STOCKHOLDERS’ EQUITY

Stock Repurchase Program

On July 31, 2017, the Company’s board of directors authorized a stock repurchase program under which the Company may repurchase up to $200.0 million of its outstanding common stock. The Company may purchase shares at management’s discretion in the open market, in privately negotiated transactions, in transactions structured through investment banking institutions, or a combination of the foregoing. During the three months ended September 30, 2017, the Company repurchased on the open market and subsequently retired 185,592 shares for an aggregate purchase price of approximately $7.7 million.

Elimination of Dual-Class Common Stock Structure

On September 22, 2016, all outstanding shares of the Company’s Class A common stock and Class B common stock automatically converted into a single class of common stock (the “Conversion”) pursuant to the terms of the Company’s amended and restated certificate of incorporation. On September 23, 2016, the Company filed a certificate with the Secretary of State of the State of Delaware effecting the retirement and cancellation of the Class A common stock and Class B common stock. This certificate of retirement had the additional effect of eliminating the authorized Class A and Class B shares, thereby reducing the Company’s total number of authorized shares of common stock from 500,000,000 to 200,000,000.

The following table presents the number of shares authorized and issued and outstanding as of the dates indicated:



	September 30, 2017		December 31, 2016
	Shares Authorized	Shares Issued and Outstanding	Shares Authorized	Shares Issued and Outstanding
Stockholders’ equity:
Common stock, $0.000001 par value	200,000,000	82,741,466	200,000,000	79,429,833
Undesignated Preferred Stock	10,000,000	—	10,000,000	—

Equity Incentive Plans

The Company has outstanding awards under three equity incentive plans: the Amended and Restated 2005 Equity Incentive Plan (the “2005 Plan”), the 2011 Equity Incentive Plan (the “2011 Plan”) and the 2012 Equity Incentive Plan, as amended (the “2012 Plan”). In July 2011, the Company adopted the 2011 Plan, terminated the 2005 Plan and provided that no further stock awards were to be granted under the 2005 Plan. All outstanding stock awards under the 2005 Plan continue to be governed by their existing terms. Upon the effectiveness of the underwriting agreement in connection with the Company’s initial public offering (“IPO”), the Company terminated the 2011 Plan and all shares that were reserved under the 2011 Plan but not issued were assumed by the 2012 Plan. No further awards will be granted pursuant to the 2011 Plan. All outstanding stock awards under the 2011 Plan continue to be governed by their existing terms. Under the 2012 Plan, the Company has the ability to issue incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock units (“RSUs”), restricted stock awards (“RSAs”), performance units and performance shares. Additionally, the 2012 Plan provides for the grant of performance cash awards to employees, directors and consultants.

Stock Options

Stock options granted under the 2012 Plan are granted at a price per share not less than the fair value of a share of the Company’s common stock at date of grant. Options granted to date generally vest over a four-year period, on one of four schedules: (a) 25% vesting at the end of one year and the remaining shares vesting monthly thereafter; (b) 10% vesting over the first year, 20% vesting over the second year, 30% vesting over the third year and 40% vesting over the fourth year; (c) ratably on a monthly basis; or (d) 35% vesting over the first year, 40% vesting over the second year and 25% vesting over the third year. Options granted are generally exercisable for up to 10 years. The Company issues new shares when stock options are exercised.

A summary of stock option activity for the nine months ended September 30, 2017 is as follows:



	Options Outstanding
	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding - December 31, 2016	8,018,941		$	21.71	6.10	$	147,673
Granted	920,850		34.60
Exercised	(1,216,110	)	19.85
Canceled	(210,770	)	47.08
Outstanding - September 30, 2017	7,512,911		$	22.88	5.85	$	162,770
Options vested and exercisable as of September 30, 2017	5,904,796		$	20.32	5.05	$	143,342

Aggregate intrinsic value represents the difference between the closing price of the Company’s common stock as quoted on the New York Stock Exchange on a given date and the exercise price of outstanding, in-the-money options. The total intrinsic value of options exercised was approximately $9.8 million and $10.2 million for the three months ended September 30, 2017 and 2016, respectively, and $20.2 million and $14.9 million for the nine months ended September 30, 2017 and 2016, respectively.

The weighted-average grant date fair value of options granted was $13.31 and $13.16 per share for the three months ended September 30, 2017 and 2016, respectively, and $15.35 and $9.60 per share for the nine months ended September 30, 2017 and 2016, respectively.

As of September 30, 2017, total unrecognized compensation costs related to unvested stock options was approximately $21.3 million, which is expected to be recognized over a weighted-average time period of 2.5 years.

RSUs

The cost of RSUs is determined using the fair value of the Company’s common stock on the date of grant. RSUs generally vest over a four-year period, on one of three schedules: (a) 25% vesting at the end of one year and the remaining vesting quarterly or annually thereafter; (b) 10% vesting over the first year, 20% vesting over the second year, 30% vesting over the third year and 40% vesting over the fourth year; or (c) ratably on a quarterly basis.

A summary of RSU activity for the nine months ended September 30, 2017 is as follows:



	Restricted Stock Units
	Number of Shares		Weighted- Average Grant Date Fair Value
Unvested - December 31, 2016	7,090,465		$	32.43
Granted	3,762,717		35.14
Released	(2,086,837	)	33.63
Canceled	(1,188,887	)	33.34
Unvested - September 30, 2017	7,577,458		$	33.30

As of September 30, 2017, the Company had approximately $234.7 million of unrecognized stock-based compensation expense related to RSUs, which is expected to be recognized over the remaining weighted-average vesting period of approximately 2.8 years.

Employee Stock Purchase Plan

The ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations, during designated offering periods. At the end of each offering period, employees are able to purchase shares at 85% of the fair market value of the Company’s common stock on the last day of the offering period, based on the closing sales price of the Company's common stock as quoted on the New York Stock Exchange on such date.

There were no shares purchased by employees under the ESPP in the three months ended September 30, 2017 or 2016. Employees purchased 228,299 shares and 200,953 shares under the ESPP during the nine months ended September 30, 2017 and 2016, respectively, at weighted-average purchase prices of $23.73 per share and $22.26 per share, respectively. The Company recognized $0.5 million and $0.4 million of stock-based compensation expense related to the discounted share price provided to employees under the ESPP in the three months ended September 30, 2017 and 2016, respectively, and $1.5 million and $1.1 million in the nine months ended September 30, 2017 and 2016, respectively.

Stock-Based Compensation

The following table summarizes the effects of stock-based compensation expense related to stock-based awards in the condensed consolidated statements of operations during the periods presented (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Cost of revenue	$	993	$	764	$	2,931	$	1,572
Sales and marketing	7,305		7,191		21,434		20,376
Product development	11,976		9,284		34,428		25,727
General and administrative	5,035		5,321		16,214		14,721
Total stock-based compensation	$	25,309	$	22,560	$	75,007	$	62,396

The Company capitalized $1.5 million and $1.3 million of stock-based compensation expense as website development costs in the three months ended September 30, 2017 and 2016, respectively, and $4.6 million and $3.3 million in the nine months ended September 30, 2017 and 2016, respectively.