STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 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 September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Cost of revenue	$	123	$	41	$	260	$	129
Selling and marketing expense	1,577		1,366		4,511		2,543
General and administrative expense	8,388		5,864		25,617		8,684
Product development	2,009		667		3,996		1,712
Total non-cash compensation	$	12,097	$	7,938	$	34,384	$	13,068

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)	58,901		317.31
Exercised	(971,211	)	16.31
Forfeited	(6,425	)	299.89
Expired	—		—
Options outstanding at September 30, 2018	945,004		61.53		5.42	$	163,927
Options exercisable at September 30, 2018	772,651		$	25.03	4.64	$	158,473

(a)

The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $230.10 on the last trading day of the quarter ended September 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 September 30, 2018. The intrinsic value changes based on the market value of the Company's common stock.

(b)

During the nine months ended September 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 $161.58, 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 September 30, 2018	37,877	$	308.90	9.20	$	—
Options exercisable at September 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	90,343		295.49
Vested	(63,980	)	99.58
Forfeited	(9,288	)	218.95
Nonvested at September 30, 2018	169,904		$	217.10

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 September 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 September 30, 2018	447,193	200.51		8.87	$	18,645
Options exercisable at September 30, 2018	—	$	—	0	$	—

(a)


(b)	During the nine months ended September 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.