What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-23 compared with 2022-02-22 · 357 added, 179 removed, 1108 unchanged (33% of the section changed)

12 unchanged sentences

We have audited the accompanying consolidated balance sheets of Qualys, Inc.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, cash flows, and stockholders’

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, cash flows, and stockholders’

equity  for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in the 2013 Internal Control  — 

Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 22, 2022 expressed an unqualified opinion.

Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"), and our report dated February 23, 2023 expressed an unqualified opinion.

Basis for opinion

6 unchanged sentences

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

1 unchanged sentence

Critical audit matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

8 unchanged sentences

Determined that the ending gross temporary difference agreed to the supporting equity documentation.

We tested the design and operating effectiveness of internal controls over the Company’s calculation of the tax effects covering the validation of the completeness and accuracy of underlying data used in the analysis.

/s/ GRANT THORNTON LLP

1 unchanged sentence

San Jose, California

February 22, 2022

February 23, 2023

Report of Independent Registered Public Accounting Firm

68 unchanged sentences

$ 2,808  

$ 1,296  

Accrued liabilities

32 unchanged sentences

Accumulated other comprehensive income (loss)

Retained earnings (accumulated deficit)

( 1,947 )  

Accumulated deficit

( 221,447 )  

Total stockholders’

41 unchanged sentences

Write off of noncurrent asset

Bad debt expense

Provision for credit losses

Loss on disposal of property and equipment

Stock-based compensation

Amortization of premiums (accretion of discounts) on marketable securities

Amortization of premiums on marketable securities

Deferred income taxes

12 unchanged sentences

Purchases of intangible assets

Maturity (purchase) of note receivable

Net cash used in investing activities

Maturity of note receivable

Net cash provided by (used in) investing activities

Cash flow from financing activities:

2 unchanged sentences

Payments for taxes related to net share settlement of equity awards

Proceeds from issuance of common stock through employee stock purchase plan

Principal payments under finance lease obligations

7 unchanged sentences

Non-cash investing and financing activities

Purchases of intangible assets recorded in accrued liabilities

Purchases of intangible assets recorded in accrued liabilities and other noncurrent liabilities

Purchases of property and equipment recorded in accounts payable and accrued liabilities

7 unchanged sentences

Balances at December 31, 2019

Other comprehensive income, net of tax

Other comprehensive loss, net of tax

Issuance of common stock upon exercise of stock options

4 unchanged sentences

Balances at December 31, 2020

Other comprehensive loss, net of tax

Other comprehensive income, net of tax

Issuance of common stock upon exercise of stock options

4 unchanged sentences

Balances at December 31, 2021

Other comprehensive income, net of tax

Other comprehensive loss, net of tax

Issuance of common stock upon exercise of stock options

2 unchanged sentences

Taxes related to net share settlement of equity awards

Issuance of common stock through employee stock purchase plan

Stock-based compensation

12 unchanged sentences

GAAP as well as the instructions to Form 10 -K and the rules and regulations of the SEC.

Certain prior year amounts have been reclassified to conform with the current year presentation.

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.

2 unchanged sentences

Risks and Uncertainties

March 2020, 

the World Health Organization declared the outbreak of COVID- 19 as a pandemic.

As a result of COVID- 19,  the Company has modified certain aspects of its business, including restricting employee travel, requiring employees to work from home, and canceling certain events and meetings, among other modifications.

The Company will continue to actively monitor the situation and 

take further actions that alter its business operations as 

be required by federal, state or local authorities or that the Company determines are in the best interests of its employees, customers, partners, suppliers and stockholders.

While the Company has 

not  incurred significant disruptions from the COVID- 19  pandemic to date and does not expect the pandemic will have a significant impact on the Company’s business in 2022, the Company is unable to accurately predict the full impact that COVID- 19  will have due to numerous uncertainties, including the duration of the outbreak, actions that 

be taken by governmental authorities and the impact to the business of its customers and partners.

The Company will continue to evaluate the nature and extent of the impact to its business, financial position, results of operations and cash flows.

The uncertainty surrounding macroeconomic factors in the U.S.

and globally characterized by the supply chain environment, inflationary pressure, rising interest rates, labor shortages, significant volatility of global markets and geopolitical conflicts could have a material adverse effect on the Company's long-term business and could lead to further economic disruption and expose the Company to greater risk as its current and potential customers 

may  reduce or eliminate their overall spending on IT security.

Use of Estimates

16 unchanged sentences

The Company classifies its marketable securities as either short-term or long-term based on each instrument's underlying remaining contractual maturity date. 

As of both 

December 31, 2021 and 2020 , the Company has a restricted cash balance of $ 1.2 million in the form of a letter of credit issued to the landlord of the Company's California headquarter office lease as security deposit. 

December 31, 2022  the Company had a restricted cash balance of $ 2.7 million, of which $ 1.5 million is related to cash held in escrow as part of the Blue Hexagon acquisition and $ 1.2 million in the form of a letter of credit issued to the landlord of the Company's California headquarter office lease as security deposit.

As of December 31, 2021, the Company has restricted cash balance of $1.2 million in the form of a letter of credit issued to the landlord of the Company’s California headquarter office lease as security deposit.

Cash equivalents are stated at cost, which approximates fair market value.

12 unchanged sentences

December 31, 2022 and 2021 .

The balance of accounts receivable, net of allowance for credit losses was $ 121.8 million, $ 109.0 million and $ 100.2 million as of December 31, 2022, December 31, 2021 and December 31, 2020, respectively. 

Non-marketable securities

16 unchanged sentences

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.

The Company leases certain offices, computer equipment and its data center facilities under finance leases and non-cancelable operating leases.

