
Assets, Fair Value Disclosure [Abstract]
Debt Securities, Available-for-sale	5,638	3,237
U.S. government agencies
Assets, Fair Value Disclosure [Abstract]
Debt Securities, Available-for-sale	220,362
U.S. government agencies \| Recurring Basis \| Fair Value
Assets, Fair Value Disclosure [Abstract]
Debt Securities, Available-for-sale	220,362	222,400
U.S. government agencies \| Level 1 \| Recurring Basis
Assets, Fair Value Disclosure [Abstract]
Debt Securities, Available-for-sale	0	0
U.S. government agencies \| Level 2 \| Recurring Basis
Assets, Fair Value Disclosure [Abstract]
Debt Securities, Available-for-sale	220,362	222,400
Corporate bonds
Assets, Fair Value Disclosure [Abstract]
Debt Securities, Available-for-sale	65,596
Corporate bonds \| Recurring Basis \| Fair Value
Assets, Fair Value Disclosure [Abstract]
Debt Securities, Available-for-sale	65,596	65,854
Corporate bonds \| Level 1 \| Recurring Basis
Assets, Fair Value Disclosure [Abstract]
Debt Securities, Available-for-sale	0	0
Corporate bonds \| Level 2 \| Recurring Basis
Assets, Fair Value Disclosure [Abstract]
Debt Securities, Available-for-sale	65,596	65,854
Asset-backed securities
Assets, Fair Value Disclosure [Abstract]
Debt Securities, Available-for-sale	42,642
Asset-backed securities \| Recurring Basis \| Fair Value
Assets, Fair Value Disclosure [Abstract]
Debt Securities, Available-for-sale	42,642	33,359
Asset-backed securities \| Level 1 \| Recurring Basis
Assets, Fair Value Disclosure [Abstract]
Debt Securities, Available-for-sale	0	0
Asset-backed securities \| Level 2 \| Recurring Basis
Assets, Fair Value Disclosure [Abstract]
Debt Securities, Available-for-sale	42,642	33,359
Money Market Funds [Member] \| Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and Cash Equivalents, Fair Value Disclosure	$ 58	$ 113

Quarterly Financial Information (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Schedule of Quarterly Financial Information

The following table shows a summary of the Company's quarterly financial information for each of the quarters in the two-year period ended December 31, 2019:



	Three Months Ended
	Dec. 31, 2019		Sep. 30, 2019		Jun. 30, 2019		Mar. 31, 2019		Dec. 31, 2018		Sep. 30, 2018		Jun. 30, 2018		Mar. 31, 2018
	(unaudited)
	(in thousands, except per share data)
Revenues	$	84,664	$	82,671	$	78,929	$	75,343	$	74,200	$	71,658	$	68,153	$	64,878
Income from operations	19,545		22,549		16,108		14,051		12,943		18,117		10,895		8,406
Other income (expense), net	1,757		1,786		2,401		1,786		1,862		1,116		884		1,245
Income before income taxes	21,302		24,335		18,509		15,837		14,805		19,233		11,779		9,651
Net income	$	20,664	$	19,174	$	16,232	$	13,266	$	14,400	$	23,469	$	10,293	$	9,142
Net income per share:
Basic	$	0.53	$	0.49	$	0.41	$	0.34	$	0.37	$	0.60	$	0.26	$	0.24
Diluted	$	0.50	$	0.47	$	0.39	$	0.32	$	0.35	$	0.56	$	0.24	$	0.22

Fair Value of Financial Instruments (Derivatives by Balance Sheet Location) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset	$ 942	$ 32
Derivative Liability, Fair Value, Gross Liability	(1,074)	(116)
Forward contracts \| Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset	427	32
Derivative Liability, Fair Value, Gross Liability	(524)	(72)
Forward contracts \| Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset	515	0
Derivative Liability, Fair Value, Gross Liability	$ (550)	$ (44)

Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Document and Entity Information - USD ($) $ in Millions	Dec. 31, 2019	Feb. 13, 2020	Jun. 30, 2019
Document and Entity Information [Abstract]
Title of 12(b) Security	Common stock, $0.001 par value per share
Entity Incorporation, State or Country Code	DE
Document Transition Report	false
Document Annual Report	true
Entity Registrant Name	QUALYS, INC.
Entity Address, Address Line One	919 E. Hillsdale Boulevard, 4th Floor
Entity Address, City or Town	Foster City
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94404
City Area Code	650
Local Phone Number	801-6100
Entity Central Index Key	0001107843
Document Type	10-K
Document Period End Date	Dec. 31, 2019
Amendment Flag	false
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		39,092,443
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Shell Company	false
Entity Public Float			$ 2,505
Entity File Number	001-35662
Entity Tax Identification Number	77-0534145
Trading Symbol	QLYS
Security Exchange Name	NASDAQ
Entity Small Business	false
Entity Emerging Growth Company	false

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Schedule of Geographical Breakdown of Income (Loss) Before Provision for (Benefit From) Income Taxes

The Company’s geographical breakdown of income before income taxes is as follows:



	Year Ended December 31,
	2019		2018		2017
	(in thousands)
Domestic	$	72,124	$	50,010	$	34,914
Foreign	7,859		5,458		4,464
Income before income taxes	$	79,983	$	55,468	$	39,378

Schedule of Provision for (Benefit From) Income Taxes

The provision for (benefit from) income taxes consists of the following:



	Year Ended December 31,
	2019			2018			2017
	(in thousands)
Current
Federal	$	(90	)	$	(90	)	$	22
State	646			62			23
Foreign	3,000			1,988			1,471
Total current provision	3,556			1,960			1,516
Deferred
Federal	7,085			(3,449		)	(1,650		)
State	447			21			(996		)
Foreign	(441		)	(368		)	68
Total deferred (benefit) provision	7,091			(3,796		)	(2,578		)
Total provision for (benefit from) provision for income taxes	$	10,647		$	(1,836	)	$	(1,062	)

Schedule of Effective Income Tax Rate Reconciliation

The reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows:



	Year Ended December 31,
	2019		2018		2017
Federal statutory rate	21.0	%	21.0	%	35.0	%
State taxes	1.5		(1.9	)	(2.1	)
Stock-based compensation	(7.2	)	(20.4	)	(58.1	)
Foreign source income	0.1		(0.2	)	(0.2	)
Change in valuation allowance	1.1		4.4		2.8
Federal rate adjustment (due to 2017 Tax Act)	—		—		26.4
Federal and state research and development credit	(3.7	)	(6.7	)	(5.3	)
Other	0.4		0.5		(1.2	)
Provision for (benefit from) income taxes	13.2	%	(3.3	)%	(2.7	)%

Schedule of Deferred Tax Assets and Liabilities

The components of the Company’s deferred tax assets and liabilities are as follows:



	December 31,
	2019			2018
	(in thousands)
Deferred tax assets
Net operating loss carryforwards	$	1,325		$	11,250
Research and development credit carryforwards	20,182			16,901
Foreign tax credit carryforwards	2,586			2,209
Accrued liabilities	1,109			4,180
Deferred revenues	4,843			4,200
Lease Liability	13,187			—
Intangible assets	327			—
Stock-based compensation	5,942			6,975
Other	158			174
Gross deferred tax assets	49,659			45,889
Valuation allowance	(10,094		)	(9,100		)
Net deferred tax assets	39,565			36,789
Deferred tax liabilities
Fixed assets	(8,097		)	(8,160		)
ROU Asset	(10,496		)	—
Deferred commissions	(2,142		)	(1,458		)
Intangible assets	—			(784		)
Total deferred tax liabilities	(20,735		)	(10,402		)
Net deferred tax assets	$	18,830		$	26,387

Schedule of Unrecognized Tax Benefits

The following table summarizes the activity related to the Company’s unrecognized tax benefits (in thousands):



	Year Ended December 31,
		2019			2018			2017

Unrecognized tax benefits beginning balance		$	6,406		$	5,112		$	4,071
Gross increase for tax positions of prior years		—			279			66
Gross decrease for tax positions of prior years		(12		)	(227		)	—
Gross increase for tax positions of current year		1,384			1,399			1,101
Lapse of statute of limitations		—			(157		)	(126		)
Total unrecognized tax benefits		$	7,778		$	6,406		$	5,112

Net Income Per Share Attributable to Common Stockholders

12 Months Ended

Dec. 31, 2019

Earnings Per Share [Abstract]

Net Income Per Share Attributable to Common Stockholders



NOTE 12.	Net Income Per Share

The computations for basic and diluted net income per share are as follows:



	Year Ended December 31,
	2019		2018		2017
	(in thousands, except per share data)
Numerator:
Net income	$	69,336	$	57,304	$	40,440

Denominator:
Weighted-average shares used in computing net income per share - basic	39,075		38,876		37,443
Effect of potentially dilutive securities:
Common stock options	1,807		2,401		2,262
Restricted stock units	463		620		366
Weighted-average shares used in computing net income per share - diluted	$	41,345	$	41,897	$	40,071
Net income per share:
Basic	$	1.77	$	1.47	$	1.08
Diluted	$	1.68	$	1.37	$	1.01

Potentially dilutive securities not included in the calculation of diluted net income per share because doing so would be anti-dilutive are as follows:



	Year Ended December 31,
	2019	2018	2017
	(in thousands)
Common stock options	461	177	742
Restricted stock units	26	22	71
Total anti-dilutive shares	487	199	813

Income Taxes (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Jan. 01, 2017
Income Tax [Line Items]
Tax Cuts and Jobs Act of 2017, Provisional income tax expense (benefit)	$ 10,400
Provision for (benefit from) income taxes		$ 10,647	$ (1,836)	$ (1,062)
Valuation allowance		10,094	9,100
Increase in valuation allowance		1,000	3,300
Unrecognized tax benefits that would impact effective tax rate	$ 2,800	4,200	$ 3,500	$ 2,800
State
Income Tax [Line Items]
Operating loss carryforwards		2,100
State \| Research and Development Credits [Member]
Income Tax [Line Items]
Tax credit carryforward		13,200
Domestic Tax Authority [Member]
Income Tax [Line Items]
Operating loss carryforwards		5,000
Domestic Tax Authority [Member] \| Research and Development Credits [Member]
Income Tax [Line Items]
Tax credit carryforward		14,600
Foreign Tax Authority
Income Tax [Line Items]
Tax credit carryforward		$ 2,600
Accounting Standards Update 2016-09
Income Tax [Line Items]
Cumulative effect of a change in accounting principle related to stock-based compensation					$ 7,745
Retained earnings \| Accounting Standards Update 2016-09
Income Tax [Line Items]
Cumulative effect of a change in accounting principle related to stock-based compensation					$ 7,745

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Allowance for Doubtful Accounts Receivable	$ 683	$ 816
Preferred Stock, Par Value (in dollars per share)	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	20,000,000	20,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Common Stock, Par or Stated Value Per Share (in dollars per share)	$ 0.001	$ 0.001
Common Stock, Shares Authorized	1,000,000,000	1,000,000,000
Common Stock, Shares, Issued	39,015,034	38,598,117
Common Stock, Shares, Outstanding	39,015,034	38,598,117

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash flows from operating activities:
Net income	$ 69,336	$ 57,304	$ 40,440
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	31,201	28,904	20,636
Bad debt expense	247	86	657
Loss on disposal of property and equipment	202	9	161
Stock-based compensation	34,892	30,090	26,961
Amortization of premiums and accretion of discounts on investments	(1,597)	(1,136)	1,324
Deferred income taxes	7,095	(2,521)	(2,718)
Changes in operating assets and liabilities:
Accounts receivable	(2,456)	(11,467)	(17,966)
Prepaid expenses and other assets	(6,012)	(4,970)	(53)
Accounts payable	(1,076)	3,515	(454)
Accrued liabilities	715	1,426	1,485
Increase (Decrease) in Contract with Customer, Liability	28,060	24,725	29,830
Other noncurrent liabilities	0	(501)	7,343
Net cash provided by operating activities	160,607	125,464	107,646
Payments to Acquire Marketable Securities	331,131	339,862	299,891
Cash flows from investing activities:
Proceeds from Sale and Maturity of Marketable Securities	328,350	285,224
Sales and maturities of investments			231,996
Purchases of property and equipment	(27,573)	(22,775)	(37,818)
Payments to Acquire Businesses, Gross	(4,050)	(13,633)	(12,482)
Payments to Acquire Investments	625
Capitalized software development costs			0
Net cash used in investing activities	(35,029)	(93,546)	(118,195)
Payments for Repurchase of Common Stock	(86,424)	(85,040)	0
Cash flows from financing activities:
Proceeds from exercise of stock options	24,831	24,053	31,327
Payments Related to Tax Withholding for Share-based Compensation	(15,743)	(14,879)	(20,924)
Repayments of Long-term Capital Lease Obligations	(1,709)	(1,617)	0
Net cash provided by financing activities	(79,045)	(77,483)	10,403
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect	46,533	(45,565)	(146)
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	42,226	87,791	87,937
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	88,759	42,226	87,791
Supplemental disclosures of cash flow information
Interest Paid, Excluding Capitalized Interest, Operating Activities	107	168	3
Cash paid for income taxes, net of refunds	3,031	2,693	1,584
Non-cash investing and financing activities
Business acquisitions recorded in Intangible Assets and Accrued liabilities	1,650	4,676	1,000
Purchases of property and equipment recorded in accounts payable and accrued liabilities	$ 235	4,190	$ 2,765
privately-held companies [Member] \| Preferred Stock
Cash flows from investing activities:
Payments to Acquire Investments		$ 2,500

