acia-20200930
000165123512/312020Q3FALSE00016512352020-01-012020-09-30xbrli:shares00016512352020-10-30iso4217:USD00016512352020-09-3000016512352019-12-31iso4217:USDxbrli:shares00016512352020-07-012020-09-3000016512352019-07-012019-09-3000016512352019-01-012019-09-300001651235us-gaap:CommonStockMember2018-12-310001651235us-gaap:TreasuryStockMember2018-12-310001651235us-gaap:AdditionalPaidInCapitalMember2018-12-310001651235us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-310001651235us-gaap:RetainedEarningsMember2018-12-3100016512352018-12-310001651235us-gaap:CommonStockMember2019-01-012019-03-310001651235us-gaap:AdditionalPaidInCapitalMember2019-01-012019-03-3100016512352019-01-012019-03-310001651235us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-03-310001651235us-gaap:RetainedEarningsMember2019-01-012019-03-310001651235us-gaap:CommonStockMember2019-03-310001651235us-gaap:TreasuryStockMember2019-03-310001651235us-gaap:AdditionalPaidInCapitalMember2019-03-310001651235us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-03-310001651235us-gaap:RetainedEarningsMember2019-03-3100016512352019-03-310001651235us-gaap:CommonStockMember2019-04-012019-06-300001651235us-gaap:AdditionalPaidInCapitalMember2019-04-012019-06-3000016512352019-04-012019-06-300001651235us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-04-012019-06-300001651235us-gaap:RetainedEarningsMember2019-04-012019-06-300001651235us-gaap:CommonStockMember2019-06-300001651235us-gaap:TreasuryStockMember2019-06-300001651235us-gaap:AdditionalPaidInCapitalMember2019-06-300001651235us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-06-300001651235us-gaap:RetainedEarningsMember2019-06-3000016512352019-06-300001651235us-gaap:CommonStockMember2019-07-012019-09-300001651235us-gaap:AdditionalPaidInCapitalMember2019-07-012019-09-300001651235us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-07-012019-09-300001651235us-gaap:RetainedEarningsMember2019-07-012019-09-300001651235us-gaap:CommonStockMember2019-09-300001651235us-gaap:TreasuryStockMember2019-09-300001651235us-gaap:AdditionalPaidInCapitalMember2019-09-300001651235us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-09-300001651235us-gaap:RetainedEarningsMember2019-09-3000016512352019-09-300001651235us-gaap:CommonStockMember2019-12-310001651235us-gaap:TreasuryStockMember2019-12-310001651235us-gaap:AdditionalPaidInCapitalMember2019-12-310001651235us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001651235us-gaap:RetainedEarningsMember2019-12-310001651235us-gaap:CommonStockMember2020-01-012020-03-310001651235us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-3100016512352020-01-012020-03-310001651235us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310001651235us-gaap:RetainedEarningsMember2020-01-012020-03-310001651235us-gaap:CommonStockMember2020-03-310001651235us-gaap:TreasuryStockMember2020-03-310001651235us-gaap:AdditionalPaidInCapitalMember2020-03-310001651235us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-310001651235us-gaap:RetainedEarningsMember2020-03-3100016512352020-03-310001651235us-gaap:CommonStockMember2020-04-012020-06-300001651235us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-3000016512352020-04-012020-06-300001651235us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-04-012020-06-300001651235us-gaap:RetainedEarningsMember2020-04-012020-06-300001651235us-gaap:CommonStockMember2020-06-300001651235us-gaap:TreasuryStockMember2020-06-300001651235us-gaap:AdditionalPaidInCapitalMember2020-06-300001651235us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-300001651235us-gaap:RetainedEarningsMember2020-06-3000016512352020-06-300001651235us-gaap:CommonStockMember2020-07-012020-09-300001651235us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300001651235us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300001651235us-gaap:RetainedEarningsMember2020-07-012020-09-300001651235us-gaap:CommonStockMember2020-09-300001651235us-gaap:TreasuryStockMember2020-09-300001651235us-gaap:AdditionalPaidInCapitalMember2020-09-300001651235us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300001651235us-gaap:RetainedEarningsMember2020-09-30utr:GB0001651235srt:MinimumMember2020-01-012020-09-300001651235srt:MaximumMember2020-01-012020-09-300001651235acia:CiscoSystemsMemberus-gaap:ScenarioPlanMember2019-07-082019-07-080001651235us-gaap:SellingGeneralAndAdministrativeExpensesMember2019-07-012019-09-300001651235us-gaap:SellingGeneralAndAdministrativeExpensesMember2020-01-012020-09-300001651235us-gaap:SellingGeneralAndAdministrativeExpensesMember2019-01-012019-09-300001651235acia:EmbeddedModulesMember2020-07-012020-09-30xbrli:pure0001651235acia:EmbeddedModulesMember2019-07-012019-09-300001651235acia:EmbeddedModulesMember2020-01-012020-09-300001651235acia:EmbeddedModulesMember2019-01-012019-09-300001651235acia:PluggableModulesMember2020-07-012020-09-300001651235acia:PluggableModulesMember2019-07-012019-09-300001651235acia:PluggableModulesMember2020-01-012020-09-300001651235acia:PluggableModulesMember2019-01-012019-09-300001651235acia:SemiconductorsMember2020-07-012020-09-300001651235acia:SemiconductorsMember2019-07-012019-09-300001651235acia:SemiconductorsMember2020-01-012020-09-300001651235acia:SemiconductorsMember2019-01-012019-09-300001651235us-gaap:CashMember2020-09-300001651235us-gaap:MoneyMarketFundsMember2020-09-300001651235us-gaap:USTreasuryBondSecuritiesMember2020-09-300001651235us-gaap:CommercialPaperMember2020-09-300001651235us-gaap:CertificatesOfDepositMember2020-09-300001651235us-gaap:AssetBackedSecuritiesMember2020-09-300001651235us-gaap:CorporateDebtSecuritiesMember2020-09-300001651235us-gaap:CashMember2019-12-310001651235us-gaap:MoneyMarketFundsMember2019-12-310001651235us-gaap:USTreasuryBondSecuritiesMember2019-12-310001651235us-gaap:CommercialPaperMember2019-12-310001651235us-gaap:CertificatesOfDepositMember2019-12-310001651235us-gaap:AssetBackedSecuritiesMember2019-12-310001651235us-gaap:CorporateDebtSecuritiesMember2019-12-310001651235us-gaap:EquipmentMember2020-09-300001651235us-gaap:EquipmentMember2019-12-310001651235acia:ComputerSoftwareMember2020-09-300001651235acia:ComputerSoftwareMember2019-12-310001651235us-gaap:ComputerEquipmentMember2020-09-300001651235us-gaap:ComputerEquipmentMember2019-12-310001651235us-gaap:FurnitureAndFixturesMember2020-09-300001651235us-gaap:FurnitureAndFixturesMember2019-12-310