The Company leases certain offices, computer equipment and its shared cloud platform facilities under finance leases and non-cancelable operating leases.

For both operating and finance leases, we recognize a right-of-use asset, which represents our right to use the underlying asset for the lease term, and a lease liability, which represents the present value of our obligation to make payments arising over the lease term. Many of our leases include rental escalation clauses, renewal options and/or termination options that are factored into our determination of lease payments and lease terms when appropriate.

1 unchanged sentence

As most of our leases do not provide a readily determinable implicit rate, the Company determines an incremental borrowing rate 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 as the leases. 

Where the Company is the lessee, the Company elects to account for non-lease components associated with its leases (e.g., common area maintenance costs) and lease components separately for substantially all of its asset classes, except for data centers, for which the Company elected to combine lease and non-lease components.

Where the Company is the lessee, the Company elects to account for non-lease components associated with its leases (e.g., common area maintenance costs) and lease components separately for substantially all of its asset classes, except for shared cloud platforms, for which the Company elected to combine lease and non-lease components.

For leases with a term of one year or less, the Company has elected not to record the right-of-use asset or liability.

16 unchanged sentences

2022 and 2021 and concluded there was no impairment of goodwill or the indefinite-lived intangible 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.

Asset Acquisitions and Business Combinations

The Company applies the provisions of ASC 805, Business Combinations, in accounting for its acquisitions. To determine whether transactions should be accounted for as asset acquisition or business combination, the Company evaluates whether substantially all of the fair value of gross assets included in a transaction is concentrated in a single asset (or a group of similar assets), resulting in an asset acquisition, if not, resulting in a business combination.

In an asset acquisition, the cost of acquiring the asset group, including transaction costs, is allocated to the acquired assets or assumed liabilities based on their relative fair values without giving rise to goodwill.

In a business combination, the Company 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.

17 unchanged sentences

The Company derives revenues from subscriptions that require customers to pay a fee in order to access the Company’s cloud solutions.

Contract period with customers generally ranges from less than a year to five years. 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. 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.

Contract period with customers generally are one  year with occasional contracts ranging up to five years. 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. 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’

19 unchanged sentences

Contract modifications happen when there is an upsell, where the customers subsequently enter into contract with the Company to purchase additional product offerings or additional scans for additional devices.

Contract modifications related to upsells are typically accounted for prospectively.

Contract modifications related to upsells are accounted for prospectively.

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.

8 unchanged sentences

Advertising costs are expensed as incurred and are included in sales and marketing expense in the consolidated statements of operations.

The Company incurred advertising costs of $ 2.1 million, $ 1.6 million and $ 1.5 million for the years ended December 31, 2021 , 2020 and 2019 , respectively.

The Company incurred advertising costs of $ 3.3  million, $ 2.1  million and $ 1.6  million for the years ended December 31, 2022 , 2021 and 2020 , respectively.

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.

34 unchanged sentences

Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("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 adopted ASU 2019 - 12 in the first quarter of 2021 with no material impact on the Company's consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

18 unchanged sentences

The foreign currency forward contracts are valued using observable inputs, such as quotations on forward foreign exchange points and foreign interest rates.

The Company's cash and cash equivalents and marketable securities consist of the following:

The following table sets forth by level within the fair value hierarchy the fair value of the Company's financial assets and liabilities measured at fair value on a recurring basis:

December 31, 2022

Amortized Cost

Unrealized Gains

Unrealized Losses

(in thousands)

Cash and cash equivalents:

$ 61,220  

Money market funds

1 unchanged sentence

$ 82,701  

Commercial paper

Treasury and government agencies

156,662  

Short-term marketable securities:

Commercial paper

Foreign government

Corporate bonds

63,910  

Corporate bonds

Asset-backed securities

1 unchanged sentence

15,027  

Foreign currency forward contracts

$ 82,701  

Treasury and government agencies

$ 238,098  

$ 320,799  

Foreign currency forward contracts

$ 4,679  

Total liabilities

$ 4,679  

Long-term marketable securities:

Asset-backed securities

$ 4,679  

December 31, 2021

(in thousands)

Money market funds

$ 75,258  

Treasury and government agencies

Commercial paper

18,896  

Treasury and government agencies

254,527  

Foreign government

2 unchanged sentences

86,703  

57,740  

111,374  

Asset-backed securities

18,863  

Foreign currency forward contracts

$ 75,258  

1 unchanged sentence

$ 458,602  

Foreign currency forward contracts

Total liabilities

There were no transfers between Level 1, Level 2  and Level 3  categories during the years ended December 31, 2022 and 2021.

Cash equivalent and investments

The Company's cash equivalents and marketable securities consist of the following:

December 31, 2022

3 unchanged sentences

(in thousands)

Cash and cash equivalents:

Cash equivalents:

Money market funds

$ 82,701  

Money market funds

Treasury and government agencies

29,787  

29,791  

Commercial paper

112,488  

1 unchanged sentence

Short-term marketable securities:

Commercial paper

Corporate bonds

1 unchanged sentence

( 337 )  

36,574  

Asset-backed securities

3 unchanged sentences

109,304  

Foreign government

148,867  

2 unchanged sentences

Long-term marketable securities:

Corporate bonds

28,146  

( 810 )  

27,336  

Asset-backed securities

1 unchanged sentence

( 132 )  

14,303  

Treasury and government agencies

Foreign government

Corporate bonds

18,076  

6 unchanged sentences

$ ( 2,713 )  

December 31, 2021  and 2020 , there were no marketable securities that had been in a continuous unrealized loss position for 12 months or longer.

The Company had the ability and intent to hold all marketable securities that were in an unrealized loss position until recovery of the amortized cost basis.

