The Company has stock-based compensation plans that provide for the award of equity incentives, including stock options, stock awards, RSUs, and purchase rights. As of March 31, 2020, the Company had stock options outstanding under the 2018 Equity Incentive Plan (the “2018 Plan”) and the 2006 Equity Incentive Plan (the “2006 Plan”), had RSUs outstanding under the 2018 Plan, and had purchase rights issued under the ESPP.

In April 2018, the 2018 Plan became effective in connection with the Company’s IPO. The 2018 Plan allows the Company to grant equity incentives to employees, directors, advisors, and consultants providing services to the Company. The total number of shares of common stock reserved for issuance under the 2018 Plan is equal to (1) 5,315,780 shares plus (2) any shares subject to outstanding awards under the 2006 Plan as of June 14, 2018 that subsequently cease to be subject to such awards. The available shares automatically increase each January 1, beginning January 1, 2019, by the lesser of (i) 5% of the aggregate number of shares of common stock outstanding on December 31^st of the immediately preceding calendar year (rounded up to the nearest whole share) and (ii) an amount determined by the Company’s Board of Directors. As of March 31, 2020, 3,540,159 shares were subject to outstanding awards and 9,204,822 shares were available for issuance under the 2018 Plan. The 2018 Plan provides that on the occurrence of certain strategic events, such as a change in control in which options and RSUs are not assumed or substituted, such outstanding options and RSUs will become fully vested and exercisable or payable.

Prior to the 2018 Plan, the Company awarded stock options under the 2006 Plan. The 2006 Plan was terminated in connection with the Company’s IPO. Outstanding awards under the 2006 Plan continue to be subject to the terms and conditions of the 2006 Plan. As of March 31, 2020, there were 4,154,956 shares subject to outstanding stock options under the 2006 Plan.

The Company recognized total stock-based compensation cost related to equity incentive awards as follows (in thousands):

	For the Three Months Ended March 31,
	2020		2019
Stock-based compensation cost:
Stock options	$	3,849	$	3,917
Restricted stock units		4,933		1,698
Employee stock purchase plan		967		956
Total stock-based compensation cost	$	9,749	$	6,571

A small portion of stock-based compensation cost above is capitalized in accordance with the accounting guidance for internal-use software. The Company uses the straight-line attribution method for recognizing stock-based compensation expense.

The following table summarizes stock option activity for the Company’s stock-based compensation plans for the three months ended March 31, 2020:

						Weighted
				Weighted		Average		Aggregate
				Average		Remaining		Intrinsic
				Exercise		Contractual		Value
	Shares			Price		Life (Years)		(in thousands)
Options outstanding as of January 1, 2020		5,884,742		$	20.09		7.22	$	312,838
Options granted		211,243			68.61
Options exercised		(532,848	)		14.88
Options cancelled or expired		(79,246	)		15.77
Options outstanding as of March 31, 2020		5,483,891			22.53		7.11		285,564
Options exercisable as of March 31, 2020		2,997,298		$	15.35		6.21	$	177,582

	Options Outstanding				Options Vested and Exercisable
Exercise	Number		Weighted Average		Number Vested		Weighted Average
Prices	Outstanding		Life (in Years)		and Exercisable		Life (in Years)
$1.50 to $1.90		29,963		1.1		29,963		1.1
2.86 to 6.40		152,780		2.9		152,780		2.9
8.04 to 11.72		457,714		3.9		457,714		3.9
12.20 to 15.06		1,933,421		6.4		1,517,566		6.2
16.06 to 24.00		1,581,078		7.9		555,420		7.8
31.99 to 42.21		826,351		8.7		235,511		8.7
55.10 to 86.61		502,584		9.5		48,344		9.0
		5,483,891				2,997,298

The total intrinsic value of options exercised during the three months ended March 31, 2020 and 2019 was $36.8 million and $109.5 million, respectively.

The weighted average grant date fair value of options granted during the three months ended March 31, 2020 and 2019 was $28.99 and $17.93 per share, respectively. During the three months ended March 31, 2020, 585,475 options vested. There were 2,486,593 options unvested as of March 31, 2020.

As of March 31, 2020, $31.9 million of total unrecognized compensation cost related to stock options was expected to be recognized over a weighted average period of approximately 2.6 years.

