Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2017	Feb. 23, 2018	Jun. 30, 2017
Document and Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	FY
Trading Symbol	SREV
Entity Registrant Name	SERVICESOURCE INTERNATIONAL, INC.
Entity Central Index Key	0001310114
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		90,425,232
Entity Public Float			$ 291,566,216

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 51,389	$ 47,692
Short-term investments	137,181	137,881
Accounts receivable, net	56,516	63,289
Prepaid expenses and other	6,112	7,607
Total current assets	251,198	256,469
Property and equipment, net	34,119	38,180
Deferred income taxes, net of current portion	70	64
Goodwill and intangible assets, net	6,419	7,932
Other assets	3,566	3,445
Total assets	295,372	306,090
Current liabilities:
Accounts payable	4,574	1,916
Accrued taxes	651	1,388
Accrued compensation and benefits	19,257	21,579
Convertible notes, net	144,167	0
Deferred revenue	1,282	4,152
Accrued expenses	6,625	5,891
Other current liabilities	2,104	2,958
Total current liabilities	178,660	37,884
Convertible notes, net	0	134,775
Other long-term liabilities	4,603	6,495
Total liabilities	183,263	179,154
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock, $0.001 par value; 20,000 shares authorized and none issued and outstanding	0	0
Common stock; $0.0001 par value; 1,000,000 shares authorized; 90,380 shares issued and 90,259 shares outstanding as of December 31, 2017; 88,304 shares issued and 88,183 shares outstanding as of December 31, 2016	8	8
Treasury stock	(441)	(441)
Additional paid-in capital	359,347	344,521
Accumulated deficit	(246,207)	(216,361)
Accumulated other comprehensive loss	(598)	(791)
Total stockholders’ equity	112,109	126,936
Total liabilities and stockholders’ equity	$ 295,372	$ 306,090

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	20,000,000	20,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	1,000,000,000	1,000,000,000
Common stock, shares issued (in shares)	90,380,000	88,304,000
Common stock, shares outstanding (in shares)	90,259,000	88,183,000

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Income Statement [Abstract]
Net revenue	$ 239,127	$ 252,887	$ 252,203
Cost of revenue	163,709	165,069	171,369
Gross profit	75,418	87,818	80,834
Operating expenses:
Sales and marketing	33,001	41,972	44,086
Research and development	5,729	8,344	16,480
General and administrative	53,087	52,995	46,299
Restructuring and other	7,308	0	3,662
Total operating expenses	99,125	103,311	110,527
Loss from operations	(23,707)	(15,493)	(29,693)
Interest expense and other, net	(9,886)	(8,704)	(9,316)
Impairment loss on cost basis equity investment	0	(4,500)	0
Gain on sale of cost basis equity investment	2,100	0	0
Loss before income taxes	(31,493)	(28,697)	(39,009)
Provision for income tax benefit (expense)	1,647	(3,429)	(1,584)
Net loss	$ (29,846)	$ (32,126)	$ (40,593)
Net loss per common share:
Basic and diluted (in dollars per share)	$ (0.33)	$ (0.37)	$ (0.48)
Weighted-average common shares outstanding:
Basic and diluted (in shares)	89,234	86,318	85,417

Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Statement of Comprehensive Income [Abstract]
Net loss	$ (29,846)	$ (32,126)	$ (40,593)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	710	(1,236)	12
Unrealized gain (loss) on short-term investments	(517)	18	(698)
Other comprehensive income (loss), net of tax	193	(1,218)	(686)
Comprehensive loss, net of tax	$ (29,653)	$ (33,344)	$ (41,279)

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Treasury Shares/Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Income (Loss)
Beginning Balance (in shares) at Dec. 31, 2014		83,928,000	(121,000)
Beginning Balance at Dec. 31, 2014	$ 169,349	$ 8	$ (441)	$ 312,017	$ (143,348)	$ 1,113
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Proceeds from the exercise of stock options and employee stock purchase plan (in shares)		1,505,000
Proceeds from the exercise of stock options and employee stock purchase plan	5,761			5,761
Vested restricted stock units converted to shares (in shares)		1,755,000
Net cash paid for payroll taxes on restricted stock unit releases	(974)			(974)
Share repurchases (in shares)		(295,000)
Share repurchases	(1,212)			(1,212)
Stock-based compensation	13,751			13,751
Acceleration of stock-based compensation expense due to restructuring	2,579			2,579
Net loss	(40,593)				(40,593)
Other comprehensive income	(686)					(686)
Ending Balance (in shares) at Dec. 31, 2015		86,893,000	(121,000)
Ending Balance at Dec. 31, 2015	147,975	$ 8	$ (441)	331,922	(183,941)	427
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative effect of stock compensation standard adoption				294	(294)
Proceeds from the exercise of stock options and employee stock purchase plan (in shares)		2,434,000
Proceeds from the exercise of stock options and employee stock purchase plan	10,866			10,866
Vested restricted stock units converted to shares (in shares)		1,240,000
Net cash paid for payroll taxes on restricted stock unit releases	$ (947)			(947)
Share repurchases (in shares)	(2,300,000)	(2,263,000)
Share repurchases	$ (8,921)			(8,921)
Stock-based compensation	11,307			11,307
Net loss	(32,126)				(32,126)
Other comprehensive income	(1,218)					(1,218)
Ending Balance (in shares) at Dec. 31, 2016		88,304,000	(121,000)
Ending Balance at Dec. 31, 2016	126,936	$ 8	$ (441)	344,521	(216,361)	(791)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Proceeds from the exercise of stock options and employee stock purchase plan (in shares)		321,000
Proceeds from the exercise of stock options and employee stock purchase plan	$ 1,062			1,062
Vested restricted stock units converted to shares (in shares)		1,755,000
Net cash paid for payroll taxes on restricted stock unit releases				(775)
Share repurchases (in shares)	0
Stock-based compensation	$ 14,187			14,187
Acceleration of stock-based compensation expense due to restructuring	352			352
Net loss	(29,846)				(29,846)
Other comprehensive income	193					193
Ending Balance (in shares) at Dec. 31, 2017		90,380,000	(121,000)
Ending Balance at Dec. 31, 2017	$ 112,109	$ 8	$ (441)	$ 359,347	$ (246,207)	$ (598)