The Company considered the extent to which fair value was less than amortized cost basis and conditions related to security’s industry and geography and changes to the ratings, if any, and concluded the decline in fair value compared to carrying value was not related to credit loss.

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:

$ 319,306  

 (1) Excludes cash of $61.2 million. 

December 31, 2021

Amortized Cost

Unrealized Gains

Unrealized Losses

(in thousands)

Cash equivalents:

Money market funds

4 unchanged sentences

76,108  

Short-term marketable securities:

Commercial paper

18,046  

Corporate bonds

28,869  

28,963  

Asset-backed securities

Treasury and government agencies

1 unchanged sentence

( 163 )  

Foreign government

216,999  

268,027  

( 170 )  

267,960  

Long-term marketable securities:

Corporate bonds

1 unchanged sentence

( 182 )  

57,740  

Asset-backed securities

2 unchanged sentences

14,911  

Treasury and government agencies

37,664  

( 136 )  

37,528  

Foreign government

111,374  

( 354 )  

111,198  

$ 455,509  

$ ( 524 )  

$ 455,266  

( 1 ) Excludes cash of $ 61.2 million. 

( 2 ) Revised for correction of classification of amounts and security types disclosed in Note 

2  to the consolidated financial statements in our Annual Report on Form 

10 -K for the fiscal year ended 

December 31, 2021.

The following table summarizes the gross unrealized losses and fair value of the Company's marketable securities that were in an unrealized loss position aggregated by length of time: 

December 31, 2022

Less than 12 months

12 months or longer

Gross unrealized losses

(in thousands)

Money market funds

Foreign government agencies

$ ( 2 )  

Asset-backed securities

13,365  

Commercial paper

Treasury and government agencies

( 124 )  

( 10 )  

Foreign government

15,017  

Corporate bonds

1 unchanged sentence

( 389 )  

Asset-backed securities

26,326  

1 unchanged sentence

60,126  

Treasury and government agencies

89,802  

( 1,175 )  

The following summarizes the fair value of marketable securities by contractual maturity:

36,833  

( 255 )  

126,635  

$ 137,965  

$ ( 1,690 )  

$ 64,811  

$ ( 1,023 )  

$ 202,776  

December 31, 2021

Mature within One Year  

Mature after One Year through Two Years  

Mature over Two Years  

Less than 12 months

12 months or longer

Gross unrealized losses

(in thousands)

Commercial paper

Asset-backed securities

$ 15,867  

$ ( 36 )  

$ 15,867  

Corporate bonds

54,143  

( 189 )  

54,143  

Treasury and government agencies

2 unchanged sentences

241,816  

Foreign government

Corporate bonds

$ 311,826  

1 unchanged sentence

$ 311,826  

The Company had the ability and intent to hold all marketable securities that were in an unrealized loss position until recovery of the amortized cost basis.

The following summarizes the fair value of marketable securities by contractual maturity:

December 31, 2022

Amortized Cost

(in thousands)

Due within One Year

$ 260,629  

Asset-backed securities

$ 259,376  

Due after One Year through Two Years

43,528  

42,272  

Mature over Two Years

Asset-backed securities

15,161  

15,027  

$ 322,012  

$ 319,306  

Derivative Financial Instruments

1 unchanged sentence

The Company enters into foreign currency forward contracts to reduce the risk of variability in future cash flow due to foreign currency exchange rate fluctuation from certain forecasted subscription revenue orders billed in GBP and Euro and operation expenses incurred in INR, which are designated as cash flow hedges.

Unrealized foreign exchange gains or losses related to those designated cash flow hedge contracts are recorded in Accumulated other comprehensive income ("AOCI") and will be reclassified into revenues or operating expenses, respectively, in the same periods when the hedged transactions hit earnings.

December 31, 2021 , the Company had designated cash flow hedge forward contracts with notional amounts of €29.8  million, £9.4  million and 

Rs.2,955.3  million.

As of December 31, 2020 , the Company had designated cash flow hedge forward contracts with notional amounts of €25.9  million, £8.7 million and Rs.1,933.5 million.

Hedge effectiveness is assessed at inception and at each reporting period utilizing regression analysis.

As of December 31, 2022 , a net amount of unrealized gains of $ 3.2  million before tax on the foreign currency forward contracts for GBP and Euro reported in AOCI is expected to be reclassified into revenue within the next 

As of December 31, 2021 , a net amount of unrealized gains of $ 0.3  million before tax on the foreign currency forward contracts for INR reported in AOCI is expected to be reclassified into operating expenses within the next 12 months.

As of December 31, 2022 , a net amount of unrealized loss of $ 1.6  million before tax on the foreign currency forward contracts for INR reported in AOCI is expected to be reclassified into operating expenses within the next 12 months.

Non-designated forward contracts

The Company also uses foreign currency forward contracts to hedge certain foreign currency denominated assets or liabilities, which are not designated as cashflow hedges.

December 31, 2021 , the Company had non-designated forward contracts with notional amounts of 

€34.5  million, £11.6  million, Rs.74.9  million, C$2.5 million and CHF1.0  million.

December 31, 2020 , the Company had non-designated forward contracts with notional amounts of €17.7  million, £6.5  million and Rs.32.8  million.

The following summarizes derivative financial instruments as of December 31, 2021 and 2020 :

The Company also uses foreign currency forward contracts to hedge certain foreign currency denominated assets or liabilities, which are not designated as cash flow hedges.

Unrealized foreign exchange gain or losses related to the non-designated forward contracts are recorded in other income (expenses), net and offset the foreign exchange gain or loss on the underlying net monetary assets or liabilities.