Fair Value of Financial Instruments (Cash and Cash Equivalents, Short-term and Long-term Marketable Securities) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Sep. 30, 2019	Dec. 31, 2018
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Fair Value, Asset Value Amortized Cost	$ 417,332		$ 366,421
Fair Value, Asset Value, Unrealized Gains	1,071		22
Fair Value, Asset Value, Unrealized Losses	5		567
Assets, Fair Value Disclosure	418,398		365,876
Noncurrent Assets [Member] \| U.S. government agencies
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Debt Securities, Available-for-sale, Amortized Cost	46,447		18,804
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Gain, before Tax	370		0
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax	0		(53)
Fair value	46,817		18,751
Noncurrent Assets [Member] \| Corporate bonds
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Debt Securities, Available-for-sale, Amortized Cost	32,236		35,322
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Gain, before Tax	262		3
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax	0		(293)
Fair value	32,498		35,032
Noncurrent Assets [Member] \| Asset-backed securities
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Debt Securities, Available-for-sale, Amortized Cost	40,001		22,945
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Gain, before Tax	193		10
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax	(1)		(28)
Fair value	40,193		22,927
Short-term Investments [Member]
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Debt Securities, Available-for-sale, Amortized Cost	211,089
Unrealized Gains	246
Unrealized Losses	(4)
Fair value	211,331
Long-Term Investments
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Debt Securities, Available-for-sale, Amortized Cost	118,684		77,071
Unrealized Gains	825		13
Unrealized Losses	(1)		(374)
Assets, Fair Value Disclosure	119,508
Fair value			76,710
Available-for-sale Securities, Line Item [Member]
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Debt Securities, Available-for-sale, Amortized Cost			248,324
Unrealized Gains			9
Unrealized Losses			(193)
Fair value			248,140
Available-for-sale Securities, Line Item [Member] \| Commercial paper
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Debt Securities, Available-for-sale, Amortized Cost		$ 2,239
Unrealized Gains		0
Unrealized Losses		$ 0
Fair value	2,239
Current Assets [Member] \| U.S. government agencies
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Debt Securities, Available-for-sale, Amortized Cost	173,364		203,734
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Gain, before Tax	184		9
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax	(3)		(94)
Fair value	173,545		203,649
Current Assets [Member] \| Commercial paper
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Debt Securities, Available-for-sale, Amortized Cost			3,237
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Gain, before Tax			0
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax			0
Fair value			3,237
Current Assets [Member] \| Corporate bonds
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Debt Securities, Available-for-sale, Amortized Cost	33,048		30,906
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Gain, before Tax	51		0
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax	(1)		(84)
Fair value	33,098		30,822
Current Assets [Member] \| Asset-backed securities
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Debt Securities, Available-for-sale, Amortized Cost	2,438		10,447
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Gain, before Tax	11
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax	0		(15)
Fair value	2,449		10,432
Cash and Cash Equivalents \| Cash and Cash Equivalents
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Cash and Cash Equivalents, Fair Value Disclosure	87,559		41,026
Cash [Member] \| Cash and Cash Equivalents
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Cash and Cash Equivalents, Fair Value Disclosure	84,102		40,913
Commercial paper \| Cash and Cash Equivalents
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Cash and Cash Equivalents, Fair Value Disclosure	3,399
Commercial paper \| Cash and Cash Equivalents \| Commercial paper
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Unrealized Gains	0
Unrealized Losses	0
Money Market Funds [Member] \| Cash and Cash Equivalents
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Cash and Cash Equivalents, Fair Value Disclosure	$ 58		$ 113

Property and Equipment, Net (Tables)

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

Property and equipment

Property and equipment, net, which includes assets under finance lease, consists of the following:



	December 31,
	2019			2018
	(in thousands)
Computer equipment	$	112,599		$	93,530
Computer software	26,137			26,030
Scanner appliances	15,864			15,356
Furniture, fixtures and equipment	6,973			5,814
Equipment under capital lease	3,503			3,503
Leasehold improvements	18,817			16,439
Total property and equipment	183,893			160,672
Less: accumulated depreciation and amortization	(123,314		)	(99,230		)
Property and equipment, net	$	60,579		$	61,442

Net Income Per Share Attributable to Common Stockholders (Tables)

12 Months Ended

Dec. 31, 2019

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The computations for basic and diluted net income per share are as follows:



	Year Ended December 31,
	2019		2018		2017
	(in thousands, except per share data)
Numerator:
Net income	$	69,336	$	57,304	$	40,440

Denominator:
Weighted-average shares used in computing net income per share - basic	39,075		38,876		37,443
Effect of potentially dilutive securities:
Common stock options	1,807		2,401		2,262
Restricted stock units	463		620		366
Weighted-average shares used in computing net income per share - diluted	$	41,345	$	41,897	$	40,071
Net income per share:
Basic	$	1.77	$	1.47	$	1.08
Diluted	$	1.68	$	1.37	$	1.01

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

Potentially dilutive securities not included in the calculation of diluted net income per share because doing so would be anti-dilutive are as follows:



	Year Ended December 31,
	2019	2018	2017
	(in thousands)
Common stock options	461	177	742
Restricted stock units	26	22	71
Total anti-dilutive shares	487	199	813

Employee Benefits Plan

12 Months Ended

Dec. 31, 2019

Retirement Benefits [Abstract]

Employee Stock and Benefit Plans



NOTE 8.	Stockholders' Equity and Stock-based Compensation

Common Stock

The Company had reserved shares of common stock for future issuance as of December 31, 2019 as follows:



Options and RSUs outstanding under equity incentive plans
2000 Equity Incentive Plan		157,385
2012 Equity Incentive Plan		3,924,108
Shares available for future grants under an equity incentive plan
2012 Equity Incentive Plan		5,243,730
Total shares reserved for future issuance		9,325,223

Preferred Stock

Effective October 3, 2012, the Company is authorized to issue 20,000,000 shares of undesignated preferred stock with a par value of $0.001 per share. Each series of preferred stock will have such rights and preferences including dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), redemption price, and liquidation preferences as determined by the Board. As of December 31, 2019, and 2018, there were no issued or outstanding shares of preferred stock.

Stock Options

2012 Equity Incentive Plan

The 2012 Equity Incentive Plan was adopted and approved in September 2012 and became effective on September 26, 2012. Under the 2012 Plan, the Company is authorized to grant to eligible participant's incentive stock options (ISOs), non-statutory stock options (NSOs), stock appreciation rights (SARs), restricted stock awards (RSAs), RSUs, performance

units and performance shares equivalent to up to 13,741,931 shares of common stock as of December 31, 2019. The number of shares of common stock available for issuance under the 2012 Plan includes an annual increase on January 1 of each year by an amount equal to the least of 3,050,000 shares; 5% of the outstanding shares of stock as of the last day of the immediately preceding fiscal year; or an amount determined by the Board of Directors. Options may be granted with an exercise price that is at least equal to the fair market value of the Company's stock at the date of grant and are exercisable when vested. Options granted generally vest over a period of up to four years, with a maximum term of ten years. ISOs may only be granted to employees and any subsidiary corporations' employees. All other awards may be granted to employees, directors and consultants and subsidiary corporations' employees and consultants. Options, SARs, RSUs, performance units and performance awards may be granted with vesting terms as determined by the Board of Directors and expire no more than ten years after the date of grant or earlier if employment or service is terminated.

2000 Equity Incentive Plan

Under the 2000 Equity Incentive Plan (2000 Plan), the Company was authorized to grant to eligible participants either ISOs or NSOs. The ISOs were granted at a price per share not less than the fair market value at the date of grant. The NSOs were granted at a price per share not less than 85% of the fair market value at the date of grant. Options granted generally vest over a period of up to four years, with a maximum term of ten years. The 2000 Plan was terminated in connection with the closing of the Company's initial public offering, and accordingly, no shares are currently available for grant under the 2000 Plan. The 2000 Plan continues to govern outstanding awards granted thereunder.

Options granted under the 2000 Plan were immediately exercisable, and unvested shares are subject to repurchase by the Company. Upon termination of employment of an option holder, the Company has the right to repurchase at the original purchase price any issued but unvested common shares. The amounts paid for shares purchased under an early exercise of stock options and subject to repurchase by the Company are not reported as a component of stockholders’ equity (deficit) until those shares vest. The amounts received in exchange for these shares are recorded as an accrued liability in the accompanying consolidated balance sheets and will be reclassified to common stock and additional paid-in capital as the shares vest.

Stock-based Compensation

The following table shows a summary of the stock-based compensation expense included in the condensed consolidated statements of operations for the fiscal years ended December 31, 2019, 2018 and 2017:



	Year Ended December 31,
	2019		2018		2017
	(in thousands)
Cost of revenues	$	2,262	$	2,489	$	2,159
Research and development	11,151		7,961		5,944
Sales and marketing	4,984		4,650		4,755
General and administrative	16,495		14,990		14,103
Total stock-based employee compensation	$	34,892	$	30,090	$	26,961

Stock-based compensation cost is recognized over the service period. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures materially differ from those estimates.

As of December 31, 2019, the Company had $17.5 million of total unrecognized employee compensation cost related to unvested options that it expects to recognize over a weighted-average period of 2.5 years.

The fair value of each option granted to employees is estimated on the date of grant using the Black-Scholes-Merton option-pricing model based on the following assumptions:



	Year Ended December 31,
	2019	2018	2017
Expected term (in years)	4.4 to 6.6	4.5 to 5.0	5.1 to 5.5
Volatility	40% to 46%	45% to 47%	47% to 49%
Risk-free interest rate	1.5% to 2.4%	2.5% to 3.0%	1.8% to 2.0%
Dividend yield	—	—	—

The expected term of the options is based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected term at the grant date. Prior to the third quarter of 2017, volatility was based on a combination of the historical volatility of the Company and of several public entities that are similar to the Company. The Company based volatility on this combination because it did not have sufficient historical transactions in its own shares on which to solely base expected volatility. Beginning in the third quarter of 2017, the volatility was estimated using the historical volatility derived from the Company's common stock. The Company has not historically declared any dividends and does not expect to in the future.

Stock Option Plan Activity

A summary of the Company’s stock option activity is as follows:



	Outstanding Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
						(in thousands)
Balance as of December 31, 2016	7,527,680		$	19.25	6.0	$	101,717
Granted	408,225		$	40.82
Exercised	(2,997,095	)	$	11.05
Canceled	(442,919	)	$	33.29
Balance as of December 31, 2017	4,495,891		$	25.29	6.6	$	153,129
Granted	366,786		$	79.79
Exercised	(1,183,235	)	$	20.33
Canceled	(250,133	)	$	39.61
Balance as of December 31, 2018	3,429,309		$	31.79	6.4	$	149,935
Granted	496,145		$	87.10
Exercised	(901,290	)	$	27.55
Canceled	(157,489	)	$	71.04
Balance as of December 31, 2019	2,866,675		$	40.54	6.0	$	125,647
Vested and expected to vest—December 31, 2019	2,655,987		$	37.27	5.9	$	124,592
Exercisable—December 31, 2019	2,099,200		$	28.39	5.4	$	115,916

The following table summarizes the outstanding and vested stock options at December 31, 2019:



	Outstanding				Exercisable
Exercise Price	Number of Shares	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (Years)	Number of Shares	Weighted Average Exercise Price Per Share
$4.10 - $13.50	297,913	$	9.75	2.5	297,913	$	9.75
$13.60 - $25.17	351,255	$	22.22	4.6	347,391	$	22.19
$25.56 - $25.56	836,635	$	25.56	6.3	764,382	$	25.56
$26.86 - $34.97	297,207	$	30.98	5.0	287,277	$	30.96
$36.25 - $40.68	301,532	$	38.19	6.3	244,236	$	38.17
$40.89 - $79.51	363,278	$	70.50	8.5	113,388	$	61.81
$86.35 - $87.26	196,706	$	86.69	5.5	2,770	$	87.26
$89.55 - $89.55	63,300	$	89.55	9.6	499	$	89.55
$94.45 - $94.45	77,425	$	94.45	9.0	10,458	$	94.45
$95.10 - $95.10	81,424	$	95.10	8.5	30,886	$	95.10
	2,866,675	$	40.54	6.0	2,099,200	$	28.39

The weighted-average grant date fair value of the Company’s stock options granted during 2019, 2018 and 2017 was $34.02, $33.05 and $18.03, respectively. The aggregate grant date fair value of the Company’s stock options granted during 2019, 2018 and 2017 was $12.2 million, $12.1 million and $7.4 million, respectively.

