Stock-Based Compensation

In connection with its IPO, the Company implemented its 2014 Equity Incentive Plan, or the 2014 Plan, which governs equity awards made to employees and directors of the Company since the IPO. In connection with the acquisition of iSocket, the Company assumed the iSocket 2009 Equity Incentive Plan, or the iSocket Plan, which governs stock options issued to former iSocket employees and assumed by the Company. In November 2014, the Company approved the 2014 Inducement Grant Equity Incentive Plan, or the Inducement Plan, which governs certain equity awards made to certain employees in connection with commencement of employment. In connection with the acquisition of Chango, the Company assumed Chango's 2009 Stock Option Plan, or the Chango plan, which governs stock options issued to former Chango employees and assumed by the Company. All compensatory equity awards outstanding at December 31, 2016 were issued pursuant to the 2014 Plan, the iSocket Plan, the Chango Plan, the Inducement Plan, or the 2007 Stock Incentive Plan, or the 2007 Plan, which governs equity awards made to employees and contractors of the Company prior to the IPO. The Company’s equity incentive plans provide for the grant of equity awards, including non-statutory or incentive stock options, restricted stock, and restricted stock units, to the Company's employees, officers, directors, and consultants. The Company's board of directors administers the plans. Options outstanding vest based upon continued service at varying rates, but generally over four years from issuance with 25% vesting after one year of service and the remainder vesting monthly thereafter. Restricted stock and restricted stock units vest at varying rates, usually 25% vesting after one year of service and the remainder vesting semi-annually thereafter. Options, restricted stock, and restricted stock units granted under the plans accelerate under certain circumstances on a change in control, as defined in the governing plan. No further awards were made under the iSocket Plan, the Chango Plan, or the 2007 Plan; available shares under the iSocket Plan and the Chango Plan were rolled into the available share pool under the 2014 Plan at the time of acquisition of each company, and available shares under the 2007 Plan were rolled into the available share pool under the 2014 Plan at the time of the IPO. An aggregate of 3,254,098 shares remained available for issuance at December 31, 2016 under the plans. The 2014 Plan has an evergreen provision pursuant to which the share reserve will automatically increase on January 1^st of each year in an amount equal to 5% of the total number of shares of capital stock outstanding on December 31^st of the preceding calendar year, although the Company’s board of directors may provide for a lesser increase, or no increase, in any year. The Inducement Plan has a provision pursuant to which the share reserve may be increased at the discretion of the Company's board of directors.

During the year ended December 31, 2016, the Company early adopted the new accounting guidance that simplifies several aspects of the accounting for share-based payments, including the Company's election to eliminate the requirement to estimate the number of awards that are expected to vest and, instead, account for forfeitures when they occur. The new standard requires the change be adopted using the modified retrospective approach. As such, the Company recorded a cumulative-effect adjustment of $0.7 million to increase the 2016 beginning of period accumulated deficit and additional paid-in capital balances. In addition, the new standard requires income tax benefits and deficiencies to be recognized as income tax expense or benefit in the income statement and the tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur. The Company recorded $7.5 million of net deferred tax assets related to net operating losses for income tax benefits as of January 1, 2016. The Company has a full valuation allowance, and thus the income tax consequences of the new standard did not have an impact on the consolidated financial statements. Excess tax benefits should be classified along with other income tax cash flows as an operating activity. The new standard also requires the presentation of cash paid by the employer for employee taxes as a financing activity. The Company has historically presented these items as financing activities, and thus the new standard did not have an impact on the consolidated statement of cash flows.

Stock Options

A summary of stock option activity for the year ended December 31, 2016 is as follows:



	Shares Under Option		Weighted- Average Exercise Price		Weighted- Average Contractual Life	Aggregate Intrinsic Value
	(in thousands)					(in thousands)
Outstanding at December 31, 2015	6,203		$	9.76
Granted	469		$	13.41
Exercised	(2,027	)	$	7.03
Canceled	(784	)	$	12.06
Outstanding at December 31, 2016	3,861		$	11.16	6.71 years	$	1,562
Exercisable at December 31, 2016	2,707		$	10.04	6.05 years	$	1,559

The total intrinsic value of options exercised during the years ended December 31, 2016, 2015 and 2014 were $18.5 million, $28.3 million and $18.5 million, respectively.

At December 31, 2016, the Company had unrecognized employee stock-based compensation expense relating to stock options of approximately $6.5 million, which is expected to be recognized over a weighted-average period of 1.9 years.

The weighted-average grant date per share fair value of stock options granted in the years ended December 31, 2016, 2015 and 2014 were $6.29, $9.25 and $7.41, respectively.

