Stock Incentive Plans | 9 Months Ended |
Sep. 30, 2013 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' |
Stock Incentive Plans | ' |
We recognize stock-based compensation related to awards granted under our 2009 Stock Option and Incentive Plan (the “2009 Plan”), 2011 Equity Incentive Award Plan (the “2011 Plan”) and ESPP. |
Total stock-based compensation expense recognized consisted of: |
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| Three months ended September 30, | | Nine months ended September 30, |
| 2013 | | 2012 | | 2013 | | 2012 |
| (in thousands) |
Cost of revenues | $ | 215 | | | $ | 80 | | | $ | 485 | | | $ | 170 | |
|
Sales and marketing | 322 | | | 85 | | | 709 | | | 256 | |
|
Research and development | 948 | | | 532 | | | 2,575 | | | 915 | |
|
General and administrative | 1,902 | | | 1,551 | | | 7,125 | | | 2,302 | |
|
| $ | 3,387 | | | $ | 2,248 | | | $ | 10,894 | | | $ | 3,643 | |
|
Capitalized stock-based compensation for the three and nine months ended September 30, 2013 and 2012 was not significant. |
2009 Stock Option and Incentive Plan and 2011 Equity Incentive Award Plan |
Stock Options |
The following table summarizes our stock option activity under the 2009 Plan and 2011 Plan: |
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| Number of | | Weighted | | Weighted | | Aggregate | | | |
Shares | Average | Average | Intrinsic | | | |
| Exercise | Remaining | Value | | | |
| Price | Contractual | | | | |
| | Term | | | | |
| | | | | (in years) | | (in thousands) | | | |
Outstanding at January 1, 2013 | 3,461,255 | | | $ | 7.19 | | | | | | | | |
| | |
Granted | 790,330 | | | $ | 23.34 | | | | | | | | |
| | |
Exercised | (698,800 | ) | | $ | 4.89 | | | | | | | | |
| | |
Forfeited or expired | (92,046 | ) | | $ | 17.1 | | | | | | | | |
| | |
Outstanding at September 30, 2013 | 3,460,739 | | | $ | 11.08 | | | 7.46 | | $ | 72,442 | | | | |
| | |
Ending vested and expected to vest at September 30, 2013 | 3,363,041 | | | $ | 10.89 | | | 7.42 | | $ | 71,013 | | | | |
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Exercisable at September 30, 2013 | 1,709,944 | | | $ | 6.39 | | | 6.15 | | $ | 43,804 | | | | |
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Stock options granted during the nine months ended September 30, 2013 were made under the 2011 Plan. There were no grants under the 2009 Plan during the nine months ended September 30, 2013. |
Intrinsic value of an option is the difference between the fair value of our common stock at the time of exercise and the exercise price to be paid. The aggregate intrinsic value for options outstanding at September 30, 2013 in the table above represents the total intrinsic value, based on our closing stock price of $32.01 as of September 30, 2013, which would have been received by option holders had all option holders exercised their in-the-money options as of that date. Options outstanding that are expected to vest are net of estimated future option forfeitures. |
Following is additional information pertaining to our stock option activity: |
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| Three months ended September 30, | | Nine months ended September 30, |
| 2013 | | 2012 | | 2013 | | 2012 |
| (in thousands, except |
per option amounts) |
Weighted average fair value per option granted | $ | 14.15 | | | $ | 12.18 | | | $ | 11.5 | | | $ | 7.29 | |
|
Grant-date fair value of options vested | $ | 1,290 | | | $ | 1,155 | | | $ | 3,328 | | | $ | 1,851 | |
|
Intrinsic value of options exercised | $ | 8,471 | | | $ | 7,458 | | | $ | 14,867 | | | $ | 10,016 | |
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Proceeds received from options exercised | $ | 2,378 | | | $ | 927 | | | $ | 3,420 | | | $ | 2,266 | |
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As of September 30, 2013, total unrecognized stock-based compensation expense related to unvested stock options, adjusted for estimated forfeitures, was $12.2 million and is expected to be recognized over a weighted average period of 2.6 years. |
Restricted Stock Units and Performance Awards |
In August 2012, we granted 147,000 Performance Awards (“2012 Performance Awards”) to designated participants under the 2011 Plan. The 2012 Performance Awards represented the right to receive up to 4 shares of our common stock per award upon achievement of certain performance goals during the performance period of July 1, 2012 through June 30, 2013. 588,000 shares of common stock earned under the 2012 Performance Awards were issued during the quarter ended September 30, 2013 after the Compensation Committee of the Board of Directors (“Compensation Committee”) determined our level of achievement of the performance goals (the “Determination Date”). Of the issued shares, 25% were vested upon issuance and the remaining shares will vest 25% on each of the first three anniversaries of the Determination Date, subject to the continuous employment of the participant through such dates. |
