Total revenue was $122.6 million, up 38% compared to the second quarter of 2017.

Subscription revenue was $116.6 million, up 38% compared to the second quarter of 2017.

Professional services and other revenue was $6.0 million, up 27% compared to the second quarter of 2017.

GAAP operating margin was (11.5%) for the quarter, compared to (11.9%) in the second quarter of 2017.

Non-GAAP operating margin was 5.3% for the quarter, an improvement of approximately 2.6 percentage points from 2.7% in the second quarter of 2017.

GAAP operating loss was ($14.1) million for the quarter, compared to ($10.6) million in the second quarter of 2017.

Non-GAAP operating income was $6.5 million for the quarter, compared to $2.4 million in the second quarter of 2017. Non-GAAP operating income and margin excludes stock-based compensation expense, amortization of acquired intangible assets, and acquisition related expenses.

GAAP net loss was ($18.2) million, or ($0.48) per basic and diluted share for the quarter, compared to ($9.5) million, or ($0.26) per basic and diluted share, in the second quarter of 2017.

Non-GAAP net income was $7.4 million, or $0.19 per basic and $0.18 per diluted share for the quarter, compared to $2.6 million, or $0.07 per basic and diluted share, in the second quarter of 2017. Non-GAAP net income per share excludes stock-based compensation expense, amortization of acquired intangible assets, acquisition related expenses, non-cash interest expense for amortization of debt discount and debt issuance costs, and the deferred income tax benefit from convertible notes.

Second quarter weighted average basic and diluted shares outstanding for GAAP net loss per share was 38.4 million, compared to 36.7 million basic and diluted shares in the second quarter of 2017.

Second quarter weighted average basic and diluted shares outstanding for non-GAAP net income per share was 38.4 million and 41.8 million respectively, compared to 36.7 million and 39.2 million, respectively, in the second quarter of 2017.

The company’s cash, cash equivalents and investments balance was $566.6 million as of June 30, 2018.

During the second quarter, the company generated $5.2 million of free cash flow compared to $1.8 million during the second quarter of 2017.

Grew total customers to 48,091 at June 30, 2018, up 40% from June 30, 2017.

Total average subscription revenue per customer was $10,004 during the second quarter of 2018 down 2% compared to the second quarter of 2017.

Total revenue is expected to be in the range of $125.6 million to $126.6 million.

Non-GAAP operating income is expected to be in the range of $1.0 million to $2.0 million. This excludes stock-based compensation expense of approximately $19.2 million, amortization of acquired intangible assets of approximately $500 thousand, and acquisition related expenses of approximately $800 thousand.

Non-GAAP net income per common share is expected to be in the range of $0.03 to $0.05. This excludes stock-based compensation expense of approximately $19.2 million, amortization of acquired intangible assets of approximately $500 thousand, acquisition related expenses of approximately $800 thousand, and non-cash interest expense for the amortization of debt discount and debt issuance costs of approximately $5.1 million. This assumes approximately 43.1 million weighted average diluted shares outstanding.

Total revenue is expected to be in the range of $496.8 million to $498.8 million, up from our previously guided range of $489 million to $492 million.

Non-GAAP operating income is expected to in be in the range of $24.3 million to $26.3 million, up from our previously guided range of $22 million to $25 million. This excludes stock-based compensation expense of approximately $75 million, amortization of acquired intangible assets of approximately $1.4 million, and acquisition related expenses of approximately $2.7 million.

Non-GAAP net income per common share is expected to be in the range of $0.63 to $0.67, up from our previously guided range of $0.59 to $0.65. This excludes stock-based compensation expense of approximately $75 million, amortization of acquired intangible assets of approximately $1.4 million, acquisition related expenses of approximately $2.7 million, and non-cash interest expense for the amortization of debt discount and debt issuance costs of approximately $20.3 million. This assumes approximately 42.5 million weighted average diluted shares outstanding.