The following summarizes the fair value of derivative financial instruments as of December 31, 2022 and 2021 :

(in thousands)  

1 unchanged sentence

$ 1,041  

$ 1,737  

Foreign currency forward contracts not designated as hedging instruments

$ 1,493  

$ 3,336  

Foreign currency forward contracts designated as cash flow hedge

3 unchanged sentences

$ ( 4,679 )  

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

Derivative transactions are measured in terms of the notional amount.

However, this amount is not recorded on the balance sheet and is 

not, when viewed in isolation, a meaningful measure of the risk profile of the derivative instruments.

The notional amount is generally not exchanged, and is used only as the underlying basis on which the value of foreign currency exchange payments under these contracts is determined.

The following summarizes the notional amounts of our outstanding derivatives: 

(in thousands)

Foreign currency forward contracts designated as cash flow hedge

$ 10,623  

$ 9,486  

Foreign currency forward contracts not designated as hedging instruments

69,972  

56,114  

$ 80,595  

$ 65,600  

The Company presents its derivative assets and derivative liabilities at gross fair values in the consolidated balance sheets.

However, under the master netting agreements with the respective counterparties of the foreign exchange contracts, subject to applicable requirements, the Company is allowed to net settle transactions of the same currency with a single net amount payable by one party to the other.

The potential offset to both assets and liabilities under the right of set-off associated with the Company's foreign currency exchange contracts are immaterial as of December 31, 2022 and 2021.

The derivatives held by the Company are not subject to any credit contingent features negotiated with its counterparties.

The Company is not required to pledge nor is entitled to receive cash collateral related to the above contracts.

The counterparties to these derivatives are large, global financial institutions that the Company believes are creditworthy, and therefore, it does not consider the risk of counterparty nonperformance to be material. 

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

6 unchanged sentences

( 6,864 )  

( 2,749 )  

Total foreign exchange gains (losses), net

( 1,771 )  

( 297 )  

Other expenses

3 unchanged sentences

$ ( 2,038 )  

$ ( 573 )  

Accumulated Other Comprehensive Income (Loss)

4 unchanged sentences

Balances at December 31, 2019

Change in unrealized gains during the period

$ 1,162  

Change in unrealized gains (losses) during the period

( 2,099 )  

Net gains reclassified into income during the period

Income tax provision

( 25 )  

( 564 )  

Income tax benefit (provision)

( 122 )  

Net change during the period

( 2,048 )  

Balances at December 31, 2020

( 1,708 )  

Change in unrealized gains (losses) during the period

Net gains reclassified into income during the period

( 1,854 )  

Net losses reclassified into income during the period

Income tax benefit (provision)

( 870 )  

Net change during the period

( 1,409 )  

Balances at December 31, 2021

( 185 )  

Change in unrealized gains (losses) during the period

Net losses reclassified into income during the period

( 2,462 )  

Net gains reclassified into income during the period

( 1,147 )  

Income tax benefit (provision)

( 58 )  

Net change during the period

( 2,520 )  

( 434 )  

Balances at December 31, 2022

$ ( 2,705 )  

The effects on income before income taxes of amounts reclassified from AOCI to the consolidated statements of operations were as follows:

Year Ended December 31,

(in thousands)

1 unchanged sentence

Other income (expense), net

$ ( 22 )  

Reclassification of AOCI - Cash flow hedges

$ 1,897  

$ ( 1,667 )  

Cost of revenues

( 169 )  

Research and development

( 478 )  

Sales and marketing

( 30 )  

General and administrative

( 73 )  

$ 1,147  

$ ( 933 )  

Property and Equipment, Net

2 unchanged sentences

Computer equipment

$ 173,832  

$ 161,809  

Computer software

25,808  

25,807  

Leasehold improvements

21,009  

21,092  

Scanner appliances

15,696  

16,510  

Furniture, fixtures and equipment

Finance leases - right of use asset

Total property and equipment

242,869  

231,697  

accumulated depreciation and amortization

( 195,441 )  

Property and equipment, net

$ 47,428  

$ 61,854  

December 31, 2022  and 2021 , physical scanner appliances and other computer equipment that are or will be subject to leases by customers had a net carrying value of $ 6.7  million and $5.3  million, respectively, including assets that had not been placed in service of $ 4.0  million and $1.3  million, respectively.

Depreciation and amortization expenses relating to property and equipment were $ 28.5  million, $ 26.1  million and $ 24.9 million for the years ended December 31, 2021 , 2020 and 2019 , respectively. Assets under finance leases were acquired upon completion of lease term and placed within computer equipment as of December 

Depreciation and amortization expenses relating to property and equipment were $ 28.2  million, $ 28.5  million and $ 26.1  million for the years ended December 31, 2022 , 2021 and 2020 , respectively. Assets under finance leases were acquired upon completion of lease term and placed within computer equipment as of December 

Revenue from Contracts with Customers

The Company records deferred revenue when cash payments are received or due in advance of its performance obligations offset by revenue recognized in the period.

Revenues of $ 211.0  million and $ 188.6  million were recognized during the years ended December 31, 2021 and December 31, 2020 , respectively, which amounts were included in the deferred revenue balances as of December 31, 2020 and December 31, 2019 , respectively.

Revenues of $ 254.9  million and $ 211.0  million were recognized during the years ended December 31, 2022 and December 31, 2021 , respectively, which amounts were included in the deferred revenue balances of $ 290.6 million and $ 244.0 million as of December 31, 2021 and December 31, 2020 , respectively.

The Company's payment terms vary by the type and location of its customers.

45 unchanged sentences

 During the same periods, there was no impairment loss related to the deferred costs to obtain contracts.