The intrinsic value of options exercised was $52.1 million, $71.7 million and $92.1 million during 2019, 2018 and 2017, respectively. Intrinsic value of an option is the difference between the fair value of the Company’s common stock at the time of exercise and the exercise price paid.

Restricted Stock

The terms and conditions of RSUs include vesting criteria and timing are set by the Board of Directors. The cost of RSUs is determined using the fair value of the Company’s common stock on the date of the grant. Compensation cost is recognized on a straight-line basis over the requisite service period of each grant adjusted for estimated forfeitures.

A summary of the Company’s RSU activity is as follows:



	Number of Shares		Weighted-Average Grant Date Fair Value Per Share
Balance as of December 31, 2016	587,333		$	28.85
Granted	1,326,849		$	42.69
Vested	(368,367	)	$	33.52
Cancelled	(135,227	)	$	32.04
Balance as of December 31, 2017	1,410,588		$	40.34
Granted	548,245		$	75.44
Vested	(525,375	)	$	39.87
Cancelled	(206,575	)	$	43.43
Balance as of December 31, 2018	1,226,883		$	55.71
Granted	595,985		$	81.59
Vested	(438,892	)	$	53.17
Cancelled	(169,158	)	$	65.51
Balance as of December 31, 2019	1,214,818		$	67.99
Expected to vest as of December 31, 2019	902,794		$	66.37

As of December 31, 2019, the Company had $66.0 million of unrecognized compensation cost related to unvested awards that it expects to recognize over a weighted-average period of 2.6 years.

Performance-Based Stock Options and Restricted Stock Units

On November 2, 2019, the Board of Directors granted an award of time-based RSUs and performance-based NSOs to the Company’s Chairman and Chief Executive Officer, Philippe Courtot. The Compensation Committee of the Board, in consultation with its independent compensation consultant, designed these awards so that greater than 50% of this compensation was based on the achievement of performance goals linked to metrics designed to drive the creation of shareholder value.

The first portion of the award consists of 48,683 time-based RSUs that will vest in quarterly installments beginning on December 1, 2019, assuming continued service through each applicable vesting date. The second portion of the award consists of 123,856 NSOs that will vest at the end of the performance period based on achievement of goals related to revenue growth and free cash flow per share growth during the three-year period from January 2020 through December 2022, generally conditioned on Mr. Courtot’s continued status as a service provider through the date that performance is certified. If Mr. Courtot’s employment (a) is terminated by reason of death or disability or (b) is terminated by the Company for reasons other than cause within 12 months following a change in control (a “double trigger” termination), then 100% of any unvested portions of the award will vest, with any vesting in connection with change in control terminations conditioned upon the effectiveness of a release of claims in favor of the Company (2019 performance-based NSOs).

On December 21, 2018, the Board of Directors granted an award of time-based and performance-based restricted stock units to Mr. Courtot. The compensation committee of the Board, in consultation with its independent compensation consultant, designed these awards so that greater than 50% of this compensation was based on the achievement of performance goals linked to metrics designed to drive the creation of shareholder value.

The first portion of the award consists of 56,250 time-based RSUs that will vest in 16 quarterly increments beginning on January 1, 2019, assuming continued service through each applicable vesting date. The second portion of the award consists of 33,089 performance-based RSUs that will vest based on achievement of goals related to revenue growth for a three-year period from January 2019 through December 2021 and adjusted EBITDA margin for the 2021 fiscal year, generally conditioned on Mr. Courtot’s continued status as a service provider through the date that performance is certified. The third portion of the award consists of 33,088 performance-based RSUs that will vest in three increments based on the achievement of goals related to revenue growth and adjusted EBITDA margin for each of the 2019, 2020 and 2021 fiscal years, generally conditioned on Mr. Courtot’s continued status as a service provider through the date that performance is certified for the relevant increment. If Mr. Courtot’s employment (a) is terminated by reason of death or disability or (b) is terminated by the Company for reasons other than cause or good reason within 12 months following a change in control (a “double trigger” termination), then 100% of any unvested portions of the award will vest, with any vesting in connection with change in control terminations conditioned upon the effectiveness of a release of claims in favor of the Company (2018 performance-based RSUs).

The Company accounts for these awards as share-based compensation with multiple performance conditions and recognizes compensation costs when it is probable that the performance conditions are met. The Company assesses these conditions on a quarterly basis. During the year ended December 31, 2019, stock-based compensation costs of $0.3 million and $0.9 million were recognized for the 2019 performance-based NSOs and the 2018 performance-based RSUs, respectively.

Share Repurchase Program

On February 5, 2018, the Company's board of directors authorized a $100.0 million two-year share repurchase program, which was announced on February 12, 2018. On October 30, 2018, the Company announced that the board of directors had authorized an increase of $100.0 million to the original share repurchase program authorization. Shares may be repurchased from time to time on the open market in accordance with Rule 10b-18 of the Exchange Act of 1934. On October 24, 2019, the Company's board of directors authorized another increase of $100.0 million, which allows the Company to repurchase shares pursuant to a pre-set trading plan adopted in accordance with Rule 10b5-1 under the Exchange Act until October 30, 2020.

Repurchased shares are retired and reclassified as authorized and unissued shares of common stock. On retirement of the repurchased shares, common stock is reduced by an amount equal to the number of shares being retired multiplied by the par value. The excess amount that is retired over its par value is first allocated as a reduction to additional paid-in capital based on the initial public offering price of the stock, with the remaining excess to retained earnings.

During the year ended December 31, 2019, the Company repurchased 1,026,455 shares of its common stock for approximately $86.4 million. All share repurchases were made using cash resources. As of December 31, 2019, approximately $128.5 million remained available for share repurchases pursuant to the Company's share repurchase program.



NOTE 9.	Employee Benefits Plan

401(k) Plan

The Company’s 401(k) Plan was established in 2000 to provide retirement and incidental benefits for its employees. As allowed under section 401(k) of the Internal Revenue Code, the 401(k) Plan provides tax-deferred salary deductions for eligible employees. Contributions to the 401(k) Plan are limited to a maximum amount as set periodically by the Internal Revenue Service. During the fiscal years ended December 31, 2019, 2018 and 2017, the Company made contributions to the 401(k) Plan of $1.3 million, $1.2 million and $1.1 million, respectively.

The Company contributes to a Provident Fund Plan for its employees in India, which is defined contribution plan set up in accordance with local labor and tax laws. Gratuity is also paid by the Company to eligible employees in India in accordance with Payment of Gratuity Act, 1972. During the fiscal years ended December 31, 2019, 2018 and 2017, the Company contributed $1.1 million, $0.7 million and $0.4 million, respectively, to those plans.

Revenue from Contracts with Customers (Tables)

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

Commission asset balances

Capitalized costs to obtain contracts, current and noncurrent are as follows (in thousands):



	December 31, 2019		December 31, 2018
Commission asset, current	$	2,568	$	1,480
Commission asset, noncurrent	$	6,454	$	4,692

Expected revenue from contracts

The following table sets forth the expected revenue from all remaining performance obligations as of December 31, 2019 (in thousands):



	Total Expected Revenue
2020	$	67,055
2021	35,437
2022	13,027
2023	1,454
2024	343
2025 and thereafter	138
Total	$	117,454

Revenue by sales channel

Revenues by sales channel are as follows (in thousands):



	Year Ended December 31,
	2019		2018		2017⁽¹⁾
Direct	$	186,130	$	164,084	$	139,908
Partner	135,477		114,805		90,920
Total	$	321,607	$	278,889	$	230,828

(1) Revenue has not been adjusted under the modified retrospective method.

Stockholders' Equity and Stock-based Compensation

12 Months Ended

Dec. 31, 2019

Share-based Compensation [Abstract]

Stockholders' Equity and Stock-based Compensation



NOTE 8.	Stockholders' Equity and Stock-based Compensation

Common Stock

The Company had reserved shares of common stock for future issuance as of December 31, 2019 as follows:



Options and RSUs outstanding under equity incentive plans
2000 Equity Incentive Plan		157,385
2012 Equity Incentive Plan		3,924,108
Shares available for future grants under an equity incentive plan
2012 Equity Incentive Plan		5,243,730
Total shares reserved for future issuance		9,325,223

Preferred Stock

Stock Options

2012 Equity Incentive Plan

2000 Equity Incentive Plan

Stock-based Compensation



	Year Ended December 31,
	2019		2018		2017
	(in thousands)
Cost of revenues	$	2,262	$	2,489	$	2,159
Research and development	11,151		7,961		5,944
Sales and marketing	4,984		4,650		4,755
General and administrative	16,495		14,990		14,103
Total stock-based employee compensation	$	34,892	$	30,090	$	26,961

The fair value of each option granted to employees is estimated on the date of grant using the Black-Scholes-Merton option-pricing model based on the following assumptions:



	Year Ended December 31,
	2019	2018	2017
Expected term (in years)	4.4 to 6.6	4.5 to 5.0	5.1 to 5.5
Volatility	40% to 46%	45% to 47%	47% to 49%
Risk-free interest rate	1.5% to 2.4%	2.5% to 3.0%	1.8% to 2.0%
Dividend yield	—	—	—

Stock Option Plan Activity

A summary of the Company’s stock option activity is as follows:



	Outstanding Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
						(in thousands)
Balance as of December 31, 2016	7,527,680		$	19.25	6.0	$	101,717
Granted	408,225		$	40.82
Exercised	(2,997,095	)	$	11.05
Canceled	(442,919	)	$	33.29
Balance as of December 31, 2017	4,495,891		$	25.29	6.6	$	153,129
Granted	366,786		$	79.79
Exercised	(1,183,235	)	$	20.33
Canceled	(250,133	)	$	39.61
Balance as of December 31, 2018	3,429,309		$	31.79	6.4	$	149,935
Granted	496,145		$	87.10
Exercised	(901,290	)	$	27.55
Canceled	(157,489	)	$	71.04
Balance as of December 31, 2019	2,866,675		$	40.54	6.0	$	125,647
Vested and expected to vest—December 31, 2019	2,655,987		$	37.27	5.9	$	124,592
Exercisable—December 31, 2019	2,099,200		$	28.39	5.4	$	115,916

The following table summarizes the outstanding and vested stock options at December 31, 2019:



	Outstanding				Exercisable
Exercise Price	Number of Shares	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (Years)	Number of Shares	Weighted Average Exercise Price Per Share
$4.10 - $13.50	297,913	$	9.75	2.5	297,913	$	9.75
$13.60 - $25.17	351,255	$	22.22	4.6	347,391	$	22.19
$25.56 - $25.56	836,635	$	25.56	6.3	764,382	$	25.56
$26.86 - $34.97	297,207	$	30.98	5.0	287,277	$	30.96
$36.25 - $40.68	301,532	$	38.19	6.3	244,236	$	38.17
$40.89 - $79.51	363,278	$	70.50	8.5	113,388	$	61.81
$86.35 - $87.26	196,706	$	86.69	5.5	2,770	$	87.26
$89.55 - $89.55	63,300	$	89.55	9.6	499	$	89.55
$94.45 - $94.45	77,425	$	94.45	9.0	10,458	$	94.45
$95.10 - $95.10	81,424	$	95.10	8.5	30,886	$	95.10
	2,866,675	$	40.54	6.0	2,099,200	$	28.39

Restricted Stock

A summary of the Company’s RSU activity is as follows:



	Number of Shares		Weighted-Average Grant Date Fair Value Per Share
Balance as of December 31, 2016	587,333		$	28.85
Granted	1,326,849		$	42.69
Vested	(368,367	)	$	33.52
Cancelled	(135,227	)	$	32.04
Balance as of December 31, 2017	1,410,588		$	40.34
Granted	548,245		$	75.44
Vested	(525,375	)	$	39.87
Cancelled	(206,575	)	$	43.43
Balance as of December 31, 2018	1,226,883		$	55.71
Granted	595,985		$	81.59
Vested	(438,892	)	$	53.17
Cancelled	(169,158	)	$	65.51
Balance as of December 31, 2019	1,214,818		$	67.99
Expected to vest as of December 31, 2019	902,794		$	66.37

As of December 31, 2019, the Company had $66.0 million of unrecognized compensation cost related to unvested awards that it expects to recognize over a weighted-average period of 2.6 years.

