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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number: 001-37496
 
RAPID7, INC.
(Exact Name of Registrant as Specified in its Charter)

Delaware 35-2423994
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)

120 Causeway Street 
Boston,MA02114
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (617247-1717

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareRPDThe Nasdaq Global Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes      No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
 
Large Accelerated Filer
Accelerated Filer
Non-accelerated Filer
Small Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No  
As of April 30, 2020, there were 50,501,098 shares of the registrant’s common stock, $0.01 par value per share, outstanding.



Table of Contents
Table of Contents
 
  Page
PART I.
Item 1.
Item 2.
Item 3.
Item 4.
PART II.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

i

Table of Contents
PART I—FINANCIAL INFORMATION

Item 1.Financial Statements.

RAPID7, INC.
Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share data)
 
March 31, 2020December 31, 2019
Assets
Current assets:
Cash and cash equivalents$204,434  $123,413  
Short-term investments36,384  116,158  
Accounts receivable, net of allowance for doubtful accounts of $2,251 and $1,829 at March 31, 2020 and December 31, 2019, respectively
64,388  87,927  
Deferred contract acquisition and fulfillment costs, current portion17,486  17,047  
Prepaid expenses and other current assets19,624  20,051  
Total current assets342,316  364,596  
Long-term investments12,804  22,887  
Property and equipment, net50,075  50,670  
Operating lease right-of-use assets62,942  60,984  
Deferred contract acquisition and fulfillment costs, non-current portion34,289  34,213  
Goodwill97,866  97,866  
Intangible assets, net27,867  28,561  
Other assets5,518  5,136  
Total assets$633,677  $664,913  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$10,062  $6,836  
Accrued expenses26,486  41,021  
Operating lease liabilities, current portion8,866  7,179  
Deferred revenue, current portion219,432  231,518  
Other current liabilities35  119  
Total current liabilities264,881  286,673  
Convertible senior notes, net187,944  185,200  
Operating lease liabilities, non-current portion71,586  72,294  
Deferred revenue, non-current portion31,641  36,226  
Other long-term liabilities1,325  1,352  
Total liabilities557,377  581,745  
Stockholders’ equity:
Preferred stock, $0.01 par value per share; 10,000,000 shares authorized at March 31, 2020 and December 31, 2019; 0 shares issued at March 31, 2020 and December 31, 2019
    
Common stock, $0.01 par value per share; 100,000,000 shares authorized at March 31, 2020 and December 31, 2019; 50,906,182 and 50,397,922 shares issued at March 31, 2020 and December 31, 2019, respectively; 50,419,374 and 49,911,114 shares outstanding at March 31, 2020 and December 31, 2019, respectively
504  499  
Treasury stock, at cost, 486,808 shares at March 31, 2020 and December 31, 2019
(4,764) (4,764) 
Additional paid-in-capital621,992  605,650  
Accumulated other comprehensive (loss) income(78) 213  
Accumulated deficit(541,354) (518,430) 
Total stockholders’ equity76,300  83,168  
Total liabilities and stockholders’ equity$633,677  $664,913  
The accompanying notes are an integral part of these unaudited consolidated financial statements.
1

Table of Contents
RAPID7, INC.
Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share data)
 
 Three Months Ended March 31,
 20202019
Revenue:
Products$87,549  $65,845  
Professional services6,791  7,340  
Total revenue94,340  73,185  
Cost of revenue:
Products21,256  14,369  
Professional services6,458  5,604  
Total cost of revenue27,714  19,973  
Total gross profit66,626  53,212  
Operating expenses:
Research and development24,202  17,865  
Sales and marketing48,145  35,138  
General and administrative14,099  9,953  
Total operating expenses86,446  62,956  
Loss from operations(19,820) (9,744) 
Other income (expense), net:
Interest income1,048  1,731  
Interest expense(3,462) (3,229) 
Other income (expense), net(447) (206) 
Loss before income taxes(22,681) (11,448) 
Provision for income taxes243  225  
Net loss$(22,924) $(11,673) 
Net loss per share, basic and diluted$(0.46) $(0.24) 
Weighted-average common shares outstanding, basic and diluted50,127,310  47,827,939  
The accompanying notes are an integral part of these unaudited consolidated financial statements.