Assets

Current assets:

Cash and cash equivalents

Short-term investments

Accounts receivable — net of allowance for doubtful accounts of $931 and $638 at June 30, 2018 and December 31, 2017, respectively

Deferred commission expense

Restricted cash

Prepaid hosting costs

Prepaid expenses and other current assets

Total current assets

Long-term investments

Property and equipment, net

Capitalized software development costs, net

Restricted cash

Other assets

Intangible assets

Goodwill

Total assets

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

Accrued compensation costs

Other accrued expenses

Deferred revenue

Total current liabilities

Deferred rent, net of current portion

Deferred revenue, net of current portion

Other long-term liabilities

Convertible senior notes

Total liabilities

Stockholders’ equity:

Common stock

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

Revenues:

Subscription

Professional services and other

Total revenue

Cost of revenues:

Subscription

Professional services and other

Total cost of revenues

Gross profit

Operating expenses:

Research and development

Sales and marketing

General and administrative

Total operating expenses

Loss from operations

Other expense:

Interest income

Interest expense

Other expense

Total other expense

Loss before income tax (expense) benefit

Income tax (expense) benefit

Net loss

Net loss per share, basic and diluted

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

Operating Activities:

Net loss

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

Depreciation and amortization

Stock-based compensation

(Provision) benefit for deferred income taxes

Amortization of debt discount and issuance costs

Accretion of bond discount

Noncash rent expense

Unrealized currency translation

Changes in assets and liabilities

Accounts receivable

Prepaid expenses and other assets

Deferred commission expense

Accounts payable

Accrued expenses

Deferred rent

Deferred revenue

Net cash and cash equivalents provided by operating activities

Investing Activities:

Purchases of investments

Maturities of investments

Purchases of property and equipment

Capitalization of software development costs

Purchases of strategic investments

Net cash and cash equivalents used in investing activities

Financing Activities:

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

Proceeds related to the issuance of common stock under stock plans

Repayments of capital lease obligations

Proceeds of the issuance of convertible notes, net of issuance costs paid $10,755 in 2017

Purchase of note hedge related to convertible notes

Proceeds from the issuance of warrants related to convertible notes, net of issuance costs of $200 in 2017

Net cash and cash equivalents provided by financing activities

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

Net increase in cash, cash equivalents, and restricted cash

Cash, cash equivalents and restricted cash, beginning of period

Cash, cash equivalents and restricted cash, end of period

GAAP operating loss

Stock-based compensation

Amortization of acquired intangible assets

Acquisition related expenses

Non-GAAP operating income

GAAP operating margin

Non-GAAP operating margin

GAAP net loss

Stock-based compensation

Amortization of acquired intangibles

Acquisition related expenses

Amortization of debt discount and debt issuance costs

Deferred income tax benefit from convertible notes and business combination

Non-GAAP net income

Non-GAAP net income per share:

Basic

Diluted

Shares used in non-GAAP per share calculations

Basic

Diluted

GAAP expense

Stock -based compensation

Amortization of acquired intangibles

Acquisition related expenses

Non-GAAP expense

GAAP expense as a percentage of revenue

Non-GAAP expense as a percentage of revenue

GAAP expense

Stock -based compensation

Amortization of acquired intangibles

Acquisition related expenses

Non-GAAP expense

GAAP expense as a percentage of revenue

Non-GAAP expense as a percentage of revenue

GAAP subscription margin

Stock -based compensation

Amortization of acquired intangible assets

Non-GAAP subscription margin

GAAP subscription margin percentage

Non-GAAP subscription margin percentage

GAAP net cash and cash equivalents provided by operating activities

Purchases of property and equipment

Capitalization of software development costs

Free cash flow

Stock-based compensation is a non-cash expense accounted for in accordance with FASB ASC Topic 718. We believe that the exclusion of stock-based compensation expense allows for financial results that are more indicative of our operational performance and provide for a useful comparison of our operating results to prior periods and to our peer companies because stock-based compensation expense varies from period to period and company to company due to such things as differing valuation methodologies and changes in stock price.

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

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

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

The deferred income tax benefit from the convertible notes issued in May 2017 is a non-cash item created by the difference in the carrying amount and tax basis of the convertible notes. This taxable temporary difference resulted in the Company recognizing a $9.4 million deferred tax liability which was recorded as an adjustment to additional paid-in capital on the consolidated balance sheet. The creation of the deferred tax liability is recognized as a component of equity and represents a source of future taxable income which supports the realization of a portion of the income tax benefit associated with the current year loss from operations. The deferred income tax benefit from the convertible notes is a non-cash item that is unique to the issuance of the Company’s convertible notes, and we believe the exclusion of this deferred tax benefit provides for a useful comparison of our operating results to prior periods and to our peer companies. The deferred income tax benefit from