Performance-Based Stock Options and Restricted Stock Units

Share Repurchase Program



NOTE 9.	Employee Benefits Plan

401(k) Plan

Schedule II Schedule of Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2019

SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract]

Schedule II Schedule of Valuation and Qualifying Accounts

SCHEDULE II

SUPPLEMENTARY CONSOLIDATED FINANCIAL STATEMENT SCHEDULE

VALUATION AND QUALIFYING ACCOUNTS

(in thousands)



			Additions
	Balance at Beginning of Year		Charged to Costs and Expenses		Deductions and Other ⁽¹⁾			Balance at End of Year
Allowance for Doubtful Accounts
Year Ended December 31, 2019	$	683	$	247	$	(345	)	$	585
Year Ended December 31, 2018	$	816	$	86	$	(219	)	$	683
Year Ended December 31, 2017	$	702	$	657	$	(543	)	$	816

(1) Primarily represents write-offs of uncollectible accounts, net of recoveries.

All other schedules have been omitted because they are not required, not applicable, or the required information is otherwise included.

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Statement [Abstract]
Foreign Currency Transaction Gain (Loss) Including Derivatives, Before Tax	$ (354)	$ (577)	$ (355)
Revenues
Revenues	321,607	278,889	230,828
Cost of revenues	69,517	66,185	51,580
Gross profit	252,090	212,704	179,248
Operating expenses:
Research and development	68,239	53,255	42,816
Sales and marketing	70,833	70,039	63,855
General and administrative	40,765	39,049	35,334
Total operating expenses	179,837	162,343	142,005
Income from operations	72,253	50,361	37,243
Other income (expense), net:
Interest expense	(106)	(172)	(3)
Interest income	8,443	6,080	2,674
Total other income (expense), net	7,730	5,107	2,135
Income before income taxes	79,983	55,468	39,378
Provision for (benefit from) income taxes	10,647	(1,836)	(1,062)
Net income	$ 69,336	$ 57,304	$ 40,440
Net income per share:
Basic (usd per share)	$ 1.77	$ 1.47	$ 1.08
Diluted (usd per share)	$ 1.68	$ 1.37	$ 1.01
Weighted average shares used in computing net income per share:
Basic (in shares)	39,075	38,876	37,443
Diluted (in shares)	41,345	41,897	40,071

Commitments and Contingencies (Future Minimum Lease Payments) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Jan. 01, 2018
Commitments and Contingencies Disclosure [Abstract]
Lessee, Operating Lease, Liability, Payments, Remainder of Fiscal Year	$ 10,603
Lessee, Operating Lease, Liability, Payments, Due Year Two	9,859
Finance Lease, Liability, Payments, Remainder of Fiscal Year	130
Finance Lease, Liability, Payments, Due Year Two	54
Lessee, Operating Lease, Liability, Payments, Due Year Three	8,539
Finance Lease, Liability, Payments, Due Year Three	0
Lessee, Operating Lease, Liability, Payments, Due Year Four	8,652
Finance Lease, Liability, Payments, Due Year Four	0
Lessee, Operating Lease, Liability, Payments, Due Year Five	8,866
Finance Lease, Liability, Payments, Due Year Five	0
Lessee, Operating Lease, Liability, Payments, Due after Year Five	15,583
Finance Lease, Liability, Payments, Due after Year Five	0
Lessee, Operating Lease, Liability, Payments, Due	62,102
Finance Lease, Liability, Payments, Due	184
Lessee, Operating Lease, Liability, Undiscounted Excess Amount	10,424
Finance Lease, Liability, Undiscounted Excess Amount	6
Operating Lease, Liability	51,678
Finance Lease, Liability	178		$ 3,500
Operating Lease, Liability, Current	7,663	$ 0
Finance Lease, Liability, Current	124
Operating Lease, Liability, Noncurrent	44,015	$ 0
Finance Lease, Liability, Noncurrent	$ 54

Income Taxes (Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Deferred tax assets
Net operating loss carryforwards	$ 1,325	$ 11,250
Research and development credit carryforwards	20,182	16,901
Foreign tax credit carryforwards	2,586	2,209
Accrued liabilities	1,109	4,180
Deferred revenues	4,843	4,200
Intangible assets	327	0
Stock-based compensation	5,942	6,975
Other	158	174
Gross deferred tax assets	49,659	45,889
Valuation allowance	(10,094)	(9,100)
Net deferred tax assets	39,565	36,789
Deferred tax liabilities
Fixed assets	(8,097)	(8,160)
Deferred Tax Liabilities, Right-of-Use Assets	(10,496)	0
Deferred Tax Liabilities, Deferred Commission	(2,142)	(1,458)
Intangible assets	0	(784)
Total deferred tax liabilities	(20,735)	(10,402)
Net deferred tax assets	18,830	26,387
Deferred Tax Assets, Tax Deferred Expense, Reserves and Accruals, Deferred Rent	$ 13,187	$ 0

Stockholders' Equity and Stock-based Compensation (Share Repurchase Program) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Oct. 24, 2019	Oct. 30, 2018	Feb. 05, 2018
Share-based Compensation [Abstract]
Stock Repurchase Program, Authorized Amount		$ 100.0	$ 100.0	$ 100.0
Treasury Stock, Shares, Acquired	1,026,455
Treasury Stock, Value, Acquired, Cost Method	$ 86.4
Stock Repurchase Program, Remaining Authorized Repurchase Amount	$ 128.5

Segment Information and Information about Geographic Area

12 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

Segment Information and Information about Geographic Area



NOTE 11.	Segment Information and Information about Geographic Area

The Company operates in one segment. The Company determines its reportable operating segments in accordance with the provisions in the FASB guidance on segment reporting, which establishes standards for, and requires disclosure of, certain financial information related to reportable operating segments and geographic regions. The Company’s chief operating decision maker is the Chairman, President and Chief Executive Officer, who makes operating decisions, assesses performance and allocates resources on a consolidated basis. All of the Company’s principal operations and decision-making functions are located in the United States.

Revenue by geographic area, based on the customers billing address, is as follows:



	Year Ended December 31,
	2019		2018		2017
	(in thousands)
United States	$	206,555	$	185,887	$	162,681
Foreign	115,052		93,002		68,147
Total revenues	$	321,607	$	278,889	$	230,828

Property and equipment, net, by geographic area, is as follows:



	December 31,
	2019		2018
	(in thousands)
United States	$	46,100	$	51,587
India	9,221		5,774
Rest of world	5,258		4,081
Total property and equipment, net	$	60,579	$	61,442

Commitments and Contingencies (Purchase Obligations) (Details) $ in Millions	Dec. 31, 2019 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Purchase Obligation	$ 25.3

Goodwill and Intangible Assets, Net (Tables)

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Carrying value of intangible assets

The carrying values of intangible assets as of December 31, 2019 are as follows (in thousands, except for years):



					December 31,
					2019
	Weighted Average Lives (Years)	Weighted Remaining Average Lives (Years)	Cost		Accumulated Amortization			Net Book Value
Developed technology	4.6	2.7	$	26,356	$	(10,066	)	$	16,290
Patent licenses	14.0	4.7	1,387		(922		)	465
Total intangibles subject to amortization			$	27,743	$	(10,988	)	16,755
Intangible assets not subject to amortization								40
Total intangible assets, net								$	16,795



					December 31,
					2018
	Weighted Average Lives (Years)	Weighted Remaining Average Lives (Years)	Cost		Accumulated Amortization			Net Book Value
Developed technology	5.0	3.8	$	25,456	$	(4,085	)	$	21,371
Patent licenses	14.0	5.9	1,388		(822		)	565
Total intangibles subject to amortization			$	26,844	$	(4,907	)	21,936
Intangible assets not subject to amortization								40
Total intangible assets, net								$	21,976

Intangible assets future periods amortization expense

As of December 31, 2019, the Company expects amortization expense in future periods to be as follows (in thousands):



2020	$	6,081
2021	6,081
2022	4,427
2023	100
2024	66
2025 and thereafter	—
Total expected future amortization expense	$	16,755

Schedule of Goodwill

Changes in the carrying amount of goodwill for the years ended December 31, 2019, 2018 and 2017 were as follows (in thousands):



	Amount
Balance as of December 31, 2017	$	1,549
Goodwill acquired	5,676
Balance as of December 31, 2018	7,225
Goodwill acquired	100
Adjustment	122
Balance as of December 31, 2019	$	7,447

The Company and Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

The Company and Summary of Significant Accounting Policies



NOTE 1.	The Company and Summary of Significant Accounting Policies

Description of Business

Qualys, Inc. (the “Company”, "we", "us", "our") was incorporated in the state of Delaware on December 30, 1999. The Company is headquartered in Foster City, California and has wholly-owned subsidiaries throughout the world. The Company is a pioneer and leading provider of cloud-based IT, security and compliance solutions that enable organizations to identify security risks to their IT infrastructures, help protect their IT systems and applications from ever-evolving cyber-attacks and achieve compliance with internal policies and external regulations. The Company’s cloud solutions address the growing security and compliance complexities and risks that are amplified by the dissolving boundaries between internal and external IT infrastructures and web environments, the rapid adoption of cloud computing and the proliferation of geographically dispersed IT assets. Organizations can use the Company’s integrated suite of solutions delivered on its Qualys Cloud Platform to cost-effectively obtain a unified view of their security and compliance posture across globally-distributed IT infrastructures.

Basis of Presentation

The accompanying consolidated financial statements and footnotes have been prepared in accordance with U.S. GAAP as well as the instructions to Form 10-K and the rules and regulations of SEC. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s consolidated financial position, results of operations and cash flows for the periods presented. The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the consolidated financial statements and the reported results of operations during the reporting period. The Company’s management regularly assesses these estimates, which primarily affect revenue recognition, the valuation of accounts receivable, goodwill and intangible assets, capitalization of internally developed software, stock-based compensation and the provision for income taxes. Actual results could differ from those estimates and such differences may be material to the accompanying consolidated financial statements.

Concentration of Credit Risk

The Company invests its cash and cash equivalents with major financial institutions. Cash balances with any one institution at times may be in excess of federally insured limits. Cash equivalents are invested in high-quality investment grade financial instruments and are diversified. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk.

Credit risk with respect to accounts receivable is dispersed due to the large number of customers. Collateral is not required for accounts receivable. As of December 31, 2019 and 2018, no customer or channel partner accounted for more than 10% of the Company's revenues and accounts receivable balance.

Cash, Cash Equivalents, Short-Term and Long-Term Marketable Securities

Cash and cash equivalents include cash held in banks, highly liquid money market funds and commercial paper, all with original maturities of three months or less when acquired. The Company’s short-term and long-term marketable securities consist of fixed-income U.S. government agency securities, corporate bonds, asset-backed securities and commercial paper. Management determines the appropriate classification of the Company's investments at the time of purchase and reevaluates such designation at each balance sheet date. The Company classifies its marketable securities as either short-term or long-term based on each instrument's underlying contractual maturity date.

Cash equivalents are stated at cost, which approximates fair market value. Short-term and long-term marketable securities are classified as available-for-sale debt securities and are carried at fair value. Unrealized gains and losses in fair value of the available-for-sale debt securities are reported in other comprehensive income (loss). When the available-for-

sale debt securities are sold, cost is based on the specific identification method, and the realized gains and losses are included in other income (expense), net in the consolidated statements of operations. Available-for-sale debt securities are reviewed quarterly for impairment that is deemed to be other-than-temporary. An investment is considered other-than-temporarily impaired when its fair value is below its amortized cost and (1) there is an intent to sell the security, (2) it is “more likely than not” that the security will be sold before recovery of its amortized cost basis or (3) the present value of expected cash flows from the investment is not expected to recover the entire amortized cost basis. Declines in value that are considered to be other-than-temporary are recorded in other income (expense), net. Adjustments to amortized cost for the amortization of premiums, the accretion of discounts and Interest and dividends are recorded in interest income as earned.

Accounts Receivable

Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts represents the Company’s best estimate of the amount of probable credit losses and is determined based on a review of existing accounts receivable by aging category to identify significant customers or invoices with collectability issues. For those invoices not specifically reviewed, the reserve is calculated based on the age of the receivable and historical write-offs.

Any change in the assumptions used in analyzing a specific account receivable may result in an additional provision for doubtful accounts being recognized in the period in which the change occurs. When the Company ultimately concludes that a receivable is uncollectible, the balance is written off against the allowance for doubtful accounts. Payments subsequently received on such receivables are credited back to the allowance for doubtful accounts.

Non-marketable securities

During the fiscal year ended December 31, 2018, the Company invested $2.5 million in preferred stock of a privately-held company. The fair value of the investment is not readily available, and there are no quoted market prices for the investment. The investment is included in other noncurrent assets on the consolidated balance sheets and measured at cost less impairment, adjusted for observable price changes. The investment is assessed for impairment annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company has not received any dividends or other-than-temporary impairment charges related to the investment. During the second quarter ended June 30, 2019, the Company made an advance payment of $0.6 million to the investee for certain development work, which is recorded in other noncurrent assets on the consolidated balance sheet. During the third quarter ended September 30, 2019, the Company made an additional investment of $0.6 million in a convertible security issued by this investee and recorded it in other current assets on the consolidated balance sheet.

