STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2021

Share-based Payment Arrangement [Abstract]

Stock-based Compensation Expense

Stock-based compensation expense for all stock-based awards expected to vest is measured at fair value on the date of grant and recognized ratably over the requisite service period. The following table summarizes the components of total stock-based compensation expense included in the condensed consolidated statements of operations for the periods presented.


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Cost of revenues	$	1,060	$	1,337	$	2,042	$	1,943
Research and development	5,467		3,263		11,216		5,182
Sales and marketing	5,335		3,610		8,872		5,552
General and administrative	3,450		4,090		8,026		7,138

Total	$	15,312	$	12,300	$	30,156	$	19,815

The following table summarizes the various types of stock-based compensation expense for the periods presented.


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Stock options, RSUs, and PSUs	$	14,361	$	11,557	$	28,201	$	18,634
Employee stock purchase plan	951		743		1,955		1,181

Total	$	15,312	$	12,300	$	30,156	$	19,815

As of June 30, 2021, there was approximately $158.0 million of total unrecognized stock-based compensation expense related to unvested equity awards, which are expected to be recognized over a weighted-average period of 2.9 years.

Description of Equity Incentive Plans

2021 Plan

On May 19, 2021, at the 2021 annual meeting of stockholders of the Company, the stockholders approved the 2021 Equity Incentive Plan (the “2021 Plan”), as the successor to the 2011 Equity Incentive Plan (the “2011 Plan”). The 2021 Plan provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance stock awards and other stock awards. Eligible participants under the 2021 Plan include Company’s employees, directors and consultants. The 2021 Plan provides, among other things, that the number of shares of the Company’s common stock, $0.00001 par value per share (“Common Stock”), reserved for issuance under the 2021 Plan (subject to adjustment for certain changes in the Company’s capitalization) is equal to: (A) the sum of (i) 9,100,456 newly reserved shares of Common Stock and (ii) 5,256,517 Returning Shares (as defined below) as such shares become available from time to time as set forth in the 2021 Plan. “Returning Shares” means shares subject to any outstanding award granted under the 2011 Plan (“Prior Plan Award”) that are (i) not issued because such Prior Plan Award or any portion thereof expires or otherwise terminates without all of the shares covered by such Prior Plan Award having been issued, or is settled in cash; (ii) forfeited back to or repurchased by the Company because of a failure to vest; or (iii) reacquired or withheld (or not issued) by the Company to satisfy the purchase price of, or a tax withholding obligation in connection with, a Prior Plan Award that is a Full Value Award (as defined in the 2021 Plan). As a result of the approval of the 2021 Plan, no additional awards may be granted from the 2011 Plan.

Valuation of Equity Awards

Stock Options

The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

•Expected term - The expected term of the option awards represents the period of time between the grant date of the option awards and the date the option awards are either exercised, converted or canceled, including an estimate for those option awards still outstanding. The Company used the simplified method, as permitted by the SEC for companies with a limited history of stock option exercise activity, to determine the expected term for its option grants.

•Expected volatility - The expected volatility was calculated based on the Company’s historical stock prices, supplemented as necessary with historical volatility of the common stock of several peer companies with characteristics similar to those of the Company.

•Risk-free interest rate - The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant and with a maturity that approximated the Company’s expected term.

•Dividend yield - The dividend yield was based on the Company’s dividend history and the anticipated dividend payout over its expected term.

The following table presents the weighted-average grant date fair value of options granted for the periods presented and the assumptions used to estimate those values using a Black-Scholes option pricing model.


	Three Months Ended June 30,			Six Months Ended June 30,
	2021	2020		2021	2020
Weighted average grant date fair value	**	$	38.45	**	$	38.45
Expected term (in years)	**	3.8		**	3.8
Expected volatility	**	86.4%		**	86.4%
Annual risk-free rate of return	**	0.1%		**	0.1%
Dividend yield	**	—%		**	—%

** No stock options were granted during the three and six months ended June 30, 2021.

Equity Awards Activity

Stock Options

The following is a summary of stock option activity.


	Number of Shares Outstanding	Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value (1)
	(In thousands)			(Years)	(In thousands)








Outstanding at December 31, 2020	2,532	$	1.96
Granted	—	—
Exercised	(199)	2.01			$	27,668
Canceled	(1)	0.83
Outstanding at June 30, 2021	2,332	$	1.96	3.3	$	423,555
Vested and expected to vest at June 30, 2021	2,332	$	1.96	3.3	$	423,555
Exercisable at June 30, 2021	2,231	$	1.97	3.3	$	405,325

(1) The intrinsic value of options exercised is based upon the value of the Company’s stock at exercise. The intrinsic value of options outstanding, vested and expected to vest, and exercisable as of June 30, 2021 is based on the closing price of the last trading day during the period ended June 30, 2021. The Company’s stock fair value used in this computation was $183.63 per share.

The following table summarizes information about stock options outstanding at June 30, 2021.


	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number of Shares	Weighted- Average Remaining Life	Weighted- Average Exercise Price		Number of Shares	Weighted- Average Exercise Price
	(In thousands)	(Years)			(In thousands)
$0.70 —– $1.11	512	3.8	$	0.85	501	$	0.85
$1.29 —– $1.29	1,000	3.2	1.29		937	1.29
$1.31 —– $1.31	556	2.8	1.31		556	1.31
$1.39 —– $14.58	253	3.4	5.64		226	5.90
$64.17 —– $64.17	11	5.9	64.17		11	64.17
Total	2,332	3.3	$	1.96	2,231	$	1.97

Restricted Stock Units

The following is a summary of RSU activity.


	Number of Shares Outstanding	Weighted- Average Fair Value per Share at Grant Date		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value (1)
	(In thousands)			(Years)	(In thousands)








Outstanding at December 31, 2020	3,588	$	27.61
Granted	571	149.01
Vested	(1,254)	15.65			$	216,814
Canceled	(33)	69.71
Outstanding at June 30, 2021	2,872	$	56.66	1.2	$	527,435
Expected to vest at June 30, 2021	2,872	$	56.66	1.2	$	527,435

(1) The intrinsic value of RSUs vested is based upon the value of the Company’s stock when vested. The intrinsic value of RSUs outstanding and expected to vest as of June 30, 2021 is based on the closing price of the last trading day during the period ended June 30, 2021. The Company’s stock fair value used in this computation was $183.63 per share.

Performance Stock Units

The following is a summary of PSU activity.


	Number of Shares Outstanding	Weighted- Average Fair Value per Share at Grant Date		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value (1)
	(In thousands)			(Years)	(In thousands)








Outstanding at December 31, 2020	494	$	51.10
Granted	367	82.93
Vested	(494)	59.19			$	91,803
Canceled	(247)	42.00
Outstanding at June 30, 2021	120	$	131.81	0.6	$	22,025

(1) The intrinsic value of PSUs vested is based upon the value of the Company’s stock when vested. The intrinsic value of PSUs outstanding and expected to vest as of June 30, 2021 is based on the closing price of the last trading day during the period ended June 30, 2021. The Company’s stock fair value used in this computation was $183.63 per share.