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Cash flows from operating activities:
Net loss	$ (29,846)	$ (32,126)	$ (40,593)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	22,588	16,052	13,736
Amortization of debt discount and issuance costs	9,392	8,724	8,048
Amortization of premium on short-term investments	(12)	1,091	(101)
Deferred income taxes	(1,999)	1,924	969
Stock-based compensation	13,683	10,752	13,387
Restructuring and other	3,063	0	2,579
Impairment loss on cost basis equity investment	0	4,500	0
Gain on sale of cost basis equity investment	(2,100)	0	0
Other	184	0	0
Changes in operating assets and liabilities:
Accounts receivable, net	9,060	(7,156)	12,002
Deferred revenue	(2,872)	(1,589)	(1,204)
Prepaid expenses and other	1,670	(673)	(1,825)
Accounts payable	2,487	872	(1,562)
Accrued taxes	(762)	269	(539)
Accrued compensation and benefits	(2,940)	(119)	2,706
Accrued expenses	(972)	1,182	(3,940)
Other liabilities	(827)	749	(66)
Net cash provided by operating activities	19,797	4,452	3,597
Cash flows from investing activities:
Acquisition of property and equipment	(17,110)	(26,337)	(11,975)
Restricted cash	0	0	(1,244)
Proceeds from sale of cost basis equity investment	2,100	0	0
Purchases of short-term investments	(56,626)	(102,130)	(95,421)
Sales of short-term investments	53,315	98,028	82,351
Maturities of short-term investments	3,506	1,525	1,095
Net cash used in investing activities	(14,815)	(28,914)	(25,194)
Cash flows from financing activities:
Repayment on capital lease obligations	(71)	(131)	(170)
Repurchase of common stock	0	(8,921)	(1,212)
Proceeds from issuance of common stock	1,062	10,866	5,703
Tax benefit (deficit) from stock-based compensation	(775)	(877)	(974)
Net cash provided by financing activities	216	937	3,347
Net increase (decrease) in cash and cash equivalents	5,198	(23,525)	(18,250)
Effect of exchange rate changes on cash and cash equivalents	(1,501)	(1,117)	202
Cash and cash equivalents, beginning of period	47,692	72,334	90,382
Cash and cash equivalents, end of period	51,389	47,692	72,334
Supplemental disclosures of cash flow information
Cash paid for interest	2,255	2,260	2,286
Income taxes paid, net	1,400	1,544	854
Supplemental disclosure of non-cash activities:
Acquisition of property and equipment accrued in accounts payable and accrued expenses	$ 108	$ 98	$ 111

The Company	12 Months Ended
The Company	Dec. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
The Company	The Company ServiceSource International, Inc. is a global leader in outsourced, performance-based customer success and revenue growth solutions. Through our people, processes and technology, we grow and retain revenue on behalf of our clients-some of the world’s leading business-to-business companies - in more than 45 languages. Our solutions help our clients strengthen their customer relationships, drive improved customer adoption, expansion and retention and minimize churn. Our technology platform and best-practice business processes combined with our highly-trained, client-focused revenue delivery professionals and data from nearly 20 years of operating experience enable us to provide our clients greater value for our customer success services than attained by our clients' in-house customer success teams. “ServiceSource,” “the Company,” “we,” “us,” or “our”, as used herein, refer to ServiceSource International, Inc. and its subsidiaries, unless the context indicates otherwise. The Company’s pay-for-performance model allows its clients to pay for the services through either flat-rate or variable commissions based on the revenue generated by the Company on their behalf. Fixed-fee arrangements are typically used in quick deployments to address discrete target areas of our clients’ needs. The Company also earns revenue through its professional services teams, who assist clients with data optimization. The Company’s corporate headquarters is located in Denver, Colorado. The Company has additional U.S. offices in California and Tennessee, and international offices in Bulgaria, Ireland, Japan, Malaysia, Philippines, Singapore and the United Kingdom.

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2017

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Basis of Consolidation

The accompanying Consolidated Financial Statements include the accounts of ServiceSource and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amount of net revenue and expenses during the reporting period.

The Company’s significant accounting judgments and estimates include, but are not limited to: revenue recognition, the valuation and recognition of stock-based compensation, the recognition and measurement of current and deferred income tax assets and liabilities and uncertain tax positions, and the provision for bad debts.

The Company bases its estimates and judgments on historical experience and on various assumptions that it believes are reasonable under the circumstances. However, future events are subject to change and estimates and judgments routinely require adjustment. Actual results may differ from these estimates, and these differences may be material.

Significant Risks and Uncertainties

The Company is subject to certain risks and uncertainties that could have a material and adverse effect on its future financial position or results of operations. The Company’s clients are primarily high technology companies and a downturn in these industries, changes in clients’ sales strategies, or widespread shift away from end customers purchasing maintenance and support contracts could have an adverse impact on the Company’s consolidated results of operations and financial condition.

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash, cash equivalents, short-term investments, accounts receivable and the Note Hedges. See "Note 7 – Debt" for additional information. The Company is also exposed to a variety of market risks, including the effects of changes in foreign currency exchange rates and interest rates.

Cash is maintained in demand deposit accounts at U.S., European and Asian financial institutions that management believes are credit worthy. Deposits in these institutions may exceed the amount of insurance provided on these deposits.

Accounts receivable are derived from services performed for clients located primarily in the U.S., Europe and Asia. The Company attempts to mitigate the credit risk in its trade receivables through its ongoing credit evaluation process and historical collection experience. The Company maintains an allowance for doubtful accounts based upon the expected collectability of its accounts receivable, which takes into consideration an analysis of historical bad debts and other available information.

Two customers represented 17%, and 15% of accounts receivable as of December 31, 2017. Three customers represented 15%, 14% and 12%, of accounts receivable as of December 31, 2016.

Fair Value of Financial Instruments

The Company accounts for certain assets and liabilities at fair value. 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. The fair value guidance establishes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. An asset or liability’s level is based upon the lowest level of input that is significant to the fair value measurement. The guidance requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

Level 1: Quoted prices in active markets for identical assets or liabilities;

Level 2: Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable;

Level 3: Inputs that are generally unobservable and typically reflect management's estimates or assumptions that market participants would use in pricing the asset or liability.

The carrying amount of financial instruments including cash, restricted cash recorded in other assets, accounts receivable, accounts payable, accrued taxes, accrued expenses and other accrued liabilities approximate carrying value due to their short-term maturities. See "Note 4 – Fair value of Financial Instruments" for additional information on the convertible note.

Foreign Currency Translation and Remeasurement

Assets and liabilities of non-U.S. subsidiaries that operate in a local currency environment, where that local currency is the functional currency, are translated to U.S. dollars at exchange rates at the balance sheet date. Net revenue and expenses are translated at monthly average exchange rates. The Company accumulates net translation adjustments in equity as a component of accumulated other comprehensive income (loss). For non-U.S. subsidiaries whose functional currency is the U.S. dollar, transactions that are denominated in foreign currencies have been remeasured in U.S. dollars, and any resulting gains and losses are reported in "Interest expense and other, net" in the Consolidated Statements of Operations. For the years ended December 31, 2017, 2016, and 2015, we recorded foreign currency transaction (gains) losses of approximately $1.1 million, $0.5 million and ($0.9) million, respectively.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are stated at their carrying values net of an allowance for doubtful accounts. The Company evaluates the ongoing collectability of its accounts receivable based on a number of factors such as the credit quality of its clients, the age of accounts receivable balances, collections experience, current economic conditions and other factors that may affect a client’s ability to pay. In circumstances where the Company is aware of a specific client’s inability to meet its financial obligations to the Company, a specific allowance for doubtful accounts is estimated and recorded, which reduces the recognized receivable to the estimated amount that management believes will ultimately be collected. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered.