Property and Equipment, net

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range from three to five years. Leasehold improvements are amortized on a straight-line basis over the lesser of the estimated useful life of the asset or the remaining lease term.

The Company purchases physical scanner appliances and other computer equipment that are provided to customers on a subscription basis. This equipment is recorded within property and equipment and the depreciation is recorded in cost of revenues over an estimated useful life of three years.

Upon retirement or disposal, the cost of assets and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the consolidated statements of operations. Repairs and maintenance that do not extend the life of an asset are expensed as incurred and major improvements are capitalized as property and equipment.

Impairment of Long-Lived Assets

The Company evaluates its long-lived assets, which consist of property and equipment, and intangible assets subject to amortization, for indicators of possible impairment when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Impairment exists if the carrying amounts of such assets exceed the estimates of future undiscounted cash flows expected to be generated by such assets. Should an impairment exist, the impairment loss would be measured based on the excess carrying value of the asset over the asset’s estimated fair value. In each of 2019, 2018 and 2017, the Company had no impairment of long-lived assets.

Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination and is not subject to amortization. Goodwill and other intangible assets with indefinite lives are not amortized, but tested for impairment at least annually or more frequently if certain circumstances indicate a possible impairment may exist. These tests are performed at the reporting unit level. The Company’s operations are organized as one reporting unit.

In testing for a potential impairment of goodwill, the Company first performs a qualitative assessment of its reporting unit to determine if it is more likely than not (a more than 50% likelihood) that the fair value of the reporting unit is less than its carrying amount. If the fair value is not considered to be less than the carrying amount, no further evaluation is necessary. The Company performed the annual assessment on December 1, 2019 and 2018 and concluded there was no potential impairment of goodwill.

In testing for a potential impairment of intangible assets with indefinite lives that are not subject to amortization, the Company first performs a qualitative assessment to determine if it is more likely than not (a more than 50% likelihood) that the fair value of the indefinite-lived intangible assets is less than the carrying amount. If the fair value is not considered to be less than the carrying amount, no further evaluation is necessary. The Company performs the annual qualitative assessment in the fourth quarter each fiscal year. There were no such impairment losses during 2019, 2018 and 2017.

If the qualitative assessment indicates there is more than a 50% likelihood that the fair value is less than the carrying amount of the reporting unit or the intangible asset, the Company would perform a quantitative test. Goodwill impairment is measured as the amount by which a reporting unit’s carrying value exceeds its fair value. For indefinite-lived intangible assets, the Company would perform the quantitative impairment test by comparing the fair value of the indefinite-lived intangible asset with its carrying value.

Internally Developed Software

Costs incurred in the development phase are capitalized and amortized over the product’s estimated useful life, which is three years. Capitalized costs include salaries, benefits and stock-based compensation charges for employees that are directly involved in developing its cloud security platform during the post planning and implementation phases. Capitalized costs related to internally developed software under development are treated as construction in progress until the program, feature or functionality is ready for its intended use, at which time amortization commences. These capitalized costs are included in other noncurrent assets on the consolidated balance sheets. For the fiscal years 2019, 2018 and 2017, the Company capitalized $1.0 million, $1.3 million and $0.4 million of costs related to internally developed software (of which $0.2 million, $0.2 million and zero, respectively, were stock-based compensation), respectively. As of December 31, 2019 and 2018, unamortized internally developed software costs totaled $2.0 million and $1.2 million, respectively. Amortization of internally developed software is recorded in cost of revenues. Costs associated with minor enhancements and maintenance are expensed as incurred. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

Business Combinations

The Company applies the provisions of ASC 805, Business Combinations, in accounting for its acquisitions. It requires the Company to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as any contingent consideration, where applicable, its estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to its consolidated statements of operations.

Derivative Financial Instruments

Derivative financial instruments are utilized by the Company to reduce foreign currency exchange risks. The Company uses foreign currency forward contracts to mitigate the impact of foreign currency fluctuations of certain non-U.S. dollar denominated asset positions, to date primarily cash and accounts receivable (non-designated forward contracts), as well as to manage foreign currency fluctuation risk related to forecasted transactions (designated cash flow hedges). Open contracts are recorded within prepaid expenses and other current assets, other noncurrent assets, accrued liabilities, or other noncurrent liabilities in the consolidated balance sheets. Gains and losses resulting from currency exchange rate movements on non-designated forward contracts are recognized in other income (expense), net. Any gains or losses from derivatives designated as cash flow hedges are first accumulated in AOCI and then reclassified to revenue when the hedged item impacts the consolidated statements of operations.

Stock-Based Compensation

The Company recognizes the fair value of its employee stock options and restricted stock units (RSUs) over the requisite service periods for those awards ultimately expected to vest. The fair value of each option is estimated on date of grant using the Black-Scholes-Merton option pricing model and the fair value of each RSU is based on the fair value of the Company's stock on the date of grant. Forfeitures are estimated on the date of grant and revised if actual or expected forfeiture activity differs materially from original estimates.

The Company recognizes compensation costs for performance-based non-qualified stock options and restricted stock units when it is probable that the performance conditions will be met. The Company assesses these conditions on a quarterly basis.

Revenue Recognition

The Company derives revenues from subscriptions that require customers to pay a fee in order to access the Company’s cloud solutions. Customers generally enter into one-year renewable subscriptions though some customers do enter into subscriptions with longer terms. The subscription fee entitles the customer to an unlimited number of scans for a specified number of networked devices or web applications and, if requested by a customer as part of their subscription, a specified number of physical or virtual scanner appliances. Revenue is recognized when control of these subscription services is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.

The Company’s physical and virtual scanner appliances are requested by certain customers as part of their subscriptions in order to scan IT infrastructures within their firewalls and do not function without, and are not sold separately from, subscriptions for the Company’s solutions. In some limited cases, the Company also provides certain computer equipment used to extend its Qualys Cloud Platform into its customers’ private cloud environment. Customers are required to return physical scanner appliances and computer equipment if they do not renew their subscriptions. Physical equipment (scanners and private cloud platforms) are accounted for as operating leases under ASC 842. The company used the practical expedient to combine lease and nonlease components as a combined component under ASC 606 due to the software subscription nonlease components being the predominant component of the combined component. Therefore, the Company recognizes revenue for the physical equipment ratably over the related subscription period.

The Company determines revenue recognition through the following steps:

•Identification of the contract, or contracts, with a customer;

•Identification of the performance obligations in the contract;

•Determination of the transaction price

•Allocation of the transaction price to the performance obligations in the contract; and

•Recognition of revenue when, or as, the Company satisfies a performance obligation.

At the inception of a customer contract, the Company makes an assessment as to that customer's ability to pay for the services provided. The Company assesses collectability based on a number of factors, including credit worthiness of the customer along with past transaction history. In addition, the Company performs periodic evaluations of its customers’ financial condition.

Deferred revenues consist of customer contracts billed or cash received that will be recognized in the future under subscriptions existing at the balance sheet date. The current portion of deferred revenues represents amounts that are expected to be recognized within one year of the balance sheet date.

Costs of shipping and handling charges incurred by the Company associated with physical scanner appliances and other computer equipment are included in cost of revenues.

Sales taxes and other taxes collected from customers to be remitted to government authorities are excluded from revenues.

Advertising Expenses

Advertising costs are expensed as incurred and include costs of advertising and promotional materials. The Company incurred advertising costs of $74 thousand, $87 thousand and $482 thousand for 2019, 2018 and 2017, respectively.

Income Taxes

The Company provides for the effect of income taxes in its consolidated financial statements using the asset and liability method which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, net operating loss carryovers, and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date.

Income tax expense or benefit is recognized for the amount of taxes payable or refundable for the current year and for deferred tax assets and liabilities for the tax consequences of events that have been recognized in an entity’s financial statements or tax returns. The Company must make significant assumptions, judgments and estimates to determine its current provision for (benefit from) income taxes, its deferred tax assets and liabilities, and any valuation allowance to be recorded against its deferred tax assets. The Company's judgments, assumptions and estimates relating to the current provision for (benefit from) income taxes include the geographic mix and amount of income (loss), its interpretation of current tax laws, and possible outcomes of current and future audits conducted by foreign and domestic tax authorities. The Company's judgments also include anticipating the tax positions the Company will record in the consolidated financial statements before actually preparing and filing the tax returns. The Company's estimates and assumptions may differ from the actual results as reflected on its income tax returns and will record the required adjustments when they are identified or resolved. Changes in the Company's business, tax laws or interpretation of tax laws, and developments in current and future tax audits, could significantly impact the amounts provided for income taxes in the Company's results of operations, financial position, or cash flows.

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to tax benefit carry-forwards and to differences between the financial statement amounts of assets and liabilities and their respective tax basis. The Company regularly reviews its deferred tax assets for recoverability and establishes a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized. To make this assessment, the Company takes into account predictions of the amount and category of taxable income from various sources and all available positive and negative evidence about these possible sources of taxable income. The weight given to the potential effect of negative and positive evidence is commensurate with the extent to which the strength of the evidence can be objectively verified.

The Company applies a two-step approach to determining the financial statement recognition and measurement of uncertain tax positions. The Company only recognizes an income tax expense or benefit with respect to uncertain tax positions in its financial statements that the Company judges is more likely than not to be sustained solely on its technical merits in a tax audit, including resolution of any related appeals or litigation processes. To make this judgment, the Company must interpret complex and sometimes ambiguous tax laws, regulations and administrative practices. If an income tax position meets the more likely than not recognition threshold, then the Company must measure the amount of the tax benefit to be recognized by determining the largest amount of tax benefit that has a greater than a 50% likelihood of being realized upon effective settlement with a taxing authority that has full knowledge of all of the relevant facts. It is inherently difficult and subjective to estimate such amounts, as this requires the Company to determine the probability of various possible settlement outcomes. To determine if a tax position is effectively settled after a tax examination has been completed, the Company must also estimate the likelihood that another taxing authority could review the respective tax position. The Company must also determine when it is reasonably possible that the amount of unrecognized tax benefits will significantly increase or decrease in the 12 months after each fiscal year-end. These judgments are difficult because a taxing authority may change its behavior as a result of the Company's disclosures in its financial statements. The Company must reevaluate its income tax positions on a quarterly basis to consider factors such as changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition or measurement would result in recognition of a tax

benefit or an additional charge to the tax provision. The Company's policy is to recognize interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes.

Comprehensive Income (Loss)

Other comprehensive income (loss) consists of unrealized gains (losses) on marketable securities, net of tax, and derivative financial instruments designated as cash flow hedges which are not included in the Company’s net income. Total comprehensive income includes net income and other comprehensive income (loss) and is included in the consolidated statements of comprehensive income.

Foreign Currency Transactions

The Company’s operations are conducted in various countries around the world and the financial statements of its foreign subsidiaries are reported in the U.S. dollar as their respective functional currency. Monetary assets and liabilities denominated in foreign currencies have been re-measured into U.S. dollars using the exchange rates in effect at the balance sheet date, and income and expenses are re-measured at average exchange rates during the period. Foreign currency re-measurement gains and losses and foreign currency transaction gains and losses are recognized in other income (expense), net. The Company recorded total foreign currency transaction losses of $0.4 million, $0.6 million and $0.4 million during 2019, 2018 and 2017, respectively.

Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. All participating securities are excluded from basic weighted average common shares outstanding. Diluted net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period, adjusted for the effects of potentially dilutive common shares, which are comprised of outstanding stock options and RSUs. The dilutive potential common shares are computed using the treasury stock method or the as-if converted method, as applicable. The outstanding stock options and RSUs which would be anti-dilutive are excluded from the computation of diluted net income per common share.

Reclassification

Reclassification has been made to the shares issued for RSUs and taxes related to net share settlement of equity awards and options in the consolidated statement of stockholders' equity for the fiscal year 2017. The reclassification had no effect on the total number of shares outstanding at the end of each period presented in the consolidated statements of stockholders' equity.