2

Table of Contents
RAPID7, INC.
Consolidated Statements of Comprehensive Loss (Unaudited)
(in thousands)

 Three Months Ended March 31,
 20202019
Net loss$(22,924) $(11,673) 
Other comprehensive income (loss):
Change in fair value of investments(235) 193  
Adjustments for net gains realized and included in net loss(56)   
Total change in unrealized (losses) gains on investments(291) 193  
Comprehensive loss$(23,215) $(11,480) 

The accompanying notes are an integral part of these unaudited consolidated financial statements.


3

Table of Contents
RAPID7, INC.
Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
(in thousands)

 Common stockTreasury stockAdditional
paid-in-capital
Accumulated
other
comprehensive
gain (loss)
Accumulated
deficit
Total
stockholders’
equity
 SharesAmountSharesAmount
Balance, December 31, 201949,911  $499  487  $(4,764) $605,650  $213  $(518,430) $83,168  
Stock-based compensation expense—  —  —  —  12,965  —  —  12,965  
Issuance of common stock under employee stock purchase plan102  1  —  —  3,345  —  —  3,346  
Vesting of restricted stock units308  3  —  —  (3) —  —    
Shares withheld for employee taxes(27)   —  —  (1,533) —  —  (1,533) 
Issuance of common stock upon exercise of stock options125  1  —  —  1,568  —  —  1,569  
Change in unrealized losses on investments—  —  —  —  —  (291) —  (291) 
Net loss—  —  —  —  —  —  (22,924) (22,924) 
Balance, March 31, 202050,419  $504  487  $(4,764) $621,992  $(78) $(541,354) $76,300  

 Common stockTreasury stockAdditional
paid-in-capital
Accumulated
other
comprehensive
gain (loss)
Accumulated
deficit
Total
stockholders’
equity
 SharesAmountSharesAmount
Balance, December 31, 201847,600  $476  487  $(4,764) $556,223  $(31) $(464,585) $87,319  
Stock-based compensation expense—  —  —  —  8,634  —  —  8,634  
Issuance of common stock under employee stock purchase plan111  1  2,633  2,634  
Vesting of restricted stock units244  3  —  —  (3) —  —    
Shares withheld for employee taxes(22) —  —  —  (980) —  —  (980) 
Issuance of common stock upon exercise of stock options225  2  —  —  2,722  —  —  2,724  
Change in unrealized gains on investments—  —  —  —  —  193  —  193  
Net loss—  —  —  —  —  —  (11,673) (11,673) 
Balance, March 31, 201948,158  $482  487  $(4,764) $569,229  $162  $(476,258) $88,851  

The accompanying notes are an integral part of these unaudited consolidated financial statements.
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RAPID7, INC.
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
 
 Three Months Ended March 31,
 20202019
Cash flows from operating activities:
Net loss$(22,924) $(11,673) 
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization4,843  3,427  
Amortization of debt discount and issuance costs2,743  2,510  
Stock-based compensation expense13,347  8,634  
Provision for doubtful accounts527  437  
Foreign currency re-measurement loss447  249  
Other non-cash (income) expense(138) (722) 
Changes in operating assets and liabilities:
Accounts receivable22,608  14,729  
Deferred contract acquisition and fulfillment costs(516) (1,094) 
Prepaid expenses and other assets135  (5,940) 
Accounts payable4,010  66  
Accrued expenses(14,563) (13,690) 
Deferred revenue(16,671) (12,104) 
Other liabilities(1,063) 1,605  
Net cash used in operating activities(7,215) (13,566) 
Cash flows from investing activities:
Purchases of property and equipment(2,756) (8,463) 
Capitalization of internal-use software costs(1,474) (1,601) 
Purchases of investments(24,272) (63,029) 
Sales/maturities of investments113,924  72,738  
Net cash provided by (used in) investing activities85,422  (355) 
Cash flows from financing activities:
Taxes paid related to net share settlement of equity awards(1,533) (979) 
Proceeds from employee stock purchase plan3,346  2,634  
Proceeds from stock option exercises1,561  2,718  
Net cash provided by financing activities3,374  4,373  
Effect of exchange rate changes on cash, cash equivalents and restricted cash(560) (148) 
Net increase (decrease) in cash, cash equivalents and restricted cash81,021  (9,696) 
Cash, cash equivalents and restricted cash, beginning of period123,413  99,565  
Cash, cash equivalents and restricted cash, end of period$204,434  $89,869  
Supplemental cash flow information:
Cash paid for interest on convertible senior notes$1,438  $1,342  
Cash paid for income taxes, net of refunds$33  $88  
Non-cash investing activities:
Leasehold improvements acquired through tenant improvement allowance$  $7,313  

