Equity Award Plans | 3 Months Ended |
Mar. 31, 2015 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Equity Award Plans | Equity Award Plans |
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Equity Incentive Plans |
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2014 Equity Incentive Plan |
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Our 2014 Equity Incentive Plan (the "2014 Plan") was adopted by our Board of Directors and approved by our stockholders in March 2014. The 2014 Plan provides for the granting of stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance units and performance shares to our employees, directors and consultants. |
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As of December 31, 2014, we had 1,343,743 shares available for future grant. Pursuant to the provisions of the 2014 Plan, on the first day of each fiscal year, starting with January 1, 2015, the number of shares in the reserve will increase by the least of (i) 8,000,000 shares, (ii) 5% of the outstanding shares of common stock on the last day of our immediately preceding fiscal year, or (iii) such other amount as determined by our Board of Directors. In January 2015, we increased common stock reserved for issuance by 3,078,645 shares in accordance with the provisions of the 2014 Plan. During the three months ended March 31, 2015, we granted 148,500 stock options and 376,280 RSUs under the 2014 Plan to our employees and consultants. As of March 31, 2015, we have 4,270,990 shares available for future grant. |
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2014 Employee Stock Purchase Plan |
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The 2014 Employee Stock Purchase Plan (the "2014 Purchase Plan") was adopted by our Board of Directors and approved by our stockholders in March 2014. |
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As of December 31, 2014, we had 1,031,316 shares available for future purchase. Under the provisions of the 2014 Purchase Plan, on the first day of each fiscal year, starting with January 1, 2015, the number of shares in the reserve will increase by the lesser of (i) 3,500,000 shares, (ii) 1% of the outstanding shares of our common stock on the last day of the immediately preceding fiscal year, or (iii) such other amount as determined by our Board of Directors or other committee administering the 2014 Purchase Plan. In January 2015, we increased common shares reserved for future purchase by 615,729 shares in accordance with the provision of the 2014 Purchase Plan. There was no purchases under the 2014 Purchase Plan during the three months ended March 31, 2015. As of March 31, 2015, we have 1,647,045 shares available for future purchase. |
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Stock-based Compensation |
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Stock-based compensation is based on the estimated fair value of awards, net of estimated forfeitures, and recognized over the requisite service period. The following is a summary of stock-based compensation for stock-based awards granted under the 2014 Plan, the 2008 Plan, and employee stock purchases under the 2014 Purchase Plan recognized during the three months ended March 31, 2015 and 2014 (in thousands): |
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| Three Months Ended March 31, | | | | | | |
| 2015 | | 2014 | | | | | | |
Stock-based compensation by type of award: | | | | | | | | | |
Stock options | $ | 1,477 | | | $ | 1,685 | | | | | | | |
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Restricted stock units | 1,934 | | | — | | | | | | | |
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Employee stock purchase plan | 1,222 | | | 85 | | | | | | | |
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Total stock-based compensation | $ | 4,633 | | | $ | 1,770 | | | | | | | |
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Stock-based compensation by category of expense: | | | | | | | | | |
Cost of revenue | $ | 471 | | | $ | 85 | | | | | | | |
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Sales and marketing | 2,066 | | | 884 | | | | | | | |
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Research and development | 1,585 | | | 463 | | | | | | | |
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General and administrative | 511 | | | 338 | | | | | | | |
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| $ | 4,633 | | | $ | 1,770 | | | | | | | |
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At March 31, 2015, we had $30.7 million of unrecognized stock-based compensation expense, net of estimated forfeitures, related to stock options, unvested restricted stock units and 2014 Stock Purchase Plan grants which will be recognized over a weighted-average period of 2.6 years. |
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Determination of Fair Value |
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We use the Black-Scholes option pricing model to determine the grant date fair value of stock options and stock purchases and recognize stock-based compensation expense on a straight-line basis over the requisite service period. |
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The determination of the fair value on the date of grant is affected by the estimated underlying common stock price, as well as assumptions regarding a number of complex and subjective variables. These variables include expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rates, and expected dividends. |
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The fair value of each grant of stock options was determined using the Black-Scholes option pricing model and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment to determine. |
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• Expected Term. We estimate the expected life of options based on an analysis of our historical experience of employee exercise and post-vesting termination behavior considered in relation to the contractual life of the option. The expected term for the 2014 Purchase Plan is based on the term of the purchase period. |
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• Risk-Free Interest Rate. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero coupon U.S. Treasury notes with maturities approximately equal to the expected terms of stock options and shares to be issued under the 2014 Purchase Plan. |
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• Expected Volatility. Due to the limited trading history of our own common stock, we determined the share price volatility factor based on a combination of the historical volatility of our own common stock and the historical volatility of our peer group. |
