The following discussion and analysis of our financial condition and results of operations ("MD&A") should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this document. In addition to historical information, the MD&A contains forward-looking statements that reflect our plans, estimates, and beliefs that involve significant risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to those differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in "Risk Factors," and "Note Regarding Forward-Looking Statements."
Overview
We are a leading provider of networking solutions that enable next-generation networks focused on reliability, availability, scalability and cybersecurity. Our portfolio supports customers operating in the cloud, on-premise or in hybrid environments providing rapid return on their investment as well as investment protection with best-in-class technical performance. As cyber-attacks increase in volume and complexity, we integrate security as a key attribute in our solutions that further enable our customers to continue to adapt to market trends in cloud, internet of things and the ever increasing need for more data, building upon our strong global footprint and leadership in application and network infrastructure. Our customers include leading service providers (cloud, telecommunications, multiple system operators, cable), government organizations, and enterprises.
Our product portfolio seeks to address many of the cyber protection challenges and solution requirements. The portfolio consists of six secure application solutions; Thunder Application Delivery Controller ("ADC"), Lightning Application
21 -------------------------------------------------------------------------------- Delivery Controller ("Lightning ADC"), Thunder Carrier Grade Networking ("CGN"), Thunder Threat Protection System ("TPS"), Thunder SSL Insight ("SSLi") and Thunder Convergent Firewall ("CFW") and intelligent management, and automation tools; Harmony Controller and aGalaxy TPS. Our products are offered in a variety of form factors and payment models, including physical appliances and perpetual and subscription-based software licenses, as well as pay-as-you-go licensing models and FlexPool, a flexible consumption-based software model. We derive revenue from sales of products and related support services. Products revenue is generated primarily by sales of hardware appliances with perpetual licenses to our embedded software solutions. We also derive revenue from licenses to, or subscription services for, software-only versions of our solutions. We generate services revenue primarily from sales of maintenance and support contracts. Our customers predominantly purchase maintenance and support in conjunction with purchases of our products. In addition, we also derive revenue from the sale of professional services. We sell our products globally to service providers and enterprises that depend on data center applications and networks to generate revenue and manage operations efficiently. We report two customer verticals: service providers and enterprises and we report customer revenues in four geographic regions: theAmericas ,Japan ,Asia Pacific (excludingJapan ) and EMEA. We believe this vertical and geographic view aligns with how we manage the business and maps our product portfolio to customer verticals.
Our end-customers operate in a variety of industries, including
telecommunications, technology, industrial, retail, financial, gaming, education
and government. Since inception, our customer base has grown rapidly. As
of
We sell substantially all of our solutions through our high-touch sales organization as well as distribution channel partners, including distributors, value-added resellers and system integrators, and fulfill nearly all orders globally through such partners. We believe this sales approach allows us to obtain the benefits of channel distribution, such as expanding our market coverage, while still maintaining face-to-face relationships with our end-customers. We outsource the manufacturing of our hardware products to original design manufacturers. We perform quality assurance and testing at ourSan Jose ,Taiwan andJapan distribution centers, as well as at our manufacturers' locations. During the three months endedJune 30, 2021 , 49% of our total revenue was generated from theAmericas region, 26% fromJapan and 25% from other geographical regions. During the three months endedJune 30, 2020 , 46% of our total revenue was generated from theAmericas region, 24% fromJapan and 30% from other geographical regions. One of our priorities is to strengthen our sales efforts inNorth America . Our enterprise customers accounted for 39% and 42% of our total revenue during the three months endedJune 30, 2021 and 2020, respectively, and our service provider customers accounted for 61% and 58% of our total revenue during the six months endedJune 30, 2021 and 2020, respectively. As a result of the nature of our target market and the current stage of our development, a substantial portion of our revenue comes from a limited number of large customers, including service providers and enterprise customers, in any period. Purchases by our ten largest end-customers accounted for 37% and 38% of our total revenue for the three months endedJune 30, 2021 and 2020, respectively, and accounted for 36% and 45% of our total revenue for the six months endedJune 30, 2021 and 2020. Sales to these large end-customers have typically been characterized by large but irregular purchases with long sales cycles. The timing of these purchases and the delivery of the purchased products are difficult to predict. Consequently, any acceleration or delay in anticipated product purchases by or deliveries to our largest customers could materially impact our revenue and operating results in any quarterly period. This may cause our quarterly revenue and operating results to fluctuate from quarter to quarter and make them difficult to predict.