The accompanying notes are an integral part of these unaudited consolidated financial statements.
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RAPID7, INC.
Notes to Consolidated Financial Statements (Unaudited)
Note 1. Description of Business, Basis of Presentation and Consolidation and Significant Accounting Policies
Description of Business
Rapid7, Inc. and subsidiaries (we, us or our) is advancing security with visibility, analytics, and automation delivered through our Insight Platform. Our solutions simplify the complex, allowing security teams to work more effectively with IT and development to reduce vulnerabilities, monitor for malicious behavior, investigate and shut down attacks, and automate routine tasks.
Basis of Presentation and Consolidation
The accompanying unaudited consolidated financial statements have been prepared by us in accordance with accounting principles generally accepted in the United States of America (GAAP), as well as pursuant to the rules and regulations of the Securities and Exchange Commission (SEC), regarding interim financial reporting. Accordingly, certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 28, 2020.
The consolidated financial statements include our results of operations and those of our wholly-owned subsidiaries and reflect all adjustments (consisting solely of normal, recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods presented. All intercompany transactions and balances have been eliminated in consolidation. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for any future period or the entire fiscal year.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant items subject to such estimates and assumptions include the determination of the estimated economic life of perpetual licenses for revenue recognition, the determination of standalone selling prices in revenue transactions with multiple performance obligations, the estimated period of benefit for deferred contract acquisition and fulfillment costs, the useful lives of long-lived assets, the valuation of allowance for doubtful accounts, the valuation of stock-based compensation, the valuation of intangible assets acquired in a business combination, the incremental borrowing rate for operating leases and the valuation for deferred tax assets. We base our estimates on historical experience and on various other assumptions that we believe are reasonable. Actual results could differ from those estimates.
The COVID-19 pandemic is expected to result in a global slowdown of economic activity that is likely to decrease demand for a broad variety of goods and services, including from our customers. We currently expect our operational and financial performance to be negatively impacted by the slowdown in activity associated with the COVID-19 pandemic for the year ending December 31, 2020 and beyond. Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of judgment. As of the date of issuance of these financial statements, we are not aware of any specific event or circumstance that would require us to update our estimates, assumptions and judgments or revise the carrying value of our assets or liabilities. These estimates may change as new events occur and additional information is obtained and will be recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to our financial statements.
Reclassification
Historically, we have presented revenue on our consolidated statement of operations as products, maintenance and support and professional services revenue. For the three months ended March 31, 2020, we have combined products and maintenance and support revenue as products revenue on our consolidated statement of operations as our customers continue to migrate from our on-premise products to our SaaS Insight Platform. Given this continued migration, we believe it is more relevant to categorize maintenance and support revenue together as products revenue. Prior periods have been adjusted to conform with this presentation.
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Significant Accounting Policies
Our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019. There have been no changes to the significant accounting policies during the three-month period ended March 31, 2020.
Recent Accounting Pronouncements
Accounting Pronouncements Recently Adopted
In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which aligns the requirements for capitalizing implementation costs in cloud computing arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. We adopted this standard on January 1, 2020 using the prospective adoption approach. The impact to our consolidated financial statements as a result of the adoption was not material.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, modifies and adds disclosure requirements for fair value measurements. We adopted this standard on January 1, 2020 and there was no impact to our consolidated financial statements as a result of the adoption.
Accounting Pronouncements Not Yet Effective
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This standard is intended to simplify various aspects related to accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarifying certain aspects of the current guidance to promote consistency among reporting entities. The new standard will be effective for us in the first quarter of 2021, with early adoption permitted. An entity that elects early adoption must adopt all the amendments in the same period. Most amendments within this ASU are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company is currently assessing the impact of adopting this standard but does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.
Note 2. Revenue from Contracts with Customers
We generate products revenue from the sale of (1) cloud-based subscriptions for our InsightIDR, InsightVM, InsightAppSec and InsightConnect products, (2) managed services offerings which utilize our products and (3) term or perpetual software licenses for our Nexpose, Metasploit and AppSpider products, and associated content subscriptions for our Nexpose and Metasploit products. We also generate appliance revenue that is included in our products revenue and is associated with hardware sold with our Nexpose product to certain customers. We generate maintenance and support revenue associated with customers’ purchases of our software licenses for Nexpose, Metasploit and AppSpider. We generate professional service revenue from the sale of our deployment and training services related to our solutions, incident response services, penetration testing and security advisory services. Our deployment services educate and assist our customers on the best use and best practices to deploy our solutions.
The following table summarizes revenue from contracts with customers for the three months ended March 31, 2020 and 2019:
Three Months Ended March 31,
20202019
(in thousands)
Subscription revenue$68,625  $46,969  
Term and perpetual software licenses10,271  8,676  
Maintenance and support8,422  9,557  
Professional services6,791  7,340  
Other231  643  
Total revenue$94,340  $73,185  
Subscription Revenue