The Company estimates the fair value of stock options that contain service and/or performance conditions using the Black-Scholes option pricing model. The weighted-average input assumptions used by the Company were as follows:



	Year Ended
	December 31, 2016		December 31, 2015		December 31, 2014
Expected term (in years)	5.9		4.5		5.7
Risk-free interest rate	1.47	%	1.30	%	1.75	%
Expected volatility	49	%	47	%	51	%
Dividend yield	—	%	—	%	—	%

Restricted Stock

A summary of restricted stock activity for the year ended December 31, 2016 is as follows:



	Number of Shares		Weighted-Average Grant Date Fair Value
	(in thousands)
Nonvested shares of restricted stock outstanding at December 31, 2015	1,479		$	15.58
Granted	525		$	12.15
Canceled	(433	)	$	14.49
Vested	(458	)	$	16.34
Nonvested shares of restricted stock outstanding at December 31, 2016	1,113		$	14.07

The weighted-average grant date per share fair value of restricted stock with service conditions granted for the years ended December 31, 2016, 2015 and 2014 was $13.26, $16.75 and $16.22, respectively. The fair value of restricted stock with service conditions that vested during the years ended December 31, 2016, 2015 and 2014 was $5.7 million, $9.8 million and $5.6 million, respectively. At December 31, 2016, the Company had unrecognized stock-based compensation expense for restricted stock with service conditions of $6.4 million, which is expected to be recognized over a weighted-average period of 2.4 years.

In March 2014, the Company granted 280,000 shares of restricted stock to certain executives that vest based on certain stock price performance metrics, beginning on the completion of the Company’s IPO in April 2014 over an estimated weighted-average period of 1.7 years. The grant date fair value per share of the 280,000 shares of restricted stock was $13.15, which was estimated using a Monte-Carlo lattice model. The compensation expense will not be reversed if performance metrics are not obtained. At December 31, 2016, the Company had unrecognized stock-based compensation expense relating to these shares of restricted stock of approximately $0.5 million, which is expected to be recognized over a weighted-average period of 4.4 years.

In May 2015, the Company granted certain executives shares of restricted stock that vest based on certain stock price performance metrics. The grant date fair value per share of restricted stock was $13.81, which was estimated using a Monte-Carlo lattice model. In February 2016, the Company granted certain executives shares of restricted stock that vest based on certain stock price performance metrics. The grant date fair value per share of restricted stock was $11.07, which was estimated using a Monte-Carlo lattice model. At December 31, 2016, the Company had unrecognized employee stock-based compensation expense relating to these shares of restricted stock with market conditions of approximately $2.8 million, which is expected to be recognized over a weighted-average period of 1.6 years. The compensation expense will not be reversed if the performance metrics are not met.

Restricted Stock Units

A summary of restricted stock unit activity for the year ended December 31, 2016 is as follows:



	Number of Shares		Weighted-Average Grant Date Fair Value
	(in thousands)
Nonvested shares of restricted stock units outstanding at December 31, 2015	2,647		$	15.76
Granted	2,306		$	12.66
Canceled	(1,105	)	$	14.73
Vested	(945	)	$	15.86
Nonvested shares of restricted stock units outstanding at December 31, 2016	2,903		$	13.63

The weighted-average grant date fair value per share of restricted stock units granted for the years ended December 31, 2016, 2015 and 2014 was $12.66, $16.45 and $13.22, respectively. The fair value of restricted stock units that vested during the years ended December 31, 2016, 2015 and 2014 was $11.5 million, $3.6 million and $0.1 million, respectively. At December 31, 2016, the intrinsic value of nonvested restricted stock units was $21.0 million. At December 31, 2016, the Company had unrecognized stock-based compensation expense relating to restricted stock units of approximately $33.0 million, which is expected to be recognized over a weighted-average period of 3.0 years.

Employee Stock Purchase Plan

In November 2013, the Company adopted the Company's 2014 Employee Stock Purchase Plan, or ESPP. The ESPP is designed to enable eligible employees to periodically purchase shares of the Company's common stock at a discount through payroll deductions of up to 10% of their eligible compensation, subject to any plan limitations. At the end of each six month offering period, employees are able to purchase shares at a price per share equal to 85% of the lower of the fair market value of the Company's common stock on the first trading day of the offering period or on the last trading day of the offering period. Offering periods generally commence and end in May and November of each year.

As of December 31, 2016, the Company has reserved 985,968 shares of its common stock for issuance under the ESPP. Shares reserved for issuance will increase on January 1^st of each year by the lesser of (i) a number of shares equal to 1% of the total number of outstanding shares of common stock on the December 31^st immediately prior to the date of increase or (ii) such number of shares as may be determined by the board of directors.

Stock-Based Compensation Expense

Total stock-based compensation expense recorded in the consolidated statements of operations was as follows:



	Year Ended
	December 31, 2016		December 31, 2015		December 31, 2014

	(in thousands)
Cost of revenue	$	344	$	240	$	166
Sales and marketing	8,520		7,415		3,217
Technology and development	5,788		4,963		2,228
General and administrative	14,042		17,966		18,235
Total stock-based compensation expense	$	28,694	$	30,584	$	23,846