001651235us-gaap:LeaseholdImprovementsMember2020-09-300001651235us-gaap:LeaseholdImprovementsMember2019-12-310001651235us-gaap:ConstructionInProgressMember2020-09-300001651235us-gaap:ConstructionInProgressMember2019-12-31acia:numberOfOption0001651235srt:MinimumMember2020-09-300001651235srt:MaximumMember2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMember2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:MoneyMarketFundsMember2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:MoneyMarketFundsMember2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:USTreasuryBondSecuritiesMember2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryBondSecuritiesMemberus-gaap:FairValueInputsLevel2Member2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:USTreasuryBondSecuritiesMember2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryBondSecuritiesMember2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel1Member2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel2Member2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommercialPaperMember2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel1Member2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel2Member2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel3Member2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CertificatesOfDepositMember2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:AssetBackedSecuritiesMember2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:AssetBackedSecuritiesMember2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:AssetBackedSecuritiesMember2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Member2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel3Member2020-09-300001651235us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMember2020-09-300001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMember2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:MoneyMarketFundsMember2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:MoneyMarketFundsMember2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:USTreasuryBondSecuritiesMember2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryBondSecuritiesMemberus-gaap:FairValueInputsLevel2Member2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:USTreasuryBondSecuritiesMember2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryBondSecuritiesMember2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel1Member2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel2Member2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommercialPaperMember2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel1Member2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel2Member2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel3Member2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CertificatesOfDepositMember2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:AssetBackedSecuritiesMember2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:AssetBackedSecuritiesMember2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:AssetBackedSecuritiesMember2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Member2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel3Member2019-12-310001651235us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2019-12-310001651235us-gaap:FairValueMeasurementsRecurringMember2019-12-310001651235us-gaap:CostOfSalesMember2020-07-012020-09-300001651235us-gaap:CostOfSalesMember2019-07-012019-09-300001651235us-gaap:CostOfSalesMember2020-01-012020-09-300001651235us-gaap:CostOfSalesMember2019-01-012019-09-300001651235us-gaap:ResearchAndDevelopmentExpenseMember2020-07-012020-09-300001651235us-gaap:ResearchAndDevelopmentExpenseMember2019-07-012019-09-300001651235us-gaap:ResearchAndDevelopmentExpenseMember2020-01-012020-09-300001651235us-gaap:ResearchAndDevelopmentExpenseMember2019-01-012019-09-300001651235us-gaap:SellingGeneralAndAdministrativeExpensesMember2020-07-012020-09-300001651235us-gaap:EmployeeStockOptionMember2020-07-012020-09-300001651235us-gaap:EmployeeStockOptionMember2019-07-012019-09-300001651235us-gaap:EmployeeStockOptionMember2020-01-012020-09-300001651235us-gaap:EmployeeStockOptionMember2019-01-012019-09-300001651235us-gaap:RestrictedStockUnitsRSUMember2020-07-012020-09-300001651235us-gaap:RestrictedStockUnitsRSUMember2019-07-012019-09-300001651235us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-09-300001651235us-gaap:RestrictedStockUnitsRSUMember2019-01-012019-09-300001651235acia:EmployeeStockPurchasePlanMember2020-07-012020-09-300001651235acia:EmployeeStockPurchasePlanMember2019-07-012019-09-300001651235acia:EmployeeStockPurchasePlanMember2020-01-012020-09-300001651235acia:EmployeeStockPurchasePlanMember2019-01-012019-09-300001651235acia:OtherAwardsMember2020-07-012020-09-300001651235acia:OtherAwardsMember2019-07-012019-09-300001651235acia:OtherAwardsMember2020-01-012020-09-300001651235acia:OtherAwardsMember2019-01-012019-09-3000016512352019-01-012019-12-310001651235us-gaap:EmployeeStockOptionMember2020-09-300001651235us-gaap:EmployeeStockOptionMember2019-12-310001651235us-gaap:EmployeeStockOptionMember2019-01-012019-12-310001651235acia:EmployeesAndExecutivesMemberus-gaap:RestrictedStockUnitsRSUMemberacia:TwoThousandAndSixteenEquityIncentivePlanMember2020-01-012020-09-300001651235us-gaap:RestrictedStockUnitsRSUMember2019-12-310001651235us-gaap:RestrictedStockUnitsRSUMember2020-09-300001651235us-gaap:RestrictedStockUnitsRSUMember2019-01-012019-12-310001651235us-gaap:EmployeeStockOptionMember2020-07-012020-09-300001651235us-gaap:EmployeeStockOptionMember2019-07-012019-09-300001651235us-gaap:EmployeeStockOptionMember2020-01-012020-09-300001651235us-gaap:EmployeeStockOptionMember2019-01-012019-09-300001651235us-gaap:RestrictedStockUnitsRSUMember2020-07-012020-09-300001651235us-gaap:RestrictedStockUnitsRSUMember2019-07-012019-09-300001651235us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-09-300001651235us-gaap:RestrictedStockUnitsRSUMember2019-01-012019-09-300001651235us-gaap:PendingLitigationMemberacia:ViaSatInc.U.S.DistrictCourtfortheSouthernDistrictofCaliforniaMemberacia:BreachOfContractMember2019-07-172019-07-170001651235acia:TradeSecretMisappropriationMemberus-gaap:PendingLitigationMemberacia:ViaSatInc.U.S.DistrictCourtfortheSouthernDistrictofCaliforniaMember2019-07-172019-07-170001651235srt:MaximumMemberus-gaap:PendingLitigationMemberacia:ViaSatInc.U.S.DistrictCourtfortheSouthernDistrictofCaliforniaMemberacia:BreachOfContractMember2019-07-182019-07-180001651235us-gaap:PendingLitigationMemberacia:ViaSatInc.U.S.DistrictCourtfortheSouthernDistrictofCaliforniaMemberacia:BreachOfContractMember2019-07-182019-07-180001651235us-gaap:PendingLitigationMemberacia:ViaSatInc.U.S.DistrictCourtfortheSouthernDistrictofCaliforniaMemberacia:BreachOfContractMember2020-01-172020-01-170001651235us-gaap:PendingLitigationMemberacia:ViaSatInc.CommonwealthofMassachusettsMember2020-09-300001651235us-gaap:PendingLitigationMemberacia:ViaSatInc.U.S.DistrictCourtfortheSouthernDistrictofCaliforniaMember2019-12-200001651235us-gaap:IndemnificationGuaranteeMember2020-09-300001651235us-gaap:IndemnificationGuaranteeMember2019-12-310001651235us-gaap:DomesticCountryMember2020-01-012020-09-30acia:segment0001651235country:US2020-07-012020-09-300001651235country:US2019-07-012019-09-300001651235country:US2020-01-012020-09-300001651235country:US2019-01-012019-09-300001651235country:CN2020-07-012020-09-300001651235country:CN2019-07-012019-09-300001651235country:CN2020-01-012020-09-300001651235country:CN2019-01-012019-09-300001651235country:DE2020-07-012020-09-300001651235country:DE2019-07-012019-09-300001651235country:DE2020-01-012020-09-300001651235country:DE2019-01-012019-09-300001651235country:TH2020-07-012020-09-300001651235country:TH2019-07-012019-09-300001651235country:TH2020-01-012020-09-300001651235country:TH2019-01-012019-09-300001651235acia:OtherCountriesMember2020-07-012020-09-300001651235acia:OtherCountriesMember2019-07-012019-09-300001651235acia:OtherCountriesMember2020-01-012020-09-300001651235acia:OtherCountriesMember2019-01-012019-09-300001651235country:US2020-09-300001651235country:US2019-12-310001651235country:TH2020-09-300001651235country:TH2019-12-310001651235country:CN2020-09-300001651235country:CN2019-12-310001651235acia:OtherCountriesMember2020-09-300001651235acia:OtherCountriesMember2019-12-310001651235us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberacia:CustomerAMember2020-07-012020-09-300001651235us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberacia:CustomerAMember2019-07-012019-09-300001651235us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberacia:CustomerAMember2020-01-012020-09-300001651235us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberacia:CustomerAMember2019-01-012019-09-300001651235us-gaap:SalesRevenueNetMemberacia:CustomerBMemberus-gaap:CustomerConcentrationRiskMember2020-07-012020-09-300001651235us-gaap:SalesRevenueNetMemberacia:CustomerBMemberus-gaap:CustomerConcentrationRiskMember2019-07-012019-09-300001651235us-gaap:SalesRevenueNetMemberacia:CustomerBMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-09-300001651235us-gaap:SalesRevenueNetMemberacia:CustomerCMemberus-gaap:CustomerConcentrationRiskMember2020-07-012020-09-300001651235us-gaap:SalesRevenueNetMemberacia:CustomerCMemberus-gaap:CustomerConcentrationRiskMember2019-07-012019-09-300001651235us-gaap:SalesRevenueNetMemberacia:CustomerCMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-09-300001651235us-gaap:SalesRevenueNetMemberacia:CustomerCMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-09-300001651235us-gaap:SalesRevenueNetMemberacia:CustomerEMemberus-gaap:CustomerConcentrationRiskMember2020-07-012020-09-300001651235us-gaap:SalesRevenueNetMemberacia:CustomerEMemberus-gaap:CustomerConcentrationRiskMember2019-07-012019-09-300001651235us-gaap:SalesRevenueNetMemberacia:CustomerEMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-09-300001651235us-gaap:SalesRevenueNetMemberacia:CustomerEMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-09-300001651235us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberacia:CustomerHMember2020-07-012020-09-300001651235us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberacia:CustomerHMember2020-01-012020-09-300001651235us-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMemberacia:CustomerAMember2020-01-012020-09-300001651235us-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMemberacia:CustomerAMember2019-01-012019-12-310001651235acia:CustomerBMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2019-01-012019-12-310001651235us-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMemberacia:CustomerFMember2020-01-012020-09-300001651235acia:CustomerGMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2019-01-012019-12-310001651235us-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMemberacia:CustomerIMember2020-01-012020-09-300001651235acia:PurchasesMemberacia:SupplierXMemberus-gaap:SupplierConcentrationRiskMember2020-07-012020-09-300001651235acia:PurchasesMemberacia:SupplierXMemberus-gaap:SupplierConcentrationRiskMember2019-07-012019-09-300001651235acia:PurchasesMemberacia:SupplierXMemberus-gaap:SupplierConcentrationRiskMember2020-01-012020-09-300001651235acia:PurchasesMemberacia:SupplierXMemberus-gaap:SupplierConcentrationRiskMember2019-01-012019-09-300001651235acia:PurchasesMemberacia:SupplierYMemberus-gaap:SupplierConcentrationRiskMember2020-07-012020-09-300001651235acia:PurchasesMemberacia:SupplierYMemberus-gaap:SupplierConcentrationRiskMember2019-07-012019-09-300001651235acia:PurchasesMemberacia:SupplierYMemberus-gaap:SupplierConcentrationRiskMember2020-01-012020-09-300001651235acia:PurchasesMemberacia:SupplierYMemberus-gaap:SupplierConcentrationRiskMember2019-01-012019-09-300001651235acia:PurchasesMemberacia:SupplierZMemberus-gaap:SupplierConcentrationRiskMember2020-07-012020-09-300001651235acia:AnalogDevicesIncMember2020-07-012020-09-300001651235acia:AnalogDevicesIncMember2019-07-012019-09-300001651235acia:AnalogDevicesIncMember2020-01-012020-09-300001651235acia:AnalogDevicesIncMember2019-01-012019-09-300001651235acia:AnalogDevicesIncMember2018-01-012018-12-31
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 SEPTEMBER 30, 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: 001-37771
Acacia Communications, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 27-0291921
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
Three Mill and Main Place, Suite 400
Maynard, Massachusetts 01754
(Address of principal executive offices)
(978) 938-4896
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.0001 par value per shareACIAThe Nasdaq Global Select 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 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 
 
