Equity Award Plans

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

We have operated under our 2013 Equity Incentive Plan ("2013 Plan") since our initial public offering ("IPO") in September 2013. Our 2013 Plan provides for the issuance of restricted stock and the granting of options, stock appreciation rights, performance shares, performance units and restricted stock units to our employees, officers, directors and consultants. Our 2013 Plan provides for annual increases in the number of shares available for issuance on the first day of each fiscal year. Awards granted under the 2013 Plan vest over the periods determined by our Board of Directors or compensation committee of our Board of Directors, generally four years, and stock options granted under the 2013 Plan expire no more than ten years after the date of grant. In the case of an incentive stock option granted to an employee who at the time of grant owns stock representing more than 10% of the total combined voting power of all classes of stock, the exercise price shall be no less than 110% of the fair value per share on the date of grant, and the award shall expire five years from the date of grant. For options granted to any other employee, the per share exercise price shall be no less than 100% of the fair value per share on the date of grant. In the case of non-statutory stock options and options granted to consultants, the per share exercise price shall be no less than 100% of the fair value per share on the date of grant. Although our 2013 Plan provides for the granting of options, we no longer utilize them as part of our overall compensation program. Stock that is purchased prior to vesting is subject to our right of repurchase at any time following termination of the participant's service for so long as such stock remains unvested. Approximately 15.5 million shares and 11.9 million shares of our common stock were reserved for future grants as of September 30, 2020 and December 31, 2019, respectively, under the 2013 Plan.

Our 2013 Employee Stock Purchase Plan ("ESPP") allows eligible employees to acquire shares of our common stock at 85% of the lower of the fair market value of our common stock on the first trading day of each offering period or on the exercise date. Our ESPP provides for annual increases in the number of shares available for issuance on the first day of each fiscal year. An aggregate of approximately 4.3 million shares and 3.4 million shares of common stock were available for future issuance as of September 30, 2020 and December 31, 2019, respectively, under our ESPP.

From time to time, we also grant restricted common stock or restricted stock awards outside of our equity incentive plans to certain employees in connection with acquisitions.

Stock Option Activity

A summary of the activity for our stock option changes during the reporting period and a summary of information related to options outstanding and options exercisable are presented below (in thousands, except per share amounts and contractual life years):



	Options Outstanding
	Number of Shares		Weighted- Average Exercise Price (per share)		Weighted- Average Contractual Life (years)	Aggregate Intrinsic Value
Balance — December 31, 2019	4,391		$	9.07	5.2	$	45,931
Exercised	(1,144	)	5.48			8,863
Cancelled	(248	)	15.82
Balance — September 30, 2020	2,999		$	9.87	4.7	$	20,115
Options exercisable — September 30, 2020	2,207		$	12.06	3.5	$	13,327

The aggregate intrinsic value above represents the pre-tax difference between the exercise price of stock options and the quoted market price of our stock on that day for all in-the-money stock options.

Restricted Stock Award ("RSA") and Restricted Stock Unit ("RSU") Activity

A summary of the activity for our restricted common stock, RSAs and RSUs during the reporting periods and a summary of information related to unvested restricted common stock, RSAs and RSUs, including those expected to vest based on the achievement of a performance condition, are presented below (in thousands, except per share amounts and contractual life years):



	Number of Shares		Weighted- Average Grant Date Fair Value (per share)		Weighted- Average Contractual Life (years)	Aggregate Intrinsic Value
Unvested balance — December 31, 2019	21,697		$	16.07	1.2	$	358,651
Granted	14,654		15.03
Vested	(8,150	)	15.20
Cancelled	(6,568	)	16.54
Unvested balance — September 30, 2020	21,633		$	15.34	1.4	$	267,163
Unvested awards for which the requisite service period has not been rendered and vesting is subject to the achievement of a performance condition — September 30, 2020	1,574		$	17.86	1.6	$	19,435

Stock-Based Compensation

We record stock-based compensation based on the fair value as determined on the date granted. We determine the fair value of stock options and shares of common stock to be issued under our ESPP using the Black-Scholes option-pricing model. The fair value of restricted stock units and restricted stock awards equals the market value of the underlying stock on the date of grant. We grant performance-based restricted stock units and restricted stock awards to certain employees which vest upon the achievement of certain performance conditions, subject to the employees’ continued service relationship with us. With respect to performance-based restricted stock units, we assess the probability of vesting at each reporting period and adjust our compensation cost based on this probability assessment. We recognize such compensation expense on a straight-line basis over the service providers' requisite service period.

The following table summarizes the assumptions used in the Black-Scholes option-pricing model to determine fair value of our common shares to be issued under the ESPP for the offering periods beginning in May 2020:



	Three and Nine Months Ended September 30, 2020	Three and Nine Months Ended September 30, 2019
Fair value of common stock	$13.06	$14.59
Risk-free interest rate	0.17% - 0.18%	2.21% - 2.35%
Expected term (in years)	0.5 - 1.0	0.5 - 1.0
Volatility	52% - 68%	39%
Dividend yield	—%	—%

Stock-based compensation expense related to stock options, ESPP and restricted stock unit awards is included in the condensed consolidated statements of operations as follows (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Cost of product, subscription and support revenue	$	4,245	$	3,590	$	12,037	$	11,501
Cost of professional services revenue	5,015		3,289		13,366		10,639
Research and development	11,830		10,718		33,236		35,031
Sales and marketing	13,306		12,252		36,202		38,019
General and administrative	5,952		6,839		18,438		21,972
Restructuring	21		—		314		—
Total	$	40,369	$	36,688	$	113,593	$	117,162

As of September 30, 2020, total compensation cost related to stock-based awards not yet recognized was $307.0 million, which is expected to be amortized on a straight-line basis over the weighted-average remaining vesting period of approximately 2.6 years.