Stock-based compensation

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

Stock-based compensation

Stock-based compensation 

The following table summarizes the stock-based compensation expense recognized in the three and nine months ended September 30, 2019 and 2018 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Cost of goods sold	$	441	$	553	$	1,651	$	1,832
Research and development	715		1,016		2,383		2,618
Sales and marketing	575		931		1,852		2,511
General and administrative	1,220		1,541		3,408		3,566
	$	2,951	$	4,041	$	9,294	$	10,527

 

Determining Fair Value 

The Company estimated the fair value of certain stock-based awards using a Black-Scholes-Merton valuation model with the following assumptions:  

	Three Months Ended September 30,		Nine Months Ended September 30,
Stock options	2019	2018	2019	2018
Weighted-average expected term (years)	6.00	0.00	6.00	6.02
Weighted-average volatility	68%	—%	67%	65%
Risk-free interest rate	1.82%	—%	1.82%-2.27%	2.27% - 2.62%
Expected dividends	—%	—%	—%	—%
Stock appreciation units
Weighted-average expected term (years)	1.45	1.87	1.56	1.99
Weighted-average volatility	65%	65%	63%	66%
Risk-free interest rate	1.75%-2.12%	1.73% - 2.52%	1.75%-2.63%	1.03%-2.52%
Expected dividends	—%	—%	—%	—%
ESPP
Weighted-average expected term (years)	0.00	0.00	0.69	0.71
Weighted-average volatility	—%	—%	60%	61%
Risk-free interest rate	—%	—%	2.36%-2.59%	1.20%-1.93%
Expected dividends	—%	—%	—%	—%

Stock Options and Restricted Stock Units (RSUs)

The following table summarizes the Company’s stock option and RSU activity, excluding market-based RSUs, during the nine months ended September 30, 2019: 

	Stock Options				Restricted Stock Units
	Number of Shares		Weighted Average Exercise Price		Number of Units		Weighted Average Grant Date Fair Value
Balance as of December 31, 2018	3,202,745		$	5.73	2,486,028		$	7.87
Granted	103,001		4.34		1,938,591		4.87
Exercised/Converted	(264,857	)	3.66		(996,340	)	8.70
Cancelled/Forfeited	(208,277	)	6.52		(220,524	)	7.51
Balance as of September 30, 2019	2,832,612		5.82		3,207,755		5.82

At September 30, 2019, the Company had $1.0 million of unrecognized stock-based compensation expense for stock options, net of estimated forfeitures, which will be recognized over the remaining weighted-average period of 1.4 years. At September 30, 2019, the Company had $14.2 million of unrecognized stock-based compensation expense for RSUs, excluding market-based RSUs, net of estimated forfeitures, which will be recognized over the remaining weighted-average period of 2.6 years.

Market-based Restricted Stock Units

As of September 30, 2019, the Company has granted 705,000 shares of market-based RSUs to certain employees. These RSUs will vest if the 30-day weighted average closing price of the Company's common stock is equal to or greater than certain price targets per share and the recipients remain in continuous service with the Company through such service period. No market-based RSUs have vested and 63,500 market-based RSUs have been cancelled through September 30, 2019.

The weighted average grant-date fair value per share of market-based RSUs granted during 2018 was approximately $5.82 per share. As of September 30, 2019, the Company had $1.6 million of unrecognized stock-based compensation expense for these RSUs, net of estimated forfeitures, which will be recognized over the remaining weighted-average period of 1.04 years. The fair value of market-based RSUs was measured on the grant date using Monte Carlo simulation model with the following assumptions:

Market-based restricted stock units	Assumptions Used
Weighted-average volatility	66%
Risk-free interest rate	2.79%
Expected dividends	—%

Stock Appreciation Units (SAU) 

SAUs are liability classified share-based awards. Outstanding SAUs are re-measured each reporting period at fair value until settlement. The Company did not grant any SAUs during the three and nine months ended September 30, 2019 or 2018. As of September 30, 2019 and December 31, 2018, there were 169,351 and 192,872 SAUs outstanding, respectively, and related SAU liabilities were $0.5 million and $0.6 million, respectively.  

Employee Stock Purchase Plan (ESPP)

The Company issued 253,718 shares under the ESPP during the nine months ended September 30, 2019. As of September 30, 2019, there was $0.1 million of unrecognized stock-based compensation expense for employee stock purchase rights that will be recognized over the remaining offering period through November 2019. In June 2019, the Company adopted an Amendment and Restatement of the ESPP to increase the number of shares authorized for issuance under the ESPP by an additional 1,500,000 shares and to eliminate the annual "'evergreen" automatic increase provisions.