9. Stock Based Awards

The Company’s 2009 Stock Incentive Plan (“2009 Plan”) is administered by the Board of Directors and Compensation Committee, which have the authority to designate participants and determine the number and type of awards to be granted and any other terms or conditions of the awards. Options generally vest over a four-year period and expire ten years from the date of grant. Restricted stock units generally vest over a three-year period. Certain stock-based awards provide for accelerated vesting if there is a change in control. On May 23, 2013, the Company’s stockholders approved an amendment to the 2009 Plan that increased the shares available to grant under the plan by 1,400,000 shares. There were 1,703,426 shares available for grant under the 2009 Plan as of June 30, 2013.

The Company uses the Black-Scholes option-pricing model to estimate the grant date fair value of stock awards. The Company estimates the expected volatility of its common stock at the date of grant based on the historical volatility of comparable public companies over the option’s expected term as well as its own stock price volatility since the Company’s IPO. The Company estimates expected term based on historical exercise activity and giving consideration to the contractual term of the options, vesting schedules, employee turnover, and expectation of employee exercise behavior. The assumed dividend yield is based upon the Company’s expectation of not paying dividends in the foreseeable future. The risk-free rate for periods within the estimated life of the stock award is based on the U.S. Treasury yield curve in effect at the time of grant. Historical employee turnover data is used to estimate pre-vesting stock awards forfeiture rates. The compensation expense is amortized on a straight-line basis over the requisite service period of the stock award, which is generally four years for options and three years for restricted stock units.

The Company used the following assumptions to apply the Black-Scholes option-pricing model:


	Three Months Ended June 30,		Six Months Ended June 30,
	2012	2013	2012	2013
Expected dividend yield	0.00%	0.00%	0.00%	0.00%
Risk-free interest rate	0.77%	0.89%	0.77% - 0.87%	0.87% - 0.89%
Expected term (in years)	5.56 - 6.25	6.25	5.56 - 6.25	6.25
Volatility	55%	55%	55% - 60%	55%

The following table summarizes stock option activity, including performance-based options:


	Number of shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at January 1, 2013		2,941,098		$	25.90		7.2	$	14,173,945


Granted		180,375			21.97
Exercised		(61,371	)		4.32			$	945,134


Forfeited		(113,495	)		33.69


Outstanding at June 30, 2013		2,946,607		$	25.84		6.9	$	15,785,517


Exercisable at December 31, 2012		1,361,728		$	17.16		5.6	$	13,090,809


Exercisable at June 30, 2013		1,708,298		$	21.31		5.9	$	14,338,894

The aggregate intrinsic value was calculated based on the positive differences between the fair value of the Company’s common stock on December 31, 2012 of $22.41 and $24.46 per share on June 30, 2013, or at time of exercise, and the exercise price of the options.

The weighted average grant date fair value of stock options issued was $18.57 per share for the year ended December 31, 2012, and $11.46 for the six months ended June 30, 2013.

During the three and six months ended June 30, 2013, the Company granted 377,575 and 519,370 restricted stock units, respectively, containing time-based vesting conditions which generally lapse over a three year period. Upon vesting, the restricted stock units entitle the holder to receive one share of common stock for each restricted stock unit. As of June 30, 2013, the Company estimates that 888,236 shares of restricted stock units with an intrinsic value of approximately $23,902,429 and a weighted average remaining contractual term of 2.3 years will ultimately vest.

The following table summarizes restricted stock unit activity:


	Number of shares Underlying Restricted Stock Units			Weighted Average Grant Date Fair Value
Unvested as of January 1, 2013		782,805		$	31.14
Restricted stock units granted		519,370			22.41
Restricted stock units vested		(148,766	)		33.12
Restricted stock units forfeited		(18,605	)		29.46


Unvested as of June 30, 2013		1,134,804		$	26.91

The Company recognized stock based compensation expense within the accompanying condensed consolidated statements of operations as summarized in the following table:


	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2013		2012		2013
Cost of revenue	$	107,789	$	180,702	$	214,970	$	383,965
Research and development		574,452		1,044,848		1,156,167		2,061,654
Sales and marketing		900,724		2,145,877		1,850,669		4,226,797
General and administrative		1,505,606		1,745,657		2,851,201		3,609,339


	$	3,088,571	$	5,117,084	$	6,073,007	$	10,281,755

As of June 30, 2013, there was approximately $41,479,000 of total unrecognized share-based compensation cost, net of estimated forfeitures, related to unvested stock awards which are expected to be recognized over a weighted average period of 2.3 years. The total unrecognized share-based compensation cost will be adjusted for future changes in estimated forfeitures.