Note 8 - Stockholders' Equity | 3 Months Ended |
Mar. 31, 2015 |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity Note Disclosure [Text Block] | 8 | Stockholders’ Equity | | | | | | | | | | | | | | | |
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Preferred Stock |
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Immediately following the closing of our initial public offering (“IPO”), the Company's certificate of incorporation was amended to, among other things, issue up to 20,000,000 shares of undesignated preferred stock, par value $0.001 per share. As of March 31, 2015 and December 31, 2014, no shares of preferred stock were outstanding. |
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Common Stock |
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Immediately following the closing of our IPO, the Company’s certificate of incorporation was amended to, among other things, authorize 200,000,000 shares of common stock. As of March 31, 2015 and December 31, 2014, there were 33,360,953 and 33,066,327 shares of common stock issued and outstanding, respectively. |
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The following table summarizes common stock activity: |
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| | Number of Shares | | | | | | | | | | | | | |
Outstanding at December 31, 2014 | | | 33,066,327 | | | | | | | | | | | | | |
Common stock issued in association with option exercises | | | 118,001 | | | | | | | | | | | | | |
Common stock issued in association with restricted stock units vesting | | | 6,257 | | | | | | | | | | | | | |
Common stock issued in association with the employee stock purchase plan | | | 170,368 | | | | | | | | | | | | | |
Outstanding at March 31, 2015 | | | 33,360,953 | | | | | | | | | | | | | |
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Treasury Stock |
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As of March 31, 2015 and December 31, 2014, the Company had 66,666 shares of treasury stock related to the acquisition of Crowd Science, Inc. Treasury stock is carried at cost and could be re-issued if the Company determined to do so. |
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Shares Reserved for Future Issuance |
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As of March 31, 2015 and December 31, 2014, the Company has reserved the following shares of common stock for future issuance: |
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| | As of March 31, 2015 | | | As of December 31, 2014 | | | | | | | | | |
Common stock reserved: | | | | | | | | | | | | | | | | |
Common stock options | | | 5,030,485 | | | | 5,058,641 | | | | | | | | | |
Restricted stock units | | | 2,359,747 | | | | 1,082,939 | | | | | | | | | |
Warrants to purchase common stock | | | 24,838 | | | | 24,838 | | | | | | | | | |
Shares available for future issuance under the 2013 Plan | | | 1,206,124 | | | | 984,455 | | | | | | | | | |
Employee stock purchase plan | | | 664,309 | | | | 504,014 | | | | | | | | | |
| | | 9,285,503 | | | | 7,654,887 | | | | | | | | | |
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Equity Incentive Plans |
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The Company’s 2004 Stock Plan (the “2004 Plan”) authorized the Company to grant restricted stock awards or stock options to employees, directors and consultants at prices not less than the fair market value at date of grant for incentive stock options and not less than 85% of fair market value for non-statutory options. Option vesting schedules were determined by the board of directors at the time of issuance and they generally vest at 25% on the first anniversary of the grant (or the employment or service commencement date) and monthly over the next 36 months. Options generally expire ten years from the date of grant unless the optionee is a 10% stockholder, in which case the term will be five years from the date of grant. Unvested options exercised are subject to the Company’s repurchase right. Upon the effective date of the registration statement related to the Company’s IPO, the 2004 Plan was amended to cease the grant of any additional awards thereunder, although the Company will continue to issue common stock upon the exercise of stock options previously granted under the 2004 Plan. |
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In July 2013, the Company adopted a 2013 Equity Incentive Plan (the “2013 Plan”) which became effective on August 6, 2013. The 2013 Plan serves as the successor equity compensation plan to the 2004 Plan. The 2013 Plan will terminate on July 23, 2023. The 2013 Plan provides for the grant of incentive stock options, nonqualified stock options, restricted stock awards, stock appreciation rights, performance stock awards, restricted stock units and stock bonus awards to employees, directors and consultants. Stock options granted must be at prices not less than 100% of the fair market value at date of grant. Option vesting schedules are determined by the Company at the time of issuance and they generally vest at 25% on the first anniversary of the grant (or the employment or service commencement date) and monthly over the next 36 months. Options generally expire ten years from the date of grant unless the optionee is a 10% stockholder, in which case the term will be five years from the date of grant. Unvested options exercised are subject to the Company’s repurchase right. The Company initially reserved 2,000,000 shares of its common stock for issuance under the 2013 Plan, and shares reserved for issuance increase January 1 of each year by the lesser of (i) 5% of the number of shares issued and outstanding on December 31 immediately prior to the date of increase or (ii) such lesser number of shares as may be determined by the board of directors. On January 1, 2015, shares reserved for issuance under the 2013 Plan increased by 1,653,316. |