Subscription revenue consists of revenue from our cloud-based subscription, managed services offerings and content subscriptions associated with our software licenses.
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We generate cloud-based subscription revenue primarily from sales of subscriptions to access our cloud platform, together with related support services to our customers. These arrangements do not provide the customer with the right to take possession of our software operating on our cloud platform at any time. Instead, customers are granted continuous access to our cloud platform over the contractual period. Revenue is recognized over time on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Our cloud-based subscription contracts generally have annual or multi-year contractual terms which are billed in advance of the annual subscription period and are non-cancellable.
Managed services offerings consist of fees generated when we operate our software and provide our capabilities on behalf of our customers. Revenue is recognized on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Our managed services offerings generally have annual or multi-year contractual terms which are billed in advance of the annual subscription period and are non-cancellable.
Revenue related to our content subscriptions associated with our software licenses is recognized ratably over the contractual period.
Term and Perpetual Software Licenses
For our perpetual software licenses where the utility to the customer is dependent on the continued delivery of content subscriptions, the content subscription renewal options result in a material right with respect to the perpetual software license. As a result, the revenue attributable to the perpetual software license is recognized ratably over the customer’s estimated economic life of five years, which represents a longer period of time in comparison to the initial contractual period of maintenance and support. The estimated economic life of five years represents the period which the customer is expected to benefit from the material right. We estimated this period of benefit by taking into consideration several factors, including the terms and conditions of our customer contracts and renewals and the expected useful life of our technology.
For our term software licenses where the utility to the customer is dependent on the continued delivery of content subscriptions, we recognize the license revenue over the contractual term of the arrangement as a material right does not exist.
For our term and perpetual software licenses, which are not dependent on the continued delivery of content subscriptions, the license is considered distinct from the maintenance and support, and we therefore recognize revenue attributable to the license at the time of delivery.
Maintenance and support services are sold with our perpetual and term software licenses. As maintenance and support services are distinct from the perpetual and term software license, revenue attributable to maintenance and support services is recognized ratably over the contractual period.
Professional Services
All of our professional services are considered distinct performance obligations when sold stand alone or with other products. These contracts generally have terms of one year or less. For the majority of these contracts, revenue is recognized over time based upon the proportion of work performed to date.
Other
Other revenue primarily includes revenue from delivery of appliances and other miscellaneous revenue.
Contracts with Multiple Performance Obligations
In cases where our contracts with customers contain multiple performance obligations, we account for individual performance obligations separately if they are considered distinct. The transaction price is allocated to the separate performance obligations on a relative SSP basis. We determine SSP based on our overall pricing objectives, taking into consideration market conditions and other factors, including the geographic locations of our customers and selling method (i.e., partner or direct).
Contract Balances
Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract. Such amounts are recognized as revenue over the contractual period consistent with the above methodology. For the three months ended March 31, 2020 and 2019, we recognized revenue of $83.4 million and $64.6 million, respectively, that was included in the corresponding contract liability balance at the beginning of the periods presented. Deferred revenue that will be
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realized during the succeeding 12-month period is recorded as current, and the remaining deferred revenue is recorded as non-current.
We receive payments from customers based upon contractual billing schedules. Accounts receivable are recorded when the right to consideration becomes unconditional. Unbilled receivables include amounts related to our contractual right to consideration for both completed and partially completed performance obligations that have not been invoiced. If the right to consideration is based on satisfaction of another performance obligation in the contract other than the passage of time, we record a contract asset. As of March 31, 2020 and December 31, 2019, unbilled receivables of $1.0 million and $0.8 million, respectively, are included in prepaid expenses and other current assets in our consolidated balance sheet. As of March 31, 2020 and December 31, 2019, we had no contract assets recorded on our consolidated balance sheet.
Transaction price allocated to the remaining performance obligations
The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied as of March 31, 2020. The estimated revenues do not include unexercised contract renewals.
Next Twelve MonthsThereafter
 (in thousands)
Subscription revenue$176,115  $31,250  
Term and perpetual software licenses24,579  13,508  
Maintenance and support19,658  3,010  
Professional services11,609    
The amounts presented in the table above primarily consist of fixed fees, which are typically recognized ratably as the performance obligation is satisfied.
Note 3. Fair Value Measurements
We measure certain financial assets and liabilities at fair value. Fair value is determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows:
Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liability.
We consider an active market to be one in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis, and we consider an inactive market to be one in which there are infrequent or few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers.
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The following table presents our financial assets measured and recorded at fair value on a recurring basis using the above input categories:
 As of March 31, 2020
 Level 1Level 2Level 3Total
 (in thousands)
Description:
Assets:
Money market funds$185,309  $  $  $185,309  
Corporate bonds  23,579    23,579  
Commercial paper  20,009    20,009  
Agency bonds  3,101    3,101  
Asset-backed securities  2,499    2,499  
Total assets$185,309  $49,188  $  $234,497  

