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 March 31, 2016 Expected life (in years) 5.93 – Risk-free interest rate 1.32% - 1.34% Volatility 65% Dividend yield — The weighted-average grant-date fair value of options granted was $8.51 per share during the three months ended March 31, 2016.There were no option grants during the three months ended March 31, 2015. 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 RSU award activity under the 2013 Plan is as follows: RSUs Outstanding Options Outstanding Shares Available for Grant Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in Balance as of December 31, 2015 2,889,301 6,786,446 $ 13.14 8,469,666 $ 7.62 5.91 $ 19,231 Increase in shares authorized 3,279,811 Options granted (1,964,700 ) 1,964,700 8.51 Options exercised — (533,205 ) 3.35 2,040 Options canceled or expired 155,675 (155,675 ) 7.85 RSUs granted (968,648 ) 968,648 7.19 RSUs vested — (1,267,623 ) 13.20 RSUs canceled or expired 542,684 (542,684 ) 13.60 Balance as of March 31, 2016 3,934,123 5,944,787 $ 11.71 9,745,486 $ 8.03 6.55 $ 40,379 Vested and expected to vest as of March 31, 2016 8,899,161 $ 7.78 6.36 $ 38,717 Vested and exercisable as of March 31, 2016 6,334,334 $ 6.55 5.19 $ 34,458 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 options which vested during the three months ended March 31, 2016 and 2015 was $0.8 million and $1.2 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 which is six months in duration, subject to certain limitations. The fair value of the option feature is estimated using the Black-Scholes model for the period presented based on the following assumptions: Three Months Ended March 31, 2016 2015 Expected life (in years) 0.50 0.50 Risk-free interest rate 0.33% 0.07% Volatility 72% 70% Dividend yield — — As of March 31, 2016, a total of 365,772 shares of common stock was issued under the 2013 Employee Stock Purchase Plan (“ESPP”). As of March 31, 2016, a total of 1,634,228 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 March 31, 2016 2015 Cost of revenues $ 497 $ 449 Sales and marketing 1,583 2,941 Research and development 2,240 2,784 General and administrative 3,290 2,758 Total stock-based compensation expense $ 7,610 $ 8,932 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. As of March 31, 2016, there was $54.2 million of unrecognized stock-based compensation expense (net of estimated forfeitures), of which $11.8 million is related to stock options and ESPP shares and $42.4 million is related to RSUs. The total unrecognized stock-based compensation expense related to stock options and ESPP as of March 31, 2016 will be amortized over a weighted-average period of 3.25 years. The total unrecognized stock-based compensation expense related to RSUs as of March 31, 2016 will be amortized over a weighted-average period of 2.69 years. |