Stock-Based Incentive Compensation Plans

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

Stock-Based Incentive Compensation Plans

Stock Options

The table below summarizes the stock option activity for the three months ended March 31, 2020:


	Number of Shares	Weighted- Average Exercise Price
Outstanding as of December 31, 2019	2,718,971	$8.02
Granted	26,236	17.31
Exercised	(43,334)	4.03
Canceled and forfeited	(1,319)	12.87
Outstanding as of March 31, 2020	2,700,554	8.17

As of March 31, 2020, there was $5.0 million of unrecognized compensation cost related to stock options granted. These costs are expected to be recognized over a period of approximately 2.4 years.

The table below summarizes the weighted average grant date fair value per share and the assumptions used to estimate the grant date fair value of the stock options granted during the respective periods using the Black-Scholes option-pricing model:


	Three Months Ended March 31,
	2020					2019
Weighted average grant date fair value per share	$8.37					$10.40
Expected term (years)	5.5	to	7.0	5.0	to	7.0
Expected volatility	46.74%	to	47.20%	42.00%	to	47.00%
Risk-free interest rate	1.56%	to	1.64%	2.52%	to	2.59%
Dividend yield	—%					—%

Early Exercise of Unvested Stock Options

Early exercises of stock options are subject to a right of repurchase by the Company of any unvested shares. The repurchase rights lapse over the original vesting period of the options. The Company accounts for the cash received in consideration for the early exercised options as a liability included in accrued liabilities, which is then reclassified to stockholders’ equity as the options vest. As of March 31, 2020 and December 31, 2019, the Company had a total of 15,567 and 21,404 shares of common stock, respectively, subject to repurchase under the 2008 Stock Option Plan and $0.1 million and $0.1 million, respectively, of associated liabilities for the repurchase.

Restricted Stock Units

The table below summarizes restricted stock units activity for the three months ended March 31, 2020:


	Number of Shares	Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2019	543,041	$19.72
Granted	868,683	20.43
Vested	(63,938)	21.00
Canceled and forfeited	(5,575)	18.43
Outstanding as of March 31, 2020	1,342,211	20.13

As of March 31, 2020, there was a total unrecognized compensation cost of $23.4 million related to the restricted stock units granted. These costs are expected to be recognized over a period of approximately 3.5 years.

Employee Stock Purchase Plan

The Company's 2018 Employee Stock Purchase Plan (the "ESPP") allows eligible employees to purchase shares of the Company's common stock through payroll deductions at the price equal to 85% of the lesser of the fair market value of the stock as of the first date or the ending date of each six month offering period. The offer period generally commence in May and November. As of March 31, 2020 and December 31, 2019, total accumulated ESPP related employee payroll deductions amounted to $0.9 million and $0.2 million, respectively, which were included within accrued compensation and related expenses in the condensed consolidated balance sheets. On March 26, 2020, the Company's Board of Directors approved the amendment of the terms of future offerings under the ESPP, among other things, to provide that the offering set to commence in May 2020 be twelve months in duration and consist of two purchase periods, provide for automatic enrollment in a new offering, and increase the maximum number of shares that may be purchased on any single purchase date.

Stock-Based Compensation

The table below presents the detail of stock-based compensation expense amounts included in the condensed consolidated statements of operations:


	Three Months Ended March 31,
	2020		2019
	(in thousands)
Cost of goods sold	$	71	$	42
Sales and marketing	1,141		670
Research and development	240		96
General and administrative	1,170		1,063
	$	2,622	$	1,871