Common Stock Reserved — As of December 31, 2021 and 2020, the Company has authorized 500 million shares of common stock. The number of shares of common stock reserved for the vesting of restricted stock units (“RSUs”), and exercise of common stock options are as follows (in thousands):


	December 31, 2021		December 31, 2020
RSUs		1,239		1,561
Common stock options		584		1,020
		1,823		2,581

For shares reserved for issuance for the Conversion Options, Warrants and Capped Call Options of the Notes, see Note 9.

Equity Incentive Plan —The Company’s 2007 Equity Incentive Plan (the “2007 Plan”) was terminated in connection with the IPO, and accordingly, no shares are available for issuance under the 2007 Plan. The 2007 Plan will continue to govern outstanding awards granted thereunder, the 2007 Plan provided for the grant of qualified incentive stock options and nonqualified stock options or other awards such as RSUs to the Company’s employees, officers, directors and outside consultants. The term of each option is fixed by the Company’s compensation committee and may not exceed 10 years from the date of grant. As of December 31, 2021, 165 thousand options to purchase common stock and no RSUs remained outstanding under the 2007 Plan.

On September 25, 2014, the Company’s board of directors adopted and the Company’s stockholders approved the 2014 Stock Option and Incentive Plan (the “2014 Plan”). The 2014 Plan became effective upon the closing of the Company’s IPO in the fourth quarter of 2014. The Company initially reserved 1,973,551 shares of its common stock, or the Initial Limit, for the issuance of awards under the 2014 Plan. The 2014 Plan provides that the number of shares reserved and available for issuance under the plan automatically increases each January 1, by 5% of the outstanding number of shares of the Company’s common stock on the immediately preceding December 31 or such lesser number of shares as determined by the compensation committee. This number is subject to adjustment in the event of a stock split, stock dividend or other change in the Company’s capitalization. The term of each option is fixed by the Company’s compensation committee and may not exceed 10 years from the date of grant. As of December 31, 2021, 419 thousand options to purchase common stock and 1.2 million RSUs remained outstanding under the 2014 Plan.

Stock Compensation Expense —The Company’s equity compensation expense is comprised of awards of options to purchase common stock, RSUs, and stock issued under the Company’s employee stock purchase plan (“ESPP”).

The following two tables show stock compensation expense by award type and where the stock compensation expense is recorded in the Company’s consolidated statements of operations:


	Year Ended December 31,
	2021		2020		2019
	( in thousands)
Options	$	6,253	$	6,377	$	5,078
ESPP		9,123		6,850		4,866
RSUs		151,385		108,261		87,810
Total stock-based compensation	$	166,761	$	121,488	$	97,754


	2021		2020		2019
	(in thousands)
Cost of revenue, subscription	$	6,297	$	4,408	$	3,127
Cost of revenue, service		3,092		2,536		2,829
Research and development		61,614		39,366		33,748
Sales and marketing		67,413		50,552		36,599
General and administrative		28,345		24,626		21,451
Total stock-based compensation	$	166,761	$	121,488	$	97,754

Excluded from stock-based compensation expense is $6.0 million of capitalized software development costs in 2021, $3.6 million in 2020, and $2.4 million in 2019.

Stock Options —The fair value of employee options is estimated on the date of each grant using the Black-Scholes option-pricing model with the following assumptions:


	Year Ended December 31,
	2021		2020		2019
Risk-free interest rate (%)	0.53-1.36		0.47-1.66		1.95-2.55
Expected term (years)	5.2-6.4		5.50-6.24		5.50-6.02
Volatility (%)	42.97-44.70		38.15-40.63		39.46-41.41
Expected dividends		—		—		—

The weighted-average grant-date fair value of options granted was $221.86 per share in 2021, $70.98 per share in 2020, and $69.44 per share in 2019.