The following table summarizes the purchase price allocation of business and asset acquisitions for the years ended December 31, 2021 , 

2020  and 

2019 based on estimated fair values of the acquired assets as of the acquisition date:

Acquisition Date

Purchase Consideration

Purchased Intangible Assets

(in thousands)

August 19, 2021

Spell security

July 24, 2020

January 10, 2019

On August 19, 2021, the Company acquired certain developed technology intangible assets of TotalCloud, a privately held company incorporated in India, for a total cash consideration of $ 1.2  million, of which $ 1.1  million was paid on the acquisition date and the remaining $ 0.1  million will be due one year from the acquisition date, subject to potential adjustment from possible indemnity claims.

On October 4, 2022, the Company acquired certain assets of Blue Hexagon Inc., a privately held company incorporated in Delaware, for $ 10  million in cash, of which $ 8.5 million was paid on the acquisition date and the remaining $ 1.5  million will be due eighteen months from the acquisition date, subject to potential adjustment from possible indemnity claims.

In addition, the Company assumed $ 1.4 million deferred revenue. Blue Hexagon's AI/ML-driven network detection enables the Company to leverage its cloud platform with AI/machine learning to uncover behavior patterns including active vulnerability exploitation, identification of advanced network threats, and adaptive risk mitigation across all assets and application.

We accounted for this transaction as an asset acquisition, as substantially all of the fair value is concentrated in developed technology acquired.

The Company incurred $ 0.6 million transaction costs which is included as the cost of acquiring the intangible assets. The Company recognized intangible assets of $ 11.5  million for developed technology and $ 0.4 million for assembled workforce, which will be amortized over five years and two years, respectively. 

TotalCloud's technology strengthens the Company's cloud security solution by allowing customers to build user-defined workflows for custom policies and execute them on-demand for simplified security and compliance.

6 unchanged sentences

two  years, respectively.

On January 10, 2019, the Company acquired 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, which was fully paid to Adya during the fiscal year ended December 31, 2020.

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.

There were no changes in the carrying amount of goodwill for the years ended December 31, 2022  and 

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The carrying values of intangible assets are as follows:

December 31, 2021

December 31, 2022  

(in thousands)

Weighted Average Life (Years)

Weighted Average Remaining Life (Years)

Accumulated Amortization

Net Book Value

Weighted Average Life (Years)  

Weighted Average Remaining Life (Years)  

Accumulated Amortization  

Net Book Value  

Developed technology

$ 40,141  

$ ( 27,860 )  

$ 12,281  

Patent licenses

( 1,221 )  

Non-compete agreements

( 500 )  

Assembled workforce

( 45 )  

Total intangibles subject to amortization

$ 42,387  

$ ( 29,626 )  

$ 12,761  

Intangible assets not subject to amortization

Total intangible assets, net

December 31, 2020

$ 12,801  

December 31, 2021  

(in thousands)

Weighted Average Life (Years)

Weighted Average Remaining Life (Years)

Accumulated Amortization

Net Book Value

Weighted Average Life (Years)  

Weighted Average Remaining Life (Years)  

Accumulated Amortization  

Net Book Value  

Developed technology

$ 28,556  

$ ( 22,463 )  

$ 6,093  

Patent licenses

( 1,121 )  

Non-compete agreements

( 354 )  

Total intangibles subject to amortization

$ 30,443  

$ ( 23,938 )  

Intangible assets not subject to amortization

Total intangible assets, net

$ 6,545  

Intangible assets amortization expenses were $ 5.7  million, $ 6.7  million and $ 6.3  million for the years ended December 31, 2022 , 

2 unchanged sentences

As of December 31, 2022 , the Company expects amortization expense in future periods to be as follows:

(in thousands)

$ 3,085  

Total expected future amortization expense

The Company leases certain offices, computer equipment and its data center facilities under non-cancelable operating leases for varying periods through 2028.

$ 12,761  

The Company leases certain offices, computer equipment and its shared cloud platform facilities under non-cancelable operating leases for varying periods through 2028.

While under the Company's lease agreements the Company has options to extend its certain leases, the Company has not included renewal options in determining the lease terms for calculating its lease liabilities, as these options are not  reasonably certain of being exercised.

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Cash payments included in the measurement of lease liabilities

$ 15,751  

$ 14,646  

$ 13,403  

Lease liabilities arising from obtaining right-of-use assets

$ 8,669  

$ 4,110  

$ 15,837  

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

3 unchanged sentences

December 31, 2022  are as follows:

(in thousands)

$ 14,940  

13,460  

2028 and thereafter

Total minimum lease payments

46,431  

Present value of net minimum lease payments

42,181  

lease liabilities, current

Lease liabilities, noncurrent

$ 29,121  

Commitment and Contingencies

5 unchanged sentences

13,261  

12,597  

11,591  

14,091  

Total purchase commitments

7 unchanged sentences

From time to time the Company may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. The Company records a provision for a liability when it is both probable that a liability has been incurred and the amount can be reasonably estimated.

Legal expenses related to such matters are expensed as incurred.

The Company provides disclosure if it is reasonably possible that a loss has been incurred and a range of loss or possible loss can be reasonably estimated.

1 unchanged sentence

The Company reviews these provisions at least quarterly and adjust these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information.

As of December 31, 2021 , there has not been at least a reasonable possibility that the Company has incurred a material loss from any ongoing legal proceedings, individually or taken together.

As of December 31, 2022 , the Company had accruals of $ 1.5 million in accrued liabilities for a matter, we believe, that has losses that are probable and can be reasonably estimated.

However, litigation is inherently unpredictable and is subject to significant uncertainties, some of which are beyond the Company's control.

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2012 Equity Incentive Plan

The 2012 Equity Incentive Plan ( “2012 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 ISOs, NSOs, stock appreciation rights (“SARs”), restricted stock awards (“RSAs”), RSUs, performance units and performance shares.

