EQUITY AWARD PLANS | 9 Months Ended |
Sep. 30, 2013 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
EQUITY AWARD PLANS | EQUITY AWARD PLANS |
Stock Option and Restricted Stock Unit Activity |
The following table summarizes the information about shares available for grant and outstanding stock option activity (in thousands, except per share amounts and years): |
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| | | Common Stock Options Outstanding |
| Shares Available for | | Number of | | Weighted Average Exercise | | Weighted | | Aggregate |
Grant | Shares | Price Per Share | Average | Intrinsic |
| | | Remaining | Value |
| | | Contractual Life | |
| | | (Years) | |
Balance, December 31, 2012 | 6,961 | | | 24,400 | | | $ | 2.82 | | | 7.7 | | | $ | 480,878 | |
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Additional shares reserved for issuance | 3,708 | | | | | | | | | |
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RSUs granted | -620 | | | — | | | | | | | |
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RSUs forfeited | 32 | | | — | | | | | | | |
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Options granted | -521 | | | 521 | | | 17.98 | | | | | |
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Options exercised | — | | | -4,071 | | | 1.23 | | | | | |
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Options forfeited | 555 | | | -555 | | | 5.02 | | | | | |
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Shares repurchased | 1 | | | — | | | — | | | | | |
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Balance, September 30, 2013 | 10,116 | | | 20,295 | | | $ | 3.47 | | | 7.3 | | | $ | 272,411 | |
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Options vested and expected to vest, September 30, 2013 | | | 19,648 | | | $ | 3.38 | | | 7.2 | | | $ | 265,414 | |
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Options exercisable, September 30, 2013 | | | 11,323 | | | $ | 1.93 | | | 6.5 | | | $ | 168,715 | |
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The weighted average grant date fair value per share of stock options was approximately $8.33 and $4.66 for the three months ended September 30, 2013 and 2012, respectively, and $11.22 and $3.54 for the nine months ended September 30, 2013 and 2012, respectively. |
The total intrinsic value of options exercised was approximately $24.9 million and $1.1 million for the three months ended September 30, 2013 and 2012, respectively, and $50.5 million and $2.6 million for the nine months ended September 30, 2013 and 2012, respectively. The aggregate intrinsic value represents the difference between the Company's estimated fair value of its common stock, prior to the IPO, or the closing stock price of the Company's common stock, following the IPO, compared to the exercise price of the outstanding, in-the-money options. |
The 2012 Plan provides for the granting of RSUs to employees, directors, and consultants. During the first quarter of 2013, the Company began granting RSUs to employees. RSUs granted under the 2012 Plan vest over the periods determined by the board of directors, generally two to four years, beginning from the vesting commencement date. |
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The following table summarizes the restricted stock units outstanding (in thousands, except per share amounts and years): |
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| Restricted Stock Units Outstanding | | | |
| Number of Shares | | Weighted Average Grant Date Fair Value Per Share | | Weighted | | Aggregate Intrinsic Value | | | |
Average | | | |
Remaining | | | |
Contractual Life | | | |
(Years) | | | |
Balance, December 31, 2012 | — | | | $ | — | | | — | | | $ | — | | | | |
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RSUs granted | 620 | | | 17.65 | | | | | | | | |
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RSUs vested | — | | | — | | | | | | | | |
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RSUs forfeited | (32 | ) | | 15.51 | | | | | | | | |
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Balance, September 30, 2013 | 588 | | | $ | 17.77 | | | 1.5 | | | $ | 9,897 | | | | |
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Fair Value Disclosures |
The Company measures compensation expense for all stock-based payment awards, including stock options and RSUs granted to employees and purchases under the Company's Employee Stock Purchase Plan (“ESPP”), based on the estimated fair values on the date of the grant. The fair value of each stock option granted is estimated using the Black-Scholes option pricing model. The fair value of each RSU granted represents the closing price of our common stock on the date of grant. The fair value of purchases under the Company's ESPP is calculated based on the closing price of the Company's stock on the date of grant and the value of put and call options estimated using the Black-Scholes option pricing model. Stock-based compensation is recognized on a straight-line basis over the requisite service period, net of estimated forfeitures. The forfeiture rate is based on an analysis of the Company’s actual historical forfeitures. |