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Prior to the IPO, the fair value of the common stock underlying the Company’s stock options was determined by the Company’s board of directors, which intended all options granted to be exercisable at a price per share not less than the per-share fair value of the Company’s common stock underlying those options on the date of grant. The valuations of the Company’s common stock were determined in accordance with the guidelines outlined in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. The assumptions the Company used in the valuation model are based on future expectations combined with management judgment. In the absence of a public trading market, the Company’s board of directors, with input from management, exercised significant judgment and considered numerous objective and subjective factors to determine the fair value of the Company’s common stock as of the date of each option grant. Subsequent to the IPO, the fair value of the common stock underlying the Company’s stock options is the closing price of the Company’s stock as of the grant date. |
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The following table summarizes option award activity: |
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| | Number of Shares | | | Weighted-Average Exercise Price | | | Weighted-Average Remaining Contractual Life | | | Aggregate Intrinsic Value | |
(in thousands) | (years) | (in thousands) |
Balance at December 31, 2014 | | | 5,059 | | | $ | 5.54 | | | | 5.78 | | | $ | 3,461 | |
Granted (1) | | | 927 | | | $ | 5.25 | | | | | | | | | |
Exercised | | | (118 | ) | | $ | 2.88 | | | | | | | | | |
Cancelled and forfeited (2) | | | (837 | ) | | $ | 8.48 | | | | | | | | | |
Balance at March 31, 2015 | | | 5,031 | | | $ | 5.06 | | | | 7.01 | | | $ | 3,599 | |
Vested as of March 31, 2015 and expected to vest thereafter (3) | | | 4,726 | | | $ | 4.98 | | | | 6.9 | | | $ | 3,588 | |
Vested and exercisable as of March 31, 2015 | | | 3,037 | | | $ | 4.3 | | | | 6 | | | $ | 3,471 | |
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| -1 | Options granted include 0.7 million re-issued options in connection with a modification. See “Modification of Employee Stock Options” below for more information. | | | | | | | | | | | | | | |
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| -2 | Options cancelled and forfeited include 0.7 million options that were cancelled in connection with a modification. See “Modification of Employee Stock Options” below for more information. | | | | | | | | | | | | | | |
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| -3 | Options expected to vest reflect an estimated forfeiture rate. | | | | | | | | | | | | | | |
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The weighted average grant date fair value of options granted was $2.99 and $5.14 in the three months ended March 31, 2015 and 2014, respectively. The aggregate intrinsic value represents the difference between the market value of the Company’s common stock and the exercise price of outstanding in-the-money options. The total intrinsic value of options exercised was approximately $0.3 million and $0.8 million for the three months ended March 31, 2015 and 2014, respectively. |
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The following table summarizes restricted stock unit activity: |
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| | Number of Shares (in thousands) | | | Weighted Average Fair Value at Grant | | | Weighted Average Remaining Contractual Life (years) | | | Aggregate Intrinsic Value (1) (in thousands) | |
Balance at December 31, 2014 | | | 1,083 | | | $ | 5.92 | | | | 1.39 | | | $ | 5,458 | |
Granted | | | 1,332 | | | $ | 5.65 | | | | | | | | | |
Released | | | (6 | ) | | $ | 7.69 | | | | | | | | | |
Cancelled and forfeited | | | (49 | ) | | $ | 6.19 | | | | | | | | | |
Balance at March 31, 2015 | | | 2,360 | | | $ | 5.75 | | | | 1.22 | | | $ | 12,248 | |
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| -1 | The intrinsic value of RSUs is based on the Company’s closing stock price as reported by the New York Stock Exchange on March 31, 2015. | | | | | | | | | | | | | | |
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Modification of Employee Stock Options |
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On January 2, 2015, the Company modified options to purchase 0.7 million shares of common stock previously granted to non-executive employees with exercise prices over $7.00 per share. The exercise price of the modified options was reduced to $5.14 per share, which represents the closing price of the Company’s common stock on the New York Stock Exchange on January 2, 2015. No other terms of these options were modified. The Company expects to recognize an additional $0.4 million of stock-based compensation expense over the remaining vesting terms of the options as a result of the modification. |
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Employee Stock Purchase Plan |
