STOCK-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2018

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

Schedule of non-cash compensation expense related to equity awards

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



	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Cost of revenue	$	79	$	45	$	137	$	88
Selling and marketing expense	1,433		692		2,934		1,177
General and administrative expense	8,490		1,601		17,229		2,820
Product development	1,176		562		1,987		1,045
Total non-cash compensation	$	11,178	$	2,900	$	22,287	$	5,130

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, 2018	1,863,739		$	30.70
Granted ^(b)	52,148		328.73
Exercised	(723,510	)	17.84
Forfeited	(2,682	)	267.28
Expired	—		—
Options outstanding at June 30, 2018	1,189,695		51.05		4.66	$	200,359
Options exercisable at June 30, 2018	1,010,061		$	20.03	3.87	$	195,761

(a)

The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $213.80 on the last trading day of the quarter ended June 30, 2018 and the exercise price, multiplied by the number of shares covered by in-the-money options) that would have been received by the option holder had the option holder exercised these options on June 30, 2018. The intrinsic value changes based on the market value of the Company's common stock.

(b)

During the six months ended June 30, 2018, the Company granted stock options to certain employees and members of the board of directors with a weighted average grant date fair value per share of $167.11, calculated using the Black-Scholes option pricing model, which vesting periods include (a) immediate vesting on grant date (b) one year from grant date (c) two years from the grant date, (d) three years from the grant date and (e) four years from the grant date.

A summary of the changes in outstanding stock options with performance conditions 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, 2018	37,877	$	308.90
Granted	—	—
Exercised	—	—
Forfeited	—	—
Expired	—	—
Options outstanding at June 30, 2018	37,877	$	308.90	9.45	$	—
Options exercisable at June 30, 2018	—	$	—	0	$	—

(a)

Schedule of stock option valuation assumptions

For purposes of determining stock-based compensation expense, the weighted average 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. The weighted average assumptions used are as follows:



Expected term ⁽¹⁾	5.00 - 6.34 years
Expected dividend ⁽²⁾	—
Expected volatility ⁽³⁾	50% - 53%
Risk-free interest rate ⁽⁴⁾	2.33% - 2.90%


(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 a lack of historical exercise behavior by the Company's employees.


(2)	For all stock options granted in 2018, 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.


(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.

For purposes of determining stock-based compensation expense, the weighted average grant date fair value per share of the stock options was estimated using the Monte Carlo simulation model, which requires the use of various key assumptions. The weighted average assumptions used are as follows:



Expected term ⁽¹⁾	7.00 - 7.15 years
Expected dividend ⁽²⁾	—
Expected volatility ⁽³⁾	50%
Risk-free interest rate ⁽⁴⁾	2.38% - 2.81%


(1)	The expected term of stock options with a market condition granted was calculated using the midpoint between the weighted average time of vesting and the end of the contractual term.


(2)	For all stock options with a market condition granted in 2018, 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.


(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.

Schedule of changes in outstanding non-vested RSUs and restricted stock

A summary of the changes in outstanding nonvested restricted stock units ("RSUs"), exclusive of RSUs granted to the Chairman and Chief Executive Officer in 2018 described below, is as follows:



	RSUs
	Number of Units		Weighted Average Grant Date Fair Value
			(per unit)
Nonvested at January 1, 2018	152,829		$	121.68
Granted	54,538		336.59
Vested	(57,736	)	94.67
Forfeited	(4,734	)	187.56
Nonvested at June 30, 2018	144,897		$	211.18

Schedule of changes in outstanding nonvested RSUs with performance conditions

A summary of the changes in outstanding nonvested RSUs with performance conditions is as follows:



	RSUs with Performance Conditions
	Number of Units		Weighted Average Grant Date Fair Value
			(per unit)
Nonvested at January 1, 2018	111,205		$	160.34
Granted	—		—
Vested	(12,226	)	106.18
Forfeited	(2,652	)	113.22
Nonvested at June 30, 2018	96,327		$	168.52

Schedule of changes in outstanding stock options with market conditions

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



	Number of Options with Market Conditions	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value^(a)
		(per option)		(in years)	(in thousands)
Options outstanding at January 1, 2018	402,694	$	183.80
Granted^(b)	44,499	351.70
Exercised	—	—
Forfeited	—	—
Expired	—	—
Options outstanding at June 30, 2018	447,193	200.51		9.12	$	12,081
Options exercisable at June 30, 2018	—	$	—	0	$	—

(a)


(b)	During the six months ended June 30, 2018, the Company granted stock options with a weighted average grant date fair value per share of $296.80, calculated using the Monte Carlo simulation model, which have vesting dates of March 31, 2022 and September 30, 2022.