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Stock-Based Compensation | 6 Months Ended
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Jun. 30, 2020
Share-based Payment Arrangement [Abstract] |
Stock-Based Compensation | Stock-Based Compensation We grant stock-based incentive awards to attract, motivate and retain qualified employees, non-employee directors and consultants, and to align their financial interests with those of our stockholders. We utilize stock-based compensation in the form of restricted stock units, options to purchase Class A common stock and Employee Stock Purchase Plan (“ESPP”) purchase rights. As of June 30, 2020, awards outstanding under the 2009 Plan consisted of stock options, and awards outstanding under the 2014 Plan consisted of stock options and restricted stock units. As of June 30, 2020, 1,523,110 shares of Class A common stock were available for grant under the 2014 Plan. Our ESPP became effective on June 13, 2017. Under the ESPP, eligible employees are granted options to purchase shares of Class A common stock at the lower of 85% of the fair market value of the stock at the time of grant or 85% of the fair market value at the time of exercise. Options to purchase shares are granted twice yearly on or about January 15 and July 15 and are exercisable on or about the succeeding July 14 and January 14, respectively, of each year. As of June 30, 2020, 4,538,213 shares of Class A common stock were available for issuance under the ESPP. No participant may purchase more than $12,500 worth of common stock in a six-month offering period. Stock-Based Compensation Expense Stock-based compensation expense was recorded in the following cost and expense categories consistent with the respective employee or service provider’s related cash compensation (in thousands):
| Three months ended June 30, |  |  |  | Six months ended June 30, |  |
| 2020 |  | 2019 |  | 2020 |  | 2019
Cost of revenue |  |  |  |  |  |  |
Subscription and support | $ | 436 |  |  | $ | 399 |  |  | $ | 867 |  |  | $ | 756 |
Professional services | 365 |  |  | 431 |  |  | 790 |  |  | 840 |
Operating expenses |  |  |  |  |  |  |
Research and development | 2,040 |  |  | 1,851 |  |  | 3,623 |  |  | 3,751 |
Sales and marketing | 2,944 |  |  | 2,032 |  |  | 5,680 |  |  | 3,996 |
General and administrative | 9,109 |  |  | 3,800 |  |  | 13,870 |  |  | 7,363 |
Total | $ | 14,894 |  |  | $ | 8,513 |  |  | $ | 24,830 |  |  | $ | 16,706 |
Stock Options The following table summarizes the option activity under the Plans for the six months ended June 30, 2020:
| Options |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value
|  |  |  |  |  |  | (in thousands)
Outstanding at December 31, 2019 | 4,353,167 |  |  | $ | 14.32 |  |  | 5.6 |  | $ | 120,714 |
Granted | — |  |  | — |  |  |  |  |
Forfeited | (45,719) |  |  | 21.47 |  |  |  |  |
Exercised | (668,220) |  |  | 14.15 |  |  |  |  |
Outstanding at June 30, 2020 | 3,639,228 |  |  | $ | 14.26 |  |  | 5.1 |  | $ | 142,764 |
Exercisable at June 30, 2020 | 3,376,057 |  |  | $ | 13.97 |  |  | 4.9 |  | $ | 133,426 |
Options to purchase Class A common stock generally vest over a three- or four-year period and are generally granted for a term of ten years. The total intrinsic value of options exercised during the six months ended June 30, 2020 and 2019 was $18.9 million and $53.3 million, respectively. No options were granted during the six months ended June 30, 2020 and 2019. The total fair value of options vested during the six months ended June 30, 2020 and 2019 was approximately $2.5 million and $3.9 million, respectively. Total unrecognized compensation expense of $1.6 million related to options will be recognized over a weighted-average period of one year. Restricted Stock Units Restricted stock units granted to employees generally vest over a three- or four-year period in equal, annual installments or with three-year cliff vesting. Restricted stock units granted to non-employee members of our Board of Directors generally have one-year cliff vesting from the date of grant. The recipient of a restricted stock unit award under the Plan will have no rights as a stockholder until share certificates are issued by us, but, at the discretion of our Compensation Committee, has the right to receive a dividend equivalent payment in the form of additional restricted stock units. Additionally, until the shares are issued, they have no voting rights and may not be bought or sold. The fair value for restricted stock units is calculated based on the stock price on the date of grant. The total fair value of restricted stock units vested during the six months ended June 30, 2020 and 2019 was approximately $21.5 million and $6.3 million, respectively. The following table summarizes the restricted stock unit activity under the Plan for the six months ended June 30, 2020:
| Number of Shares |  | Weighted- Average Grant Date Fair Value
Unvested at December 31, 2019 | 3,039,020 |  |  | $ | 31.39 |
Granted | 882,672 |  |  | 43.00 |
Forfeited | (243,540) |  |  | 37.02 |
Vested(1) | (671,435) |  |  | 31.90 |
Unvested at June 30, 2020 | 3,006,717 |  |  | $ | 35.09 |
(1) During the six months ended June 30, 2020, in accordance with our Nonqualified Deferred Compensation Plan, recipients of 409,302 shares had elected to defer settlement of the vested restricted stock units and 7,420 shares were released from deferral. This resulted in total deferred units of 939,084 as of June 30, 2020. Compensation expense associated with unvested restricted stock units is recognized on a straight-line basis over the vesting period. At June 30, 2020, there was approximately $69.9 million of total unrecognized compensation expense related to restricted stock units, which is expected to be recognized over a weighted-average period of 2.6 years. Employee Stock Purchase Plan The fair value of each share issued under the ESPP is estimated on the date of grant using the Black-Scholes option-pricing model. Expected volatility is based on the historical volatility of our common stock. The expected term represents the period of time the ESPP purchase rights are expected to be outstanding. The expected term for the ESPP purchase rights approximates the offering period. The risk-free interest rate is based on yields on U.S. Treasury STRIPS (Separate Trading of Registered Interest and Principal of Securities) with a maturity similar to the estimated expected term of the ESPP purchase rights. The fair value of our ESPP purchase rights was estimated assuming no expected dividends and the following weighted-average assumptions:
| Six months ended June 30, |  |
| 2020 |  | 2019
Expected term (in years) | 0.5 |  | 0.5
Risk-free interest rate | 1.5% |  | 2.6%
Expected volatility | 40.6% |  | 48.6%
During the six months ended June 30, 2020, 94,020 shares of common stock were purchased under the ESPP at a weighted-average price of $38.93 per share, resulting in cash proceeds of $3.7 million. Compensation expense associated with ESPP purchase rights is recognized on a straight-line basis over the vesting period. At June 30, 2020, there was approximately $96,000 of total unrecognized compensation expense related to the ESPP, which is expected to be recognized over a weighted-average period of 0.04 years.

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