Equity and Equity Compensation Plans

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Common Stock—As of December 31, 2019 and 2018, our amended and restated certificate of incorporation authorized us to issue 500,000,000 shares of common stock with a par value of $0.001 per share.

Preferred Stock—As of December 31, 2019 and 2018, our amended and restated certificate of incorporation authorized us to issue 10,000,000 shares of preferred stock at a par value of $0.001, of which no shares were outstanding.

Amended and Restated 2004 Equity Incentive Plan—We granted stock options under our 2004 Equity Incentive Plan, as amended ("2004 Plan"), until July 26, 2017, when we terminated it in connection with our IPO. Accordingly, no shares are available for future issuance under our 2004 Plan. Our 2004 Plan continues to govern outstanding equity awards granted thereunder. The term of each stock option under the plan is no more than 10 years, and each stock option generally vests over a four-year period.

2017 Equity Incentive Plan—Our 2017 Equity Incentive Plan ("2017 EIP") became effective on July 26, 2017 and provides for issuance of incentive and nonqualified common stock options and restricted stock units to employees, directors, officers, and consultants. The number of shares of common stock initially reserved for issuance under our 2017 EIP was 7,898,159. The number of shares reserved for issuance under our 2017 EIP will increase automatically on January 1 of each calendar year beginning on January 1, 2018, and continuing through January 1, 2028, by the number of shares equal to the lesser of 5% of the total outstanding shares of our common stock as of the immediately preceding December 31 or an amount determined by our board of directors. The term of each stock option and restricted stock unit under the plan will not exceed 10 years, and each award generally vests over a four-year period.

We have reserved shares of common stock for future issuance under our 2017 EIP as follows:



	December 31,
	2019	2018
Stock options issued and outstanding	7,792,181	9,435,349
Restricted stock units outstanding	5,023,412	3,264,702
Shares available for future equity grants	7,100,499	5,068,013
Total shares reserved for future issuance	19,916,092	17,768,064

2017 Employee Stock Purchase Plan—Our ESPP was approved by the board of directors on July 27, 2017, and enables eligible employees to purchase shares of our common stock at a discount. Purchases will be accomplished through participation in discrete offering periods. We initially reserved 1,600,000 shares of common stock for issuance under our ESPP. The number of shares reserved for issuance under our ESPP will increase automatically on January 1 of each calendar year beginning after the first offering date and continuing through January 1, 2028, by the number of shares equal to the lesser of 1% of the total outstanding shares of our common stock as of the immediately preceding December 31 or an amount determined by our board of directors. On each purchase date, eligible employees will purchase our common stock at a price per share equal to 85% of the lesser of (i) the fair market value of our common stock on the first trading day of the offering period, and (ii) the fair market value of our common stock on the purchase date.

We have reserved shares of common stock for future issuance under our ESPP as follows:



	Year Ended December 31,
	2019	2018
Shares available for issuance at beginning of period	2,890,973	2,414,688
Shares issued during the period	490,717	425,228
Total shares available for future issuance at end of period	2,400,256	1,989,460

The weighted-average grant date fair value and the assumptions used in calculating fair values of shares forecasted to be issued pursuant to our ESPP are as follows:



	For the Offering Period beginning July 1, 2019	For the Offering Period beginning January 1, 2019
Expected life	0.5 years	0.5 years
Volatility	39.60%	42.25%
Risk-free interest rate	2.10%	2.51%
Dividend yield	—%	—%
Weighted-average grant date fair value	$4.59	$3.80

Stock Options—The fair value of stock option awards was estimated at the grant date with the following weighted average assumptions:



	December 31,
	2019	2018	2017
Expected life	6.5 years	—	7 years
Volatility	33.76%	—%	37.88%-40.97%
Risk-free interest rate	2.12%	—%	1.96%-2.26%
Dividend yield	—%	—%	—%
Weighted-average grant date fair value	$3.22	—	$4.86

The following table summarizes activity for stock options for the year ended December 31, 2019:



	Number Of Options		Weighted- Average Exercise Price		Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value
Outstanding as of January 1, 2019	9,435,349		$	6.48	6.06	$	74,669
Options granted	150,000		27.50		—	—
Options exercised	(1,666,162	)	5.74
Options forfeited	(116,398	)	9.16
Options canceled	(10,608	)	8.75
Outstanding as of December 31, 2019	7,792,181		$	7.00	5.28	$	111,122
Options exercisable as of December 31, 2019	7,043,042		$	6.35	5.05	$	104,141

The grant date fair value of stock options is recorded as stock-based compensation over the vesting period. As of December 31, 2019, there was $3,573 of total unrecognized stock-based compensation related to stock options. These costs are expected to be recognized over a weighted-average period of 1.13 years. The total fair value of stock options vested during 2019, 2018, and 2017 was $4,747, $7,089, and $10,571, respectively. The total intrinsic value of stock options exercised during 2019, 2018, and 2017 was $20,811, $49,276, and $9,322, respectively.

On June 1, 2019, we granted stock options subject to performance conditions, with a target of 150,000 shares and a maximum 300,000 shares, to our Chief Executive Officer. The options have an exercise price of $27.50 per share and have the same performance and vesting conditions as the restricted

stock units subject to performance conditions that we granted in 2019 (the "2019 PSUs"). We granted no stock options in 2018.

Restricted Stock Units—The following table summarizes activity for restricted stock units for the year ended December 31, 2019:



	Restricted Stock Units		Weighted Average Grant-Date Fair Value
Outstanding as of January 1, 2019	3,264,702		$	19.68
Granted	3,184,465		18.19
Vested	(966,037	)	19.95
Forfeited or canceled	(459,718	)	19.65
Outstanding as of December 31, 2019	5,023,412		$	18.69

The grant date fair value of restricted stock units is recorded as stock-based compensation over the vesting period. As of December 31, 2019, there was $86,549 of total unrecognized stock-based compensation related to restricted stock units, which is expected to be recognized over a weighted-average period of 3.06 years.

As of December 31, 2019, there were outstanding 314,999 restricted stock units subject to performance conditions ("PSUs") at 100% of the target level. Depending on our achievement of the performance conditions, the actual number of shares of common stock issuable upon vesting of PSUs will range from 0% to 200% of the target amount. For each PSU recipient, the award will vest, subject to the recipient continuing to provide service to us, upon our board of directors, or its compensation committee, certifying that we have achieved the PSU's related performance conditions. Stock-based compensation expense for PSUs will be recognized when it is probable that the performance conditions will be achieved. For the year ended December 31, 2019, we recognized a net $284 of stock-based compensation expense for PSUs, which includes (i) an adjustment of ($610) related to PSUs granted in 2018 as the probability of achieving the performance conditions was determined to be not probable and (ii) a charge of $894 related to the 2019 PSUs.

Compensation Cost—The following table details, for each period indicated, (i) our stock-based compensation net of forfeitures, and the amount capitalized in internally developed software and (ii) includes changes to the probability of achieving outstanding performance-based equity awards, each as included in our consolidated statements of operations:



	Year Ended December 31,
	2019		2018		2017
Cost of revenue	$	6,087	$	5,567	$	2,902
Technology and development	12,362		7,576		3,325
Marketing	1,418		662		487
General and administrative	7,947		6,633		4,387
Total stock-based compensation	$	27,814	$	20,438	$	11,101

We capitalize stock-based compensation related to work performed on internally developed software. There was $1,280, $522, and $268 of stock-based compensation that was capitalized in the years ended December 31, 2019, 2018, and 2017, respectively. All capitalized stock-based compensation is related to employees in technology and development.