United states securities and exchange commission

 

General and administrative expenses increased $2.1 million for the year ended December 31, 2016 primarily due to an increase in employee-related costs, information technology, third-party services and allocated overhead expenses. Stock-based compensation decreased $3.4 million resulting from expense associated with the purchase, by an investor, of common stock from current and former employees at a premium over fair value offset by salaries and wages of $2.3 million.  Our information technology expenses increased $0.9 million as we continued to automate our internal systems. Third-party services increased $1.2 million primarily due to legal and administrative costs relating to our continued expansion. Allocated overhead and other insignificant expenses increased $1.1 million primarily due to increased business insurance, higher rent and communication expense, maintenance on our facilities and depreciation of capital equipment.  

Other Income (Expense)

 

		Year Ended December 31,								Change
		2016				2015				Amount				%
		(dollars in thousands)
Other expense, net		$	(26	)		$	(889	)		$	863				-97	%

 

Other expense, net includes interest income and expense, the change in fair value of warrant liability and the impact of foreign currency transaction gains and losses. Other expense, net decreased $0.9 million for the year ended December 31, 2016 as the change in fair value of warrant liability decreased $0.7 million due to the exercise of the majority of common stock warrants in February 2016, in addition to a net decrease in the fair value of the warrant liability for the period.  This expense was further decreased by $0.3 million due to an increase in interest income and was partially offset by a $0.1 million increase in net foreign currency transaction losses.  

Year Ended December 31, 2015 Compared to the Year Ended December 31, 2014

Revenue

 

		Year Ended December 31,								Change
		2015				2014				Amount				%
		(dollars in thousands)
Subscription and support		$	62,463			$	38,093			$	24,370				64	%
Professional services and other			10,730				6,259				4,471				71
Total revenue		$	73,193			$	44,352			$	28,841				65

 

46

 

Subscription and support revenue increased $24.4 million for the year ended December 31, 2015 primarily due to an increase in the total number of customers, which grew from app roximately 1,000 as of December 31, 2014 to over 1,800 as of December 31, 2015.

Professional services and other revenue increased $4.5 million for the year ended December 31, 2015 primarily due to an increase in new customers and the sale of premium implementations, which include additional professional services and onsite training .

Cost of Revenue and Gross Margin

 

		Year Ended December 31,								Change
		2015				2014				Amount				%
		(dollars in thousands)
Cost of revenue:
Subscription and support		$	17,682			$	12,131			$	5,551				46	%
Professional services and other			6,391				2,982				3,409				114
Total cost of revenue		$	24,073			$	15,113			$	8,960				59
Gross margin percentage:
Subscription and support			72	%			68	%
Professional services and other			40				52
Total gross margin			67				66

 

Total cost of revenue increased $9.0 million for the year ended December 31, 2015 primarily due to an increase in employee-related costs, web hosting costs and amortization of developed technology. Total gross margin increased slightly as the impact of improved leverage of our web hosting costs relative to the growth in subscription and support revenue was offset by higher costs of professional services and other revenue.  

Subscription and support cost of revenue increased $5.6 million for the year ended December 31, 2015 primarily due to an increase in employee-related costs, web hosting and third-party software license costs, amortization of developed technology and overhead allocations. Employee-related costs increased $2.4 million as we continued to grow our customer support organization to support our customer growth and improve service levels and offerings. Web hosting and third-party software license costs increased $2.4 million due to the increase in total customers. Amortization of capitalized software development costs increased $0.4 million due to the continued development of our software platform. Allocated overhead expenses increased $0.3 million primarily due to higher rent expense and the depreciation of capital equipment. The remaining $0.1 million increase is due to other insignificant items.

Professional services and other costs of revenue increased $3.4 million for the year ended December 31, 2015 primarily due to an increase in employee-related costs, travel costs, outside contractors and overhead allocations. Employee-related costs increased $2.5 million as we continued to grow our professional services organization to support our customer growth and improve service levels and offerings. Travel and other costs increased $0.4 million as our premium implementations provided for onsite training. Outside contractor costs increased $0.2 million due to an increase in seasonal demand for training and professional services. Allocated overhead expenses and other insignificant items increased $0.3 million primarily due to higher rent expense and the depreciation of capital equipment.

Operating Expenses

Sales and Marketing

 

		Year Ended December 31,								Change
		2015				2014				Amount				%
		(dollars in thousands)
Sales and marketing		$	53,459			$	35,390			$	18,069				51	%