  Smaller 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 October 30, 2020, the registrant had 42,143,990 shares of common stock outstanding.



Table of Contents
ACACIA COMMUNICATIONS, INC.
Table of Contents
 
Page
EX-31.1(CERTIFICATION OF THE CEO PURSUANT TO SECTION 302)
EX-31.2(CERTIFICATION OF THE CFO PURSUANT TO SECTION 302)
EX-32.1(CERTIFICATION OF THE CEO PURSUANT TO SECTION 906)
EX-32.2(CERTIFICATION OF THE CFO PURSUANT TO SECTION 906)

i

Table of Contents
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” “will” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” under Part II, Item 1A below and elsewhere in this Quarterly Report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as indicative of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Some of the key factors that could cause actual results to differ from our expectations include:
the occurrence of any event, change or other circumstances that could give rise to the termination of the Agreement and Plan of Merger we have entered into with Cisco Systems, Inc. and Amarone Acquisition Corp. and any inability to complete the proposed merger due to the failure to satisfy conditions to completion of the proposed merger, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the proposed merger;
uncertainty regarding the extent to which the COVID-19 pandemic and related response measures will adversely affect our business, results of operations and financial condition, or the business and financial condition of our customers and suppliers;
our ability to sustain or increase revenue from our larger customers, generate revenues from new customers, or offset the discontinuation of concentrated purchases by our larger customers with purchases by new or existing customers;
our ability to anticipate the timing and scale of demand for our products, including from our largest customers;
the adverse impact of negative economic conditions created or exacerbated by the ongoing COVID-19 pandemic;
our expectations regarding our expenses and revenue, our ability to maintain and expand gross profit, the sufficiency of our cash resources and needs for additional financing;
our ability to produce products free of problems, defects, errors and vulnerabilities;
our anticipated growth strategies;
our expectations regarding competition;
the anticipated trends and challenges in our business and the markets in which we operate;
our expectations regarding, and the capacity and stability of, our supply chain and manufacturing;
the size and growth of the potential markets for our products and the ability to serve those markets;
the scope, progress, expansion, and costs of developing and commercializing our products;
the timing, rate and degree of introducing any of our products into the market and the market acceptance of any of our products;
our ability to establish and maintain development partnerships;
our ability to attract or retain key personnel;
1

Table of Contents
our expectations regarding federal, state and foreign regulatory requirements, including export controls, tax law changes and interpretations, economic sanctions and anti-corruption regulations;
regulatory or legislative developments in the United States and foreign countries, including trade policy and tariffs and export control laws or regulations that could impede our ability to sell our products to our customer ZTE Kangxun Telecom Co. Ltd. or any of its affiliates, or that could impede our ability to sell our products to other customers in certain foreign jurisdictions, particularly in China, or that could impede sales by such customers in the United States; and
our ability to obtain and maintain intellectual property protection for our products.
Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise.

2

Table of Contents
PART I—FINANCIAL INFORMATION
ITEM 1. Condensed Consolidated Financial Statements (Unaudited).
ACACIA COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(Unaudited)
 September 30, 2020December 31, 2019
ASSETS  
Current assets:  
Cash and cash equivalents$211,224 $36,617 
Marketable securities - short-term244,458 300,129 
Accounts receivable137,246 97,948 
Inventory35,195 40,820 
Prepaid expenses and other current assets8,641 6,518 
Total current assets636,764 482,032 
Marketable securities - long-term83,477 134,632 
Property and equipment, net28,187 26,801 
Operating lease right-of-use assets29,470 25,046 
Deferred tax asset51,976 51,798 
Other assets1,132 1,106 
Total assets$831,006 $721,415 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities:  
Accounts payable$65,355 $46,957 
Accrued liabilities67,331 61,680 
Deferred revenue6,973 4,483 
Total current liabilities139,659 113,120 
Income taxes payable6,280 7,117 
Non-current operating lease liabilities18,972 15,726 
Other long-term liabilities4,992 7,029 
Total liabilities169,903 142,992 
Commitments and contingencies (Note 12)
Stockholders’ equity:  
Preferred stock, $0.0001 par value; 5,000 shares authorized; none issued and outstanding at September 30, 2020 and December 31, 2019
  
Common stock, $0.0001 par value; 150,000 shares authorized; 43,078 and 42,399 shares issued at September 30, 2020 and December 31, 2019, respectively
4 4 
Treasury stock, at cost; 974 shares at September 30, 2020 and December 31, 2019
(39,712)(39,712)
Additional paid-in capital428,532 402,032 
Accumulated other comprehensive income886 720 
Retained earnings271,393 215,379 
Total stockholders’ equity661,103 578,423 
Total liabilities and stockholders’ equity$831,006 $721,415 
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3