Recently Adopted Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updates (ASU) 2018-13, Disclosure Framework - Changes to the Disclosure requirements for Fair Value Measurement, which adds, modifies and removes certain fair value measurement disclosure requirements. The ASU is effective for the Company for fiscal years beginning after December 15, 2019, including interim periods therein. The Company early adopted the guidance in the fiscal year 2019. The adoption of this ASU did not have a material impact on the Company's consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This ASU expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The Company adopted this guidance as of January 1, 2019. The adoption of this ASU did not have a material impact on the Company's consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (Topic 350). This standard eliminates Step 2 from the goodwill impairment test, instead requiring an entity to recognize a goodwill impairment charge for the amount by which the goodwill carrying amount exceeds the reporting unit’s fair value. This ASU is effective for interim and annual goodwill impairment tests in fiscal years beginning after December 15, 2019 with early adoption permitted. The Company adopted this ASU on a prospective basis during the first quarter of fiscal 2019 and the adoption did not have a material impact on the Company's consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize all leases, including operating leases, on the balance sheet as a lease asset and lease liability, unless the lease is a short-term lease. ASU 2016-02 also requires additional disclosures regarding leasing arrangements. ASU 2016-02 is effective for the Company beginning in the first quarter of fiscal 2019 and early adoption is permitted. In July 2018, the FASB issued ASU 2018-11,

Targeted Improvements - Leases (Topic 842). This update provides an optional transition method that allows entities to elect to apply the standard prospectively at its effective date, versus recasting the prior periods presented. If elected, an entity would recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Pursuant to the leasing criteria, most of the Company's leased space and equipment leases will be required to be accounted for as right-of-use assets (ROU) on the balance sheet with offsetting financing obligations. In the statement of operations, what was formerly rent expense for operating leases will be lease expense; and finance leases will be bifurcated into amortization of right-of-use assets and interest on lease liabilities. The Company adopted the ASU utilizing the current period adjustment method on January 1, 2019, and recognized a ROU asset of $30.8 million and a lease liability of $41.6 million on its consolidated financial statements. As of January 1, 2019, $3.9 million of deferred rent and $6.9 million related to tenant improvement allowance was removed upon adoption. As part of this adoption, the Company elected the package of transitional practical expedients to not reassess (1) whether any contracts that existed prior to adoption have or contain leases, (2) the classification of existing leases or (3) initial direct costs for existing leases. The Company also elected to make the accounting policy election for short-term leases, permitting the Company to not apply the recognition requirements of this standard to short-term leases with terms of 12 months or less.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. ASU 2019-12 is effective for the Company for fiscal years beginning after December 15, 2020. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company is currently evaluating the impacts of the provisions of ASU 2019-12 on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs related to internal-use software. ASU 2018-15 is effective for the Company beginning in the first quarter of fiscal 2020 and early adoption is permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326) as modified by subsequently issued ASU No. 2018-19, 2019-04 and 2019-05, which introduces a new accounting model, Current Expected Credit Losses (CECL). CECL requires earlier recognition of credit losses, while also providing additional transparency about credit risk. CECL utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses at the time the financial asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. The ASUs are effective for the Company beginning in the first quarter of fiscal 2020. The adoption of the ASUs is not expected to have a material impact on the Company's consolidated financial statements.

Property and Equipment, Net

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

Property and Equipment, net



NOTE 3.	Property and Equipment, Net

Property and equipment, net, which includes assets under finance lease, consists of the following:



	December 31,
	2019			2018
	(in thousands)
Computer equipment	$	112,599		$	93,530
Computer software	26,137			26,030
Scanner appliances	15,864			15,356
Furniture, fixtures and equipment	6,973			5,814
Equipment under capital lease	3,503			3,503
Leasehold improvements	18,817			16,439
Total property and equipment	183,893			160,672
Less: accumulated depreciation and amortization	(123,314		)	(99,230		)
Property and equipment, net	$	60,579		$	61,442

Physical scanner appliances and other computer equipment that are or will be subject to leases by customers have a net carrying value of $4.9 million and $7.9 million, respectively, including assets that have not been placed in service of $0.9 million and $1.8 million, respectively, as of December 31, 2019 and 2018. Depreciation and amortization expenses relating to property and equipment were $24.9 million, $25.1 million and $19.9 million for 2019, 2018 and 2017, respectively.

Commitments and Contingencies (Weighted Average Remaining Lease Term And Discount Rate) (Details)	Dec. 31, 2019
Commitments and Contingencies Disclosure [Abstract]
Operating Lease, Weighted Average Remaining Lease Term	6 years 6 months
Finance Lease, Weighted Average Remaining Lease Term	1 year 3 months
Operating Lease, Weighted Average Discount Rate, Percent	5.00%
Finance Lease, Weighted Average Discount Rate, Percent	5.00%

Revenue from Contracts with Customers - Commission Asset Balances (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Revenue from Contract with Customer [Abstract]
Amortization of commissions assets	$ 2,000	$ 1,200
Commission asset, current	2,568	1,480
Commission asset, noncurrent	$ 6,454	$ 4,692

Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Assets And Liabilities, Lease [Table Text Block]

The table below presents the lease-related assets and liabilities recorded on the balance sheet.



		December 31
(in thousands)	Classification on the Balance Sheet	2019
Assets
Operating lease assets	Operating lease - right of use asset	$	40,551
Finance lease assets	Property and equipment, net	1,299
Total lease assets		$	41,850

Liabilities
Current
Operating	Operating lease liabilities, current	$	7,663
Finance	Accrued liabilities	124
Noncurrent
Operating	Operating lease liabilities, noncurrent	44,015
Finance	Other noncurrent liabilities	54
Total lease liabilities		$	51,856

Schedule of Future Minimum Lease Payments for Operating Leases

The following are the minimum annual lease payments due under operating leases at December 31, 2019 (in thousands):



	Operating Leases			Finance Leases
	(in thousands)
2020	$	10,603		$	130
2021	9,859			54
2022	8,539			—
2023	8,652			—
2024	8,866			—
2025 and thereafter	15,583			—
Total minimum lease payments	62,102			184
Less: amount representing interest	(10,424		)	(6		)
Present value of minimum payments	51,678			178
Less: lease obligations, current	(7,663		)	(124		)
Lease obligations, noncurrent	$	44,015		$	54

Lease, Cost [Table Text Block]

The weighted average remaining lease term and the weighted average discount rate of the Company's leases were as follows:



	December 31, 2019
Weighted average remaining lease term (years)
Operating leases	6.5
Finance leases	1.25
Weighted average discount rates
Operating leases	5.0	%
Finance leases	5.0	%

Commitments and Contingencies (Additional Information) (Details) ft² in Thousands, $ in Thousands		1 Months Ended	3 Months Ended	12 Months Ended
	Oct. 01, 2019 USD ($)	Jan. 31, 2018	Dec. 31, 2019 USD ($) ft²	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Jan. 01, 2018 USD ($)
Operating Leased Assets [Line Items]
Lease, Expense				$ 13,900	$ 9,900
Finance Lease, Liability			$ 178	$ 178			$ 3,500
Capital Leased Assets, Interest Rate		5.00%
Lease, Office Building, Square Feet \| ft²			282,000
Rent expense						$ 9,600
Pune, India [Domain]
Operating Leased Assets [Line Items]
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability	$ 14,700

Business Combination (Tables)

12 Months Ended

Dec. 31, 2019

Business Combinations [Abstract]

Schedule of Business Acquisitions, by Acquisition [Table Text Block]



Acquiree	Acquisition Date	Purchase Consideration		Net Tangible Assets Acquired/ (liabilities assumed)		Purchased Intangible Assets		Goodwill		Deferred Tax Liability
Adya	January 10,2019	$	1,000	$	—	$	900	$	100	$	—
Layered Insight	October 16, 2018	$	13,434	$	80	$	9,600	$	5,498	$	1,500
1Mobility	April 1, 2018	$	4,000	$	—	$	3,700	$	300	$	—
NetWatcher	November 28, 2017	$	7,729	$	80	$	7,000	$	649	$	—
Nevis	August 29, 2017	$	5,753	$	14	$	5,156	$	583	$	—

Consolidated Statements of Comprehensive Income Consolidated Statements of Comprehensive Income (parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Tax impact on OCI components [Abstract]
Other Comprehensive Income (Loss), Available-for-sale Securities, before Reclassification Adjustments, Tax	$ (243)	$ 0	$ 0
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, Tax	0	0	0
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification, Tax	(136)	0	0
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, Tax	$ 35	$ 0	$ 0

Fair Value of Financial Instruments (Contractual Maturity) (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Debt Securities, Available-for-sale [Line Items]
Mature within One Year	$ 214,731
After One Year through Two Years	85,617
Over Two Years	33,890
Fair Value	334,238
Commercial paper
Debt Securities, Available-for-sale [Line Items]
Mature within One Year	5,638
After One Year through Two Years	0
Over Two Years	0
Fair Value	5,638
U.S. government agencies
Debt Securities, Available-for-sale [Line Items]
Mature within One Year	173,546
After One Year through Two Years	46,816
Over Two Years
Fair Value	220,362
Corporate bonds
Debt Securities, Available-for-sale [Line Items]
Mature within One Year	33,098
After One Year through Two Years	23,251
Over Two Years	9,247
Fair Value	65,596
Asset-backed securities
Debt Securities, Available-for-sale [Line Items]
Mature within One Year	2,449
After One Year through Two Years	15,550
Over Two Years	24,643
Fair Value	$ 42,642

Segment Information and Information about Geographic Area (Tables)

12 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

Revenues and property and equipment, net, by geographic area

Revenue by geographic area, based on the customers billing address, is as follows:



	Year Ended December 31,
	2019		2018		2017
	(in thousands)
United States	$	206,555	$	185,887	$	162,681
Foreign	115,052		93,002		68,147
Total revenues	$	321,607	$	278,889	$	230,828

Property and equipment, net, by geographic area, is as follows:



	December 31,
	2019		2018
	(in thousands)
United States	$	46,100	$	51,587
India	9,221		5,774
Rest of world	5,258		4,081
Total property and equipment, net	$	60,579	$	61,442

Fair Value of Financial Instruments (Derivative Gains (Losses) By Income Statement Location) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign Currency Transaction Gain (Loss), before Tax	$ (792)	$ (1,120)	$ 1,310
Foreign Currency Transaction Gain (Loss) Including Derivatives, Before Tax	(354)	(577)	(355)
Other Expense [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative, Gain (Loss) on Derivative, Net	(253)	(224)	(181)
Other Operating Income (Expense) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative, Gain (Loss) on Derivative, Net	(607)	(801)	(536)
Forward contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Instruments, Gain (Loss) Recognized in Income, Ineffective Portion and Amount Excluded from Effectiveness Testing, Net	$ 438	$ 543	$ (1,665)

Net Income Per Share Attributable to Common Stockholders (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Numerator:
Net income attributable to common stockholders - basic and diluted	$ 20,664	$ 19,174	$ 16,232	$ 13,266	$ 14,400	$ 23,469	$ 10,293	$ 9,142	$ 69,336	$ 57,304	$ 40,440
Denominator:
Weighted-average shares used in computing net income per share - basic									39,075	38,876	37,443
Effect of potentially dilutive securities:
Common stock options (in shares)									1,807	2,401	2,262
RSUs (in shares)									463	620	366
Weighted - average shares used in computing net income (loss) per share attributable to common stockholders - diluted (in shares)									41,345	41,897	40,071
Basic (usd per share)	$ 0.53	$ 0.49	$ 0.41	$ 0.34	$ 0.37	$ 0.60	$ 0.26	$ 0.24	$ 1.77	$ 1.47	$ 1.08
Diluted (usd per share)	$ 0.50	$ 0.47	$ 0.39	$ 0.32	$ 0.35	$ 0.56	$ 0.24	$ 0.22	$ 1.68	$ 1.37	$ 1.01
Antidilutive Securities
Common stock options (in shares)									487	199	813
Stock Options
Antidilutive Securities
Common stock options (in shares)									461	177	742
RSUs
Antidilutive Securities
Common stock options (in shares)									26	22	71

Stockholders' Equity and Stock-based Compensation (Fair Value Assumptions, Stock Options) (Details) - Stock Options	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividend yield	0.00%	0.00%	0.00%
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term	4 years 4 months 24 days	4 years 6 months	5 years 1 month 6 days
Volatility	40.00%	45.00%	47.00%
Risk-free interest rate	1.50%	2.50%	1.80%
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term	6 years 7 months 6 days	5 years	5 years 6 months
Volatility	46.00%	47.00%	49.00%
Risk-free interest rate	2.40%	3.00%	2.00%

The Company and Summary of Significant Accounting Policies Non-marketable securities (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2018
Security Owned Not Readily Marketable [Line Items]
Payments to Acquire Investments			$ 625
privately-held companies [Member] \| Preferred Stock
Security Owned Not Readily Marketable [Line Items]
Payments to Acquire Investments		$ 600		$ 2,500
privately-held companies [Member] \| Convertible Debt Securities [Member]
Security Owned Not Readily Marketable [Line Items]
Payments to Acquire Investments	$ 600