As of
We intend to continue to invest for long-term growth. We have invested and expect to continue to invest in our product development efforts to deliver new products and additional features in our current products to address customer needs. Our investments in growth in these areas may affect our short-term profitability. 22 --------------------------------------------------------------------------------
Results of Operations
A summary of our condensed consolidated statements of operations for the three and six months endedJune 30, 2021 and 2020 is as follows (dollars in thousands): Three Months Ended June 30, 2021 2020 Increase (Decrease) Percent of Percent of Amount Total Revenue Amount Total Revenue Amount Percent Revenue: Products$ 34,363 58.1 %$ 29,214 55.6 %$ 5,149 17.6 % Services 24,805 41.9 23,286 44.4 1,519 6.5 Total revenue 59,168 100.0 52,500 100.0 6,668 12.7 Cost of revenue: Products 8,215 14.0 6,544 12.5 1,671 25.5 Services 5,415 9.2 4,878 9.3 537 11.0 Total cost of revenue 13,630 23.0 11,422 21.8 2,208 19.3 Gross profit 45,538 77.0 41,078 78.2 4,460 10.9 Operating expenses: Sales and marketing 19,749 33.4 18,476 35.2 1,273 6.9 Research and development 13,491 22.8 13,450 25.6 41 0.3 General and administrative 5,082 8.6 5,237 10.0 (155) (3.0) Total operating expenses 38,322 64.8 37,163 70.8 1,159 3.1 Income from operations 7,216 12.2 3,915 7.5 3,301 84.3
Non-operating income (expense):
Interest and other income (expense), net (112) (0.2) 227 0.4 (339)
(149.3)
Total non-operating income (expense), net (112) (0.2) 227 0.4 (339)
(149.3)
Income before provision for income taxes 7,104 12.0 4,142 7.9 2,962 71.5 Provision for income taxes 488 0.8 334 0.6 154 46.1 Net income$ 6,616 11.2 %$ 3,808 7.3 %$ 2,808 73.7 % 23
-------------------------------------------------------------------------------- Six Months Ended June 30, 2021 2020 Increase (Decrease) Percent of Percent of Amount Total Revenue Amount Total Revenue Amount Percent Revenue: Products$ 64,903 56.9 %$ 59,950 56.4 %$ 4,953 8.3 % Services 49,108 43.1 46,314 43.6 2,794 6.0 Total revenue 114,011 100.0 106,264 100.0 7,747 7.3 Cost of revenue: Products 15,301 13.4 13,485 12.7 1,816 13.5 Services 10,828 9.4 10,079 9.5 749 7.4 Total cost of revenue 26,129 22.9 23,564 22.2 2,565 10.9 Gross profit 87,882 77.1 82,700 77.8 5,182 6.3 Operating expenses: Sales and marketing 38,841 34.1 39,097 36.8 (256) (0.7) Research and development 27,472 24.1 28,765 27.1 (1,293) (4.5) General and administrative 10,329 9.1 11,132 10.5 (803) (7.2) Total operating expenses 76,642 67.2 78,994 74.3 (2,352) (3.0) Income from operations 11,240 9.9 3,706 3.5 7,534 203.3
Non-operating income (expense):
Interest and other income (expense), net (1,295) (1.1) 458 0.4 (1,753) (382.8) Total non-operating income (expense), net (1,295) (1.1) 458 0.4 (1,753) (382.8) Income before income taxes 9,945 8.7 4,164 3.9 5,781 138.8 Provision for income taxes 672 0.6 653 0.6 19 2.9 Net income$ 9,273 8.1 %$ 3,511 3.3 %$ 5,762 164.1 % Revenue Our products revenue primarily consists of revenue from sales of our hardware appliances upon which our software is installed. Such software includes our ACOS software platform plus one or more of our ADC, CGN, TPS, SSLi or CFW solutions. Purchase of a hardware appliance includes a perpetual license to the included software. We recognize products revenue upon transfer of control, generally at the time of shipment, provided that all other revenue recognition criteria have been met. As a percentage of revenue, our products revenue may vary from quarter to quarter based on, among other things, the timing of orders and delivery of products, cyclicality and seasonality, changes in currency exchange rates and the impact of significant transactions with unique terms and conditions. We generate services revenue from sales of post contract support ("PCS"), which is bundled with sales of products and professional services. We offer tiered PCS services under renewable, fee-based PCS contracts, primarily including technical support, hardware repair and replacement parts, and software upgrades on a when-and-if-available basis. We recognize services revenue ratably over the term of the PCS contract, which is typically one year, but can be up to seven years. 24 --------------------------------------------------------------------------------