In February 2013, we granted 113,000 Performance Awards (“2013 Performance Awards”) to designated participants under the 2011 Plan. The 2013 Performance Awards represent the right to receive up to 2.5 shares of our common stock per award upon achievement of certain performance goals during the performance period of January 1, 2013 through December 31, 2013. Shares of common stock earned, if any, under the 2013 Performance Awards will be issued during the first quarter of 2014 after the Compensation Committee determines the level of achievement of the performance goals (the “2013 Award Determination Date”), with 25% of the shares to vest upon issuance and the remaining shares to vest 25% on each of the first three anniversaries of the 2013 Award Determination Date, subject to the continuous employment of each participant through such dates. As of September 30, 2013, we expect the performance goals will be achieved so that each award will convert to 1.1 shares of our common stock on the 2013 Award Determination Date. No forfeitures are expected. |
The following table summarizes our RSU and Performance Award activity: |
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| RSUs | | Performance Awards | | |
| Number of | | Weighted | | Number of | | Weighted | | |
Shares | Average | Shares | Average | | |
| Grant Date | | Grant Date | | |
| Fair Value | | Fair Value | | |
| Per Share | | Per Share | | |
| | | | | | | | | |
Outstanding at January 1, 2013 | 40,625 | | | $ | 8.9 | | | 588,000 | | | $ | 25.79 | | | |
| |
Granted | 273,669 | | | 24.9 | | | 124,300 | | | 19.6 | | | |
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Released | (13,125 | ) | | 13.33 | | | (147,000 | ) | | 25.79 | | | |
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Forfeited or expired | (5,697 | ) | | 24.87 | | | — | | | — | | | |
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Outstanding at September 30, 2013 | 295,472 | | | $ | 23.22 | | | 565,300 | | | $ | 24.43 | | | |
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Ending vested and expected to vest at September 30, 2013 | 269,939 | | | | | 565,300 | | | | | |
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RSUs and Performance Awards that are expected to vest are net of estimated future forfeitures. RSUs released during the nine months ended September 30, 2013 had an aggregate intrinsic value of $0.3 million and an aggregate grant-date fair value of $0.2 million. Performance Awards released during the nine months ended September 30, 2013 had an aggregate intrinsic value of $4.5 million and an aggregate grant-date fair value of $3.8 million. There were no RSUs or Performance Awards released during the nine months ended September 30, 2012. The number of RSUs released includes shares that we withheld on behalf of employees to satisfy the minimum statutory tax withholding requirements. |
As of September 30, 2013, total unrecognized compensation expense related to unvested RSUs and Performance Awards was $14.0 million and is expected to be recognized over a weighted average period of 2.5 years. |
Employee Stock Purchase Plan |
For the nine months ended September 30, 2013 and 2012, employees purchased 109,270 shares and 126,242 shares, respectively, under the ESPP for a total of $1.9 million and $0.7 million, respectively. As of September 30, 2013, unrecognized compensation expense related to the current ESPP period which ends on February 28, 2014 was $0.3 million and is expected to be recognized over five months. |
Valuation Information |
The fair value of stock options and stock purchase rights granted under the 2009 Plan, the 2011 Plan and the ESPP were estimated at the date of grant using the Black-Scholes option valuation model with the following weighted average assumptions: |
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| Three months ended September 30, | | Nine months ended September 30, | | | | |
| 2013 | | 2012 | | 2013 | | 2012 | | | | |
Stock option plans: | | | | | | | | | | | | | | | |
Risk-free interest rate | 1.72 | % | | 0.87 | % | | 1.08 | % | | 0.87 | % | | | | |
Expected life of options (in years) | 6.08 | | | 6.08 | | | 6.08 | | | 6.08 | | | | | |
Expected dividend yield | — | % | | — | % | | — | % | | — | % | | | | |
Volatility | 52 | % | | 52 | % | | 52 | % | | 55 | % | | | | |
Employee Stock Purchase Plan: | | | | | | | | | | | | | | | |
Risk-free interest rate | 0.13 | % | | 0.14 | % | | 0.13 | % | | 0.15 | % | | | | |
Expected life of options (in years) | 0.5 | | | 0.5 | | | 0.5 | | | 0.5 | | | | | |
Expected dividend yield | — | % | | — | % | | — | % | | — | % | | | | |
Volatility | 36 | % | | 37 | % | | 37 | % | | 43 | % | | | | |
Stock-based compensation expense during the three and nine months ended September 30, 2013 and 2012 was recorded net of estimated forfeiture rates of 4.4% and 4.1%, respectively. |
Common Stock |
The following numbers of shares of common stock were reserved and available for future issuance at September 30, 2013: |
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| Reserved | | | | | | | | | | | | | |
Shares | | | | | | | | | | | | | |
Options and awards outstanding under stock incentive plans | 4,321,511 | | | | | | | | | | | | | | |
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Shares available for future grant under the stock incentive plan | 2,080,132 | | | | | | | | | | | | | | |
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Shares available under the Employee Stock Purchase Plan | 852,392 | | | | | | | | | | | | | | |
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Total | 7,254,035 | | | | | | | | | | | | | | |
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In January 2013, 260,585 additional shares were reserved under the ESPP and 1,302,926 additional shares were reserved under the 2011 Plan, pursuant to the automatic increase provisions in each plan. |