Business Combination (Details) - USD ($)						12 Months Ended
Business Combination (Details) - USD ($)	Jan. 10, 2019	Oct. 16, 2018	Apr. 01, 2018	Nov. 28, 2017	Aug. 29, 2017	Dec. 31, 2019	Dec. 31, 2017	Dec. 31, 2018
Business Acquisition [Line Items]
Goodwill						$ 7,447,000	$ 1,549	$ 7,225,000
Adya
Business Acquisition [Line Items]
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability	$ 200,000
Business Combination, Contingent Consideration Arrangements, Period Before Due	18 months
Purchased Intangible Assets	$ 900,000
Goodwill	100,000
Total purchase price	$ 1,000,000
Layered Insight
Business Acquisition [Line Items]
Purchased Intangible Assets		$ 9,600,000
Goodwill		5,498,000
Total purchase price		13,434,000
Reserve fund						1,600,000
Business Combination, Additional Consideration		4,000,000.0
Business Combination, Earnout Milestone		$ 1,500,000
Estimated useful life of technology-based intangible assets		4 years
1Mobility
Business Acquisition [Line Items]
Purchased Intangible Assets			$ 3,700,000
Goodwill			300,000
Total purchase price			$ 4,000,000
Reserve fund						600,000
Estimated useful life of technology-based intangible assets			4 years
Nevis
Business Acquisition [Line Items]
Purchased Intangible Assets					$ 5,156,000
Goodwill					583,000
Total purchase price					$ 5,753,000
NetWatcher
Business Acquisition [Line Items]
Purchased Intangible Assets				$ 7,000,000
Goodwill				649,000
Total purchase price				$ 7,729,000
Reserve fund						$ 1,000,000.0
Estimated useful life of technology-based intangible assets							5 years

Stockholders' Equity and Stock-based Compensation (Common Stock and Preferred Stock) (Details) - $ / shares	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Oct. 03, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options and RSUs outstanding under equity incentive plans	2,866,675	3,429,309	4,495,891	7,527,680
Total shares reserved for future issuance	9,325,223
Preferred Stock
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, par value per share (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Preferred Stock
Preferred Stock
Preferred stock, shares authorized					20,000,000
Preferred stock, par value per share (in dollars per share)					$ 0.001
2000 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options and RSUs outstanding under equity incentive plans	157,385
2012 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options and RSUs outstanding under equity incentive plans	3,924,108
Shares available for future grants under an equity incentive plan	5,243,730

Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2019

Investment [Line Items]

Fair Value of Financial Instruments



NOTE 2.	Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. For certain of the Company’s financial instruments, including certain cash equivalents, accounts receivable, accounts payable, and other current liabilities, the carrying amounts approximate their fair values due to the relatively short maturity of these balances.

The Company measures and reports certain cash equivalents, marketable securities, derivative foreign currency forward contracts and commitments associated with prior business combinations at fair value in accordance with the provisions of the authoritative accounting guidance that addresses fair value measurements. This guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The hierarchy is broken down into three levels based on the reliability of inputs as follows:

Level 1-Valuations based on quoted prices in active markets for identical assets or liabilities.

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

Level 3-Valuations based on inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

The Company's financial instruments consist of assets and liabilities measured using Level 1 and 2 inputs. Level 1 assets include a highly liquid money market fund, which is valued using unadjusted quoted prices that are available in an active market for an identical asset. Level 2 assets include fixed-income U.S. government agency securities, commercial paper, corporate bonds, asset-backed securities and derivative financial instruments consisting of foreign currency forward contracts. The securities, bonds and commercial paper are valued using prices from independent pricing services based on quoted prices in active markets for similar instruments or on industry models using data inputs such as interest rates and prices that can be directly observed or corroborated in active markets. The foreign currency forward contracts are valued using observable inputs, such as quotations on forward foreign exchange points and foreign interest rates. The fair value of commitments from prior acquisitions was determined based on management’s estimate of fair value using a Monte Carlo simulation model, which uses Level 3 inputs for fair value measurements. As of December 31, 2019, management estimated the fair value of such commitments to be zero. During the fiscal year ended December 31, 2019 and 2018, the Company made investments of $0.6 million and $2.5 million in a convertible security and preferred stock issued by a privately-held company. The estimated fair value of the investments was determined based on Level 3 inputs. As of December 31, 2019, management estimated that the fair value of the investments equaled its carrying value.

The Company's cash and cash equivalents, short-term marketable securities, and long-term marketable securities consist of the following:



	December 31, 2019
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(in thousands)
Cash and cash equivalents:
Cash	$	84,102	$	—	$	—		$	84,102
Money market funds	58		—		—			58
Commercial paper	3,399		—		—			3,399
Total	87,559		—		—			87,559
Short-term marketable securities:
Commercial paper	2,239		—		—			2,239
Corporate bonds	33,048		51		(1		)	33,098
Asset-backed securities	2,438		11		—			2,449
U.S. government agencies	173,364		184		(3		)	173,545
Total	211,089		246		(4		)	211,331

Long-term marketable securities:
Asset-backed securities	40,001		193		(1		)	40,193
U.S. government agencies	46,447		370		—			46,817
Corporate bonds	32,236		262		—			32,498
Total	118,684		825		(1		)	119,508
Total	$	417,332	$	1,071	$	(5	)	$	418,398



	December 31, 2018
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(in thousands)
Cash and cash equivalents:
Cash	$	40,913	$	—	$	—		$	40,913
Money market funds	113		—		—			113
Total	41,026		—		—			41,026
Short-term marketable securities:
Commercial paper	3,237		—		—			3,237
Corporate bonds	30,906		—		(84		)	30,822
Asset-backed securities	10,447		—		(15		)	10,432
U.S. government agencies	203,734		9		(94		)	203,649
Total	248,324		9		(193		)	248,140
Long-term marketable securities:
Asset-backed securities	22,945		10		(28		)	22,927
U.S. government agencies	18,804		—		(53		)	18,751
Corporate bonds	35,322		3		(293		)	35,032
Total	77,071		13		(374		)	76,710
Total	$	366,421	$	22	$	(567	)	$	365,876

As of December 31, 2019 and 2018, the Company had no investments utilizing level 3 inputs, other than the aforementioned investments in the privately-held company.

The following table sets forth by level within the fair value hierarchy the fair value of the Company's cash equivalents and marketable securities measured on a recurring basis:



	December 31, 2019
	Level 1		Level 2		Fair Value
	(in thousands)
Money market funds	$	58	$	—	$	58
Commercial paper	—		5,638		5,638
U.S. government agencies	—		220,362		220,362
Corporate bonds	—		65,596		65,596
Asset-backed securities	—		42,642		42,642
Total	$	58	$	334,238	$	334,296



	December 31, 2018
	Level 1		Level 2		Fair Value
	(in thousands)
Money market funds	$	113	$	—	$	113
Commercial paper	—		3,237		3,237
U.S. government agencies	—		222,400		222,400
Corporate bonds	—		65,854		65,854
Asset-backed securities	—		33,359		33,359
Total	$	113	$	324,850	$	324,963

The following summarizes the fair value of marketable securities classified as available-for-sale debt securities by contractual maturity:



	December 31, 2019
	Mature within One Year		After One Year through Two Years		Over Two Years		Fair Value
	(in thousands)
Commercial paper	$	5,638	$	—	$	—	$	5,638
U.S. government agencies	173,546		46,816				220,362
Corporate bonds	33,098		23,251		9,247		65,596
Asset-backed securities	2,449		15,550		24,643		42,642
Total	$	214,731	$	85,617	$	33,890	$	334,238

Derivative Financial Instruments

The Company uses a hedging strategy to reduce its exposure to foreign currency exchange rate fluctuations for forecasted subscription renewals and new orders in both GBP and Euro. The Company uses forward currency contracts accounted for as cash flow hedges against a designated portion of forecasted subscription renewals and new orders. Upon executing a hedging contract and periodically thereafter, the Company assesses hedge effectiveness using regression analysis. The Company includes time value in its effectiveness testing and the changes in the value of hedge contracts is recorded as unrealized gains or losses in AOCI within stockholders’ equity on the Company's consolidated balance sheet as of December 31, 2019. The unrealized gains or losses in AOCI will be reclassified into revenue when the respective hedged transactions affect earnings. As of December 31, 2019, the net amount of unrealized gains and losses related to the hedged forecasted transactions reported in AOCI that is expected to be reclassified into revenue within the next 12 months was $0.7 million gains, net of losses (before taxes).

At December 31, 2019, the Company had 26 open designated cash flow hedge forward contracts with notional amounts of €24.2 million and £9.7 million. During the fiscal year ended December 31, 2019, the Company recorded $0.7 million of unrealized foreign exchange gains, net of losses (before taxes) related to the designated cash flow hedge contracts in AOCI. During the fiscal year ended December 31, 2019, $0.2 million of gains, net of losses (before tax) were realized and reclassified into revenue.

At December 31, 2018, the Company had 12 open cash flow hedge contracts with notional amount of €12.9 million and £4.1 million. The unrealized foreign exchange losses on these contracts recorded in AOCI were insignificant.

At December 31, 2019, the Company had 15 outstanding non-designated forward contracts with notional amounts of €20.0 million, £5.6 million and ₨756.0 million which will mature at various dates through January 2021. At December 31, 2018, the Company had two non-designated outstanding forward contracts with notional amounts of €16.0 million and £6.3 million.

The following summarizes derivative financial instruments as of December 31, 2019 and 2018:



	December 31,
	2019			2018
Assets:	(in thousands)
Foreign currency forward contracts designated as cash flow hedge	$	427		$	32
Foreign currency forward contracts not designated as hedging instruments	515			—
Total	$	942		$	32
Liabilities:
Foreign currency forward contracts designated as cash flow hedge	$	(524	)	$	(72	)
Foreign currency forward contracts not designated as hedging instruments	(550		)	(44		)
Total	$	(1,074	)	$	(116	)

All foreign currency forward contracts were valued at fair value using level 2 inputs.



	Year Ended December 31,
	2019			2018			2017
Net gains (losses) from forward contracts	$	438		$	543		$	(1,665	)
Other foreign currency transaction (losses) gains	(792		)	(1,120		)	1,310
Total foreign exchange loss, net	(354		)	(577		)	(355		)
Other expenses	(253		)	(224		)	(181		)
Other income (expense), net	$	(607	)	$	(801	)	$	(536	)

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Fair Value of Financial Instruments (Narrative) (Details)	12 Months Ended
	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2019 GBP (£) contract	Dec. 31, 2019 EUR (€) contract	Dec. 31, 2019 USD ($) contract	Dec. 31, 2018 GBP (£) contract	Dec. 31, 2018 EUR (€) contract	Dec. 31, 2018 USD ($) contract
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash Flow Hedge Gain (Loss) to be Reclassified within Twelve Months	$ 700,000
Derivative, notional amount \| £				£ 4,800,000
Unrealized Gain (Loss) on Interest Rate Cash Flow Hedges, Pretax, Accumulated Other Comprehensive Income (Loss)	700,000
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, before Tax	200,000
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), after Reclassification and Tax	381,000	$ (40,000)	$ 0
Foreign Exchange Contract [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative, Number of Instruments Held \| contract							12	12	12
Designated as Hedging Instrument [Member] \| Cash Flow Hedging [Member] \| Foreign Exchange Contract [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative, Number of Instruments Held \| contract				26	26	26
Designated as Hedging Instrument [Member] \| Cash Flow Hedging [Member] \| Foreign Currency Contract, Euro [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative, notional amount \| £				£ 24,200,000			£ 12,900,000
Designated as Hedging Instrument [Member] \| Cash Flow Hedging [Member] \| Foreign Currency Contract, Pound [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative, notional amount \| £				£ 9,700,000			£ 4,100,000
Not Designated as Hedging Instrument [Member] \| Forward contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative, Number of Instruments Held \| contract				15	15	15	2	2	2
Not Designated as Hedging Instrument [Member] \| Euro Member Countries, Euro \| Forward contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative, notional amount \| €					€ 20,000,000.0			€ 16,000,000.0
Not Designated as Hedging Instrument [Member] \| United Kingdom, Pounds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative, notional amount						$ 5,600,000			$ 6,300,000
Not Designated as Hedging Instrument [Member] \| India, Rupees
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative, notional amount						$ 756,000,000.0
Convertible Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Convertible Security, Investment In Period	$ 600,000
Preferred Stock
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Convertible Security, Investment In Period		$ 2,500,000

Stockholders' Equity and Stock-based Compensation (Restricted Stock Units and Restricted Stock Awards Activity) (Details) - Restricted Stock Units - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Number of Shares
Beginning balance (in shares)	1,226,883	1,410,588	587,333
Granted (in shares)	595,985	548,245	1,326,849
Vested (in shares)	(438,892)	(525,375)	(368,367)
Canceled (in shares)	(169,158)	(206,575)	(135,227)
Ending balance (in shares)	1,214,818	1,226,883	1,410,588
Expected to vest as of December 31, 2016	902,794
Weighted-Average Grant Date Fair Value Per Share
Beginning balance (usd per share)	$ 55.71	$ 40.34	$ 28.85
Granted (in shares)	81.59	75.44	42.69
Vested (in shares)	53.17	39.87	33.52
Canceled (in shares)	65.51	43.43	32.04
Ending balance (usd per share)	67.99	$ 55.71	$ 40.34
Expected to vest as of December 31, 2016	$ 66.37