A summary of our total revenue is as follows (dollars in thousands):
Three Months Ended June 30, 2021 2020 Increase (Decrease) Percent of Percent of Amount Total Revenue Amount Total Revenue Amount Percent Revenue: Products$ 34,363 58 %$ 29,214 56 %$ 5,149 18 % Services 24,805 42 23,286 44 1,519 7 Total revenue$ 59,168 100 %$ 52,500 100 %$ 6,668 13 % Revenue by geographic region: Americas$ 28,836 49 %$ 23,962 46 %$ 4,874 20 % Japan 15,564 26 12,854 24 2,710 21 Asia Pacific, excluding Japan 7,703 13 8,005 15 (302) (4) EMEA 7,065 12 7,679 15 (614) (8) Total revenue$ 59,168 100 %$ 52,500 100 %$ 6,668 13 % Six Months Ended June 30, 2021 2020 Increase (Decrease) Percent of Percent of Amount Total Revenue Amount Total Revenue Amount Percent Revenue: Products$ 64,903 57 %$ 59,950 56 %$ 4,953 8 % Services 49,108 43 46,314 44 2,794 6 Total revenue$ 114,011 100 %$ 106,264 100 %$ 7,747 7 % Revenue by geographic region: Americas$ 55,106 48 %$ 49,400 46 %$ 5,706 12 % Japan 29,183 26 30,495 29 (1,312) (4) Asia Pacific, excluding Japan 14,038 12 12,887 12 1,151 9 EMEA 15,684 14 13,482 13 2,202 16 Total revenue$ 114,011 100 %$ 106,264 100 %$ 7,747 7 % Total revenue increased by$6.7 million , or 13%, during the three months endedJune 30, 2021 compared to the same period of 2020. This increase was due primarily to a$4.9 million increase in theAmericas region and a$2.7 million increase inJapan , partially offset by a$0.6 million decrease in the EMEA region and a$0.3 million decrease in theAsia region, excludingJapan . The overall increase in revenue was attributable to a$5.7 million increase in revenue from service provider customers, especially in theAmericas region andJapan . Revenue from enterprise customers increased$1.0 million during the three months endedJune 30, 2021 compared to the same period of 2020. Total revenue increased by$7.7 million , or 7%, during the six months endedJune 30, 2021 compared to the same period of 2020. This increase was due primarily to a$5.7 million increase in theAmericas region, a$2.2 million increase in the EMEA region and a$1.2 million increase in theAsia Pacific region, excludingJapan , partially offset by a$1.3 million decrease inJapan . The overall increase in revenue was attributable to a$4.6 million increase in revenue from service provider customers, especially in theAmericas and EMEA regions. Revenue from enterprise customers increased$3.1 million during the six months endedJune 30, 2021 compared to the same period of 2020, due to increases in theAmericas and EMEA regions. 25 -------------------------------------------------------------------------------- Products revenue increased by$5.1 million , or 18%, during the three months endedJune 30, 2021 compared to the same period of 2020, primarily driven by increased demand from our service provider customers in theAmericas region andJapan . Products revenue increased by$5.0 million , or 8%, during the six months endedJune 30, 2021 compared to the same period of 2020, primarily driven by increased demand from our enterprise and service provider customers in theAmericas region and increased demand from our service provider customers in the EMEA region. Services revenue increased by$1.5 million , or 7%, during the three months endedJune 30, 2021 compared to the same period of 2020, and grew by$2.8 million , or 6%, during the six months endedJune 30, 2021 compared to the same period of 2020, primarily attributable to an increase in PCS sales as a result of our growing installed customer base. During the three months endedJune 30, 2021 ,$28.8 million , or 49% of total revenue, was generated from theAmericas region, which represents a 3% increase compared to the same period of 2020. The increase was primarily due to higher products revenue driven by higher demand from our service provider customers in theAmericas region. During the six months endedJune 30, 2021 ,$55.1 million , or 48% of total revenue, was generated from theAmericas region, which represents a 2% increase compared to the same period of 2020. The increase was primarily due to higher products revenue driven by higher demand from our service provider customers in theAmericas region.