The following table presents changes in the allowance for doubtful accounts (in thousands):



	For the Year Ended December 31,
	2017		2016			2015
Balance, beginning of year	$	—	$	137		$	37
Charged to expense	—		392			137
Recoveries	—		(529		)	(37		)
Balance, end of year	$	—	$	—		$	137

Property and Equipment

The Company records property and equipment at cost, less accumulated depreciation and amortization. Depreciation is recorded using the straight-line method over the estimated useful lives for owned assets as follows: seven years for office furniture and equipment, three to five years for network equipment, two to three years for computer hardware and three to seven years for software. Leasehold improvements are amortized on a straight-line basis over the lesser of the related lease term or the estimated useful life of the related assets, ranging from three to fifteen years.

When assets are disposed, the cost and related accumulated depreciation and amortization are removed from their respective accounts and any gain or loss on sale or disposal is reported in "General and administrative expense" in the Consolidated Statement of Operations.

Lease Asset Retirement Obligations

The fair value of a liability for an asset retirement obligation (“ARO”) is recognized in the period in which it is incurred. The Company’s AROs associated with leasehold improvements at our international office locations, which, at the end of a lease, are contractually obligated to be removed. Our AROs were approximately $1.0 million and $1.2 million as of December 31, 2017 and 2016, respectively. Accretion expense was insignificant for the years ended December 31, 2017, 2016 and 2015.

Capitalized Internal-Use Software

Expenditures related to software developed or obtained for internal use are capitalized and amortized over a period of two to five years on a straight-line basis. The Company capitalizes direct external costs associated with developing or obtaining internal-use software. In addition, the Company also capitalizes certain payroll and payroll-related costs for employees or professional fees for consultants who are directly associated with the development of such applications. Costs associated with preliminary project stage activities, training, maintenance and all other post-implementation stage activities are expensed as incurred and are recorded in "Research and development" in the Consolidated Statements of Operations. Capitalized costs related to internal-use 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.

Goodwill

We evaluate goodwill and indefinite-lived intangible assets for possible impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company does not have intangible assets with indefinite useful lives other than goodwill.

To assess if goodwill is impaired a qualitative assessment, referred to as the simplified method, is first performed to determine whether further quantitative impairment testing is necessary. This qualitative analysis evaluates factors including, but not limited to, macro-economic conditions such as deterioration in the entity's operating environment or industry or market considerations; entity-specific events such as increasing costs, declining financial performance, or loss of key personnel; or other events such as an expectation that a reporting unit will be sold or a sustained decrease in the stock price on either an absolute basis or relative to peers. If, as a result of the qualitative assessment, the Company considers it more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, then a two-step quantitative impairment test is performed. The first step requires comparing the fair value of the reporting unit to its net book value, including goodwill. A potential impairment exists if the fair value of the reporting unit is lower than its net book value. The second step of the process, which is performed only if a potential impairment exists, involves determining the difference between the fair value of the reporting unit's net assets other than goodwill and the fair value of the reporting unit. If this difference is less than the net book value of goodwill, an impairment is recorded.

Application of the goodwill impairment test requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value of each reporting unit. Significant judgments are required to estimate the fair value of reporting units which includes estimating future cash flows and determining appropriate discount rates, growth rates and other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value for each reporting unit which could trigger impairment.

If a two-step quantitative impairment test is required, the fair value of each reporting unit is determined based upon the income approach. Under the income approach, the Company estimates the fair value of the reporting unit based upon the present value of estimated future cash flows. Cash flow projections are determined by management to be commensurate with the risk inherent in our current business model. Key assumptions used to estimate the fair value of the reporting unit includes the discount rate, compounded annual revenue growth rates, operating expense assumptions and terminal value capitalization rate. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the reporting unit's ability to execute on the projected cash flows. The discount rate and terminal value capitalization rate are derived from the use of market data which are Level 3 inputs within the fair value hierarchy.

No impairment was recorded for the years ended December 31, 2017, 2016, and 2015.

The carrying value of goodwill for the years ended December 31, 2017 and 2016 was $6.3 million.

Impairment of Long-Lived Assets Including Intangible Assets

The Company evaluates the recoverability of its long-lived assets whenever events or changes in circumstances indicate the carrying amount of the long-lived asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If the long-lived asset is impaired, an impairment is recognized for the amount by which the carrying value of the asset exceeds its fair value. No impairment was recorded for the years ended December 31, 2017, 2016, and 2015.

Acquired intangible assets are amortized over their useful lives on a straight-line basis which represents the pattern in which the Company derives benefit from the asset.

Cost Basis Equity Investment

In 2013, the Company made an equity investment in a private company for $4.5 million, which represented less than 5% of the outstanding equity of that company. Based on unfavorable growth trends and declining financial performance of this private company, the Company determined that its investment was fully impaired and recorded a $4.5 million impairment during the year ended December 31, 2016. The impairment is included in "Impairment loss on cost basis equity investment" in the Consolidated Statement of Operations. During 2017, the Company sold this investment for $2.1 million in cash and recorded the proceeds as a gain in "Gain on sale of cost basis equity investment" in our Consolidated Statements of Operations.

Operating Leases

The Company’s operating lease agreements for office facilities include provisions for certain rent holidays, tenant incentives and escalations in the base price of the rent payment. The Company records rent holidays and rent escalations on a straight-line basis over the lease term and records the difference between expense and cash payments as deferred rent. Tenant incentives are recorded as deferred rent and amortized on a straight-line basis over the lease term. Deferred rent is included in "Other current liabilities and Other long-term liabilities" in the Consolidated Balance Sheets.

Deferred Debt Issuance Costs

The Company defers debt issuance costs, which consist of the debt discount on the convertible notes and issuances costs related to the Notes. Discounts and debt issuance costs are included in the carrying value of the convertible notes and amortized to “Interest expense and other, net” in our Consolidated Statement of Operations over the remaining life of the convertible notes. See "Note 7 - Debt" for additional information.

Comprehensive Loss

We report comprehensive loss in our Consolidated Statements of Comprehensive Loss. Amounts reported in “Accumulated other comprehensive loss” consist of foreign currency translation adjustments from those subsidiaries not using the U.S. dollar as their functional currency and unrealized gains and losses on available-for-sale securities.

Revenue Recognition

The Company’s revenue is derived primarily from recurring revenue management. Other revenues include subscriptions to the Company’s cloud applications and professional services.

Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured from clients and no significant obligations remain unfulfilled by the Company.

Recurring Revenue Management

Revenue from recurring revenue management consists of fees earned from the sales of services contracts on behalf of the Company’s customers, which are referred to as clients, or assisting in their sales process. The Company’s contract obligations include administering and managing the sales and/or renewal processes for client contracts; providing adequately trained staff; reporting; and holding periodic business reviews with clients. Client obligations include providing a detailed listing of sales prospects, access to their databases or systems and sales or marketing materials. Fees are generally based on a fixed percentage of the overall sales value associated with the service contracts. Some client contracts include performance-based fees determined by the achievement of specified performance metrics. Recurring revenue management contracts entitle the Company to additional fees and adjustments which are invoked in various circumstances including a client’s failure to provide the Company with a specified minimum value of sales prospects, untimely delivery of client sales prospect data or other obligations inhibiting the Company’s ability to perform its obligations. In addition, many client contracts contain early termination fees.

