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Stock-Based Compensation
 3 Months Ended
Mar. 31, 2026
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation Stock-Based Compensation
Our equity compensation plans include grants of incentive and nonqualified stock options, performance share units (“PSUs”), restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and deferred stock units (“DSUs”), to employees, executive officers, and non-employee directors. We also provide an employee stock purchase plan (“ESPP”) and 401(k) match to eligible participants. At March 31, 2026, there were 10.8 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
March 31,
(in thousands)20262025
Cost of revenues$3,156 $3,111 
Operating expenses
Sales and marketing4,260 2,427 
Research and development2,265 2,017 
General and administrative8,392 6,312 
$18,073 $13,867 
Stock-based compensation expense by grant type or plan was as follows:
Three Months Ended
March 31,
(in thousands)20262025
Stock options$491 $549 
PSUs4,534 3,007 
RSUs & DSUs11,426 8,633 
RSAs— 113 
ESPP825 836 
401(k) stock match797 729 
$18,073 $13,867 
As of March 31, 2026, there was $117.0 million of unrecognized stock-based compensation expense under our equity compensation plans, which is expected to be recognized on a primarily straight-line basis over a weighted average period of 2.7 years.
Stock Options
Our stock option activity was as follows:
Three Months Ended
March 31, 2026
Options (#) Weighted Average
Exercise Price
($/share)
Outstanding, beginning of period261,403 $121.47 
Granted129,122 57.95 
Exercised(18,312)53.52 
Forfeited(3,127)118.16 
Outstanding, end of period369,086 $102.65 
Of the total outstanding options at March 31, 2026, 0.2 million were exercisable. The outstanding and exercisable options had a weighted average exercise price of $117.31 per share and a weighted average remaining contractual life of 2.8 years.
The weighted average grant date fair value of options granted during the three months ended March 31, 2026, was $20.76 per share. This was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:
Life (in years)4.0
Volatility39.9 %
Dividend yield— 
Risk-free interest rate3.5 %
Performance Share Units, Restricted Stock Units and Awards, and Deferred Stock Units
In each of the quarters ended March 31, 2026, 2025, 2024, and 2023, we granted PSU awards with a target performance level. These awards are earned based upon our Company’s total shareholder return as compared to an indexed total shareholder return over the course of a fiscal based three-year performance period, starting in the year of grant. Earned awards vest in the quarter following the conclusion of the performance period. During the three months ended March 31, 2026, PSU awards granted in 2023 vested without achievement of the minimum threshold of performance level and therefore no shares of common stock were issued.
Activity for our PSUs, RSUs, RSAs, and DSUs in aggregate was as follows:
Three Months Ended
March 31, 2026
#Weighted Average Grant
Date Fair Value
($/share)
Outstanding, beginning of period1,006,417 $150.69 
Granted719,042 67.43 
Vested and common stock issued(167,041)156.12 
Forfeited(106,770)228.44 
Outstanding, end of period1,451,648 $103.11 
The number of PSUs, RSUs, RSAs, and DSUs outstanding at March 31, 2026 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
March 31,
(in thousands, except shares)20262025
Amounts for shares purchased$520 $411 
Shares purchased6,795 2,630 
A total of 1.5 million shares of common stock are reserved for issuance under the ESPP at March 31, 2026.
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
Volatility41.2 %
Dividend yield— 
Risk-free interest rate4.3 %