9. Stock-Based Compensation

The Company has granted stock options, restricted stock units and restricted stock awards under its incentive plans. The Company recognizes compensation expense based on estimated grant date fair values for all stock-based awards issued to employees and directors, including stock options, restricted stock awards and restricted stock units.

Stock-based Compensation Expense

The total stock-based compensation expense related to all stock-based awards was $5.4 million and $3.1 million during the three months ended September 30, 2016 and 2015, respectively, and $17.8 million and $9.4 million during the nine months ended September 30, 2016 and 2015, respectively. During the nine months ended September 30, 2016 and 2015, the Company reported excess tax benefits as a decrease in cash flows from operations and an increase in cash flows from financing activities of $22.1 million and $22.0 million, respectively. Excess tax benefits reflect the total of the individual stock option exercise transactions and vesting of restricted stock awards and restricted stock units in which the reduction to the Company’s income tax liability is greater than the deferred tax assets that were previously recorded. The Company capitalized stock-based compensation expense as website and software development costs of $0.6 million and $0.1 million during the three months ended September 30, 2016 and 2015, respectively, and $1.4 million and $0.3 million during the nine months ended September 30, 2016 and 2015, respectively. As of September 30, 2016, $52.9 million of total unrecognized stock-based compensation expense is expected to be recognized over a weighted-average period of 3.1 years. The total unrecognized stock-based compensation expense to be recognized in future periods as of September 30, 2016 does not consider the effect of stock-based awards that may be granted in subsequent periods.

Stock Options

The Company granted 131,816 and 1,496,861 stock options during the nine months ended September 30, 2016 and 2015, respectively. The fair value of each stock option award was estimated based on the assumptions below as of the grant date using the Black-Scholes-Merton option pricing model. Expected volatilities are based on a combination of the historical and implied volatilities of comparable publicly-traded companies and the historical volatility of the Company’s own common stock due to its limited trading history as there was no active external or internal market for the Company’s common stock prior to the Company’s initial public offering in April 2014. The Company uses historical data to estimate option exercises and employee terminations within the valuation model. Separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The expected term of the award is estimated using a simplified method. The risk-free rate for the period within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The assumptions used to determine the fair value of the stock options granted during the nine months ended September 30, 2016 and 2015 were as follows:

	Nine Months Ended September 30,
	2016			2015
Weighted-average fair value options granted	$	10.74		$	16.48
Average risk-free interest rate		1.41	%		1.46	%
Expected stock price volatilities		50.3	%		47.0	%
Dividend yield	None			None
Expected stock option life (years)		5.78			6.06

Stock option awards as of December 31, 2015 and September 30, 2016, and changes during the nine months ended September 30, 2016, were as follows:

	Options			Weighted-Average Exercise Price		Aggregate Intrinsic Value (thousands)		Weighted-Average Exercise Term (years)
Outstanding at December 31, 2015		5,078,297		$	19.66	$	41,107		8.21
Granted		131,816			22.54
Forfeited		(795,391	)		26.39
Exercised		(1,227,543	)		9.63
Outstanding at September 30, 2016		3,187,179			21.96		67,059		7.85
Vested and expected to vest at September 30, 2016		2,675,453			21.11		58,572		7.85
Exercisable at September 30, 2016		1,069,786		$	16.61	$	28,246		6.79

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the fair value of the common stock 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 in-the-money options on each date. This amount will change in future periods based on the fair value of the Company’s stock and the number of options outstanding. The aggregate intrinsic value of awards exercised during the three months ended September 30, 2016 and 2015 was $13.8 million and $4.6 million, respectively. The aggregate intrinsic value of awards exercised during the nine months ended September 30, 2016 and 2015 was $26.9 million and $82.6 million, respectively.

The Company recorded compensation expense for stock options of $2.5 million and $2.3 million for the three months ended September 30, 2016 and 2015, respectively, and $9.5 million and $7.8 million for the nine months ended September 30, 2016 and 2015, respectively. As of September 30, 2016, total unrecognized compensation cost, adjusted for estimated forfeitures, related to non-vested stock options was $19.5 million and is expected to be recognized over a weighted-average period of 2.6 years.

Restricted Stock Units and Restricted Stock Awards

Non-vested restricted stock units and restricted stock awards as of December 31, 2015 and September 30, 2016, and changes during the nine months ended September 30, 2016 were as follows:

	Restricted Stock Units					Restricted Stock Awards
	Shares			Weighted-Average Grant Date Fair Value		Shares			Weighted-Average Grant Date Fair Value
Outstanding at December 31, 2015		888,483		$	27.85		67,744		$	42.01
Granted		952,239			28.35		—			—
Forfeited		(178,305	)		27.19		—			—
Vested		(52,810	)		37.32		(67,744	)		42.01
Outstanding at September 30, 2016		1,609,607		$	27.91		—		$	—

Compensation expense recognized related to restricted stock awards was $0.6 million during the three months ended September 30, 2015, and $1.7 million and $1.3 million during the nine months ended September 30, 2016 and 2015, respectively. There were no non-vested restricted stock awards or related expense during the three months ended September 30, 2016. During the three and nine months ended September 30, 2016, compensation expense related to restricted stock units was $2.9 million and $6.6 million, respectively. Compensation expense related to restricted stock units was $0.2 million and $0.3 million for the three and nine months ended September 30, 2015, respectively. The aggregate fair value as of the vest date of restricted stock units that vested during the three months ended September 30, 2016 was $0.7 million. The aggregate fair value as of the vest date of restricted stock awards and restricted stock units that vested during the nine months ended September 30, 2016 was $1.7 million and $1.5 million, respectively. As of September 30, 2016, $33.4 million of total unrecognized compensation cost, adjusted for estimated forfeitures, related to 1,609,607 non-vested restricted stock units with weighted-average grant date fair values of $27.91 is expected to be recognized over a weighted-average period of 3.3 years. As of September 30, 2016, there were no remaining non-vested restricted stock awards or related unrecognized compensation cost. The fair value of these awards was determined based on the Company’s stock price at the grant date and assumes no expected dividend payments through the vesting period.