During the three months ended
During the six months ended
During the three months endedJune 30, 2021 ,$7.7 million , or 13% of total revenue, was generated from theAsia Pacific region, excludingJapan , which represents a 4% decrease compared to the same period of 2020. The decrease was primarily due to lower products revenue driven by a decrease in demand from our service provider customers in theAsia Pacific region, excludingJapan . During the six months endedJune 30, 2021 ,$14.0 million , or 12% of total revenue, was generated from theAsia Pacific region, excludingJapan . Although revenue from theAsia Pacific region, excludingJapan , increased$1.2 million compared to the same period of 2020, the percentage of total revenue remained flat at 12% in both periods. The increase of$1.2 million was primarily due to higher products and services revenue driven by an increase in demand from enterprise customers in theAsia Pacific region, excludingJapan . During the three months endedJune 30, 2021 ,$7.1 million , or 12% of total revenue, was generated from the EMEA region, which represents a 3% decrease compared to the same period of 2020. The decrease was primarily due to lower products revenue driven by a decrease in demand from our enterprise customers in the EMEA region. During the six months endedJune 30, 2021 ,$15.7 million , or 14% of total revenue, was generated from the EMEA region, which represents a 1% increase compared to the same period of 2020. The increase was primarily due to higher products and services revenue driven by an increase in demand from our service provider customers in the EMEA region.
Cost of Revenue, Gross Profit and Gross Margin
Cost of revenue
Cost of products revenue is primarily comprised of cost of third-party manufacturing services and cost of inventory for the hardware component of our products. Cost of products revenue also includes warehouse personnel costs, shipping costs, inventory write-downs, certain allocated facilities and information technology infrastructure costs, and expenses associated with logistics and quality control.
Cost of services revenue is primarily comprised of personnel costs for our technical support, training and professional service teams. Cost of services revenue also includes the costs of inventory used to provide hardware replacements to end- customers under PCS contracts and certain allocated facilities and information technology infrastructure costs. 26 --------------------------------------------------------------------------------
A summary of our cost of revenue is as follows (dollars in thousands):
Three Months Ended June 30, Increase (Decrease) 2021 2020 Amount Percent Cost of revenue: Products$ 8,215 $ 6,544 $ 1,671 25.5 % Services 5,415 4,878 537 11.0 Total cost of revenue$ 13,630 $ 11,422 $ 2,208 19.3 % Six Months Ended June 30, Increase (Decrease) 2021 2020 Amount Percent Cost of revenue: Products$ 15,301 $ 13,485 $ 1,816 13.5 % Services 10,828 10,079 749 7.4 Total cost of revenue$ 26,129 $ 23,564 $ 2,565 10.9 % Products cost of revenue increased 25.5% during the three months endedJune 30, 2021 compared to the same period of 2020, primarily driven by an increase in products revenue of 18% and changes in product mix and geographic mix. The increase in products revenue in theAmericas region andJapan contributed to the increase in products cost of revenue. Products cost of revenue increased 13.5% during the six months endedJune 30, 2021 compared to the same period of 2020, primarily driven by an increase in products revenue of 8% and changes in product mix and geographic mix. The increase in products revenue in theAmericas region contributed to the increase in products cost of revenue. Services cost of revenue increased 11.0% during the three months endedJune 30, 2021 compared to the same period of 2020, primarily driven by an increase in services revenue of 7% and the mix of services delivered, which include technical support, training and service costs. Services cost of revenue increased 7.4% during the six months endedJune 30, 2021 compared to the same period of 2020, primarily driven by an increase in services revenue of 6% and the mix of services delivered, which include technical support, training and service costs.
