We have various stock incentive plans under which we have issued stock-based awards. Stock options granted under our stock incentive plans have a maximum term of ten years, generally vest over a period of three to four years, and the exercise price cannot be less than the fair market value on the date of grant. RSUs granted under our stock incentive plans generally vest over a period of two to four years.

In 2018, our Board of Directors adopted, and our stockholders approved, our 2018 Equity Incentive Plan ("2018 Plan"). No additional grants were made under our other stock incentive plans, and any shares subject to stock options or other stock awards granted under our other plans that would have returned to such plan (such as upon the expiration or termination of a stock award prior to vesting) were added to, and are available for issuance under, our 2018 Plan. In addition, the number of shares of our common stock reserved for issuance under our 2018 Plan automatically increases on January 1 of each year through 2028, according to an evergreen provision. Due to this provision, we reserved an additional 4,656,320 shares of our common stock in January 2019. At December 31, 2019, there were 15,395,809 shares available for grant.



	Year Ended December 31,
(in thousands)	2019		2018		2017
Cost of revenue	$	2,817	$	1,707	$	281
Sales and marketing	16,032		6,911		1,579
Research and development	8,911		5,804		1,782
General and administrative	15,683		8,453		4,118
Total stock-based compensation expense	$	43,443	$	22,875	$	7,760

At December 31, 2019, the total unrecognized stock-based compensation expense related to outstanding stock options was $24.3 million, which is expected to be recognized over an estimated remaining weighted average period of 2.1 years.

At December 31, 2019, the unrecognized stock-based compensation expense related to unvested awards of restricted stock was $1.7 million, which is expected to be recognized over an estimated remaining period of 1.0 year.

At December 31, 2019, the unrecognized stock-based compensation expense related to unvested RSUs was $59.4 million, which is expected to be recognized over an estimated remaining period of 3.1 years.



(in thousands, except for per share data and years)	Number of Shares	Weighted Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at December 31, 2016	9,336	$	2.77	7.2	$	15,374
Granted	9,022	5.22
Exercised	(1,870)	1.62			7,667
Forfeited/canceled	(1,915)	3.21
Outstanding at December 31, 2017	14,573	4.38		8.2	77,020
Granted	6,108	15.17
Exercised	(740)	2.26			9,902
Forfeited/canceled	(722)	7.23
Outstanding at December 31, 2018	19,219	7.78		8.0	277,114
Granted	—	—
Exercised	(4,205)	4.53			98,378
Forfeited/canceled	(2,075)	10.63
Outstanding at December 31, 2019	12,939	8.38		7.1	201,608
Exercisable at December 31, 2019	6,473	6.04		6.4	116,016

In 2018 and 2017, we granted stock options to employees that vest over three to four years and had a per share weighted average grant date fair value of $6.84 and $2.48, respectively. Estimating the fair value of stock options using the Black-Scholes option-pricing model requires assumptions as to the estimated term of the option, the risk-free interest rate, the expected volatility of the price of our common stock, the expected dividend yield, and the fair value of our underlying common stock prior to our IPO.

Fair Value of Common Stock. Following our IPO, we use the market price of our common stock at the date of grant. Prior to our IPO, the lack of an active public market for our common stock required an estimate of the fair value of the common stock for granting stock options and restricted shares, and for determining stock-based compensation expense. Contemporaneous third-party valuations were obtained to assist in determining the fair value of our common stock. The contemporaneous valuations were performed in accordance with applicable methodologies, approaches and assumptions of the technical practice-aid issued by the American Institute of Certified Public Accountants Practice Aid entitled Valuation of Privately-Held Company Equity Securities Issued as Compensation.

Expected Term. This is the period of time that the options granted are expected to remain unexercised. We employ the simplified method to calculate the average expected term.

Expected Volatility. Volatility is a measure of the amount by which a financial variable, such as a share price, has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. As we do not yet have sufficient history of our own volatility, we have identified several public entities of similar size, complexity, and stage of development and estimate volatility based on the volatility of these companies.



	Year Ended December 31,
	2018	2017
Expected term (in years)	6.3	6.3
Expected volatility	41.3% — 43.3%	45.2% — 47.0%
Risk-free interest rate	2.7% — 2.9%	1.9% — 2.4%
Expected dividend yield	—	—
Expected forfeiture rate	—	—



	Restricted Stock				Restricted Stock Units
(in thousands, except for per share data and years)	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
Unvested balance at December 31, 2016	—		$	—	—		$	—
Granted	1,583		4.25		—		—
Vested	—		—		—		—
Forfeited	—		—		—		—
Unvested balance at December 31, 2017	1,583		4.25		—		—
Granted	—		—		1,200		18.75
Vested	(693	)	4.25		—		—
Forfeited	—		—		(71	)	16.27
Unvested balance at December 31, 2018	890		4.25		1,129		18.90
Granted	—		—		2,715		27.81
Vested	(395	)	4.25		(479	)	18.28
Forfeited	—		—		(471	)	25.21
Unvested balance at December 31, 2019	495		4.25		2,894		26.34

The grant date fair value was based on the estimated fair value of our common stock on the date of grant. RSUs granted before July 30, 2018 vest upon the satisfaction of both service-based and performance-based vesting conditions. The performance-based condition was satisfied upon the completion of our IPO. RSUs granted after July 30, 2018 vest upon the satisfaction of a service-based vesting condition.

Compensation expense for restricted stock and RSUs is recognized on a straight-line basis over the requisite service period, with the exception of RSUs that include performance-based vesting conditions, which are expensed using the accelerated attribution method.

In 2018, our board of directors adopted, and our stockholders approved, our 2018 ESPP. The number of shares of common stock reserved for issuance under our 2018 ESPP automatically increases on January 1 of each year through 2028 according to an evergreen provision. Due to this provision, we reserved an additional 1,396,896 shares of our common stock in January 2019. At December 31, 2019, there were 4,620,087 shares available for grant.

Under our 2018 ESPP, employees may set aside up to 15% of their gross earnings, on an after-tax basis, to purchase our common stock at a discounted price, which is calculated at 85% of the lower of the fair market value of our common stock on the first day of an offering or on the date of purchase. The 2018 ESPP permits offerings up to 27 months in duration, with one or more purchase periods in each offering. Additionally, in cases where the fair market value of a share of our common stock on the first day of a new purchase period within an offering is less than or equal to the fair market value of a share of our common stock at the beginning of the offering, that offering will be terminated and participants will be automatically enrolled in a new offering with a new 24-month duration with purchase periods every six months.

At December 31, 2019, there was $5.4 million of employee contributions to the 2018 ESPP included in accrued compensation. The unrecognized stock-based compensation expense related to our 2018 ESPP was $8.5 million, which is expected to be recognized over the remaining offering period of 1.7 years.

The fair value of the 2018 ESPP purchase rights was estimated on the offering or modification dates using a Black-Scholes option-pricing model and the following assumptions:



	Year Ended December 31,
	2019	2018
Expected term (in years)	0.5 — 2.0	0.6 — 2.1
Expected volatility	34.4% — 44.6%	31.9% — 33.5%
Risk-free interest rate	1.5% — 2.5%	2.3% — 2.7%
Expected dividend yield	—	—