The Company accounts for stock options issued to nonemployees based on the fair value of the awards determined using the Black-Scholes option pricing model. The fair value of stock options granted to nonemployees is re-measured as the stock options vest, and the resulting change in fair value, if any, is recognized in the Company’s condensed consolidated statement of operations during the period the related services are rendered. |
Employee Stock Options |
The following table summarizes the weighted average assumptions relating to our stock options: |
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| Three Months Ended September 30, | | Nine Months Ended September 30, | | | | | |
| 2013 | | 2012 | | 2013 | | 2012 | | | | | |
Volatility | 68.4 | % | | 72.2 | % | | 69.6 | % | | 68.8 | % | | | | | |
Expected term (years) | 6.08 | | | 6.03 | | | 6.05 | | | 6.03 | | | | | | |
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Risk-free interest rate | 1.71 | % | | 0.87 | % | | 1.34 | % | | 1 | % | | | | | |
Dividend yield | — | | | — | | | — | | | — | | | | | | |
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Employee Stock Purchase Plan |
There were no stock purchase rights granted under the ESPP during the three months ended September 30, 2013 and the three and nine months ended September 30, 2012. The following table summarizes the weighted average assumptions relating to our ESPP: |
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| Nine Months Ended September 30, | | | | | | | | | | | | | | |
| 2013 | | | | | | | | | | | | | | |
Volatility | 57.6 | % | | | | | | | | | | | | | | |
Expected term (years) | 0.5 | | | | | | | | | | | | | | | |
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Risk-free interest rate | 0.11 | % | | | | | | | | | | | | | | |
Dividend yield | — | | | | | | | | | | | | | | | |
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Stock-based Compensation Expense |
Stock-based compensation expense consists primarily of expenses for stock options, RSUs, and employee stock purchase rights granted to employees. The following table summarizes stock-based compensation expense (in thousands): |
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| Three Months Ended September 30, | | Nine Months Ended September 30, | |
| 2013 | | 2012 | | 2013 | | 2012 | |
Cost of revenue | $ | 193 | | | $ | 84 | | | $ | 575 | | | $ | 137 | | |
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Research and development | 1,994 | | | 748 | | | 4,772 | | | 1,505 | | |
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Sales and marketing | 1,223 | | | 552 | | | 3,410 | | | 1,110 | | |
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General and administrative | 1,476 | | | 1,018 | | | 4,472 | | | 2,528 | | |
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Total stock-based compensation | 4,886 | | | 2,402 | | | 13,229 | | | 5,280 | | |
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Tax benefit from stock-based compensation | (289 | ) | | — | | | (469 | ) | | — | | |
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Total stock-based compensation, net of tax effect | $ | 4,597 | | | $ | 2,402 | | | $ | 12,760 | | | $ | 5,280 | | |
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The following table presents stock-based compensation expense by award-type (in thousands): |
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| Three Months Ended September 30, | | Nine Months Ended September 30, | |
| 2013 | | 2012 | | 2013 | | 2012 | |
Stock options | $ | 3,183 | | | $ | 2,402 | | | $ | 9,332 | | | $ | 5,280 | | |
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Restricted stock units | 1,252 | | | — | | | 2,116 | | | — | | |
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Employee stock purchase plan | 451 | | | — | | | 1,781 | | | — | | |
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Total stock-based compensation | 4,886 | | | 2,402 | | | 13,229 | | | 5,280 | | |
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Tax benefit from stock-based compensation | (289 | ) | | — | | | (469 | ) | | — | | |
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Total stock-based compensation, net of tax effect | $ | 4,597 | | | $ | 2,402 | | | $ | 12,760 | | | $ | 5,280 | | |
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For the three months ended September 30, 2013, the Company recognized $0.4 million in stock-based compensation related to the cash settlement of equity awards held by former YFind employees. |
At September 30, 2013, total compensation expense related to unvested share-based awards granted to employees under our stock plans but not yet recognized was $33.4 million, net of estimated forfeitures. This expense is expected to be amortized on a straight-line basis over a weighted-average period of 2.3 years. |