Gross Margin
Gross margin may vary and be unpredictable from period to period due to a variety of factors. These may include the mix of revenue from each of our regions, the mix of our products sold within a period, discounts provided to customers, inventory write-downs and foreign currency exchange rates.
Our sales are generally denominated in
Any of the factors noted above can generate either a favorable or unfavorable impact on gross margin.
A summary of our gross profit and gross margin is as follows (dollars in thousands):
27 -------------------------------------------------------------------------------- Three Months Ended June 30, 2021 2020 Increase (Decrease) Amount Gross Margin Amount Gross Margin Amount Gross Margin Gross profit: Products$ 26,148 76.1 %$ 22,670 77.6 %$ 3,478 (1.5) % Services 19,390 78.2 18,408 79.1 982 (0.9) Total gross profit$ 45,538 77.0 %$ 41,078 78.2 %$ 4,460 (1.2) % Six Months Ended June 30, 2021 2020 Increase (Decrease) Amount Gross Margin Amount Gross Margin Amount Gross Margin Gross profit: Products$ 49,602 76.4 %$ 46,465 77.5 %$ 3,137 (1.1) % Services 38,280 78.0 36,235 78.2 2,045 (0.2) Total gross profit$ 87,882 77.1 %$ 82,700 77.8 %$ 5,182 (0.7) % Products gross margin decreased 1.5% during the three months endedJune 30, 2021 compared to the same period of 2020, primarily driven by changes in product mix and geographic mix. The increase in products revenue in theAmericas region andJapan also contributed to the decrease in products gross margin. Products gross margin decreased 1.1% during the six months endedJune 30, 2021 compared to the same period of 2020, primarily driven by changes in product mix and geographic mix. The increase in products revenue in theAmericas region also contributed to the decrease in products gross margin. Services gross margin decreased 0.9% during the three months endedJune 30, 2021 compared to the same period of 2020, primarily driven by the mix of services delivered, which include technical support, training and service costs. Services gross margin decreased 0.2% during the six months endedJune 30, 2021 compared to the same period of 2020, primarily driven by the mix of services delivered, which include technical support, training and service costs. 28 --------------------------------------------------------------------------------
Operating Expenses
Our operating expenses consist of sales and marketing, research and development and general and administrative expenses. The largest component of our operating expenses is personnel costs which consist of wages, benefits, bonuses, and, with respect to sales and marketing expenses, sales commissions. Personnel costs also include stock-based compensation.
A summary of our operating expenses is as follows (dollars in thousands):
Three Months Ended June 30, Increase (Decrease) 2021 2020 Amount Percent Operating expenses: Sales and marketing$ 19,749 $ 18,476 $ 1,273 6.9 % Research and development 13,491 13,450 41 0.3 General and administrative 5,082 5,237 (155) (3.0) Total operating expenses$ 38,322 $ 37,163 $ 1,159 3.1 % Six Months Ended June 30, Increase (Decrease) 2021 2020 Amount Percent Operating expenses: Sales and marketing$ 38,841 $ 39,097 $ (256) (0.7) % Research and development 27,472 28,765 (1,293) (4.5) General and administrative 10,329 11,132 (803) (7.2) Total operating expenses$ 76,642 $ 78,994 $ (2,352) (3.0) % As a result of COVID-19, we implemented restrictions on travel inMarch 2020 , some of which are now being loosened, depending upon evolving circumstances. Our travel restrictions, along with travel restrictions put in place by many of our vendors, have directly and indirectly impacted activities such as marketing events, trade shows and consulting services.
