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Stock-Based Compensation
 9 Months Ended
Sep. 30, 2024
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation Stock-Based Compensation
Our equity compensation plans provide for the grant of incentive and nonqualified stock options, as well as other stock-based awards including performance share units (“PSUs”), restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and deferred stock units (“DSUs”), to employees, non-employee directors and other consultants who provide services to us. We also provide an employee stock purchase plan (“ESPP”) and 401(k) match to eligible participants.
We recognize stock-based compensation expense based on grant date award fair value. This cost is recognized over the period for which the employee is required to provide service in exchange for the award or the award performance period, except for expenses relating to retirement-eligible employees. If retirement-eligible employees have not given their required notice, expense is recognized on a pro-rata basis over the notice period prior to retirement; if they have given their notice, expense is recognized over the notice period; if they have given their notice and completed the notice period, expense is recognized upon grant. At September 30, 2024, there were 12.3 million shares available for grant under approved equity compensation plans.
Stock-based compensation expense was allocated in the condensed consolidated statements of comprehensive income as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
(in thousands)2024202320242023
Cost of revenues$1,412 $2,506 $8,224 $7,595 
Operating expenses
Sales and marketing2,820 2,428 9,776 7,379 
Research and development1,939 1,798 7,001 5,387 
General and administrative4,581 4,704 17,263 15,736 
$10,752 $11,436 $42,264 $36,097 
Stock-based compensation expense by grant type or plan was as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
(in thousands)2024202320242023
Stock options$514 $487 $1,517 $1,472 
PSUs2,260 2,812 7,149 10,236 
RSUs & DSUs6,309 6,722 28,751 20,165 
RSAs112 122 329 345 
ESPP800 637 2,323 1,974 
401(k) stock match757 656 2,195 1,905 
$10,752 $11,436 $42,264 $36,097 
As of September 30, 2024, there was $78.9 million of unrecognized stock-based compensation expense under our equity compensation plans, which is expected to be recognized on a primarily straight-line basis over a weighted average period of 2.5 years.
Stock Options
Our stock option activity was as follows:
Nine Months Ended
September 30, 2024
Options (#) Weighted Average
Exercise Price
($/share)
Outstanding, beginning of period346,822 $80.02 
Granted36,993 197.42 
Exercised(85,364)49.18 
Forfeited(2,094)158.63 
Outstanding, end of period296,357 $103.01 
Of the total outstanding options at September 30, 2024, 0.2 million were exercisable. The outstanding and exercisable options had a weighted average exercise price of $83.65 per share and a weighted average remaining contractual life of 3.0 years.
The weighted average grant date fair value of options granted during the nine months ended September 30, 2024 was $69.82 per share. This was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:
Life (in years)4.1
Volatility36.7 %
Dividend yield— 
Risk-free interest rate4.3 %
Performance Share Units, Restricted Stock Units and Awards, and Deferred Stock Units
In each of the quarters ended March 31, 2024, 2023, 2022, and 2021 we granted PSU awards with a target performance level. These awards are earned based upon our Company’s total shareholder return as compared to an indexed total shareholder return over the course of a fiscal based three-year performance period, starting in the year of grant. Earned awards vest in the quarter following the conclusion of the performance period. In the three months ended March 31, 2024, PSU awards granted in 2021 vested at the maximum performance level and 0.1 million shares of common stock were issued.
Activity for our PSUs, RSUs, RSAs, and DSUs in aggregate was as follows:
Nine Months Ended
September 30, 2024
#Weighted Average Grant
Date Fair Value
($/share)
Outstanding, beginning of period773,414 $147.50 
Granted409,843 185.73 
Vested and common stock issued(403,291)124.30 
Forfeited(33,725)180.49 
Outstanding, end of period746,241 $179.54 
The number of PSUs, RSUs, RSAs, and DSUs outstanding at September 30, 2024 included less than 0.1 million units that have vested, but the shares of common stock have not yet been issued, pursuant to the terms of the underlying agreements.
Employee Stock Purchase Plan
Our ESPP activity was as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
(in thousands, except shares)2024202320242023
Amounts for shares purchased$453 $344 $5,672 $4,481 
Shares purchased2,833 3,159 35,416 41,384 
A total of 1.6 million shares of common stock are reserved for issuance under the plan at September 30, 2024.
The fair value was estimated based on the market price of our common stock at the beginning of the offering period using the following assumptions:
Life (in years)0.5
Volatility30.9 %
Dividend yield— 
Risk-free interest rate5.3 %