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• Dividend Rate. The expected dividend was assumed to be zero as we have never paid dividends and have no current plans to do so. |
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Stock Option Activity |
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The following table summarizes our stock option activity and related information as of and for the three months ended March 31, 2015 (in thousands, except for years and per share amounts): |
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| | Number of Shares Underlying Outstanding Options | | Weighted-Average Exercise Price | | Weighted-Average Remaining Contractual Term (Years) | | Aggregate Intrinsic Value |
Outstanding as of December 31, 2014 | | 11,084 | | | $ | 5.18 | | | 7.9 | | | |
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Granted | | 149 | | | $ | 4.67 | | | | | | |
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Exercised | | (166 | ) | | $ | 1.59 | | | | | | |
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Canceled | | (415 | ) | | $ | 7.32 | | | | | | |
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Outstanding as of March 31, 2015 | | 10,652 | | | $ | 5.15 | | | 7.6 | | $ | 7,521 | |
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Vested and expected to vest as of March 31, 2015 | | 10,091 | | | $ | 5.1 | | | 7.5 | | $ | 7,518 | |
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Vested and exercisable as of March 31, 2015 | | 5,118 | | | $ | 3.97 | | | 6.2 | | $ | 7,368 | |
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The aggregate intrinsic value represents the difference between the closing stock price of our common stock on March 31, 2015 compared to the exercise price of the outstanding in-the-money options. |
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The following table provides information pertaining to our stock options for the three months ended March 31, 2015 and 2014 (in thousands, except weighted-average fair values): |
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| Three Months Ended March 31, | | | | | | |
| 2015 | | 2014 | | | | | | |
Total fair value of options granted | $ | 305 | | | $ | 7,071 | | | | | | | |
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Weighted average fair value of options granted | $ | 2.05 | | | $ | 5.97 | | | | | | | |
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Intrinsic value of options exercised | $ | 537 | | | $ | 6,692 | | | | | | | |
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The estimated grant-date fair value of our equity-based awards issued to employees was calculated using the Black- |
Scholes option-pricing model, based on the following assumptions: |
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| Three Months Ended March 31, | | | | | | | | | | |
| 2015 | | 2014 | | | | | | | | | | |
Expected term (in years) | 4.8 | | 5.5 | | | | | | | | | | |
Risk-free interest rate | 1.41% | | 1.73% | | | | | | | | | | |
Expected volatility | 51% | | 47% | | | | | | | | | | |
Dividend rate | —% | | —% | | | | | | | | | | |
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Restricted Stock Units Activity |
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We have granted time-based restricted stock units ("RSU") to our employees, directors and consultants and market performance-based restricted stock units ("MSU") to certain executive officers. |
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Time-based Restricted Stock Units |
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A summary of RSU activities for the three months ended March 31, 2015, is as follows (in thousands, except years and per share amounts): |
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| Number of Shares | | Weighted Average Grant Date Fair Value | | Weighted Average Remaining Contractual Life | | Aggregated Intrinsic Value | |
Outstanding as of December 31, 2014 | 2,388 | | | $ | 8.97 | | | | | | |
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Granted | 376 | | | $ | 4.61 | | | | | | |
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Released | (18 | ) | | $ | 10.58 | | | | | | |
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Canceled | (168 | ) | | $ | 9.27 | | | | | | |
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Outstanding as of March 31, 2015 | 2,578 | | | $ | 8.3 | | | 1.5 | | $ | 11,161 | | |
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The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (calculated by multiplying our closing stock price on the last trading day of the period by the number of unvested RSUs) that would have been received by the unit holders had all RSUs been vested and released on March 31, 2015. This amount will fluctuate based on the fair market value of our stock. |
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Market Performance-based Restricted Stock Units |
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We granted MSUs covering 540,000 shares of our common stock to our executive officers during 2014, all of which were outstanding as of March 31, 2015. These MSUs will vest if the closing price of our common stock remains above certain predetermined target prices for 20 consecutive trading days within a 4-year period following the award’s grant date, subject to continued service by the award holder. |
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The total aggregate intrinsic value for the MSUs granted was $2.4 million, which represents the total pre-tax intrinsic value (calculated by multiplying our closing stock price on the last trading day of period by the number of unvested MSUs) that would have been received by the award holders had all MSUs vested and been released on March 31, 2015. This amount will fluctuate based on the fair market value of our stock. No MSUs were vested or released during the three months ended March 31, 2015. |
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Employee Stock Purchase Plan |
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The fair value of the option component of the 2014 Purchase Plan shares was estimated at the grant date using the Black-Scholes option pricing model with the following weighted average assumptions: |
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| Three Months Ended March 31, | | | | | | | | | | |
| 2015 | | 2014 | | | | | | | | | | |
Expected term (in years) | n/a | | 1.42 | | | | | | | | | | |
Risk-free interest rate | n/a | | 2.14% | | | | | | | | | | |
Expected volatility | n/a | | 31.00% | | | | | | | | | | |
Dividend rate | n/a | | —% | | | | | | | | | | |
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* There were no stock purchase rights granted under the 2014 Purchase Plan during the three months ended March 31, 2015. |