Stock-based compensation | 11. Stock-based compensation 2018 Equity Incentive Plan On September 26, 2018, the board of directors adopted the 2018 Equity Incentive Plan (the 2018 Plan) as a successor to the 2013 Stock Plan (the 2013 Plan). The maximum aggregate number of shares that may be issued under the 2018 Plan is 5,856,505 shares of the Company’s common stock. The number of shares reserved for issuance under the 2018 Plan will be increased automatically on the first day of each fiscal year, following the fiscal year in which the 2018 Plan became effective, by a number equal to the least of 999,900 shares, 4% of the shares of common stock outstanding at that time, or such number of shares determined by the Company’s board of directors. The common shares issuable under the 2018 Plan were registered pursuant to a registration statement on Form S-8 on November 1, 2018. Any shares subject to outstanding awards under the 2013 Equity Incentive Plan that are cancelled or repurchased subsequent to the 2018 Plan’s effective date are returned to the pool of shares reserved for issuance under the 2018 Plan. Awards granted under the 2018 Plan may be nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and performance units. 2018 Employee Stock Purchase Plan On September 26, 2018, the board of directors adopted the 2018 Employee Stock Purchase Plan (the 2018 ESPP). A total of 275,225 shares of the Company’s common stock have been reserved for issuance under the 2018 ESPP. The number of shares reserved for issuance under the 2018 ESPP will be increased automatically on the first day of each fiscal year, following the fiscal year in which the 2018 ESPP becomes effective, by a number equal to the least of 249,470 shares, 1% of the shares of common stock outstanding at that time, or such number of shares determined by the Company’s board of directors. Subject to any plan limitations, the 2018 ESPP allows eligible service providers (through qualified and non-qualified offerings) to contribute, normally through payroll deductions, up to 15% of their earnings for the purchase of the Company’s common stock at a discounted price per share. The offerings periods beginning in February and August of each year, except the initial offering period which commenced with the initial public offering in October 2018 and ends on August 20, 2019. The common shares issuable under the 2018 ESPP were registered pursuant to a registration statement on Form S-8 on November 26, 2018. Unless otherwise determined by the board of directors, the Company’s common stock will be purchased for the accounts of employees participating in the 2018 ESPP at a price per share that is the lesser of 85% of the fair market value of the Company’s common stock on the first trading day of the offering period, which for the initial offering period is the price at which shares of the Company’s common stock were first sold to the public, or 85% of the fair market value of the Company’s common stock on the last trading day of the offering period. Activity under the equity incentive plans during the three months ended December 31, 2018 is summarized below: Shares Options Weighted Weighted Aggregate Outstanding at September 30, 2018 860,287 2,520,485 $ 8.22 8.38 $ 11,482,909 Additional shares authorized 2,494,700 — Stock options granted (1,038,532 ) 1,038,532 25.46 Stock options exercised — (48,841 ) 4.67 Stock options forfeited 10,136 (10,136 ) 9.52 Restricted stock units granted (395,698 ) — — Early exercised options repurchased 442 — Outstanding at December 31, 2018 1,931,335 3,500,040 13.38 8.63 $ 37,247,861 Vested or expected to vest and exercisable at December 31, 2018 3,500,040 13.38 8.63 $ 37,247,861 Total stock-based compensation expense recognized was as follows: Three months ended (in thousands) 2017 2018 Cost of revenues $ 77 $ 251 Research and development 144 300 Selling, general and administrative 315 1,313 Total stock-based compensation $ 536 $ 1,864 As of December 31, 2018, there was $31.3 million of total unrecognized compensation cost related to non-vested Restricted Stock Units Restricted stock primarily consists of restricted stock unit awards (RSUs) which have been granted to employees. The value of an RSU grant is based on the Company’s stock price on the date of grant. The shares underlying the RSU awards are not issued until the RSUs vest. Upon vesting, each RSU converts into one share of the Company’s common stock. In November 2018, the Company granted 395,698 RSUs to its employees and executive officers under the 2018 Plan of which 390,002 have a service-based vesting condition over a five-year period and 5,696 have a service-based vesting condition over a four-year period. The RSUs have a weighted average grant date fair value of $26.66. As of December 31, 2018, there was $10.4 million of total unrecognized compensation cost related to this issuance that is expected to be recognized over a weighted-average period of 4.9 years. |