Recurring revenue management services are deemed delivered when clients accept purchased orders from their sales prospects (the end customer) and no significant post-delivery obligations remain for the Company. Fees from recurring revenue management services are recognized on a net basis since the Company acts as an agent on behalf of its clients. The Company does not provide the services being renewed by the end customers, nor does it determine pricing, terms or scope of services to the end customers. Performance incentive fees and early termination fees are recorded in the period when either the performance criteria have been met or a triggering event has occurred.

Subscriptions

Subscription revenue is comprised of subscriptions fees to access the Company’s cloud based applications. Subscription revenue is recognized ratably over the contract term, generally over a period of one to three years, commencing when the cloud applications are made available. The Company's subscription service arrangements are generally non-cancelable and do not contain refund-type provisions.

Professional Services

Professional services revenue is generated from implementation services. Professional services are deemed delivered upon the successful completion of implementation projects or when project milestones have been achieved and accepted by the client.

Multiple Element Arrangements

The Company enters into multiple element arrangements when clients utilize a combination of recurring revenue management services, subscriptions and professional services. Deliverables are separated at the inception of the arrangement if each deliverable has stand-alone value to the client. The Company believes that it has stand-alone value for professional services. Arrangement consideration is allocated based on the relative best selling prices of each deliverable. However, most fees earned from recurring revenue management services are contingent in nature as the fees earned by the Company are based on performance against the specific terms of each contract. Therefore, contingent fees from recurring revenue management services are excluded from the allocation of relative best selling prices at inception of multiple element arrangements.

Selling prices for each deliverable is determined based on the selling price hierarchy of vendor-specific objective evidence ("VSOE"), third-party evidence ("TPE") and best estimated selling price ("BESP"). Generally, the Company has not been able to establish VSOE for its deliverables as the items have not been sold separately. The Company has not been able to reliably determine the stand-alone selling prices of competitors’ products and services, and therefore cannot rely on TPE for its deliverables. Therefore, the Company utilizes BESP to determine the selling prices of its deliverables. The objective of BESP is to determine the price at which the Company would price a product or service if it were sold on a stand-alone basis. BESP is generally used for offerings that are not typically sold separately or for new offerings. BESP is determined by considering multiple factors including, but not limited to, pricing practices, market conditions, competitive landscape, internal costs, geographies and gross margin. The determination of BESP is made through consultation with and formal approval with management, taking into consideration the Company’s marketing strategy. As these marketing strategies evolve, the Company may modify its pricing practices in the future, which could result in changes to selling prices.

Once arrangement consideration is allocated to the various deliverables in a multiple element arrangement, revenue is recognized when all other revenue recognition criteria has been achieved.

Advertising Costs

Advertising costs are expensed as incurred and are reported in "Sales and marketing expenses" in the Consolidated Statements of Operations. Advertising expense for the years ended December 31, 2017, 2016 and 2015 was approximately $0.2 million, $0.1 million, and $0.1 million, respectively.

Income Taxes

The Company accounts for income taxes using an asset and liability method, which requires the recognition of taxes payable or refundable for the current year and deferred tax assets and liabilities for the expected future tax consequences of temporary differences that currently exist between the tax basis and the financial reporting basis of our taxable subsidiaries’ assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in operations in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are not expected to be realized.

The Company files U.S. federal and state and foreign income tax returns in jurisdictions with varying statutes of limitations. In the normal course of business the Company is subject to examination by taxing authorities throughout the world. These audits include questioning the timing and amount of deductions, the allocation of income among various tax jurisdictions and compliance with federal, state, local and foreign tax laws. The Company accounts for unrecognized tax benefits using a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. The Company establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. The Company records an income tax liability, if any, for the difference between the benefit recognized and measured and the tax position taken or expected to be taken on our tax returns. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in the income tax provision.

Stock-Based Compensation

The Company issues share-based awards to employees and directors. Awards are measured at fair value on the grant date and amortized to compensation expense over the service period during which the awards fully vest. Such expense is included in in our Consolidated Statements of Operations, see "Note 9 - Share Repurchase Program and Stock-Based Compensation" for additional information. Forfeitures are recognized as incurred. Options issued are valued using the Black-Scholes option-pricing model, which relies on assumptions we make related to the expected term of the options, volatility, dividend yield and risk-free interest rate.

Net Income (Loss) Per Common Share

Basic net income (loss) per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, shares to be purchased under the Company’s employee stock purchase plan and unvested restricted stock units (“RSUs”). The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s common stock can result in a greater dilutive effect from potentially dilutive securities.

Potential shares of common stock that are not included in the determination of diluted net loss per share because they are anti-dilutive consist of stock options, non-vested restricted stock and shares to be purchased under our Employee Stock Purchase Plan. The Company excluded from diluted earnings per share the weighted-average common share equivalents related to 7.1 million, 7.7 million and 9.5 million shares for the years ended December 31, 2017, 2016 and 2015, respectively, because their effect would be anti-dilutive.

New Accounting Standards Issued but not yet Adopted

Revenue Recognition

In May 2014, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”) which amended the existing FASB Accounting Standards Codification. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. The standard also specifies that the incremental costs of obtaining a contract with a customer and the costs of fulfilling a contract with a customer (if those costs are not within the scope of another Topic or Sub-Topic) would be deferred and recognized over the appropriate period of contract performance if they are expected to be recovered. In addition, the standard requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective method, also known as the cumulative catch-up transition method).

The Company will adopt the standard effective January 1, 2018 utilizing the modified retrospective method. The Company has completed its analysis of this standard and the adoption of this guidance will not have a material impact on our Consolidated Financial Statements or our internal controls over financial reporting.

Leases

In February 2016, the FASB issued an ASU that modifies existing accounting standards for lease accounting. The new standard requires a lessee to record a lease asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. Leases in which the Company is the lessee will generally be accounted for as operating leases and we will record a lease asset and a lease liability. The guidance is effective for fiscal years beginning after December 15, 2018, with early adoption permitted for fiscal years beginning after December 15, 2018. The standard requires a modified retrospective transition approach for all capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with an option to use certain transition relief. The Company expects to adopt this standard effective January 1, 2019, and is in the process of assessing the impact of this standard.

Restricted Cash

In November 2016, the FASB issued an ASU that requires companies to combine restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning and end of period total amounts on the statement of cash flows. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The Company will adopt the standard effective January 1, 2018 utilizing the retrospective transition method. The adoption of this guidance will not have a significant impact on our Consolidated Financial Statements.

Comprehensive Income

In February 2018, the FASB issued an ASU that allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years with early adoption permitted. The guidance should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. We are currently evaluating this guidance.

Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Cash, Cash Equivalents and Short-Term Investments

Cash equivalents consist of highly liquid fixed-income investments with original maturities of three months or less at the time of purchase. Short-term investments consist of readily marketable securities with a remaining maturity of more than three months from time of purchase. The Company classifies its cash equivalents and short-term investments as “available for sale,” as these investments are free of trading restrictions and are available for use in the Company's daily operations. These marketable securities are carried at fair value, with the unrealized gains and losses, net of tax, reported as accumulated other comprehensive loss and included as a separate component of stockholders’ equity. Gains and losses are recognized when realized. When the Company determines that an other-than-temporary decline in fair value occurred, the amount of the decline that is related to a credit loss is recognized in earnings. Gains and losses are determined using the specific identification method. The Company’s realized gains and losses in the years ended December 31, 2017 and 2016 were insignificant. There were no transfers between levels during the years ended December 31, 2017 and 2016.

The following tables present the Company's cash and cash equivalents and short-term investments by significant investment category (in thousands) measured at fair value on a recurring basis:

For the Year Ended December 31, 2017:



	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
Level 1:
Cash	$	48,712	$	—	$	—		$	48,712
Cash equivalents:
Money market mutual funds	2,677		—		—			2,677
Total cash and cash equivalents	51,389		—		—			51,389
Level 2:
Short-term investments:
Corporate bonds	55,763		1		(346		)	55,418
U.S. agency securities	34,640		—		(410		)	34,230
Asset-backed securities	21,739		—		(127		)	21,612
U.S. Treasury securities	26,292		—		(371		)	25,921
Total short-term investments	138,434		1		(1,254		)	137,181
Cash, cash equivalents and short-term investments	$	189,823	$	1	$	(1,254	)	$	188,570

For the Year Ended December 31, 2016:



	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
Level 1:
Cash	$	47,060	$	—	$	—		$	47,060
Cash equivalents:
Money market mutual funds	632		—		—			632
Total cash and cash equivalents	47,692		—		—			47,692
Level 2:
Short-term investments:
Corporate bonds	54,827		19		(188		)	54,658
U.S. agency securities	34,658		—		(281		)	34,377
Asset-backed securities	26,431		25		(23		)	26,433
U.S. Treasury securities	22,701		—		(288		)	22,413
Total short-term investments	138,617		44		(780		)	137,881
Cash, cash equivalents and short-term investments	$	186,309	$	44	$	(780	)	$	185,573

The following table presents the amortized cost and estimated fair value of money market mutual funds and short-term fixed income securities classified as short-term investments based on stated maturities as of December 31, 2017 (in thousands):



	Amortized Cost		Estimated Fair Value
Less than 1 year	$	14,315	$	14,295
Due in 1 to 3 years	126,796		125,563
Total	$	141,111	$	139,858

The Company considers the declines in market value of its marketable securities investment portfolio to be temporary in nature. The Company typically invests in highly-rated securities, and its investment policy generally limits the amount of credit exposure to any one issuer. The policy generally requires investments to be investment grade, with the primary objective of minimizing the potential risk of principal loss. Fair values were determined for each individual security in the investment portfolio. When evaluating an investment for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer and any changes thereto, changes in market interest rates and the Company’s intent to sell, or whether it is more likely than not it will be required to sell the investment before recovery of the investment’s cost basis. As of December 31, 2017, the Company does not consider any of its investments to be other-than-temporarily impaired.

The Company had restricted cash of $1.2 million in "Other assets" in the Consolidated Balance Sheets as of December 31, 2017 and 2016. The restricted cash is classified within Level 1.

The convertible notes issued by the Company in August 2013 are included in the Consolidated Balance Sheets at their original issuance value, net of unamortized discount and issuance costs, and are not marked to market each period. The approximate fair value of the convertible notes was approximately $145.9 million and $143.8 million as of December 31, 2017 and 2016, respectively. The fair value of the convertible notes was determined using quoted market prices for similar securities and are considered Level 2 inputs due to limited trading activity.

The Company did not have any other financial instruments or debt measured at fair value as of December 31, 2017 and 2016, respectively.

- 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

Property and Equipment, Net

12 Months Ended

Dec. 31, 2017

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

Property and equipment, net were comprised of the following (in thousands):



	For the Year Ended December 31,
	2017			2016
Computers and equipment	$	22,186		$	19,930
Software	72,147			59,453
Leasehold improvements	19,574			18,092
Furniture and fixtures	11,606			10,947
Property and equipment	125,513			108,422
Less: accumulated depreciation and amortization	(91,394		)	(70,242		)
Property and equipment, net	$	34,119		$	38,180

Depreciation and amortization expense, which includes amortization expense related to capital leases, was approximately $21.1 million, $16.1 million and $13.7 million, respectively, during the years ended December 31, 2017, 2016 and 2015.

The Company capitalized costs of approximately $12.6 million, $13.1 million and $7.2 million during the years ended December 31, 2017, 2016 and 2015, respectively, related to internal-use software. As of December 31, 2017 and 2016, the carrying value of capitalized costs related to internal-use software, net of accumulated amortization, was $16.5 million and $17.2 million, respectively. Amortization expense related to internal-use software was approximately $13.3 million, $7.6 million and $5.0 million during the years ended December 31, 2017, 2016 and 2015, respectively.

Debt

12 Months Ended

Dec. 31, 2017

Debt Disclosure [Abstract]

Debt

Senior Convertible Notes

In August 2013, the Company issued senior convertible notes (the "Notes") in exchange for gross proceeds of $150.0 million. The Notes mature on August 1, 2018 and are recorded as a current liability in "Convertible notes" in our Consolidated Balance Sheet as of December 31, 2017.

The Notes are governed by an Indenture, dated August 13, 2013 (the "Indenture"), between the Company and Wells Fargo Bank, National Association, as trustee. The notes bear interest at a rate of 1.50% per year payable semi-annually in arrears on February 1 and August 1, beginning February 1, 2014.

The Notes are convertible at an initial conversion rate of 61.6770 shares of common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $16.21 per share of common stock, subject to anti-dilution adjustments upon certain specified events, as defined in the Indenture. Upon conversion, the Notes will be settled in cash, shares of the Company’s common stock, or any combination thereof, at the Company’s option. The Notes were not subject to conversion or repurchase as of December 31, 2017. However, holders of the Notes may convert their Notes at any time on or after February 1, 2018, until the close of business on the second schedule trading day immediately preceding the maturity date, regardless of the foregoing circumstances.

To account for the Notes at issuance, the Company separated the Notes into debt and equity components pursuant to the accounting standards for convertible debt instruments that may be fully or partially settled in cash upon conversion. The fair value of debt component was estimated using an interest rate for nonconvertible debt, with terms similar to the Notes, excluding the conversion feature. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The excess of the principal amount of the Notes over the fair value of the debt component was recorded as a debt discount and a corresponding increase in additional paid-in capital. The debt discount is accreted to interest expense over the term of the Notes using the interest method. The amount recorded to additional paid-in capital is not to be remeasured as long as it continues to meet the conditions of equity classification. Upon issuance of the $150.0 million of Notes, the Company recorded $111.5 million to debt and $38.5 million to additional paid-in capital.