 As of December 31, 2019
 Level 1Level 2Level 3Total
 (in thousands)
Description:
Assets:
Money market funds$106,781  $  $  $106,781  
Corporate bonds  60,878    60,878  
U.S. government agencies36,979      36,979  
Commercial paper  19,966    19,966  
Agency bonds  12,242    12,242  
Asset-backed securities  8,980    8,980  
Total assets$143,760  $102,066  $  $245,826  
As of March 31, 2020, the fair value of our 1.25% convertible senior notes due 2023, as further described in Note 7, Convertible Senior Notes and Capped Calls, was $278.7 million based upon quoted market prices. We consider the fair value of the Notes to be a Level 2 measurement due to limited trading activity of the Notes. We had no other liabilities measured and recorded at fair value on a recurring basis as of March 31, 2020 or December 31, 2019.
Our investments, which are all classified as available-for-sale, consisted of the following:
 As of March 31, 2020
 Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
 (in thousands)
Description:
Corporate bonds23,658  22  (101) 23,579  
Commercial paper20,009      20,009  
Agency bonds3,100  1    3,101  
Asset-backed securities2,499      2,499  
Total assets$49,266  $23  $(101) $49,188  

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 As of December 31, 2019
 Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
 (in thousands)
Description:
U.S. government agencies$36,880  $99  $  $36,979  
Corporate bonds60,803  77  (2) 60,878  
Commercial paper19,965  1    19,966  
Agency bonds12,198  44    12,242  
Asset-backed securities8,986  1  (7) 8,980  
Total assets$138,832  $222  $(9) $139,045  
As of March 31, 2020, our available-for-sale investments had maturities ranging from two to nineteen months. As of December 31, 2019, our available-for-sale investments had maturities ranging from three months to two years.
For all of our investments for which the amortized cost basis was greater than the fair value at March 31, 2020 and December 31, 2019, we have concluded that there is no plan to sell the security nor is it more likely than not that we would be required to sell the security before its anticipated maturity. In making the determination as to whether the unrealized loss is other-than-temporary, we considered the length of time and extent the investment has been in an unrealized loss position, the financial condition and near-term prospects of the issuers, the issuers’ credit rating and the time to maturity.
Note 4. Property and Equipment
Property and equipment are recorded at cost and consist of the following:
As of March 31, 2020As of December 31, 2019
 (in thousands)
Computer equipment and software$14,037  $13,106  
Furniture and fixtures7,921  7,522  
Leasehold improvements 44,320  44,050  
Total66,278  64,678  
Less accumulated depreciation(16,203) (14,008) 
Property and equipment, net$50,075  $50,670  
Depreciation expense was $2.7 million and $1.9 million for the three months ended March 31, 2020 and 2019, respectively.
Note 5. Goodwill and Intangible Assets
Goodwill was $97.9 million as of March 31, 2020 and December 31, 2019.
The following table presents details of our intangible assets, which include acquired identifiable intangible assets and capitalized internal-use software costs:
  As of March 31, 2020As of December 31, 2019
 Weighted-
Average
Life (years)
Gross Carrying
Amount
Accumulated
Amortization
Net Book ValueGross Carrying
Amount
Accumulated
Amortization
Net Book Value
  (in thousands)
Intangible assets subject to amortization:
Developed technology
5.4$35,855  $(17,738) $18,117  $35,855  $(16,080) $19,775  
Customer relationships
6.71,000  (673) 327  1,000  (641) 359  
Trade names
6.1519  (519)   519  (519)   
Non-compete agreements
2.040  (40)   40  (40)   
Total acquired intangible assets37,414  (18,970) 18,444  37,414  (17,280)