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In July 2013, the Company adopted a 2013 Employee Stock Purchase Plan (the “2013 Purchase Plan”) that became effective on August 6, 2013. The 2013 Purchase Plan is designed to enable eligible employees to periodically purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. At the end of each offering period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last day of the offering period. Purchases are accomplished through participation in discrete offering periods. The 2013 Purchase Plan is intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code. The Company originally reserved 500,000 shares of its common stock for issuance under the 2013 Purchase Plan and shares reserved for issuance increase January 1 of each year by the lesser of (i) a number of shares equal to 1% of the total number of outstanding shares of common stock on December 31 immediately prior to the date of increase or (ii) such number of shares as may be determined by the board of directors. A total of 170,368 shares were purchased by employees under the Company’s ESPP for the three months ended March 31, 2015. |
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The expected term of ESPP shares is the average of the remaining purchase periods under each offering period. The assumptions used to value employee stock purchase rights were as follows: |
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| | Three Months Ended March 31, | | | | | | | | | |
| | 2015 | | | 2014 | | | | | | | | | |
Expected term (years) | | | 0.5 | | | | 0.5 | | | | | | | | | |
Volatility | | | 56 | % | | | 80 | % | | | | | | | | |
Risk-free interest rate | | | 0.07 | % | | | 0.08 | % | | | | | | | | |
Dividend yield | | | — | | | | — | | | | | | | | | |
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Stock-Based Compensation |
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The fair value of options granted to employees is estimated on the grant date using the Black-Scholes option valuation model. This valuation model for stock-based compensation expense requires the Company to make assumptions and judgments about the variables used in the calculation including the expected term (weighted-average period of time that the options granted are expected to be outstanding), volatility of the Company’s common stock, a risk-free interest rate, expected dividends, and the estimated forfeitures of unvested stock options. To the extent actual results differ from the estimates, the difference will be recorded as a cumulative adjustment in the period estimates are revised. The Company uses the simplified calculation of expected life, and volatility is based on an average of the historical volatilities of the common stock of a group of entities with characteristics similar to those of the Company. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. Expected forfeitures are based on the Company’s historical experience. The Company currently has no history or expectation of paying cash dividends on common stock. |
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The fair value of option grants is determined using the Black-Scholes option valuation model with the following assumptions: |
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| | Three Months Ended March 31, | | | | | | | | | |
| | 2015 | | | 2014 | | | | | | | | | |
Expected term (years) | | | 6 | | | | 6 | | | | | | | | | |
Volatility | | | 56 | % | | | 80 | % | | | | | | | | |
Risk-free interest rate | | | 1.54 | % | | | 1.89 | % | | | | | | | | |
Dividend yield | | | — | | | | — | | | | | | | | | |
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The following table summarizes the effects of stock-based compensation related to vesting stock-based awards included in the Company’s accompanying condensed consolidated statements of operations (in thousands): |
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| | Three Months Ended March 31, | | | | | | | | | |
| | 2015 | | | 2014 | | | | | | | | | |
Cost of revenue (1) | | $ | 112 | | | $ | 63 | | | | | | | | | |
Sales and marketing | | | 900 | | | | 564 | | | | | | | | | |
Research and development (2) | | | 204 | | | | 47 | | | | | | | | | |
General and administrative | | | 878 | | | | 487 | | | | | | | | | |
Total employee stock-based compensation | | $ | 2,094 | | | $ | 1,161 | | | | | | | | | |
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| -1 | Excludes $6,000 for the three months ended March 31, 2015 that was capitalized as part of internal-use software development costs. | | | | | | | | | | | | | | |
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| -2 | Excludes $126,000, and $104,000 for the three months ended March 31, 2015 and 2014, respectively, that was capitalized as part of internal-use software development costs. | | | | | | | | | | | | | | |
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401(k) Plan |
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The Company’s 401(k) Plan (the “401(k) Plan”) is a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, participating U.S. employees may defer a portion of their pre-tax earnings, up to the IRS annual contribution limit of $17,500 for calendar years 2014 and 2015. The Company began matching employee’s contributions in April 2014. The Company will match 50% of each participating employee contributions up to a maximum of 6% of each employee’s eligible earnings with an annual maximum match of $2,500 per employee per year. |