All stock-based payments to participants, including employees and non-employee directors, are measured based on the grant date fair value of the awards and recognized in the consolidated statements of operations over the period during which the participant is required to perform services in exchange for the award. The vesting period is generally four years for employees and one year for non-employee directors. For the options granted during the periods presented, the fair value of options was estimated using the Black-Scholes option-pricing model with the following assumptions:

	For the Three Months Ended March 31,
	2020	2019
Fair market value of common stock	$67.27 - 86.61	$39.76 - 55.79
Volatility	43%	40%
Expected term	6 years	6 years
Expected dividend yield	n/a	n/a
Risk-free interest rate	0.82% - 1.25%	2.31% - 2.65%

The Board of Directors intends all options granted to be exercisable at a price per share not less than the per share fair market value of the Company’s common stock underlying those options on the date of grant. The fair market value per share of the Company’s common stock for purposes of determining stock-based compensation is the closing price of the Company’s common stock as reported on the applicable grant date.

Beginning in 2020, expected volatility for stock options is based on a combination of annualized daily historical volatility of the Company’s stock price and the historical and implied volatility of comparable publicly traded companies over a similar expected term. Prior to 2020, expected volatility was based only on the historical and implied volatility of comparable publicly traded companies over a similar expected term.

The expected term represents the period that the Company’s stock-based awards are expected to be outstanding. Given the Company’s relative inexperience of significant exercise activity, the expected term assumptions were determined based on application of the simplified method of expected term calculation by averaging the contractual life of option grants and the vesting period of such grants. This application, when coupled with the contractual life of ten years and average vesting term of four years for employees and one year for non-employee directors, creates an expected term of six years and five years, respectively.

The risk-free interest rate was based on the rate for a U.S. Treasury zero-coupon issue with a term that closely approximates the expected term of the option grant at the date nearest the option grant date.

The following table summarizes RSU activity for the Company’s stock-based compensation plans for the three months ended March 31, 2020:

				Weighted
				Average
				Grant Date Fair
	Restricted Stock Units			Value Per Share
RSUs outstanding as of January 1, 2020		1,508,281		$	51.52
RSUs granted		945,698			68.89
RSUs vested		(186,475	)		43.89
RSUs cancelled		(56,280	)		49.45
RSUs outstanding as of March 31, 2020		2,211,224		$	59.64

Stock-based compensation cost for RSUs is recognized on a straight-line basis in the consolidated statements of operations over the period during which the participant is required to perform services in exchange for the award, based on the fair value of the Company’s underlying common stock on the date of grant. The vesting period of each RSU grant is generally four years for employees and one year for non-employee directors. As of March 31, 2020, $123.9 million of total unrecognized compensation cost related to RSUs was expected to be recognized over a weighted average period of approximately 3.5 years.

The ESPP became effective on June 15, 2018, the first trading day of the Company’s common stock. The ESPP is intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended. Purchases are accomplished through participation in discrete offering periods. The first offering period began on June 15, 2018 and ended on January 31, 2019. Subsequent offering periods begin on August 1 and February 1 (or such other date determined by our Board of Directors or our Compensation and Leadership Development Committee).

Eligible employees can select a rate of payroll deduction for purchases under the ESPP of between 1% and 15% of their eligible compensation. The purchase price for shares of common stock purchased under the ESPP is 85% of the lesser of the fair market value of the Company’s common stock on (i) the first day of the applicable offering period or (ii) the last day of the purchase period in the applicable offering period.

The Company initially reserved 996,709 shares of common stock for sale under the ESPP. The aggregate number of shares reserved for sale under the ESPP increases automatically on each January 1, beginning January 1, 2019, by the number of shares equal to the least of (i) 1,000,000 shares of common stock, (ii) 1% of the aggregate number of shares of common stock outstanding on December 31^st of the immediately preceding calendar year (rounded up to the nearest whole share), and (iii) an amount determined by the Board of Directors. No more than an aggregate of 10,102,525 shares of common stock may be issued over the ten-year term of the ESPP. As of March 31, 2020, 1,850,081 shares of common stock are reserved for sale under the ESPP.

During the three months ended March 31, 2020, 81,894 shares of common stock were purchased under the ESPP.

As of March 31, 2020, there was approximately $1.3 million of unrecognized stock-based compensation cost related to the ESPP that is expected to be recognized over the remaining term of the offering period that began on February 1, 2020 and will end on July 31, 2020.

For the periods presented, the fair value of ESPP purchase rights was estimated using the Black-Scholes option-pricing model with the following assumptions:

	For the Three Months Ended March 31,
	2020	2019
Fair market value of common stock	$85.14	$40.60
Volatility	32%	40%
Expected term	0.5 years	0.5 years
Expected dividend yield	n/a	n/a
Risk-free interest rate	1.54%	2.59%

Beginning in 2020, the expected volatility for ESPP purchase rights is based on daily historical volatility of the Company’s stock price. Prior to 2020, expected volatility was based only on the historical and implied volatility of comparable publicly traded companies over a similar expected term.