8. Stock-based Compensation

2013 Equity Incentive Plan

In October 2013, the Company adopted the 2013 Equity Incentive Plan (the “2013 Plan”), which became effective in March 2014 and serves as the successor to the Company’s 2006 Stock Plan (the “2006 Plan”). Under the 2013 Plan, the Company may grant stock options, stock appreciation rights, restricted stock and restricted stock units, performance shares and units to employees, directors and consultants.

Stock Options

The fair value of each option was estimated on the date of grant for the period presented using the following assumptions:

	Three Months Ended September 30,			Nine Months Ended September 30,
	2015		2014	2015	2014
Expected life (in years)		6.08	—	5.50 - 6.08		6.08
Risk-free interest rate		1.67%	—	1.67 - 1.89%		2.33%
Volatility		60%	—	55 - 60%		55%
Dividend yield	—		—	—	—

The weighted-average grant-date fair value of options granted was $5.34 and $5.57 per share during the three months and nine months ended September 30, 2015 and $8.60 per share during the nine months ended September 30, 2014. There were no option grants during the three months ended September 30, 2014.

Restricted Stock Units

The fair value of RSUs equals the market value of the Company’s common stock on the date of the grant. The RSUs are excluded from issued and outstanding shares until they are vested.

A summary of the Company’s stock option and RSUs award activity under the 2013 Plan is as follows:

				Options Outstanding									RSUs Outstanding
	Shares Available for Grant			Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (in thousands)		Number of Shares			Weighted Average Grant Date Fair Value
Balance as of December 31, 2014		1,825,112			9,494,763		$	7.00		6.57	$	107,913		6,809,415		$	12.66
Increase in shares authorized		3,255,200
Options granted		(328,680	)		328,680			10.05
Options exercised		—			(1,034,605	)		3.51				9,438
Options canceled or expired		49,829			(49,829	)		8.04
RSUs granted		(3,155,953	)											3,155,953			13.48
RSUs released		—												(1,687,983	)		11.75
RSUs canceled or expired		1,117,472												(1,117,472	)		12.83
Balance as of September 30, 2015		2,762,980			8,739,009		$	7.52		6.12	$	31,768		7,159,913		$	13.14
Vested and expected to vest as of September 30, 2015					8,350,252		$	7.27		6.03	$	31,409
Vested and exercisable as of September 30, 2015					6,668,290		$	5.82		5.46	$	30,100

The aggregate intrinsic value disclosed in the table above is based on the difference between the exercise price of the options and the fair value of the Company’s common stock.

The aggregate total fair value of shares which vested during the three and nine months ended September 30, 2015 was $0.8 million and $3.0 million, respectively, and during the three and nine months ended September 30, 2014 was $0.8 million and $2.6 million, respectively.

Employee Stock Purchase Plan

Eligible employees can enroll and elect to contribute up to 15% of their base compensation through payroll withholdings in each offering period, subject to certain limitations. Each offering period is six months in duration, with the exception of the initial offering period which commenced in March 2014 and ended in November 2014. The purchase price of the stock is the lower of 85% of the fair market value on (a) the first day of the offering period or (b) the purchase date.

The fair value of the option feature is estimated using the Black-Scholes model for the period presented based on the following assumptions:

	Nine Months Ended September 30,
	2015		2014
Expected life (in years)		0.50		0.62
Risk-free interest rate		0.08%		0.08%
Volatility		63%		55%
Dividend yield	—		—

95,251 shares of common stock were issued under the 2014 Employee Stock Purchase Plan (“ESPP”) in May 2015. As of September 30, 2015, 1,332,472 shares are available for issuance under the ESPP.

Stock-based Compensation Expense

The following table sets forth the total stock-based compensation expense resulting from stock options, RSUs and ESPP included in the Company’s condensed consolidated statements of operations (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Cost of revenues	$	419	$	494	$	1,301	$	2,594
Sales and marketing		2,723		1,498		9,097		6,899
Research and development		2,411		2,147		7,460		9,417
General and administrative		2,521		2,335		7,655		8,817
Total stock-based compensation expense	$	8,074	$	6,474	$	25,513	$	27,727

As of September 30, 2015, there was $64.6 million of unrecognized stock-based compensation expense (net of estimated forfeitures), of which $6.1 million is related to stock options and ESPP shares and $58.5 million is related to RSUs. The total unrecognized stock-based compensation expense related to stock options and ESPP as of September 30, 2015 will be amortized over a weighted-average period of 2.5 years. The total unrecognized stock-based compensation expense related to RSUs as of September 30, 2015 will be amortized over a weighted-average period of 2.9 years.

The amount of stock-based compensation cost capitalized in property and equipment, net on the accompanying condensed consolidated balance sheets was immaterial for all periods presented.