Sales and Marketing
Sales and marketing expenses are our largest functional category of operating expenses and primarily consist of personnel costs. Sales and marketing expenses also include the cost of marketing programs, trade shows, consulting services, promotional materials, demonstration equipment, depreciation and certain allocated facilities and information technology infrastructure costs. The increase of$1.3 million , or 6.9%, in sales and marketing expense for the three months endedJune 30, 2021 compared to the same period of 2020, was attributable to a$1.7 million increase in employee compensation and benefit expense, partially offset by a decrease of$0.4 million in bad debt expense. Employee compensation and benefits increased primarily due to an increase in sales commissions. The decrease of$0.3 million , or 0.7%, in sales and marketing expense for the six months endedJune 30, 2021 compared to the same period of 2020, was attributable to a$0.8 million decrease in meeting and event expense and a$0.6 million decrease in travel and entertainment expense as a result of the Company's COVID-19 safety measures and travel restrictions. These decreases were partially offset by an increase in employee compensation and benefit expense, which increased primarily due to an increase in sales commissions.
For the full year 2021, we expect sales and marketing expenses to remain near 2020 levels as we continue to actively control costs.
29 --------------------------------------------------------------------------------
Research and Development
Research and development efforts are focused on new product development and on developing additional functionality for our existing products. These expenses primarily consist of personnel costs, and, to a lesser extent, prototype materials, depreciation and certain allocated facilities and information technology infrastructure costs. We expense research and development costs as incurred. The increase of$41 thousand , or 0.3%, in research and development expenses for the three months endedJune 30, 2021 compared to the same period of 2020, was primarily attributable to a$1.3 million increase in consulting expenses, partially offset by a decrease of$1.0 million in employee compensation and benefit expense due to a decrease in employee headcount. The Company decreased its employee headcount in theAsia Pacific region, excludingJapan , in the first half of 2021 and engaged a third-party contracting firm to perform the same distribution services that the terminated employees previously performed. Additionally, depreciation and amortization decreased$0.2 million during the three months endedJune 30, 2021 , compared to the same period of 2020. The decrease of$1.3 million , or 4.5%, in research and development expenses for the six months endedJune 30, 2021 compared to the same period of 2020, was primarily attributable to a$2.4 million decrease in employee compensation and benefit expense due to a decrease in employee headcount. Additionally, depreciation and amortization decreased$0.4 million and equipment and software expenses decreased$0.2 million . Partially offsetting these decreases was an increase in consulting expenses of$1.9 million related to our new third-party contracting firm performing distribution services inAsia .
For the full year 2021, we expect research and development expenses to remain near 2020 levels as we continue to actively control costs.
General and Administrative
General and administrative expenses primarily consist of personnel costs, professional services and office expenses. General and administrative personnel costs include executive, finance, human resources, information technology, facility and legal related expenses. Professional services primarily consist of fees for outside accounting, tax, external legal counsel (including litigation), recruiting and other administrative services. The decrease of$0.2 million , or 3.0%, in general and administrative expenses for the three months endedJune 30, 2021 compared to the same period of 2020, was primarily due to a$0.2 million decrease in employee compensation and benefit expense due to a decrease in employee headcount. The decrease of$0.8 million , or 7.2%, in general and administrative expenses for the six months endedJune 30, 2021 compared to the same period of 2020, was primarily due to a$0.5 million decrease in facility expense. We completed the relocation of our headquarters facility inSan Jose, California , in early 2020 and incurred certain non-recurring facility expenses in the six months endedJune 30, 2020 . Additionally, employee compensation and benefit expense decreased$0.4 million due to a decrease in employee headcount.
For the full year 2021, we expect general and administrative expenses to remain near 2020 levels as we continue to actively control costs.
Interest and Other Income (Expense), Net
Interest income consists primarily of interest income earned on our cash and cash equivalents and marketable securities. Other income (expense) consists primarily of foreign currency exchange gains and losses.