The net carrying amount of the liability component of the Notes consists of the following (in thousands):



	For the Year Ended December 31,
	2017			2016
Principal amount	$	150,000		$	150,000
Unamortized debt discount	(5,336		)	(13,928		)
Unamortized debt issuance costs	(497		)	(1,297		)
Net carrying amount	$	144,167		$	134,775

Estimated future amortization of deferred issuance costs is approximately $5.8 million for the year ended December 31, 2018.

The following table presents interest expense recognized related to the Notes (in thousands):



	For the Year Ended December 31,
	2017		2016		2015
Contractual interest expense at 1.5% per annum	$	2,250	$	2,250	$	2,250
Amortization of debt issuance costs	800		743		686
Accretion of debt discount	8,592		7,981		7,362
Total	$	11,642	$	10,974	$	10,298

Note Hedges

Concurrent with the issuance of the Notes, the Company entered into note hedges ("Note Hedges") with certain bank counterparties, with respect to its common stock. The Company paid $31.4 million for the Note Hedges. The Note Hedges cover approximately 9.25 million shares of the Company's common stock at a strike price of $16.21 per share. The Note Hedges will expire upon the maturity of the Notes. The Note Hedges are intended to reduce the potential dilution to the Company's common stock upon conversion of the Notes and/or offset the cash payment in excess of the principal amount of the Notes the Company is required to make in the event that the market value per share of the Company's common stock at the time of exercise is greater than the conversion price of the Notes.

Warrants

Separately, the Company entered into warrant transactions, whereby it sold warrants to the same bank counterparties as the Note Hedges to acquire approximately 9.25 million shares of the Company's common stock at an initial strike price of $21.02 per share ("Warrants"), subject to anti-dilution adjustments. The Company received proceeds of approximately $21.8 million from the sale of the Warrants. If the fair value per share of the Company's common stock exceeds the strike price of the Warrants, the Warrants will have a dilutive effect on earnings per share, unless the Company elects, subject to certain conditions, to settle the Warrants in cash.

The amounts paid and received for the Note Hedges and the Warrants have been recorded in additional paid-in capital. The fair value of the Note Hedges and the Warrants are not remeasured through earnings each reporting period.

Letter of Credit

On February 3, 2015, the Company issued a $1.2 million letter of credit in connection with a lease for a new San Francisco office facility. The letter of credit is secured by $1.2 million of cash in a money market account which is classified as restricted cash in "Other assets" in the Consolidated Balance Sheets.

Commitments and Contingencies

12 Months Ended

Dec. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Operating Leases

The Company leases its office space and certain equipment under non-cancelable operating lease agreements with various expiration dates through December 2022. Rent expense during the years ended December 31, 2017, 2016 and 2015 was approximately $10.6 million, $11.3 million and $9.4 million, respectively. The Company recognizes rent expense on a straight-line basis over the lease period and accrues for rent expense incurred but not paid.

Future annual minimum lease payments under non-cancelable operating leases as of December 31, 2017 were as follows (in thousands):



Fiscal Year
2018	$	11,354
2019	9,600
2020	8,362
2021	7,819
2022	4,616
Thereafter	—
Total	$	41,751

In January 2018, the Company entered into a sublease with a third-party for the Company's San Francisco office space for the remaining term of the lease. The future minimum payments through November 30, 2022 under the original lease total approximately $9.3 million and future sublease rental income totals approximately $8.9 million over the same period.

Other Purchase Commitments

The Company had $14.1 million in non-cancelable purchase commitments with our suppliers as of December 31, 2017.

Litigation

The Company is subject to various legal proceedings and claims arising in the ordinary course of our business, including the cases discussed below. Although the results of litigation and claims cannot be predicted with certainty, the Company is currently not aware of any litigation or threats of litigation in which the final outcome could have a material adverse effect on our business, operating results, financial position, or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. The Company records a contingent liability when it is probable that a loss has been incurred and the amount is reasonably estimable in accordance with accounting for contingencies. As of December 31, 2017 and 2016, the Company accrued a $1.5 million reserve relating to our potential liability for currently pending disputes, reflected in "Accrued expenses" in the Consolidated Balance Sheets.

On August 23, 2016, the United States District Court for the Middle District of Tennessee granted conditional class certification in a lawsuit originally filed on September 21, 2015 by three former senior sales representatives. The lawsuit, Sarah Patton, et al v. ServiceSource Delaware, Inc., asserts a claim under the Fair Labor Standards Act alleging that certain sales account representatives and senior sales representatives in our Nashville location were not paid for all hours worked and were not properly paid for overtime hours worked. The complaint also asserts claims under Tennessee state law for breach of contract and unjust enrichment, however, the plaintiffs have not yet filed a motion to certify the state law breach of contract and unjust enrichment claims as a class action. The Company will continue to vigorously defend itself against these claims.

Share Repurchase Program, Stock-Based Compensation and ESPP

12 Months Ended

Dec. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share Repurchase Program, Stock-Based Compensation and ESPP

Share Repurchase Program

In August 2015, our Board of Directors authorized a stock repurchase program (the "program") to repurchase up to $30.0 million of our common stock. The program expired August 2017. During the year ended December 31, 2016, the Company repurchased 2.3 million shares of common stock at a weighted-average price of $3.94 per share for an aggregate purchase price of $8.9 million. No shares were repurchased under this program during the year ended December 31, 2017.

Equity Plans

The Company maintains the 2011 Equity Incentive Plan (the “2011 Plan”) and the 2011 Employee Stock Purchase Plan. The Company’s Board of Directors, by delegation to its compensation committee, administers the 2011 Plan and has authority to determine the directors, officers, employees and consultants to whom options, restricted stock units or restricted stock awards may be granted, the option price or restricted stock purchase price, the timing of when each share is exercisable and the duration of the exercise period and the nature of any restrictions or vesting periods applicable to an option or restricted stock grant

At the end of each fiscal year, the share reserve under the 2011 Plan automatically increases, to the lessor of an amount equal to 4% of the outstanding shares as of the end of that fiscal year or 3,840,000 shares. As of December 31, 2017, there were approximately 12.4 million shares available for grant under the 2011 Plan. On January 1, 2018, 3.6 million additional shares were reserved under the 2011 Equity Incentive Plan pursuant to the automatic increase.

Stock options are recorded at fair value on the date of grant date using the Black-Scholes option-pricing model and generally vest ratably over a four-year period. Vested options may be exercised up to ten years from the grant date, as defined in the 2011 Plan. Vested but unexercised options expire 90 days after termination of employment with the Company. Compensation expense is amortized on a straight-line basis over the service period during which the right to exercise such options fully vests.

