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Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2023
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 ESPP purchase rights. Prior to our corporate conversion in December 2014, awards were provided under the 2009 Unit Incentive Plan (“the 2009 Plan”). The 2009 Plan was amended to provide that no further awards will be issued thereunder, and our board of directors and stockholders adopted and approved our 2014 Equity Incentive Plan (“the 2014 Plan” and, together with the 2009 Plan, “the Plans”). As of December 31, 2023, awards granted under the 2009 Plan consisted of stock options and awards granted under the 2014 Plan consisted of stock options, restricted stock units, and performance restricted stock units. There were no other grants of any other award types under the Plans. As of December 31, 2023, 2,269,207 shares of Class A common stock were available for grant under the 2014 Plan. Our ESPP became effective on June 13, 2017 and was amended and restated on October 28, 2022. 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 July 15 and January 15 and are exercisable on or about the succeeding January 14 and July 14, respectively, of each year. As of December 31, 2023, 3,964,611 shares of Class A common stock were available for issuance under the ESPP. No participant may purchase more than $12,500 worth of Class A 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):
| Year ended December 31,
| 2023 |  | 2022 |  | 2021
Cost of revenue |  |  |  |  |
Subscription and support | $ | 5,030 |  |  | $ | 3,437 |  |  | $ | 2,868 |
Professional services | 2,540 |  |  | 2,128 |  |  | 1,729 |
Operating expenses |  |  |  |  |
Research and development | 18,441 |  |  | 12,554 |  |  | 9,590 |
Sales and marketing | 27,774 |  |  | 19,323 |  |  | 13,901 |
General and administrative | 44,980 |  |  | 33,218 |  |  | 20,545 |
Total | $ | 98,765 |  |  | $ | 70,660 |  |  | $ | 48,633 |
During 2023, we recognized an additional $18.1 million in stock-based compensation pursuant to certain transition agreements with former executives who retired during the period. Stock Options The following table summarizes the option activity under the Plans for the year ended December 31, 2023:
| Options |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value
|  |  |  |  |  |  | (in thousands)
Outstanding at December 31, 2022 | 1,509,172 |  |  | $ | 14.57 |  |  | 3.2 |  | $ | 104,737 |
Granted | — |  |  | — |  |  |  |  |
Forfeited | (10) |  |  | 13.60 |  |  |  |  |
Expired | — |  |  | — |  |  |  |  |
Exercised | (297,543) |  |  | 15.03 |  |  |  |  |
Outstanding at December 31, 2023 | 1,211,619 |  |  | $ | 14.46 |  |  | 2.3 |  | $ | 105,500 |
Exercisable at December 31, 2023 | 1,211,619 |  |  | $ | 14.46 |  |  | 2.3 |  | $ | 105,500 |
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 years ended December 31, 2023, 2022 and 2021 was $24.8 million, $17.0 million and $123.4 million, respectively. No options were granted during the years ended December 31, 2023, 2022 and 2021. As of December 31, 2021, all outstanding options have vested. The total fair value of options vested during the year ended December 31, 2021 was $0.9 million. As of December 31, 2023 there was no unrecognized compensation expense related to options. Restricted Stock Units and Performance 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. Performance restricted stock units generally vest in annual tranches over a three-year period. The recipient of a restricted stock unit award or performance restricted stock unit award under the 2014 Plan will have no rights as a stockholder until share certificates are issued by us. Additionally, until the shares are issued, they have no voting rights and may not be bought or sold. The fair value for restricted stock unit awards and performance restricted stock unit awards are calculated based on the stock price on the date of grant. Total performance restricted stock units earned may vary based on the attainment of company-specific performance targets during the vesting period. The total fair value of restricted stock units vested during the years ended December 31, 2023, 2022, and 2021 was approximately $66.6 million, $57.7 million, and $54.9 million, respectively. The following table summarizes the restricted stock unit and performance restricted stock unit activity under the Plan for the year ended December 31, 2023:
| Number of Shares |  | Weighted-Average Grant Date Fair Value
Unvested at December 31, 2022 | 1,921,927 |  |  | $ | 93.80 |
Granted | 1,191,796 |  |  | 94.76 |
Forfeited | (145,648) |  |  | 91.84 |
Vested(1) | (769,664) |  |  | 86.06 |
Unvested at December 31, 2023 | 2,198,411 |  |  | $ | 97.17 |
(1) During the year ended December 31, 2023, in accordance with our Nonqualified Deferred Compensation Plan, recipients of 2,925 shares had elected to defer settlement of the vested restricted stock units and 362,100 were released from deferral. This resulted in total deferred units of 327,269 as of December 31, 2023. Compensation expense associated with unvested restricted stock units and performance restricted stock units is recognized on a straight-line basis over the vesting period. At December 31, 2023, there was approximately $138.7 million of total unrecognized compensation expense related to restricted stock units and performance restricted stock units, which is expected to be recognized over a weighted-average period of 2.5 years. Employee Stock Purchase Plan The fair value of each option grant 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 Class A common stock, and the expected term represents the period of time the ESPP purchase rights are expected to be outstanding and 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:
| Year ended December 31,
| 2023 |  | 2022 |  | 2021
ESPP |  |  |  |  |
Expected term (in years) | 0.5 |  | 0.5 |  | 0.5
Risk-free interest rate | 4.6% - 5.3% |  | 0.6% - 3.1% |  | 0.1%
Expected volatility | 33.9% - 57.3% |  | 45.7% - 58.7% |  | 41.8% - 45.0%
The following table summarizes the ESPP activity under the Plan for the years ended December 31, 2023, 2022 and 2021:
|  | For the year ended December 31,
|  | 2023 |  | 2022 |  | 2021
Shares issued |  | 200,436 |  |  | 131,467 |  |  | 148,864 |
Weighted-average purchase price |  | $ | 62.43 |  |  | $ | 70.41 |  |  | $ | 59.52 |
Total proceeds (in thousands) |  | $ | 12,512 |  |  | $ | 9,256 |  |  | $ | 8,861 |
Compensation expense associated with ESPP purchase rights is recognized on a straight-line basis over the vesting period. At December 31, 2023, there was approximately $152,158 of total unrecognized compensation expense related to the ESPP, which is expected to be recognized over a weighted-average period of 12 days.

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