STOCK-BASED COMPENSATION (Tables)

3 Months Ended

Mar. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of non-cash compensation expense related to equity awards

Non-cash compensation expense related to equity awards is included in the following line items in the accompanying consolidated statements of operations (in thousands):



	Three Months Ended March 31,
	2014		2013
Cost of revenue	$	6	$	2
Selling and marketing expense	233		217
General and administrative expense	1,061		1,030
Product development	316		184
Total non-cash compensation expense	$	1,616	$	1,433

Summary of changes in outstanding stock options

A summary of changes in outstanding stock options is as follows:



	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value^(a)
			(per option)		(in years)	(in thousands)
Options outstanding at January 1, 2014	1,038,999		$	8.98
Granted ^(b)	42,757		33.59
Exercised	(2,692	)	11.44
Forfeited	—		—
Expired	(10	)	0.47
Options outstanding at March 31, 2014	1,079,054		9.95		4.74	$	22,865
Options exercisable at March 31, 2014	935,005		$	9.23	4.21	$	20,394

(a)

The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $31.04 on the last trading day of the quarter ended March 31, 2014 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on March 31, 2014. The intrinsic value changes based on the fair market value of the Company's common stock.


(b)	During the first quarter of 2014 the Company granted stock options with a weighted average grant date fair value per share of $17.13 that vest over a period of three years from their grant date.

Schedule of stock option valuation assumptions

For purposes of determining stock-based compensation expense, the grant date fair value per share of the stock options was estimated using the Black-Scholes option pricing model, which requires the use of various key assumptions, including the following:



Expected term ⁽¹⁾	6.0 years
Expected dividend ⁽²⁾	—
Expected volatility ⁽³⁾	54	%
Risk-free interest rate ⁽⁴⁾	1.85	%


(1)	The expected term of stock options granted was calculated using the 'Simplified Method', which utilizes the midpoint between the weighted-average time of vesting and the end of the contractual term. This method was utilized for the stock options due to the lack of historical exercise behavior by the Company's employees.


(2)	For all stock options granted in 2014, no dividends are expected to be paid over the contractual term of the stock options, resulting in a zero expected dividend rate.

(3)

The expected volatility rate is based on the historical volatility of the Company's common stock for the four years preceding the grant date, supplemented with the historical volatility of its peer group for the two years preceding the Company's historical volatility over the expected term. A blended rate was used because the Company became a public company in 2008 and, therefore, does not have a historical volatility equal to the expected term of these awards.


(4)	The risk-free interest rate is specific to the date of grant. The risk-free interest rate is based on U.S. Treasury yields for notes with comparable expected terms as the awards, in effect at the grant date.

Summary of the information about stock options outstanding and exercisable



	Options Outstanding				Options Exercisable
Range of Exercise Prices	Outstanding	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Exercisable	Weighted Average Exercise Price
		(in years)	(per option)			(per option)
$0.01 to $4.99	15	0.12	$	1.52	15	$	1.52
$5.00 to $7.45	304,032	7.47	6.65		202,740	6.65
$7.46 to $9.99	601,783	3.78	8.46		601,783	8.46
$10.00 to $14.99	3,679	0.56	12.25		3,679	12.25
$15.00 to $19.99	80,125	1.18	15.00		80,125	15.00
$20.00 to $33.59	89,420	5.35	26.60		46,663	20.19
Options at March 31, 2014	1,079,054	4.74	$	9.95	935,005	$	9.23

Schedule of non-vested RSUs, RSUs with a market condition, restricted stock and restricted stock with a market condition as at the end of the period and changes during the reporting period



	RSUs				RSUs Market Condition
	Number of Units		Weighted Average Grant Date Fair Value		Number of Units	Weighted Average Grant Date Fair Value
			(per unit)			(per unit)
Nonvested at January 1, 2014	599,122		$	14.15	—	$	—
Granted	102,440		33.59		500	33.59
Vested	(141,116	)	13.54		—	—
Forfeited	(10,371	)	16.44		—	—
Nonvested at March 31, 2014	550,075		$	17.89	500	$	33.59



	Restricted Stock				Restricted Stock Market Condition
	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
			(per share)				(per share)
Nonvested at January 1, 2014	119,500		$	22.47	62,500		$	13.93
Granted	—		—		—		—
Vested	(20,833	)	17.49		(62,500	)	13.93
Forfeited	—		—		—		—
Nonvested at March 31, 2014	98,667		$	23.53	—		$	—