Equity Award Plans | Equity Award Plans Equity Incentive Plans 2014 Equity Incentive Plan 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. As of December 31, 2014, we had 1,343,743 shares available for future grant. Annually, the shares authorized for the Plan 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. On January 1, 2015, the number of shares in the 2014 Plan was increased by 3,078,645 shares, which represents 5% of the prior year end’s common stock outstanding. In addition, effective as of June 10, 2015, our Board of Directors adopted, and our stockholders approved, an amendment and restatement of our 2014 Plan, which increased the number of shares available for issuance under the 2014 Plan by the number of shares available from the 2008 Plan that were canceled or otherwise forfeited or repurchased by us after March 20, 2014. A maximum of 8,310,566 shares may become available from the 2008 Plan for issuance under the 2014 Plan. As of September 30, 2015, 1,374,975 shares of our common stock were eligible to be added to the 2014 Plan share reserve in accordance with the amendment and restatement of the 2014 Plan. During the nine months ended September 30, 2015 , we granted 408,500 stock options and 1,295,806 restricted stock units ("RSUs") under the 2014 Plan to our employees, directors and consultants. As of September 30, 2015 , we have 3,532,415 shares available for future grant, excluding shares eligible to be added from the 2008 Plan. 2014 Employee Stock Purchase Plan 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. 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. The participants of the plan purchased 542,102 shares during the nine months ended September 30, 2015, and as of September 30, 2015 , we have 1,104,943 shares available for future purchase. Stock-based Compensation 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 and nine months ended September 30, 2015 and 2014 (in thousands): Three Months Ended Nine Months Ended 2015 2014 2015 2014 Stock-based compensation by type of award: Stock options $ 1,347 $ 1,615 $ 4,326 $ 5,012 Restricted stock units 2,412 929 6,477 965 Employee stock purchase plan 849 994 2,443 2,337 Total stock-based compensation $ 4,608 $ 3,538 $ 13,246 $ 8,314 Stock-based compensation by category of expense: Cost of revenue $ 428 $ 277 $ 1,241 $ 578 Sales and marketing 2,093 1,700 6,032 4,041 Research and development 1,489 1,139 4,347 2,546 General and administrative 598 422 1,626 1,149 $ 4,608 $ 3,538 $ 13,246 $ 8,314 At September 30, 2015 , we had $26.6 million of unrecognized stock-based compensation expense, net of estimated forfeitures, related to stock options, unvested restricted stock units and 2014 Purchase Plan purchases. This unamortized stock-based compensation expense will be recognized over a weighted-average period of 2.6 years. Determination of Fair Value We use the Black-Scholes option pricing model to determine the grant date fair value of stock options and stock purchases and generally recognize stock-based compensation expense on a straight-line basis over the requisite service period. 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. The fair value of the stock options and employee stock purchases were 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. • 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. • 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. • 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. • Dividend Rate . The expected dividend was assumed to be zero as we have never paid dividends and have no current plans to do so. We estimate the fair value of RSUs using the closing market price of our common stock on the grant date. Stock Option Activity The following table summarizes our stock option activity and related information as of and for the nine months ended September 30, 2015 (in thousands, except for years and per share amounts): 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 Granted 408 $ 4.84 Exercised (535 ) $ 2.93 Canceled (1) (922 ) $ 7.27 Outstanding as of September 30, 2015 10,035 $ 5.10 7.4 $ 17,394 Vested and expected to vest as of September 30, 2015 9,633 $ 5.06 7.3 $ 16,950 Vested and exercisable as of September 30, 2015 5,592 $ 4.27 6.3 $ 13,179 __________________________________________ (1) Common shares granted under the 2008 Plan and canceled after March 20, 2014 are reallocated to the 2014 Plan’s share reserve as they become available for issuance under the 2014 Plan. During the nine months ended September 30, 2015, 469,440 shares of the canceled stock options were eligible to be reallocated to the 2014 Plan share reserve. As of September 30, 2015 , the aggregate intrinsic value represents the excess of the closing price of our common stock of $5.99 over the exercise price of the outstanding in-the-money options. The following table provides information pertaining to our stock options for the nine months ended September 30, 2015 and 2014 (in thousands, except weighted-average fair values): Nine Months Ended 2015 2014 Total fair value of options granted $ 869 $ 7,536 Weighted average fair value of options granted $ 2.13 $ 5.96 Intrinsic value of options exercised $ 1,535 $ 13,900 The estimated grant-date fair value of our stock options issued to employees was calculated using the Black-Scholes option-pricing model, based on the following assumptions: Three Months Ended Nine Months Ended 2015 2014 2015 2014 Expected term (in years) n/a n/a 4.80 5.5 Risk-free interest rate n/a n/a 1.60% 1.73% Expected volatility n/a n/a 50% 47% Dividend rate n/a n/a —% —% We did not grant any stock options during each of the three months ended September 30, 2015, and 2014. Restricted Stock Units Activity We have granted time-based RSUs to our employees, directors and consultants and market performance-based restricted stock units ("MSUs") to certain company executives. Time-based Restricted Stock Units A summary of RSUs activities for the nine months ended September 30, 2015 , is as follows (in thousands, except years and per share amounts): Number of Shares Weighted Average Grant Date Fair Value Weighted Average Remaining Service Period (in years) Aggregated Intrinsic Value Outstanding as of December 31, 2014 2,388 $ 8.97 Granted 1,256 $ 5.48 Released (713 ) $ 10.82 Canceled (359 ) $ 9.19 Outstanding as of September 30, 2015 2,572 $ 6.72 1.7 $ 15,409 The aggregate intrinsic value is the amount that would have been received by the unit holders had all RSUs been vested and released on September 30, 2015 . This amount will fluctuate based on the fair market value of our stock. Market Performance-based Restricted Stock Units We granted MSUs covering 540,000 shares and 40,000 shares of our common stock to certain company executives during 2014 and the nine months ended September 30, 2015, all of which were outstanding as of September 30, 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. The total aggregate intrinsic value for the MSUs granted was $3.5 million , which 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 MSUs) that would have been received by the award holders had all MSUs vested and been released on September 30, 2015 . This amount will fluctuate based on the fair market value of our stock. No MSUs were vested or released during the nine months ended September 30, 2015 . Employee Stock Purchase Plan The fair value of the option component of the 2014 Purchase Plan shares was determined at the grant date using the Black-Scholes option pricing model with the following weighted average assumptions: Three and Nine Months Ended September 30, 2015 2014 Expected term (in years) 1.2 1.4 Risk-free interest rate 0.32% 0.24% Expected volatility 40% 31% Dividend rate —% —% |