Table of Contents
ACACIA COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
 
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Revenue$158,456 $119,591 $419,297 $335,990 
Cost of revenue78,541 60,512 214,892 175,982 
Gross profit79,915 59,079 204,405 160,008 
Operating expenses:  
Research and development39,884 28,649 104,554 88,578 
Sales, general and administrative15,082 20,457 47,729 66,143 
Total operating expenses54,966 49,106 152,283 154,721 
Income from operations24,949 9,973 52,122 5,287 
Other income, net:  
Interest income, net951 2,592 4,869 7,940 
Other income (expense), net44 (102)(33)(209)
Total other income, net995 2,490 4,836 7,731 
Income before income tax expense (benefit)25,944 12,463 56,958 13,018 
Income tax expense (benefit)1,655 (2,642)944 (7,039)
Net income$24,289 $15,105 $56,014 $20,057 
Earnings per share:  
Basic$0.58 $0.37 $1.34 $0.49 
Diluted$0.56 $0.35 $1.30 $0.47 
Weighted-average shares used to compute earnings per share:  
Basic42,061 41,119 41,841 40,730 
Diluted43,229 42,667 43,195 42,404 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4

Table of Contents
ACACIA COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(Unaudited)
 
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Net income$24,289 $15,105 $56,014 $20,057 
Other comprehensive (loss) income:  
Changes in unrealized income (loss) on marketable securities, net of income taxes of $79, $(98), $(12) and $(172) for the three and nine months ended September 30, 2020 and 2019, respectively
(612)101 166 1,134 
Comprehensive income$23,677 $15,206 $56,180 $21,191 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5

Table of Contents
ACACIA COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(Unaudited)
 
 Common StockTreasury StockAdditional Paid-in CapitalAccumulated Other Comprehensive (Loss) IncomeRetained Earnings 
 SharesAmountSharesAmountTotal
Balance at December 31, 201841,024 $4 974 $(39,712)$360,267 $(372)$182,540 $502,727 
Exercise of common stock options190 — 1,400   1,400 
Vesting of restricted stock units316 — — — 
Stock-based compensation expense  7,967   7,967 
Unrealized gains on marketable securities, net of tax of $(88)
555 555 
Net income    6,977 6,977 
Balance at March 31, 201941,530 $4 974 $(39,712)$369,634 $183 $189,517 $519,626 
Exercise of common stock options72 — 413 413 
Vesting of restricted stock units297 — — 
Common stock issued under employee stock purchase plan
56 — 2,131 2,131 
Stock-based compensation expense8,927 8,927 
Unrealized gains on marketable securities, net of tax of $(72)
478 478 
Net loss(2,025)(2,025)
Balance at June 30, 201941,955 $4 974 $(39,712)$381,105 $661 $187,492 $529,550 
Exercise of common stock options89 — 560 560 
Vesting of restricted stock units169 — — 
Stock-based compensation expense8,605 8,605 
Unrealized gains on marketable securities, net of tax of $(12)
101 101 
Net income15,105 15,105 
Balance at September 30, 201942,213 $4 974 $(39,712)$390,270 $762 $202,597 $553,921 
Balance at December 31, 201942,399 $4 974 $(39,712)$402,032 $720 $215,379 $578,423 
Exercise of common stock options36 — 323   323 
Vesting of restricted stock units255 — —   — 
Stock-based compensation expense  9,263   9,263 
Unrealized losses on marketable securities, net of tax of $39
   (1,013) (1,013)
Net income    15,644 15,644 
Balance at March 31, 202042,690 $4 974 $(39,712)$411,618 $(293)$231,023 $602,640 
Exercise of common stock options12 — 150 150 
Vesting of restricted stock units263 — — 
Stock-based compensation expense8,647 8,647 
Unrealized gains on marketable securities, net of tax of $(216)
1,791 1,791 
Net income16,081 16,081 
Balance at June 30, 202042,965 $4 974 $(39,712)$420,415 $1,498 $247,104 $629,309 
Exercise of common stock options30 — 229 229 
Vesting of restricted stock units83 — — 
Stock-based compensation expense7,888 7,888 
Unrealized losses on marketable securities, net of tax of $79
(612)(612)
Net income24,289 24,289 
Balance at September 30, 202043,078 $4 974 $(39,712)$428,532 $886 $271,393 $661,103 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6

Table of Contents
ACACIA COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited) 
 Nine Months Ended September 30,
 20202019
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net income$56,014 $20,057 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation8,109 9,274 
Stock-based compensation26,216 25,717 
Deferred income taxes(178)(8,294)
Non-cash lease expense3,261 3,667 
Other non-cash benefits(253)(1,970)
Changes in operating assets and liabilities:
Accounts receivable(39,298)(8,913)
Inventory5,625 (11,796)
Prepaid expenses and other current assets(2,123)4,321 
Other assets(17)(112)
Accounts payable19,493 (1,227)
Accrued liabilities5,267 27,814 
Deferred revenue(231)6,703 
Income taxes payable(837)(1,674)
Lease liabilities(4,212)(3,741)
Other long-term liabilities299 458 
Net cash provided by operating activities77,135 60,284 
CASH FLOWS FROM INVESTING ACTIVITIES:  
Purchases of property and equipment(10,466)(9,111)
Purchases of marketable securities(217,802)(359,578)
Sales and maturities of marketable securities325,047 307,927 
Deposits(9)(2)
Net cash provided by (used in) investing activities96,770 (60,764)
CASH FLOWS FROM FINANCING ACTIVITIES:  
Proceeds from the issuance of common stock under stock-based compensation plans702 4,504 
Net cash provided by financing activities702 4,504 
Net increase in cash and cash equivalents174,607 4,024 
Cash and cash equivalents—Beginning of period36,617 60,444 
Cash and cash equivalents—End of period$211,224 $64,468 
Supplemental cash flow disclosures:  
Cash paid (refunds received) for income taxes, net $1,390 $(972)
Supplemental disclosure of non-cash investing and financing activities:
Right of use assets acquired under operating leases$4,913 $7,084 
Capital expenditures incurred but not yet paid$243 $623 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7