Stockholders' Equity and Stock-based Compensation (Expense) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based employee compensation	$ 34,892	$ 30,090	$ 26,961
Restricted Stock Units
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Unrecognized employee compensation cost	$ 66,000
Unrecognized employee compensation cost, period for recognition	2 years 7 months 6 days
Stock Options
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Unrecognized employee compensation cost	$ 17,500
Unrecognized employee compensation cost, period for recognition	2 years 6 months
Cost of revenues
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based employee compensation	$ 2,262	2,489	2,159
Research and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based employee compensation	11,151	7,961	5,944
Sales and marketing
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based employee compensation	4,984	4,650	4,755
General and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based employee compensation	$ 16,495	$ 14,990	$ 14,103

Stockholders' Equity and Stock-based Compensation (Tables)

12 Months Ended

Dec. 31, 2019

Share-based Compensation [Abstract]

Schedule of shares reserved for future issuance

The Company had reserved shares of common stock for future issuance as of December 31, 2019 as follows:



Options and RSUs outstanding under equity incentive plans
2000 Equity Incentive Plan		157,385
2012 Equity Incentive Plan		3,924,108
Shares available for future grants under an equity incentive plan
2012 Equity Incentive Plan		5,243,730
Total shares reserved for future issuance		9,325,223

Stock-based employee compensation



	Year Ended December 31,
	2019		2018		2017
	(in thousands)
Cost of revenues	$	2,262	$	2,489	$	2,159
Research and development	11,151		7,961		5,944
Sales and marketing	4,984		4,650		4,755
General and administrative	16,495		14,990		14,103
Total stock-based employee compensation	$	34,892	$	30,090	$	26,961

Fair value assumptions of options granted to employees

The fair value of each option granted to employees is estimated on the date of grant using the Black-Scholes-Merton option-pricing model based on the following assumptions:



	Year Ended December 31,
	2019	2018	2017
Expected term (in years)	4.4 to 6.6	4.5 to 5.0	5.1 to 5.5
Volatility	40% to 46%	45% to 47%	47% to 49%
Risk-free interest rate	1.5% to 2.4%	2.5% to 3.0%	1.8% to 2.0%
Dividend yield	—	—	—

Stock option activity

A summary of the Company’s stock option activity is as follows:



	Outstanding Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
						(in thousands)
Balance as of December 31, 2016	7,527,680		$	19.25	6.0	$	101,717
Granted	408,225		$	40.82
Exercised	(2,997,095	)	$	11.05
Canceled	(442,919	)	$	33.29
Balance as of December 31, 2017	4,495,891		$	25.29	6.6	$	153,129
Granted	366,786		$	79.79
Exercised	(1,183,235	)	$	20.33
Canceled	(250,133	)	$	39.61
Balance as of December 31, 2018	3,429,309		$	31.79	6.4	$	149,935
Granted	496,145		$	87.10
Exercised	(901,290	)	$	27.55
Canceled	(157,489	)	$	71.04
Balance as of December 31, 2019	2,866,675		$	40.54	6.0	$	125,647
Vested and expected to vest—December 31, 2019	2,655,987		$	37.27	5.9	$	124,592
Exercisable—December 31, 2019	2,099,200		$	28.39	5.4	$	115,916

Schedule of exercise price range, outstanding and vested

The following table summarizes the outstanding and vested stock options at December 31, 2019:



	Outstanding				Exercisable
Exercise Price	Number of Shares	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (Years)	Number of Shares	Weighted Average Exercise Price Per Share
$4.10 - $13.50	297,913	$	9.75	2.5	297,913	$	9.75
$13.60 - $25.17	351,255	$	22.22	4.6	347,391	$	22.19
$25.56 - $25.56	836,635	$	25.56	6.3	764,382	$	25.56
$26.86 - $34.97	297,207	$	30.98	5.0	287,277	$	30.96
$36.25 - $40.68	301,532	$	38.19	6.3	244,236	$	38.17
$40.89 - $79.51	363,278	$	70.50	8.5	113,388	$	61.81
$86.35 - $87.26	196,706	$	86.69	5.5	2,770	$	87.26
$89.55 - $89.55	63,300	$	89.55	9.6	499	$	89.55
$94.45 - $94.45	77,425	$	94.45	9.0	10,458	$	94.45
$95.10 - $95.10	81,424	$	95.10	8.5	30,886	$	95.10
	2,866,675	$	40.54	6.0	2,099,200	$	28.39

Summary of the Company’s RSUs and RSAs activity

A summary of the Company’s RSU activity is as follows:



	Number of Shares		Weighted-Average Grant Date Fair Value Per Share
Balance as of December 31, 2016	587,333		$	28.85
Granted	1,326,849		$	42.69
Vested	(368,367	)	$	33.52
Cancelled	(135,227	)	$	32.04
Balance as of December 31, 2017	1,410,588		$	40.34
Granted	548,245		$	75.44
Vested	(525,375	)	$	39.87
Cancelled	(206,575	)	$	43.43
Balance as of December 31, 2018	1,226,883		$	55.71
Granted	595,985		$	81.59
Vested	(438,892	)	$	53.17
Cancelled	(169,158	)	$	65.51
Balance as of December 31, 2019	1,214,818		$	67.99
Expected to vest as of December 31, 2019	902,794		$	66.37

Revenue from Contracts with Customers

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

The Company's subscription contracts are typically satisfied ratably over the subscription term as its cloud-based offerings are delivered to customers electronically and over time. In addition, the Company recognizes revenues for certain limited scan arrangements on an as-used basis. The Company recognizes revenue related to professional services based on time and materials or completion of milestones stated in the contracts.

As the vast majority of the Company’s offerings are subscription based, the Company rarely needs to allocate the transaction price to separate performance obligations. In the rare case that allocation of the transaction price is needed, the Company recognizes revenue in proportion to the standalone selling prices (SSP) of the underlying services at contract inception. If an SSP is not directly observable, the Company determines the SSP using information that may include market conditions and other observable inputs. The Company's transaction prices typically do not include variable consideration and are a fixed amount for a specific period of time, and the majority of contracts are twelve months with certain customers signing longer term deals. In general, the Company does not offer rights of return, performance bonuses, customer loyalty programs, payments via non-cash methods, refunds, volume rebates, incentive payments, penalties, price concessions or payments or discounts contingent on future events and the Company does not grant its customers any material rights. For contracts that include leased scanners and PCPs, the Company applies the lease and non-lease component practical expedient under ASC 842 to account for non-lease components and lease components as combined components under the revenue recognition guidance in ASU 2014-09, "Revenue from Contracts with Customers" (Topic 606) as the subscriptions are the predominant components in the arrangements.

Costs of shipping and handling charges associated with physical scanner appliances and other computer equipment are included in cost of revenues. Sales taxes and other taxes collected from customers to be remitted to government authorities are excluded from revenues.

Incremental direct costs of obtaining a contract, which consist of sales commissions primarily for new business and upsells, are deferred and amortized over the estimated life of the customer relationship if renewals are expected and the renewal commission is not commensurate with the initial commission. The Company elected the practical expedient to expense commissions on renewals where the specific anticipated contract term amortization period is one year or less. The Company amortizes the capitalized commission cost as a selling expense on a straight-line basis over a period of five years. The Company classifies deferred commissions as current or noncurrent based on the timing of when it expects to recognize the expense. The current and noncurrent portions of deferred commissions are included in prepaid expenses and other current assets and other noncurrent assets, respectively, in its consolidated balance sheets.

Capitalized costs to obtain contracts, current and noncurrent are as follows (in thousands):



	December 31, 2019		December 31, 2018
Commission asset, current	$	2,568	$	1,480
Commission asset, noncurrent	$	6,454	$	4,692

For the year ended December 31, 2019 and 2018, the Company recognized $2.0 million and $1.2 million of commission expense from amortization of its commission assets. During the same periods, there was no impairment loss related to the capitalized costs.

The Company records deferred revenue when cash payments are received or due in advance of its performance offset by revenue recognized in the period. Revenues of $160.8 million and $141.3 million were recognized during the years ended December 31, 2019 and December 31, 2018, respectively, which amounts were included in the deferred revenue balances as of December 31, 2018 and December 31, 2017, respectively.

The Company's payment terms vary by the type and location of its customer and the products or services offered. The term between invoicing and when payment is due is not significant. For certain products or services and customer types, the Company requires payment before the products or services are delivered to the customer.

The following table sets forth the expected revenue from all remaining performance obligations as of December 31, 2019 (in thousands):



	Total Expected Revenue
2020	$	67,055
2021	35,437
2022	13,027
2023	1,454
2024	343
2025 and thereafter	138
Total	$	117,454

Revenues allocated to remaining performance obligations represents contracted revenues that have not yet been recognized, which include deferred revenue and the amounts that will be invoiced and recognized as revenues in future periods from open contracts. Remaining performance obligations represent the transaction price of noncancelable orders for which service has not been performed and excludes unexercised renewals. The Company applied the short-term contract exemption to exclude the remaining performance obligations that are part of a contract that has an original expected duration of one year or less.

From time to time, the Company enters into contracts with customers that extend beyond one year, with certain of its customers electing to pay for more than one year of services upon contract execution. For any discounts associated with these multiple year contracts, the Company concluded its contracts did not contain a financing component.

Revenues by sales channel are as follows (in thousands):



	Year Ended December 31,
	2019		2018		2017⁽¹⁾
Direct	$	186,130	$	164,084	$	139,908
Partner	135,477		114,805		90,920
Total	$	321,607	$	278,889	$	230,828

(1) Revenue has not been adjusted under the modified retrospective method.

The Company utilizes partners to enable and accelerate the adoption of its cloud platform by increasing its distribution capabilities and market awareness of its cloud platform as well as by targeting geographic regions outside the reach of its direct sales force. The Company's channel partners maintain relationships with their customers throughout the territories in which they operate and provide their customers with services and third-party solutions to help meet those customers’ evolving security and compliance requirements. As such, these partners may offer the Company's IT security and compliance solutions in conjunction with one or more of their own products or services and act as a conduit through which the Company can connect with these prospective customers to offer its solutions. For sales involving a channel partner, the channel partner engages with the prospective customer directly and involves the Company's sales team as needed to assist in developing and closing an order. When a channel partner secures a sale, the Company sells the associated subscription to the channel partner who in turn resells the subscription to the customer. Sales to channel partners are made at a discount and revenues are recorded at this discounted price over the subscription terms. The Company does not have any influence or specific knowledge of its partners' selling terms with their customers. See Note 11, "Segment Information and Information about Geographic Area" for disaggregation of revenue by geographic area.

Property and Equipment, Net (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Property and equipment	$ 183,893	$ 160,672
Finance Lease, Right-of-Use Asset	1,299
Less: accumulated depreciation and amortization	(123,314)	(99,230)
Property and equipment, net	60,579	61,442
Depreciation	24,900	25,100	$ 19,900
Computer equipment
Property, Plant and Equipment [Line Items]
Property and equipment	112,599	93,530
Computer software
Property, Plant and Equipment [Line Items]
Property and equipment	26,137	26,030
Furniture, fixtures and equipment
Property, Plant and Equipment [Line Items]
Property and equipment	6,973	5,814
Equipment Under Capital Lease [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	3,503
Finance Lease, Right-of-Use Asset		3,503
Scanner appliances
Property, Plant and Equipment [Line Items]
Property and equipment	15,864	15,356
Scanner appliances and other computer equipment subject to subscription
Property, Plant and Equipment [Line Items]
Property and equipment, net	4,900	7,900
Scanner appliances and other computer equipment not placed in service
Property, Plant and Equipment [Line Items]
Property and equipment	900	1,800
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment	$ 18,817	$ 16,439

Income Taxes (Tax Rate Reconciliation) (Details)	12 Months Ended
Income Taxes (Tax Rate Reconciliation) (Details)	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation [Abstract]
Federal statutory rate	21.00%	21.00%	35.00%
State taxes	1.50%	(1.90%)	(2.10%)
Stock-based compensation	(7.20%)	(20.40%)	(58.10%)
Effective Income Tax Rate Reconciliation, Foreign Income Tax Rate Differential, Percent	0.10%	(0.20%)	(0.20%)
Change in valuation allowance	1.10%	4.40%	2.80%
Incremental federal rate benefit previously not recognized	0.00%	0.00%	26.40%
Federal and state research and development credit	(3.70%)	(6.70%)	(5.30%)
Other	0.40%	0.50%	(1.20%)
Provision for (benefit from) income taxes	13.20%	(3.30%)	(2.70%)

Employee Benefits Plan (Details) - USD ($) $ in Millions	12 Months Ended
Employee Benefits Plan (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
401(k) Plan [Member]
Defined Contribution Plan Disclosure [Line Items]
Defined Contribution Plan, Employer Discretionary Contribution Amount	$ 1.3	$ 1.2	$ 1.1
Provident Fund Plan and Gratuity Plan [Member]
Defined Contribution Plan Disclosure [Line Items]
Defined Contribution Plan, Employer Discretionary Contribution Amount	$ 1.1	$ 0.7	$ 0.4