Equity Incentive Plans | Note 7. Equity Incentive Plans 2016 Equity Incentive Plan The Company’s 2016 Equity Incentive Plan, or the 2016 Plan, became effective on September 21, 2016. The 2016 Plan provides for the grant of incentive stock options, or ISOs, within the meaning of Section 422 of the Internal Revenue Code, to the Company’s employees or any of the Company’s subsidiaries’ employees, and for the grant of nonstatutory stock options, or NSOs, restricted stock, restricted stock units, or RSUs, stock appreciation rights, performance units and performance shares to employees, directors and consultants of the Company and the Company’s subsidiaries’ employees and consultants. As of December 31, 2017, the total number of shares available for issuance under the 2016 Plan was 4,237,746. These available shares will automatically increase each January 1, by the least of 5,500,000 shares of Class A common stock, by 5% of the outstanding shares of all classes of the Company’s common stock as of the last day of the Company’s immediately preceding fiscal year, and such other amount as the Company’s board of directors may determine on or before the last day of the Company’s immediately preceding fiscal year. Pursuant to the above, on January 1, 2018, the number of available shares automatically increased by 2,105,647. 2007 Stock Plan The Company granted options under its 2007 stock plan, as amended, or the 2007 Plan, until September 23, 2016, when the plan was terminated in connection with the Company’s IPO. Accordingly, no shares are available for future issuance under this plan. The 2007 Plan continues to govern outstanding equity awards granted thereunder. 2011 Executive Equity Incentive Plan The Company granted options under its 2011 executive equity incentive plan as amended, or the 2011 Plan, until September 23, 2016, when the plan was terminated in connection with the Company’s IPO. Accordingly, no shares are available for future issuance under this plan. The 2011 Plan continues to govern outstanding equity awards granted thereunder. 2016 Employee Stock Purchase Plan The Company’s Employee Stock Purchase Plan, or 2016 ESPP, became effective on September 21, 2016. As of December 31, 2017, the total number of shares of Class A common stock available for issuance under the 2016 ESPP was 821,635 These available shares will automatically increase each January 1, by the least of 1,600,000 shares of Class A common stock, 1% of the number of shares of all classes of the Company’s common stock outstanding on the immediately preceding fiscal year, and such lesser number of shares as determined by the Company’s board of directors. Pursuant to the above, on January 1, 2018, the number of available shares automatically increased by 421,129. The 2016 ESPP allows eligible employees to purchase shares of the Company’s Class A common stock at a discount through payroll deductions of their eligible compensation, subject to any plan limitations. Except for the initial offering period, the 2016 ESPP provides for separate six-month offering periods beginning November 30 and May 31 of each fiscal year. The initial offering period ran from September 23, 2016 through May 31, 2017. The initial offering period included the employee enrollment period, which ran from September 23, 2016 to November 10, 2016, at which time employee deductions commenced. On each purchase date, eligible employees will purchase the Company’s Class A common stock at a price per share equal to 85% of the lesser of (1) the fair market value of the Company’s Class A common stock on the first trading day of the offering period, and/or (2) the fair market value of the Company’s common stock on the purchase date. Stock Options Stock options are exercisable at a price equal to the market value of the underlying shares of the Company’s common stock on the date of the grant as determined by the Company’s board of directors or, for those stock options issued subsequent to the IPO, the closing price of the Company’s common stock as reported on the Nasdaq Global Market on the date of grant. Stock options granted under the 2016 Plan, 2011 Plan and the 2007 Plan generally vest 25% one year from the date the requisite service period begins and continue to vest monthly for each month of continued employment over the remaining three years. Options granted generally are exercisable for a period of up to 10 years. Stock option activity under the 2016 Plan, 2011 Plan and the 2007 Plan during the year ended December 31, 2017 was as follows (in thousands, except per share and contractual life data): Weighted- Weighted- Average Average Remaining Total Options Exercise Price Contractual Intrinsic Outstanding per Share Life (years) Value Outstanding at December 31, 2016 11,203 $ 9.49 Options granted 451 16.97 Options exercised (3,339 ) 6.56 Options forfeited or canceled (825 ) 13.84 Outstanding at December 31, 2017 7,490 $ 10.76 6.41 $ 95,553 Vested and expected to vest at December 31, 2017 7,410 $ 10.71 6.39 $ 94,925 Exercisable at December 31, 2017 4,935 $ 8.74 5.53 $ 72,930 The weighted-average n n The total intrinsic value n n 2017, n and n The fair value of stock options granted was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: Years Ended December 31, 2017 2016 2015 Dividend yield 0.0% 0.0% 0.0% Risk-free interest rate 1.8% - 2.1% 1.1% - 2.1% 1.3% - 2.0% Expected life 4.1 - 5.6 5.6 - 7.9 5.0 - 6.1 Expected volatility 33.3% - 35.4% 37.4% - 42.4% 38.9% - 47.0% The weighted-average and The Company has not declared As of December 31, 2017, there was a total of $14.9 million of unrecognized compensation cost related to unvested stock-based compensation associated with options granted under the 2007, 2011 and 2016 Plans. That cost is expected to be recognized over a weighted-average remaining expected term of 2.3 years RSUs RSU activity under the 2016 Plan during the year ended December 31, 2017 was as follows (in thousands, except per share data): Weighted-Average RSUs Grant Date Fair Value Outstanding per Share Non-Vested outstanding at December 31, 2016 628 $ 16.43 Granted 1,741 15.97 Vested (128 ) 16.46 Forfeited or canceled (211 ) 15.27 Non-Vested outstanding at December 31, 2017 2,030 $ 16.15 RSUs granted under the 2016 Plan generally vest 25% one year from the date the requisite service period begins and continue to vest quarterly for each quarter of continued employment over the remaining three years. The aggregate grant date fair value of RSUs granted in 2017 and 2016 was $27.8 million and $10.4 million, respectively. We recognized $5.3 million of stock-based compensation associated with RSUs during the year ended December 31, 2017. As of December 31, 2017, total unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested RSUs was approximately $28.8 million and weighted-average remaining vesting period was 3.3 years. ESPP There were 311,742 shares of Class A common stock issued under the 2016 ESPP. For the years ended December 31, 2017 and 2016, the fair value of common shares to be issued under the 2016 ESPP was estimated using the Black-Scholes option pricing model with the following assumptions: Years Ended December 31, 2017 2016 Dividend yield 0.0% 0.0% Risk-free interest rate 1.07% - 1.45% 0.6% Expected life 0.50 0.56 Expected volatility 27.0% - 44.3% 33.9% Stock-based compensation expense recognized in the Company’s statement of comprehensive loss was as follows (in thousands): Years Ended December 31, 2017 2016 2015 Cost of revenue Subscription $ 1,218 $ 891 $ 482 Professional services 1,131 820 738 Operating expenses Research and development 4,491 2,977 2,283 Sales and marketing 4,614 3,132 2,477 General and administrative 4,616 2,639 1,835 Total stock-based compensation $ 16,070 $ 10,459 $ 7,815 |