Table of Contents
Acacia Communications, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
 
1. NATURE OF THE BUSINESS AND OPERATIONS
Acacia Communications, Inc. was incorporated on June 2, 2009, as a Delaware corporation. Acacia Communications, Inc. and its wholly-owned subsidiaries (the “Subsidiaries”) are collectively referred to as the Company. The Company’s mission is to deliver high-speed coherent optical interconnect products that transform communications networks, relied upon by cloud infrastructure operators and content and communication service providers, through improvements in performance and capacity and reductions in associated costs. By implementing optical interconnect technology in a silicon-based platform, a process the Company refers to as the siliconization of optical interconnect, the Company believes it is leading a disruption that is analogous to the computing industry’s integration of multiple functions into a microprocessor. The Company’s products fall into three product groups: embedded modules, pluggable modules and semiconductors. The Company’s embedded module and pluggable module product groups consist of optical interconnect modules with transmission speeds ranging from 100 to 1,200 gigabits per second (“Gbps”), for use in long-haul, metro and inter-data center markets. The Company’s semiconductor product group consists of its low-power coherent digital signal processor application-specific integrated circuits (“DSP ASICs”) and its silicon photonic integrated circuits (“silicon PICs”) which are either integrated into the Company’s embedded and pluggable modules or sold to customers on a standalone basis for integration into internally developed or other merchant modules. The Company is also developing a 400ZR module that will expand its pluggable module product group, and enable inter-data center transmission capacity of 400 Gbps in the same compact pluggable form factors used for 400G client optics, including QSFP-DD and OSFP. The Company’s 400 Gbps pluggable product family will also include a new CFP2-DCO module that supports transmission rates up to 400 Gbps and the OpenROADM specification. The Company’s modules perform a majority of the digital signal processing and optical functions in optical interconnects and offer low power consumption, high density and high speeds at attractive price points. Through the use of standard interfaces, the Company’s modules can be easily integrated with customers’ network equipment. The advanced software in the Company’s modules enables increased configurability and automation, provides insight into network and connection point characteristics and helps identify network performance problems, all of which increase flexibility and reduce operating costs.
The Company is headquartered in Maynard, Massachusetts, and has wholly-owned subsidiaries in North America, Europe and Asia.
Proposed Merger with Cisco Systems
On July 8, 2019, the Company, Cisco Systems, Inc., a California corporation (the “Parent”), and Amarone Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of the Parent (the “Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which, among other things, the Merger Sub will be merged with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of the Parent. The Merger Agreement was adopted by the Company’s stockholders at a special meeting held on September 6, 2019. Completion of the Merger is subject to customary closing conditions, including (i) obtaining antitrust approval in China, (ii) the absence of governmental injunctions or other legal restraints prohibiting the Merger or imposing certain antitrust restraints and (iii) the absence of a “Material Adverse Effect,” as defined in the Merger Agreement. The Company and the Parent have already received antitrust clearance for the Merger in the United States, Germany and Austria. Other than customary closing conditions that are to be satisfied at the time of closing, regulatory clearance from the State Administration for Market Regulation of the People’s Republic of China represents the only remaining outstanding closing condition set forth in the Merger Agreement. If the Merger is completed, each share of the Company’s common stock issued and outstanding immediately prior to the effective time of the Merger, subject to certain exceptions, will be converted into the right to receive $70.00 in cash. The parties expect the Merger to close no later than the third business day following the satisfaction or waiver of these closing conditions.
For additional information related to the Merger Agreement, refer to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 9, 2019, which includes the full text of the Merger Agreement as Exhibit 2.1.
The Company recorded an immaterial amount of acquisition-related costs during the three months ended September 30, 2020, $6.4 million of acquisition-related costs during the three months ended September 30, 2019, and $1.6 million and $7.0 million of acquisition-related costs during the nine months ended September 30, 2020 and 2019, respectively, in sales, general and administrative expense within our condensed consolidated statements of operations.
8

Table of Contents
Impact of COVID-19
An outbreak of the novel coronavirus, severe acute respiratory syndrome coronavirus 2 (“SARS-CoV-2”), and the coronavirus disease, COVID-19, was identified in China in late 2019 and has spread globally. The Centers for Disease Control and Prevention has recognized this outbreak as a pandemic which has resulted in authorities imposing, and businesses and individuals implementing, numerous unprecedented measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place/stay-at-home and social distancing orders and shutdowns. These measures have impacted and may further impact the Company’s workforce and operations, the operations of the Company’s customers, and those of the Company’s and its customers’ respective vendors, suppliers and partners. While the COVID-19 pandemic did not have a material impact on the Company’s financial results for the three or nine month periods ended September 30, 2020, the extent to which the COVID-19 pandemic could impact the Company’s results of operations going forward depends on future developments that are highly uncertain and cannot be predicted, including the adverse impact of negative economic conditions created or exacerbated by the pandemic, new information that may emerge concerning the severity of the virus and required or voluntary actions to contain its impact. Due to the inherent uncertainty of this unprecedented and evolving situation, the Company is unable to predict with any confidence the likely impact of COVID-19 on its future business, results of operations and financial condition. Additional information regarding COVID-19 related risks and uncertainties may be found in the section titled “Risk Factors” under Part II, Item 1A in this Quarterly Report on Form 10-Q.
2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The unaudited condensed consolidated financial statements include the accounts of Acacia Communications, Inc. and its Subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for annual financial statements. For further information, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on February 18, 2020. There have been no significant changes in the Company’s accounting policies from those disclosed in the Annual Report on Form 10-K that have had a material impact on the Company’s condensed consolidated financial statements.
The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements as of and for the year ended December 31, 2019, and in management’s opinion, include all adjustments, consisting of only normal recurring adjustments, necessary for the fair statement of the Company’s condensed consolidated balance sheet as of September 30, 2020, its condensed consolidated statements of operations for the three and nine months ended September 30, 2020 and 2019, its condensed consolidated statements of comprehensive income for the three and nine months ended September 30, 2020 and 2019, its condensed consolidated statements of stockholders’ equity for the three and nine months ended September 30, 2020 and 2019, and its condensed consolidated statements of cash flows for the nine months ended September 30, 2020 and 2019. All intercompany balances and transactions have been eliminated in consolidation. The financial data and the other financial information disclosed in the notes to these condensed consolidated financial statements related to the three and nine months ended September 30, 2020 and 2019 are also unaudited. The results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the full fiscal year or any other period.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Recently Adopted Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 is intended to provide more decision-useful information about expected credit losses on financial instruments, including trade receivables, and other commitments to extend credit held by a reporting entity at each reporting date. The main provisions include presenting financial assets measured at amortized cost at the amount expected to be collected, which is net of an allowance for expected credit losses, and recording credit losses related to available-for-sale securities through an allowance for credit losses. On January 1, 2020, the Company adopted ASU 2016-13 using the modified
9