The number of shares of common stock available for issuance under the 2012 Plan is subject to an annual increase on January 1 of each year by an amount equal to the least of 3,050 thousand 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.

For the year ended 

December 31, 2021 , 1,963 thousand shares were added to the 2012 Plan.

As of December 31, 2021 , a total of 17,662  thousand shares have been authorized for issuance under the 2012 Plan and 8,091  thousand shares are available for future grants.

The 2012 Equity Incentive Plan (“Previous 2012 Plan”) was adopted and approved in September 2012 and became effective on September 26, 2012.

Under the Previous 2012 Plan, the Company is authorized to grant to eligible participant’s ISOs, NSOs, stock appreciation rights (“SARs”), restricted stock awards (“RSAs”), RSUs, performance units and performance shares.

The number of shares of common stock available for issuance under the Previous 2012 Plan is subject to an annual increase on January 1 of each year by an amount equal to the least of 3,050 thousand 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. For the year ended December 31, 2022, 1,956 thousand shares were added to the Previous 2012 Plan. 

June 8, 2022 

( "Effective Date"), the Company's stockholders approved the Amended and Restated 

2012  Equity Incentive Plan (the "Restated 

2012  Plan"). Under the Restated 

2012  Plan, the Company is authorized to grant to eligible participants incentive stock options (“ISOs”), nonstatutory stock options (“NSOs”), restricted stock, restricted stock units ("RSUs"), stock appreciation rights ("SARs"), performance units and performance shares.

Pursuant to the relevant plan provisions, 

3,072  thousand shares were available for grant under the Restated 

2012  Plan on the Effective Date.

In addition, any outstanding awards or options granted under the Previous 2012  Equity Incentive Plan will be added back to the shares available for grant under the Restated 

2012  Plan if they expire unexercised or are otherwise forfeited after the Effective Date. Any remaining shares of 9,689  thousand available for grant under the Previous 

2012  Plan as of the Effective Date were 

no  longer available for future grants under the Restated 

2012  Plan.

As of December 31, 2022 , 2,351  thousand shares are available for future grants.

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.

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On June 9, 2021, the Company’s stockholders approved the 2021 ESPP.

A total of 600 thousand shares were authorized for issuance to eligible participating employees upon adoption of the ESPP, all of which are available for future purchases as of December 31, 2021.

A total of 600 thousand shares were authorized for issuance to eligible participating employees upon adoption of the ESPP.

The ESPP provides for consecutive 6 -month offering periods beginning on or about August 16 and February 16 of each year.

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Any contributions made prior to each purchase date in the case of withdrawal or termination of employment will be refunded. On each purchase date, eligible participating employees will purchase the shares at a price per share equal to 85 % of the lesser of (i) the fair market value of the Company's stock on the first trading day of the offering period or (ii) the fair market value of the Company's stock on the purchase date (i.e., the last trading day of the offering period).

The first ESPP offering period commenced on August 16, 2021 and will end on February 15, 2022.

As of December 31, 2022, 555 thousand shares are available for future purchase. 

Stock-based Compensation

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The income tax benefit related to the stock-based compensation expenses was 

$ 6.2  million, $ 5.5 million and $ 5.5  million for the years ended December 31, 2021 , 2020 and 2019 , respectively. 

$ 8.3  million, $ 6.2  million and $ 5.3  million for the years ended December 31, 2022 , 2021 and 2020 , respectively. 

As of December 31, 2022 , the Company had unrecognized stock-based compensation expenses of $ 24.5  million, $ 92.2  million and $ 0.3  million related to options, RSUs and ESPP, respectively, which are expected to be recognized over weighted-average periods of 

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On December 

21, 2018, the compensation committee of the Company's board of directors (“Compensation Committee”) granted the equity award for 2019  to the Company’s former chief executive officer, Philippe Courtot (“Mr.

21, 2018, the Compensation and Talent committee of the Company's board of directors (“Compensation Committee”) granted the equity award for 2019  to the Company’s former chief executive officer, Philippe Courtot (“Mr.

Courtot”).

The first portion of the award consists of 56 thousand RSUs that were scheduled to vest in 16 quarterly increments beginning on January 

The second portion of the award consists of a target number of 33 thousand PSUs, which were scheduled to vest at the end of the three -year performance period from January 2019 through December 2021.

The actual number of PSUs eligible to vest range from 0 % to 200 % of the target number, depending on the level of achievement of goals related to revenue growth during the three -year performance period from January 2019 through December 2021 and Adjusted EBITDA margin for the fiscal year of 2021.

The third portion of the award consists of a target number of 33 thousand PSUs, one third of which ( 11 thousand target PSUs) was scheduled to vest at the end of each fiscal year of 2019, 2020 and 2021.

 The actual number of PSUs eligible to vest at each vesting date range from 0 % to 200 % of the target number, depending on the level of achievement of goals related to revenue growth and Adjusted EBITDA margin for each of those years.

The first portion of the award consisted of 56 thousand RSUs that were scheduled to vest in 16 quarterly increments beginning on January 

The second portion of the award consisted of a target number of 33 thousand PSUs, which were scheduled to vest at the end of the three -year performance period from January 2019 through December 2021.

The actual number of PSUs eligible to vest ranged from 0 % to 200 % of the target number, depending on the level of achievement of goals related to revenue growth during the three -year performance period from January 2019 through December 2021 and Adjusted EBITDA margin for the fiscal year of 2021.

The third portion of the award consisted of a target number of 33 thousand PSUs, one third of which ( 11 thousand target PSUs) was scheduled to vest at the end of each fiscal year of 2019, 2020 and 2021.

