Stock-Based Compensation | 8. Stock-based Compensation 2013 Equity Incentive Plan In October 2013, the Company adopted the 2013 Equity Incentive Plan (the “2013 Plan”), which became effective in March 2014 and serves as the successor to the Company’s 2006 Stock Plan (the “2006 Plan”). Under the 2013 Plan, the Company may grant stock options, stock appreciation rights, restricted stock and restricted stock units, performance shares and units to employees, directors and consultants. Stock Options The fair value of each option was estimated on the date of grant for the period presented using the following assumptions: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Expected life (in years) 6.08 — 5.50 - 6.08 6.08 Risk-free interest rate 1.67% — 1.67 - 1.89% 2.33% Volatility 60% — 55 - 60% 55% Dividend yield — — — — The weighted-average grant-date fair value of options granted was $5.34 and $5.57 per share during the three months and nine months ended September 30, 2015 and $8.60 per share during the nine months ended September 30, 2014. There were no option grants during the three months ended September 30, 2014. Restricted Stock Units The fair value of RSUs equals the market value of the Company’s common stock on the date of the grant. The RSUs are excluded from issued and outstanding shares until they are vested. A summary of the Company’s stock option and RSUs award activity under the 2013 Plan is as follows: Options Outstanding RSUs Outstanding Shares Available for Grant Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in Number of Shares Weighted Average Grant Date Fair Value Balance as of December 31, 2014 1,825,112 9,494,763 $ 7.00 6.57 $ 107,913 6,809,415 $ 12.66 Increase in shares authorized 3,255,200 Options granted (328,680 ) 328,680 10.05 Options exercised — (1,034,605 ) 3.51 9,438 Options canceled or expired 49,829 (49,829 ) 8.04 RSUs granted (3,155,953 ) 3,155,953 13.48 RSUs released — (1,687,983 ) 11.75 RSUs canceled or expired 1,117,472 (1,117,472 ) 12.83 Balance as of September 30, 2015 2,762,980 8,739,009 $ 7.52 6.12 $ 31,768 7,159,913 $ 13.14 Vested and expected to vest as of September 30, 2015 8,350,252 $ 7.27 6.03 $ 31,409 Vested and exercisable as of September 30, 2015 6,668,290 $ 5.82 5.46 $ 30,100 The aggregate intrinsic value disclosed in the table above is based on the difference between the exercise price of the options and the fair value of the Company’s common stock. The aggregate total fair value of shares which vested during the three and nine months ended September 30, 2015 was $0.8 million and $3.0 million, respectively, and during the three and nine months ended September 30, 2014 was $0.8 million and $2.6 million, respectively. Employee Stock Purchase Plan Eligible employees can enroll and elect to contribute up to 15% of their base compensation through payroll withholdings in each offering period, subject to certain limitations. Each offering period is six months in duration, with the exception of the initial offering period which commenced in March 2014 and ended in November 2014. The purchase price of the stock is the lower of 85% of the fair market value on (a) the first day of the offering period or (b) the purchase date. The fair value of the option feature is estimated using the Black-Scholes model for the period presented based on the following assumptions: Nine Months Ended September 30, 2015 2014 Expected life (in years) 0.50 0.62 Risk-free interest rate 0.08% 0.08% Volatility 63% 55% Dividend yield — — 95,251 shares of common stock were issued under the 2014 Employee Stock Purchase Plan (“ESPP”) in May 2015. As of September 30, 2015, 1,332,472 shares are available for issuance under the ESPP. Stock-based Compensation Expense The following table sets forth the total stock-based compensation expense resulting from stock options, RSUs and ESPP included in the Company’s condensed consolidated statements of operations (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Cost of revenues $ 419 $ 494 $ 1,301 $ 2,594 Sales and marketing 2,723 1,498 9,097 6,899 Research and development 2,411 2,147 7,460 9,417 General and administrative 2,521 2,335 7,655 8,817 Total stock-based compensation expense $ 8,074 $ 6,474 $ 25,513 $ 27,727 As of September 30, 2015, there was $64.6 million of unrecognized stock-based compensation expense (net of estimated forfeitures), of which $6.1 million is related to stock options and ESPP shares and $58.5 million is related to RSUs. The total unrecognized stock-based compensation expense related to stock options and ESPP as of September 30, 2015 will be amortized over a weighted-average period of 2.5 years. The total unrecognized stock-based compensation expense related to RSUs as of September 30, 2015 will be amortized over a weighted-average period of 2.9 years. The amount of stock-based compensation cost capitalized in property and equipment, net on the accompanying condensed consolidated balance sheets was immaterial for all periods presented. |