Table of Contents
retrospective approach. There was no impact from the adoption of ASU 2016-13 on the Company’s condensed consolidated financial statements. The Company is exposed to credit losses through sales of its products. The Company determines if there is an expected loss on its accounts receivables using historical collection experience, current and future economic and market conditions and a review of the current status of customers' trade accounts receivables. The Company has not recorded any allowance for credit losses as of September 30, 2020 or December 31, 2019. Refer to Note 4 for information regarding how the Company assesses credit losses on its available-for-sale debt securities.
Recently Issued Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 is intended to simplify the accounting for income taxes by, among other things, eliminating certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. Upon adoption, ASU 2019-12 will require companies to apply certain aspects of this standard retrospectively for all periods presented, while requiring other aspects to be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The Company expects the impact of adopting this new standard to be immaterial to its condensed consolidated financial statements.
3. REVENUE
The opening and closing balances of the Company’s accounts receivable and deferred revenue for the nine months ended September 30, 2020 are as follows (in thousands):
Balance at Beginning of PeriodIncrease / (Decrease)Balance at End of Period
Nine Months Ended September 30, 2020
Accounts receivable$97,948 39,298 $137,246 
Deferred revenue (current)$4,483 2,490 $6,973 
Deferred revenue (non-current)$3,444 (2,721)$723 
The amount of revenue recognized in the period that was included in the opening deferred revenue balances was approximately $3.2 million for the nine months ended September 30, 2020. Generally, increases in current and non-current deferred revenue are related to billings to, or advance payments from, customers for which the Company has not yet fulfilled its performance obligations, and decreases are related to revenue recognized. Deferred revenue not expected to be recognized within the Company’s operating cycle of one year is presented as a component of “Other long-term liabilities” on the condensed consolidated balance sheets.
At times, the Company receives orders for products that may be delivered over multiple dates that may extend across reporting periods. The Company invoices for each delivery upon shipment and recognizes revenues for each distinct product delivered, assuming transfer of control has occurred. Generally, scheduled delivery dates are within one year, and the Company has elected to use the optional exemption whereby revenues allocated to partially completed contracts with an expected duration of one year or less are not disclosed. As of September 30, 2020, the Company had no contracts with unsatisfied performance obligations with a duration of more than one year.
Disaggregation of Revenue
The following table provides information about disaggregated revenue based on product group (in thousands). Further disaggregation of revenue by geographic country can be found in Note 14.
Three Months Ended September 30, 2020Three Months Ended September 30, 2019Nine Months Ended September 30, 2020Nine Months Ended September 30, 2019
 Revenue ($)Revenue (%)Revenue ($)Revenue (%)Revenue ($)Revenue (%)Revenue ($)Revenue (%)
Embedded modules$77,586 49 %$27,218 23 %$146,093 35 %$66,488 20 %
Pluggable modules50,858 32 %57,526 48 %170,620 41 %167,948 50 %
Semiconductors30,012 19 %34,847 29 %102,584 24 %101,554 30 %
Total revenue$158,456 100 %$119,591 100 %$419,297 100 %$335,990 100 %
10

Table of Contents
4. FINANCIAL INSTRUMENTS
The following tables set forth the Company’s cash, cash equivalents and short- and long-term marketable securities as of September 30, 2020 and December 31, 2019 (in thousands):
 As of September 30, 2020
  Gross Unrealized
 Amortized CostGains
Losses(1)
Estimated Fair ValueCash and Cash EquivalentsMarketable Securities
Cash$157,866 $— $— $157,866 $157,866 $ 
Money market funds45,102 — — 45,102 45,102  
U.S. treasury bonds49,655 255  49,910  49,910 
Commercial paper60,477 9 (1)60,485 5,499 54,986 
Certificates of deposit11,907 14  11,921  11,921 
Asset-backed securities32,452 162  32,614  32,614 
Corporate debt securities180,693 630 (62)181,261 2,757 178,504 
Total$538,152 $1,070 $(63)$539,159 $211,224 $327,935 
(1) Losses represent marketable securities that were in loss positions for less than one year.
 As of December 31, 2019
  Gross Unrealized
 Amortized CostGains
Losses(1)
Estimated Fair ValueCash and Cash EquivalentsMarketable Securities
Cash$29,116 $— $— $29,116 $29,116 $ 
Money market funds2,010 — — 2,010 2,010  
U.S. treasury bonds116,710 126 (1)116,835  116,835 
Commercial paper44,300   44,300 5,491 38,809 
Certificates of deposit24,522 19 (2)24,539  24,539 
Asset-backed securities73,370 134 (5)73,499  73,499 
Corporate debt securities180,607 475 (3)181,079  181,079 
Total$470,635 $754 $(11)$471,378 $36,617 $434,761 
(1) Losses represent marketable securities that were in loss positions for less than one year.
The proceeds from the sales and maturities of marketable securities, which were primarily reinvested and resulted in realized gains and losses, were as follows (in thousands):
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Proceeds from the sales and maturities of marketable securities$75,877 $124,439 $325,047 $307,927 
Realized gains$1 $36 $110 $42 
Realized losses$ $ $ $(2)
 The contractual maturities of short-term and long-term marketable securities held at September 30, 2020 and December 31, 2019 are as follows (in thousands):
 As of September 30, 2020As of December 31, 2019
 Amortized Cost BasisAggregate Fair ValueAmortized Cost BasisAggregate Fair Value
Due within one year$243,602 $244,458 $299,725 $300,129 
Due after one year through three years83,325 83,477 134,292 134,632 
Total$326,927 $327,935 $434,017 $434,761 