Restricted stock units are recorded at fair value on the date of grant and amortized on a straight-line basis over the service period during which the stock vests. Restricted stock units generally vest ratably over four years with vesting contingent upon employment of the Company.

2017 PSU Awards

During the second quarter of 2017, the Company granted performance-based restricted stock unit awards under the Company’s 2011 Equity Incentive Plan to certain key executives (the “2017 PSU Awards”). For each 2017 PSU Award, a number of restricted stock units became eligible to vest based on the levels of achievement of the performance-based conditions, and those restricted stock units that became eligible to vest will vest 50% on the first anniversary of the grant date and 50% on the second anniversary of the grant date, except as otherwise provided under certain termination and change-in-control provisions in each award agreement. The aggregate target number of restricted stock units subject to the 2017 PSU Awards was 1.0 million, with an aggregate grant date fair value of $3.7 million.

The performance-based conditions are based upon the Company’s revenue and adjusted EBITDA performance in fiscal year 2017 against the target goals for such metrics under the Company’s 2017 corporate incentive plan (in each case, “Performance Achievement”), which will each be determined on the date the Company files its Annual Report on Form 10-K for fiscal year 2017. The target number of restricted stock units for each 2017 PSU Award will be divided equally between the two performance metrics. For each performance metric, the number of restricted stock units that become eligible to vest will be: (i) if the applicable Performance Achievement is less than 90% of the target revenue goal or less than 69% of the target EBITDA goal, no restricted stock units for such performance metric, (ii) if the applicable Performance Achievement is equal to 90% of the target revenue goal or 69% of the target EBITDA goal, 50% of the target number of restricted stock units for such performance metric, (iii) if the applicable Performance Achievement is equal to 100% of the target revenue and EBITDA goals, 100% of the target number of restricted stock units for such performance metric, or (iv) if the applicable Performance Achievement is at least 107% of the target revenue goal or 146% of the target EBITDA goal, 150% of the target number of restricted stock units for such performance metric. For each performance metric, if the applicable Performance Achievement falls between any of the thresholds (ii), (iii), and (iv) specified in the previous sentence, the number of restricted stock units that become eligible to vest for such performance metric will be determined via linear interpolation.

Under the time-based vesting condition, 50% of the restricted stock units that have become eligible to vest will vest on the first anniversary of the grant date, and 50% of the restricted stock units that have become eligible to vest will vest on the second anniversary of the grant date, except as otherwise provided under certain termination and change-in-control provisions in each award agreement governing a 2017 PSU Award. Such provisions will determine the number of restricted stock units that become eligible to vest and when and how many restricted stock units will actually vest in connection with the specified terminations of employment and changes in-control.

2016 PSU Awards

During the third quarter of 2016, the Company granted performance-based restricted stock unit awards under the Company’s 2011 Equity Incentive Plan to certain key executives (the “2016 PSU Awards”). The 2016 PSU Awards contain similar performance and vesting conditions as the 2017 PSU Awards. The aggregate target number of restricted stock units subject to the 2016 PSU Awards was 1.0 million with an aggregate grant date fair value of $5.1 million. Upon the filing of the Company’s 2016 form 10-K on March 6, 2017, an additional 0.2 million shares with a grant date fair value of $1.2 million became eligible to vest under the 2016 PSU Awards. The 2016 PSU Awards are expensed over the two-year vesting term using the accelerated attribution method.

Fair Value of Stock Options and Restricted Units

The estimated fair value of stock options and restricted stock units granted during the years ended December 31, 2017, 2016 and 2015, was approximately $11.5 million, $13.3 million, and $18.6 million, respectively.

The fair value of each grant of options during 2017, 2016 and 2015 was determined by the Company using the methods and assumptions discussed below. The Company stratifies its population of outstanding share options into two relatively homogeneous groups to estimate the expected term of options grants. Each of these inputs is subjective and generally requires significant judgment to determine.

Expected Term—The expected term represents the period that the Company’s share-based awards are expected to be outstanding. The Company calculated the expected term of share options using four data points: options exercised, options expired, options forfeited and options outstanding. The weighted-average of the four data points were used to calculate the expected term.

Expected Volatility—The expected volatility is based on the historical stock volatility of the Company's own common shares.

Risk-Free Interest Rate—The risk-free interest rate was based on the implied yield on U.S. Treasury zero-coupon issues for each option grant date with maturities approximately equal to the option’s contractual term.

Expected Dividend Yield—The Company has not paid dividends on its common shares nor does it expect to pay dividends in the foreseeable future.

The weighted average Black-Scholes option-pricing model assumptions were as follows:



	For the Year Ended December 31,
	2017		2016		2015
Expected term (in years)	5.0		5.0		5.0
Expected volatility	59	%	58	%	34	%
Risk-free interest rate	1.87	%	1.23	%	1.64	%
Expected dividend yield	0.00	%	0.00	%	0.00	%

Employee Stock Purchase Plan

The Company’s 2011 Employee Stock Purchase Plan (the “ESPP”) is intended to qualify under Section 423 of the Internal Revenue Code of 1986. Under the ESPP, employees are eligible to purchase common stock through payroll deductions of up to 10% of their eligible compensation, subject to any plan limitations. The purchase price of the shares on each purchase date is equal to 85% of the lower of the fair market value of the Company’s common stock on the first and last trading days of each six-month offering period.

The Company estimates the fair value of purchase rights under the ESPP using the Black-Scholes option-pricing model and the straight-line attribution approach. The following weighted-average assumptions were as follows:



	For the Year Ended December 31,
	2017		2016		2015
Expected term (in years)	0.5 -1.0		0.5 -1.0		0.5 -1.0
Expected volatility	29%-66%		38%-52%		25%-35%
Risk-free interest rate	0.65%-1.21%		0.42%-0.56%		0.07%-0.37%
Expected dividend yield	0.00	%	0.00	%	0.00	%

The expected term represents the period of time from the beginning of the offering period to the purchase date. The Company uses its historical volatility for a period equivalent to the expected term of the options to estimate the expected volatility. The risk-free interest rate the Company uses in the Black-Scholes option valuation model is based on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term. The Company has never declared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future, and, therefore, used an expected dividend yield of zero in the valuation model.

The ESPP provides that additional shares are reserved annually on the first day of each fiscal year in an amount equal to the lesser of (i) 1.5 million shares, (ii) one percent of the outstanding shares of common stock on the last day of the immediately preceding fiscal year, or (iii) an amount determined by the board of directors and/or the compensation committee of the board of directors. As of December 31, 2017, 2.1 million shares had been issued under the ESPP and 3.7 million shares were available for future issuance. On January 1, 2018, 0.9 million additional shares were reserved under the 2011 ESPP.