Interest and other income (expense), net, had an unfavorable change of$0.3 million for the three months endedJune 30, 2021 compared to the same period of 2020, primarily driven by a decrease in interest income received from our investments in liquid marketable securities. Interest income was$0.1 million in the three months endedJune 30, 2021 compared to$0.4 million in the three months endedJune 30, 2020 primarily as a result of fluctuations in prevailing interest rates. Interest and other income (expense), net, had an unfavorable change of$1.8 million for the six months endedJune 30, 2021 compared to the same period of 2020, primarily driven by a$1.0 million unfavorable change in foreign exchange gains and losses as we incurred$1.5 million of net foreign exchange losses in the six months endedJune 30, 2021 compared to$0.5 30 -------------------------------------------------------------------------------- million of net foreign currency losses in the six months endedJune 30, 2020 primarily as a result of the weakening of the Japanese Yen. Additionally, interest income received from our investments in liquid marketable securities decreased$0.7 million from$1.0 million in the six months endedJune 30, 2020 compared to$0.3 million in the six months endedJune 30, 2020 primarily as a result of fluctuations in prevailing interest rates.
Provision for Income Taxes
We recorded income tax provisions of$0.5 million and$0.7 million for the three and six months endedJune 30, 2021 , respectively, which primarily consisted of foreign taxes. We recorded income tax provisions of$0.3 million and$0.7 million for the three and six months endedJune 30, 2020 , respectively, which primarily consisted of foreign taxes. We currently maintain a valuation allowance on federal and state deferred tax assets. However, there is a reasonable possibility that within the next year, a significant portion, or all, of the valuation allowance will no longer be needed. We will continue to monitor both the quantitative and qualitative evidence to determine if the valuation assertion would be revised.
Liquidity and Capital Resources
As ofJune 30, 2021 , we had cash and cash equivalents of$67.9 million , including$4.7 million held outsidethe United States at our foreign subsidiaries, and$98.9 million of marketable securities. We currently do not have any plans to repatriate our earnings from our foreign operations. As ofJune 30, 2021 , we had working capital of$147.3 million , accumulated deficit of$263.0 million and total stockholders' equity of$124.5 million . Our marketable securities are highly liquid and are classified as available for sale should the Company decide to quickly raise cash at any time in the future. We plan to continue to invest for long-term growth, and our investment may increase. We believe that our existing cash and cash equivalents and marketable securities will be sufficient to meet our anticipated cash needs for at least the next 12 months. Our future capital requirements will depend on many factors, including our growth rate, the expansion of sales and marketing activities, the timing and extent of spending to support development efforts, the introduction of new and enhanced product and service offerings and the continuing market acceptance of our products. In the event that additional financing is required from outside sources, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, operating results and financial condition could be adversely affected. OnMay 17, 2020 , we entered into a Common Stock Repurchase and Option Exchange Agreement (the "Repurchase Agreement") withLee Chen , the Company's founder and its former Chairman, President and Chief Executive Officer. Pursuant to the Repurchase Agreement, we repurchased 2.2 million shares of common stock fromMr. Chen for approximately$13.3 million . The common shares repurchased are held in treasury and accounted for under the cost method. OnSeptember 17, 2020 , we issued a press release announcing that our Board of Directors had approved a stock repurchase program of up to$50 million of its common stock over a period of twelve months. During the six months endedJune 30, 2021 , the Company repurchased 1.2 million shares of its common stock for a total cost of$11.2 million . Since approving the program, the Company has repurchased 3.9 million shares for a total cost of$30.4 million throughJune 30, 2021 and the Company had$19.6 million available to repurchase shares under this program as ofJune 30, 2021 . Our stock repurchase program does not obligate us to acquire any specific number of shares. Shares may be repurchased in privately negotiated and/or open market transactions. To date, all repurchases under this program have occurred in the open market. As described in Part II, Item 1. Legal Proceedings of this Quarterly Report on Form 10-Q, from time to time we are involved in ongoing litigation. Any adverse settlements or judgments in any litigation could have a material adverse impact on our results of operations, cash balances and cash flows in the period in which such events occur. 31
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