As of September 30, 2020, the Company believed that none of its unrealized losses on its available-for-sale investments were attributable to credit losses and therefore were not impaired. The investments with unrealized losses consisted primarily of corporate debt securities. In making the determination that the decline in fair value of these securities did not indicate impairment, the Company considered various factors, including, but not limited to: the extent to which fair value was
11

Table of Contents
less than cost; the financial condition and near-term prospects of the issuers; and the Company’s intent not to sell these securities and the assessment that it is more likely than not that the Company would not be required to sell these securities before the recovery of their amortized cost basis.
Unrealized gains and losses, net of taxes, are reported as a component of accumulated other comprehensive (loss) income in the Company’s condensed consolidated statements of stockholders’ equity. No material amounts were reclassified out of accumulated other comprehensive (loss) income during the three and nine months ended September 30, 2020 and 2019 for realized gains or losses on available-for-sale investments.
5. INVENTORY
Inventory consisted of the following as of September 30, 2020 and December 31, 2019 (in thousands):
 September 30, 2020December 31, 2019
Raw materials$19,272 $24,777 
Work-in-process80 673 
Finished goods15,843 15,370 
Inventory$35,195 $40,820 
6. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following as of September 30, 2020 and December 31, 2019 (in thousands):
 September 30, 2020December 31, 2019
Engineering laboratory equipment$64,737 $58,320 
Computer software3,940 3,730 
Computer equipment9,227 7,837 
Furniture and fixtures3,641 3,641 
Leasehold improvements4,233 3,999 
Construction in progress3,693 2,449 
Total property and equipment89,471 79,976 
Less: Accumulated depreciation(61,284)(53,175)
Property and equipment, net$28,187 $26,801 
Depreciation expense was $2.8 million and $2.9 million for the three months ended September 30, 2020 and 2019, respectively, and $8.1 million and $9.3 million for the nine months ended September 30, 2020 and 2019, respectively.
7. ACCRUED LIABILITIES
Accrued liabilities consisted of the following as of September 30, 2020 and December 31, 2019 (in thousands):
 September 30, 2020December 31, 2019
Employee-related liabilities$7,388 $10,816 
Current maturities of operating leases4,455 4,228 
Goods and services received not invoiced1,776 2,297 
Accrued manufacturing related expenses1,528 3,781 
Warranty reserve8,055 10,354 
Litigation and settlement accrual28,000 20,000 
Outsourced foundry expenses10,012 2,739 
Other accrued liabilities6,117 7,465 
Accrued liabilities$67,331 $61,680 

Certain prior period amounts have been reclassified to conform to the current period presentation. Specifically, as of December 31, 2019, $2.7 million of outsourced foundry expenses were included in “Other accrued liabilities” and have now been reclassified to be presented on a separate line in conformity with the current period presentation.
12

Table of Contents
8. LEASES
The Company leases real estate assets and equipment. For leases with terms greater than 12 months, the Company records the related right-of-use (“ROU”) asset and lease obligation at the present value of lease payments over the term. Many leases include fixed rental escalation clauses, renewal options and/or termination options that are factored into the determination of lease payments when appropriate. The Company’s leases do not usually provide a readily determinable implicit discount rate; therefore, an estimate of the Company’s incremental borrowing rate is used to discount the lease payments based on information available at lease commencement, including observable rates, adjusted for various factors including financing spreads and other lease specific adjustments, as applicable. The Company has elected not to record an ROU asset and lease obligation for short-term leases (with terms less than 12 months) or separate non-lease components from associated lease components for its real estate lease assets.
The Company’s leases have remaining lease terms of less than one year to eight years. Some leases include one or more options to renew with renewal terms that can extend the lease term from three years to five years, or options to terminate the leases, both at the Company’s discretion. The Company’s lease terms include options to extend or terminate leases when the Company concludes it is reasonably certain that it would exercise those options. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company’s lease agreements do not contain any variable lease payments, material residual value guarantees or material restrictive covenants.
The table below presents the lease-related assets and liabilities recorded on the condensed consolidated balance sheet as of September 30, 2020 (in thousands):
Classification on the Balance SheetSeptember 30, 2020
Assets
Operating lease assetsOperating lease right-of-use assets$29,470 
Liabilities
Current - operatingAccrued liabilities4,455 
Noncurrent - operatingNoncurrent operating lease liabilities18,972 
Total lease liabilities$23,427 
Weighted-average remaining lease term - operating leases6.3 years
Weighted-average discount rate - operating leases4.21 %
Operating lease costs were $1.5 million during the three months ended September 30, 2020 and 2019, and $4.5 million and $4.1 million during the nine months ended September 30, 2020 and 2019, respectively. Short-term lease costs during the three and nine months ended September 30, 2020 and 2019 were immaterial. Cash paid for amounts included in the measurement of lease liabilities was $1.1 million during the three months ended September 30, 2020 and 2019, and $3.3 million and $3.1 million during the nine months ended September 30, 2020 and 2019, respectively, which were operating cash outflows.
The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities recorded on the condensed consolidated balance sheet as of September 30, 2020 (in thousands):
13