Stock Awards Issued to Employees

The following table presents total options outstanding, granted, exercised, expired or forfeited, as well as total options exercisable (shares and aggregate intrinsic value in thousands):



	Shares	Weighted-Average Option Price Per Share		Weighted-Average Fair Value of Options Granted During the Year		Weighted-Average Remaining Contractual Life (Years)	Intrinsic Value
Issued and outstanding as of December 31, 2014	10,070	$	5.08
Granted	4,206	$	4.45	$	1.45
Options exercised	(1,126)	$	4.13				$	1,312
Expired and/or Forfeited	(2,534)	$	5.65
Issued and outstanding as of December 31, 2015	10,616	$	4.79
Granted	709	$	4.11	$	2.05
Options exercised	(2,111)	$	4.62				$	1,455
Expired and/or Forfeited	(1,719)	$	5.43
Issued and outstanding as of December 31, 2016	7,495	$	4.63
Granted	173	$	3.63	$	1.86
Options exercised	(14)	$	4.86				$	8
Expired and/or Forfeited	(1,143)	$	5.31
Issued and outstanding as of December 31, 2017	6,511	$	4.48			6.54	$	6,571
Options exercisable as of December 31, 2017	4,619	$	4.61			6.13	$	4,889

The total estimated fair value of options vested during the years ended December 31, 2017, 2016, and 2015 was $2.5 million, $3.7 million and $2.7 million, respectively.

The following table summarizes additional information concerning our vested restricted stock units and performance stock units (shares in thousands):



	Shares	Weighted-Average Grant Date Fair Value
Unvested as of December 31, 2016	4,236	$	4.77
Granted	3,458	$	3.58
Vested⁽¹⁾	(1,963)	$	4.89
Forfeited	(704)	$	4.30
Unvested as of December 31, 2017	5,027	$	3.98

⁽¹⁾1,755 shares of common stock were issued for restricted stock units vested and the remaining 208 shares were withheld for taxes.

The total estimated fair value of restricted stock units and PSU awards vested during the years ended December 31, 2017, 2016 and 2015 was $7.3 million, $6.2 million and $8.5 million.

The following table presents stock-based compensation expense as allocated within the Company’s Consolidated Statements of Operations (in thousands):



	For the Year Ended December 31,
	2017		2016		2015
Stock-based compensation included in operating expenses:
Cost of revenue	$	1,335	$	1,484	$	2,666
Sales and marketing	3,774		3,004		3,393
Research and development	149		586		1,299
General and administrative	8,425		5,678		6,029
Restructuring and other	352		—		2,579
Total stock-based compensation	$	14,035	$	10,752	$	15,966

The above table does not include approximately $0.5 million, $0.6 million and $0.4 million of capitalized stock-based compensation related to internal-use software for the years ended December 31, 2017, 2016 and 2015, respectively.

As of December 31, 2017, there was approximately $15.9 million of unrecognized compensation expense related to non-vested share-based compensation arrangements granted under the 2011 Plan, which is expected to be recognized over a weighted-average period of 1.96 years.

Employee Benefit Plan	12 Months Ended
Employee Benefit Plan	Dec. 31, 2017
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract]
Employee Benefit Plan	Employee Benefit Plan The Company maintains a 401(k) defined contribution plan that covers domestic employees who have attained 21 years of age and provide at least 20 hours of service per week. This plan allows U.S. employees to contribute up to 90% of their pre-tax salary into investments at the discretion of the employee, up to maximum annual contribution limits established by the U.S. Department of Treasury. During the years ended December 31, 2017, 2016 and 2015, the Company matched up to 50% of an employee's contributions up to an annual limit of $2,000. Matching contributions by the Company are fully vested upon completion of the first year of employment. Employer matching contributions, which may be discontinued at the Company’s discretion, were approximately $1.5 million, $1.7 million and $2.1 million, during 2017, 2016 and 2015, respectively.

Income Taxes

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

Income Taxes

Loss from continuing operations before provision for income taxes for the Company’s domestic and international operations was as follows (in thousands):



	For the Year Ended December 31,
	2017			2016			2015
U.S.	$	(28,463	)	$	(32,499	)	$	(40,720	)
International	(3,030		)	3,802			1,711
Loss before provision for income taxes	$	(31,493	)	$	(28,697	)	$	(39,009	)

The income tax provision consisted of the following (in thousands):



	For the Year Ended December 31,
	2017			2016			2015
Current:
Federal	$	94		$	279		$	—
Foreign	46			1,112			632
State and local	212			89			(32		)
Total current income tax provision	352			1,480			600
Deferred:
Federal	(1,645		)	129			160
Foreign	(5		)	(54		)	52
State and local	(349		)	1,874			772
Total deferred income tax provision (benefit)	(1,999		)	1,949			984
Income tax provision (benefit)	$	(1,647	)	$	3,429		$	1,584

The following table provides a reconciliation of income taxes provided at the federal statutory rate of 35% to the income tax provision (in thousands):



	For the Year Ended December 31,
	2017			2016			2015
U.S. income tax at federal statutory rate	$	(11,012	)	$	(10,046	)	$	(13,388	)
State income taxes, net of federal benefit	(650		)	(170		)	342
Section 956 inclusion	—			2,976			—
Foreign tax rate differential	(21		)	(882		)	(85		)
Share-based compensation	1,748			5,038			—
Permanent differences	926			383			254
Tax cuts and jobs act	37,042			—			—
Tax credits	(5		)	(111		)	(405		)
Federal rate change	—			(1,954		)	—
Return to provision	(407		)	1,068			—
Adjustments to opening deferreds	—			2,009			—
Valuation allowance	(29,334		)	4,458			14,529
Other, net	66			660			337
Income tax provision (benefit)	$	(1,647	)	$	3,429		$	1,584

In November 2015, the Philippine Economic Zone Authority granted a four year tax holiday to the Company's Philippine affiliate, commencing with its fiscal year beginning January 1, 2016. The earnings per share benefit in 2017, 2016, and 2015 was not material.

In December 2013, Malaysia granted a ten year tax holiday to the Company’s Malaysia affiliate, commencing with its fiscal year beginning January 1, 2014. This resulted in a tax benefit in fiscal 2013 of approximately $0.2 million from the elimination of the Malaysia subsidiary’s deferred tax liabilities. The earnings per share benefit in 2017, 2016 and 2015 was not material.

The following table provides the effect of temporary differences that created deferred income taxes as of December 31, 2017 and 2016. Deferred tax assets and liabilities represent the future effects on income taxes resulting from temporary differences and carryforwards at the end of the respective periods (in thousands):



	For the Year Ended December 31,
	2017			2016
Deferred tax assets:
Accrued liabilities	$	3,847		$	3,540
Share-based compensation expense	3,904			4,961
Net operating loss carryforwards	65,958			92,087
Tax credits	6,860			5,676
Amortization of tax intangibles	2,842			5,957
Investments	—			1,774
Other, net	355			351
Total deferred tax assets	83,766			114,346
Deferred tax liabilities:
Property and equipment	(811		)	(3,607		)
Convertible debt costs	(263		)	(1,041		)
Total deferred tax liabilities	(1,074		)	(4,648		)
Net deferred tax assets	82,692			109,698
Less: Valuation allowance	(82,923		)	(111,935		)
Net deferred tax liabilities	$	(231	)