 The actual number of PSUs eligible to vest at each vesting date ranged from 0 % to 200 % of the target number, depending on the level of achievement of goals related to revenue growth and Adjusted EBITDA margin for each of those years.

On November 2, 2019, the Compensation Committee granted the equity award for 2020 to Mr.

Courtot. The first portion of the award consists of 49 thousand RSUs that were scheduled to vest in 16 quarterly installments beginning on December 1, 2019.

The second portion of the award consists of a target number of 124 thousand PSOs, which were scheduled to vest at the end of the three -year performance period from January 2020 through December 2022.

The actual number of PSOs eligible to vest range from 0 % to 200 % of the target number, depending on the level of achievement of goals related to revenue growth and free cash flow per share growth during the performance period.

Courtot. The first portion of the award consisted of 49 thousand RSUs that were scheduled to vest in 16 quarterly installments beginning on December 1, 2019.

The second portion of the award consisted of a target number of 124 thousand PSOs, which were scheduled to vest at the end of the three -year performance period from January 2020 through December 2022.

The actual number of PSOs eligible to vest ranged from 0 % to 200 % of the target number, depending on the level of achievement of goals related to revenue growth and free cash flow per share growth during the performance period.

On December 10, 2020, the Compensation Committee granted the equity award for 2021  to Mr.

The first portion of the award consists of 69 thousand RSUs that were scheduled to vest in 16 quarterly installments beginning on November 1, 2020. 

The second portion of the award consists of a target number of 224 thousand PSOs, which were scheduled to vest at the end of the three -year performance period from January 2021 through December 2023.

The first portion of the award consisted of 69 thousand RSUs that were scheduled to vest in 16 quarterly installments beginning on November 1, 2020. 

The second portion of the award consisted of a target number of 224 thousand PSOs, which were scheduled to vest at the end of the three -year performance period from January 2021 through December 2023.

The actual number of PSOs eligible to vest ranged from 0 % to 200 % of the target number, depending on the level of achievement of goals related to revenue growth and free cash flow per share growth during the performance period.

The vesting of the above awards was conditioned on Mr. Courtot’s continued service through the vesting dates or, for PSOs and PSUs, the dates that performance is certified in addition to the achievement of performance goals. If Mr. Courtot’s employment was terminated (a) by reason of death or disability or (b) by the Company for reasons other than cause or good reason within 12 months following a change in control, then 100 % of any unvested portions of these awards would 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.

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100% of any unvested portions of the award will vest, with any vesting in connection with terminations due to change in control conditioned upon the effectiveness of a release of claims in favor of the Company.

On October 28, 2021, the Compensation Committee granted to certain executive officers of the Company equity awards consisting of certain RSUs and an aggregate number of 73  thousand PSUs. The target PSUs are scheduled to vest in three equal annual installments over a three -year period from January 2022 through December 2024. 

On October 28, 2021, the Compensation Committee approved to certain executive officers of the Company equity awards consisting of certain RSUs and an aggregate target number of 73  thousand PSUs. The target PSUs are scheduled to vest in three equal annual installments over a three -year period from January 2022 through December 2024. 

Each annual installments at 200 % of the annual target will be considered granted when the performance targets for the corresponding performance year are determined and approved.

The actual number of the PSUs eligible to vest each year range from 0 % to 200 % of the annual target number, depending on the level of achievement of goals related to revenue growth and adjusted EBITDA margin corresponding to that year.

3 unchanged sentences

100%  for past installments along with any target number of unvested PSUs for any remaining installments will vest immediately.

For the years ended December 31, 2021 , 2020 and 2019 , stock-based compensation expenses of $13.3  million, 

$0.2  million and $0.3 million for PSOs, respectively, and $ 5.3  million, $ 2.8  million and $ 0.9  million for PSUs, respectively, were recognized.

On October 27, 2022, the Compensation Committee approved to certain executive officers of the Company equity awards consisting of certain RSUs and an aggregate target number of 86  thousand PSUs. The target PSUs are scheduled to vest in three equal annual installments over a three -year period from January 2023 

through December 2025. 

Each annual installments at 200 % of the annual target will be considered granted when the performance targets for the corresponding performance year is determined and approved.

The vesting and release of the first and second installment is capped at 100% of the target number at the end of the first and second year, respectively, with cumulative achievement over 100%, if any, to be vested and released at the end of the third year, together with the vesting of the third installment.

If any of the executive officers is terminated (a) by reason of death or disability or (b) by the Company for reasons other than cause or good reason within 

12  months following a change in control, any unvested PSUs eligible to vest pursuant to cumulative achievements over 

100%  for past installments along with any target number of unvested PSUs for any remaining installments will vest immediately.

For the years ended December 31, 2022 , 2021 and 2020 , stock-based compensation expenses of $[nil],  

$13.3  million and $0.2  million for PSOs, respectively, and $ 3.9  million, $ 5.3  million and $ 2.8  million for PSUs, respectively, were recognized.

Stock Options

7 unchanged sentences

38 % to 41 %  

38 % to 43 %  

Risk-free interest rate

1 unchanged sentence

0.5 % to 1.2 %  

1.5 % to 2.4 %

0.3 % to 1.4 %  

Dividend yield

30 unchanged sentences

$ 56,062  

( 1 ) Included 348  thousand shares of PSOs.

The total intrinsic value of options exercised for the years ended December 31, 2022 , 2021 and 2020  was $ 39.8  million, $ 42.5  million and $ 77.5  million, respectively.

