The following table presents the detail of stock-based compensation expense amounts included in our consolidated statements of operations for the periods presented (in thousands):


	Year Ended December 31,
	2023		2022		2021
Cost of revenue	$	1,869	$	1,522	$	1,869
Research and development expense		21,307		17,961		17,170
Sales and marketing expense		10,240		9,447		9,496
General and administrative expense		14,570		13,513		11,963
Total stock-based compensation expense	$	47,986	$	42,443	$	40,498

In June 2016, our board of directors adopted and our stockholders approved our 2016 Equity Incentive Plan, or the 2016 Plan, which became effective in July 2016 at which time the 2010 Equity Incentive Plan, or the 2010 Plan, was terminated. The number of shares of common stock reserved for issuance under the 2016 Plan may increase on January 1 of each year, beginning on January 1, 2017 and ending on and including January 1, 2026, by the lesser of (1) 1,825,000 shares; (2) 5% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year; and (3) a lesser number of shares determined by our board of directors. The 2016

Plan provides for granting incentive or non-qualified stock options, restricted stock, restricted stock units, stock appreciation rights and performance shares or performance units to employees, non-employee directors and consultants.

All options granted under the 2010 Plan and the 2016 Plan have a maximum 10-year term and generally vest and become exercisable over four years of continued employment or service as defined in each option agreement. We generally grant stock options with exercise prices that equal the fair value of the common stock on the date of grant. As allowed under the 2016 Plan, there are a few exceptions to this vesting schedule, which permit vesting at different rates or based on achieving performance targets. We use newly issued shares to satisfy option exercises. As of December 31, 2023, we had approximately 2.8 million shares of common stock available for future grants.

We did not issue stock options in fiscal year 2023 or fiscal year 2022. The following table summarizes option award activity for the year ended December 31, 2023 (in thousands, except per share data and years):


	Number of Underlying Shares			Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life (Years)		Total Intrinsic Value
Outstanding at December 31, 2022		1,712		$	25.09		5.92	$	143,996
Granted		—			—
Exercised		(243	)		22.72
Forfeited or expired		(3	)		27.72
Outstanding at December 31, 2023		1,466			25.48		4.97		94,650
Vested and exercisable at December 31, 2023		1,408		$	25.35		4.91	$	91,089

We estimate the fair value of options granted at the date of grant using the Black-Scholes option-pricing model with the following assumptions for the periods presented:


	Year Ended December 31,
	2023	2022	2021
Risk-free interest rate	N/A	N/A	0.8% - 1.2%
Expected dividends yield	N/A	N/A	None
Expected volatility	N/A	N/A	71.2% - 72.4%
Weighted-average expected term	N/A	N/A		6.08
Weighted-average fair value of options granted	N/A	N/A	$	36.94

In 2021, we determined that it was not practicable to calculate the volatility of our share price because we do not have an extensive public trading history for shares of our common stock. Therefore, we estimated our volatility based on a combination of our historical volatility since becoming a publicly traded company and reported market value data for a group of publicly traded entities that we believe are relatively comparable after considering their size, stage of lifecycle, profitability, growth, risk and return on investment.

In 2021, to determine the expected term, we applied the simplified approach in which the expected term of an award is presumed to be the midpoint between the vesting date and the expiration date of the options as we did not have sufficient historical exercise data to provide a reasonable basis for an estimate of expected term.

The total intrinsic value of options exercised during 2023, 2022 and 2021 was $19.1 million, $31.9 million and $33.7 million, respectively. The total grant date fair value of options vested was $3.3 million, $7.0 million and $12.8 million during 2023, 2022 and 2021, respectively.

As of December 31, 2023, our total unrecognized stock-based compensation cost related to unvested stock options was $0.9 million, which we will recognize over the weighted-average remaining requisite service period of 0.5 years.

The following table summarizes activity for restricted stock units, or RSUs, PSUs, and MSUs for the year ended December 31, 2023 (in thousands, except per share data):


	Number of Underlying Shares									Weighted-Average Grant Date Fair Value
	RSUs			MSUs			PSUs			RSUs		MSUs		PSUs
Outstanding at December 31, 2022		1,310			110			74		$	56.92	$	80.40	$	64.03
Granted		441			126			—			119.12		145.51		—
Vested		(633	)		(58	)		(57	)		52.92		39.15		64.03
Forfeited		(40	)		(4	)		(17	)		71.49		185.49		64.03
Outstanding at December 31, 2023		1,078			174			—		$	84.18	$	138.77	$	—

We record stock-based compensation expense for RSUs and MSUs on a straight-line basis over the requisite service period, which is generally the vesting period. We record stock-based compensation for PSUs based on the probability of achieving the performance criteria defined in the PSU agreements. Forfeitures are recognized as they occur.

We granted PSUs under our annual bonus program to our senior executives and other bonus-eligible employees. The number of annual PSUs that ultimately vest depends on us attaining certain financial metrics for the fiscal year as well as on the employee’s continued employment through the vesting date. In fiscal year 2022, we transitioned to a bonus plan that was half cash and half PSUs. In fiscal year 2023, we transitioned to an all cash bonus plan.

The following table summarizes information related to granted and vested RSUs, PSUs, and MSUs (in thousands, except per share data):


	Year Ended December 31,
	2023		2022		2021
RSU weighted-average grant date fair value	$	119.12	$	65.81	$	56.40
MSU weighted-average grant date fair value		145.51		81.22		77.01
PSU weighted-average grant date fair value	$	—	$	64.07	$	54.67

Fair market value of RSUs vested	$	64,417	$	32,871	$	18,228
Fair market value of MSUs vested		7,219		—		—
Fair market value of PSUs vested	$	7,261	$	18,873	$	15,384

As of December 31, 2023, our total unrecognized stock-based compensation cost related to unvested MSUs was $13.7 million, which we will recognize over the weighted-average period of 1.3 years. As of December 31, 2023, there was $78.4 million of total unrecognized compensation cost related to unvested RSUs, which we expect to recognize over a weighted-average period of 2.4 years.

Effective July 2016, we adopted the 2016 Employee Stock Purchase Plan, or the ESPP, allowing eligible employees to authorize payroll deductions of up to 15% of their eligible compensation. An ESPP participant may purchase a maximum of 4,000 shares, or a lesser number as determined by the IRS rules, each six-month period. The offering periods generally start on the first trading day on or after February 20 and August 20 of each year. Participants in an offering period are granted the right to purchase common shares at a price per share that is 85% of the lesser of the fair market value of the shares on (1) the first day of the offering period or (2) the end of the purchase period. The number of shares reserved for the ESPP may increase each year, beginning on January 1, 2017 and continuing through and including January 1, 2036, by the lesser of: (1) 1% of the total number of shares of common stock outstanding on the first day of each year; (2) 365,411 shares of common stock; and (3) an amount determined by our board of directors.

As of December 31, 2023, the total unrecognized stock-based compensation from the ESPP was $0.3 million, which we will recognize on a straight-line basis over the weighted-average remaining service period of less than one year.

We estimate the fair value of the ESPP grant at the start of the offering period using the Black-Scholes option-pricing model with the following assumptions for the periods presented:


	Year Ended December 31,
	2023	2022	2021
Risk-free interest rate	5.1% - 5.6%	0.7% - 3.2%	0.0% - 0.1%
Expected term	0.5 Years	0.5 Years	0.5 Years
Expected volatility	64.7% - 85.9%	71.9% - 76.3%	61.0% - 65.8%