The interest rate was based on the U.S. Treasury bond rate at the date of grant with a maturity approximately equal to the expected term. The expected term of options granted to employees was calculated using the simplified method, which represents the average of the contractual term of the option and the weighted-average vesting period of the option. The expected volatility for the Company’s common stock was based on an average of the historical volatility of a peer group of similar public companies. The assumed dividend yield is based upon the Company’s expectation of not paying dividends in the foreseeable future. Forfeitures of share-based awards prior to vesting results in a reversal of previously recorded stock-compensation expense associated with such forfeited awards. The fair value of the Company’s common stock is the closing price of the stock on the date of grant.

The stock option activity for the year ended December 31, 2021 is as follows:


	Options (in thousands)			Weighted- Average Exercise Price		Weighted- Average Remaining Life (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding—January 1, 2021		1,020		$	57.98		4.4	$	345,144
Granted	63				480.08
Exercised		(457	)	35.57
Forfeited/expired		(42	)	174.03
Outstanding—December 31, 2021		584		$	112.82		4.7	$	320,882
Options vested or expected to vest—December 31, 2021		584		$	112.82		4.7	$	320,882
Options exercisable—December 31, 2021		458		$	60.17		3.7	$	274,155

Total unrecognized compensation cost related to the nonvested options was $14.7 million at December 31, 2021. That cost is expected to be recognized over a weighted-average period of 3.0 years as of December 31, 2021.

Restricted Stock Units —RSUs vest upon achievement of a service condition. The service condition is a time-based condition met over a period of four years, with 25% met after one year, and then in equal monthly or quarterly installments over the succeeding three years, or over a period of four years, with equal quarterly installments over those four years. As soon as practicable following each vesting date, the Company will issue to the holder of the RSUs the number of shares of common stock equal to the aggregate number of RSUs that have vested. Notwithstanding the foregoing, the Company may, in its sole discretion, in lieu of issuing shares of common stock to the holder of the RSUs, pay the holder an amount in cash equal to the fair market value of such shares of common stock. The total stock-based compensation expense expected to be recorded over the remaining life of outstanding RSUs is approximately $351.0 million at December 31, 2021. That cost is expected to be recognized over a weighted-average period of 2.9 years. As of December 31, 2021, there are 1.2 million RSUs expected to vest with an aggregate intrinsic value of $816.0 million. The total fair value of RSUs vested was approximately $134.5 million in 2021, $101.2 million in 2020, and $85.2 million in 2019.

The following table summarizes the activity related to RSUs for the year ended December 31, 2021:


	RSUs Outstanding
	Shares (in thousands)			Weighted- Average Grant Date Fair Value Per Share
Unvested and outstanding at January 1, 2021		1,561		$	153.91
Granted		632			513.94
Vested		(773	)		174.01
Canceled		(181	)		206.81
Unvested and outstanding at December 31, 2021		1,239		$	317.48

Employee Stock Purchase Plan (“ESPP”)— The ESPP authorizes the issuance of up to a total of 2,389,445 shares of common stock to participating employees and allows eligible employees to purchase shares of common stock at a 15% discount from the fair market value of the stock as determined on specific dates at six-month intervals. The offering periods for the ESPP commence on June 1 and December 1 of each year.

The fair value of employee options is estimated using the Black-Scholes option-pricing model with the following assumptions:


	Year Ended December 31,
	2021		2020		2019
Risk-free interest rate (%)	0.04-0.10		0.14-1.60		2.56
Expected term (years)		0.50		0.50		0.50
Volatility (%)	42.73-45.67		34.75-67.22		41.32-45.07
Expected dividends		—		—		—

The interest rate was based on the U.S. Treasury bond rate at the date of grant with a maturity approximately equal to the expected term. The expected term is based on the offering period. The expected volatility for the Company’s common stock was based on an average of the historical volatility of a peer group of similar public companies. The assumed dividend yield is based upon the Company’s expectation of not paying dividends in the foreseeable future. The fair value of the Company’s common stock is the closing price of the stock on the date the offering period starts.

The following table summarizes the activity related to ESPP:


	Shares Issued (in thousands)		Weighted- Average Purchase Price		Total Cash Proceeds (in thousands)
2021		77	$	372.50	$	28,667
2020		132	$	149.23	$	19,653
2019		116	$	123.69	$	14,383