12 unchanged sentences

$ 117.63  

$ 90.42  

Balance as of December 31, 2022

$ 124.42  

$ 104.78  

Outstanding and expected to vest - December 31, 2022

$ 122.55  

( 1 ) Included 34  thousand shares of PSUs granted to certain executive officers in 2021 and 11 thousand additional shares of PSUs vested as a result of the Company achieving the corresponding level of performance goals for 2020.

( 2 ) Included 11 thousand additional shares of PSUs vested as a result of the Company achieving the corresponding level of performance goals for 2020.

( 3 ) Included 34  thousand shares of PSUs granted to certain executive officers in 2021.

The aggregate fair value of RSUs vested for the years ended December 31, 2021 , 2020 and 2019 was $ 59.5  million, $ 46.5  million and $ 37.9 million, respectively. 

( 1 ) Included 68  thousand shares of PSUs granted to certain executive officers in 2021 for performance year 2022 at 200 % vest level.

( 2 ) Included 58  thousand shares of PSUs grant ed to certain executive officers in 2022 and 49  thousand shares of PSU granted in 2021 as a result of defining the level of performance goals for performance year 2023.

( 3 ) Included 175  thousand shares of PSUs granted to certain executive officers in 2022 and 2021.

The aggregate fair value of RSUs vested for the years ended December 31, 2022 , 2021 and 2020 was $ 43.9  million, $ 59.5  million and $ 46.5  million, respectively. 

Employee Stock Purchase Plan

The weighted-average grant date fair value of the Company’s ESPP for the year ended December 31, 2021  was $ 26.88 using the Black-Scholes-Merton option-pricing model based on the following assumptions:

The weighted-average grant date fair value of the Company’s ESPP for the year ended December 31, 2022  was $ 39.14  using the Black-Scholes-Merton option-pricing model based on the following assumptions:

Year Ended December 31,

Expected term (in years)

41.1 % to 50.1 %  

Risk-free interest rate

0.7 % to 3.1 %  

Dividend yield

29 unchanged sentences

For the years ended December 31, 2022 , 2021 and 2020 , the Company repurch ased 2.5  

1.1  million shares, 1.3  million shares and 1.0  million shares of its common stock for $ 130.0 million, $ 126.7 million and $ 86.4 million, respectively .

million shares, 1.1  million shares and 1.3  million shares of its common stock for $ 317.3 million, $ 130.0  million and $ 126.7  million, respectively .

As of December 31, 2022 , $ 154.5  million  remained available for share repurchases pursuant to the Company's share repurchase program.

February 9, 2023 ,  the Company announced that its Board of Directors authorized an additional $ 100.0  million under the share repurchase program, increasing the total amount of authorized repurchase to $ 1.0  billion.

Employee Benefits Plan

4 unchanged sentences

2021  and 

2019 , the Company made contributions to the 401 (k) Plan of $ 2.4  million, $ 1.3 million and $ 1.3  million, respectively.

2020 , the Company made contributions to the 401 (k) Plan of $ 3.5  million, $ 2.4  million and $ 1.3  million, respectively.

The Company contributes to a Provident Fund Plan for its employees in India, which is a defined contribution plan set up in accordance with local labor and tax laws.

9 unchanged sentences

$ 94,099  

11,687  

Income before income taxes

7 unchanged sentences

$ 20,135  

$ 1,944  

Current income tax provision

4 unchanged sentences

( 3,055 )  

( 1,722 )  

( 301 )  

( 659 )  

Deferred income tax provision (benefit)

( 20,453 )  

( 9,723 )  

Income tax provision

18 unchanged sentences

( 0.2 )  

( 0.1 )  

Income tax provision

7 unchanged sentences

$ 10,743  

Foreign tax credit carryforwards

Accrued liabilities

4 unchanged sentences

Intangible assets

12,377  

Stock-based compensation

Capitalized R&D

30,234  

Gross deferred tax assets

3 unchanged sentences

( 12,476 )  

Net deferred tax assets

Total deferred tax assets

59,176  

18 unchanged sentences

Accordingly, the Company has recorded a valuation allowance of $ 12.5  million and $ 11.4  million against such deferred tax assets as of December 31, 2022 and 2021 , respectively.

The increase of $ 0.2 million in valuation allowance was mainly associated with the California research and development credit generated during the year ended December 31, 2021  that will not likely be realized in the foreseeable future.

December 31, 2021 , the Company had federal net operating loss carryforwards of approximately $ 0.7  million available to reduce federal taxable income. The state net operating loss carryforwards are 

not material.

The federal net operating losses begin to expire in 2022.

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.

The increase of $ 1.1  million in valuation allowance was mainly associated with the California research and development credit generated during the year ended December 31, 2022  and unrealized loss on available for sale securities that will not likely be realized in the foreseeable future.

As of December 31, 2022 , the Company had $ 16.2  million of state research and development credit carryforwards.

13 unchanged sentences

Lapse of statute of limitations

( 185 )  

Total unrecognized tax benefits

8 unchanged sentences

The Company’s subsidiaries file tax returns in various foreign jurisdictions.

The tax years 2001 through 2020  remain open to examination by the major taxing jurisdictions in which the Company is subject to tax.

The tax years 2001  through 2021  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.

36 unchanged sentences

12,029  

15,658  

Total Long-lived Assets

5 unchanged sentences

(in thousands, except per share data)

$ 107,992  

$ 70,960  

$ 91,572  

Basic weighted average shares

38,453  

39,030  

39,167  

Effect of potentially dilutive shares:

3 unchanged sentences

Diluted weighted average shares

$ 39,344  

$ 40,118  

$ 40,740  

Net income per share:

$ 2.81  

$ 1.82  

$ 2.34  

$ 2.74  

$ 1.77  

$ 2.25  

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

3 unchanged sentences

Restricted stock units

Employee stock purchase plan

Total anti-dilutive shares

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data