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Stockholders' Equity | 12 Months Ended
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Dec. 31, 2016
Equity [Abstract] |
Stockholders' Equity | 7. Stockholders’ Equity Initial Public Offering On April 9, 2014, the Company consummated its IPO and issued and sold 10,000,000 shares of common stock at a public offering price of $7.00 per share, less the underwriters’ discount. In addition, on April 22, 2014, the Company consummated the sale of an additional 1,500,000 shares of common stock to the underwriters of the Company's IPO pursuant to the underwriters’ exercise in full of their option to purchase 1,500,000 shares of common stock from the Company at the IPO price of $7.00 per share, less the underwriters' discount. The Company received aggregate proceeds of $74.9 million from the IPO after deducting underwriters’ discounts and commissions of $5.6 million, but before deducting offering expenses of approximately $4.2 million, of which $0.8 million had been paid prior to 2014 and the remaining $3.4 million had been paid in the first two quarters of 2014. On April 3, 2014, a reverse stock split of the Company's then-outstanding common stock at a ratio of 4:1 was effected in connection with the IPO. Prior to such reverse stock split being effected, all outstanding convertible preferred stock elected to convert to common stock on a 1:1 basis. Capital Structure Convertible Preferred Stock Prior to the IPO, the Company had outstanding 75,643,683 shares of Series A-2 convertible preferred stock, 18,565,794 shares of Series B-2 convertible preferred stock, 12,903,226 shares of Series C-2 convertible preferred stock, and 15,269,294 shares of Series D-2 convertible preferred stock. On April 3, 2014, immediately prior to the effectiveness of the Company’s registration statement filed with the SEC and the reverse stock split being effected, all shares of the Company's outstanding convertible preferred stock converted into common stock on a 1:1 basis. These shares of common stock issued upon conversion of the convertible preferred stock represented 30,595,477 shares of common stock after giving effect to the 4:1 reverse stock split on April 3, 2014. Common Stock Pursuant to the Company's amended and restated certificate of incorporation, or Amended and Restated Certificate of Incorporation, which became effective on April 8, 2014 in connection with the Company's IPO, the Company is authorized to issue 450,000,000 shares of common stock with a par value of $0.001 per share. As of December 31, 2016, the Company had 53,363,013 shares of common stock issued and outstanding. Holders of the Company's common stock are entitled to dividends, if and when declared by the board of directors. In the event of liquidation, dissolution or winding up, subject to the rights of the holders of any then outstanding shares of preferred stock, holders of common stock will be entitled to receive the assets and funds of the Company that are legally available for distribution. Preferred Stock Pursuant to the Amended and Restated Certificate of Incorporation, the Company's board of directors is also authorized to designate and issue up to 5,000,000 shares of preferred stock with a par value of $0.001 per share in one or more series without stockholder approval and to fix the rights, preferences, privileges and restrictions thereof. As of December 31, 2016, there were no shares of preferred stock issued and outstanding. Common Stock Subject to Forfeiture Pursuant to employment and service agreements entered into in connection with the Company’s acquisition of SoCoCare in October 2013, or Acquisition Date, the Company issued 118,577 shares of unvested restricted common stock, the vesting of which was contingent upon continuing employment or services and subject to forfeiture. These shares were valued at $8.48 per share based on the Acquisition Date fair value of the Company’s common stock. This amount was recorded as stock-based compensation on a straight-line basis over the requisite service periods. During October 2014, 50% of such shares vested. As of December 31, 2014, there were 59,289 shares of such restricted common stock subject to forfeiture, which were included in issued and outstanding shares of common stock. During 2015, in accordance with the applicable stock issuance agreement, the vesting on 37,905 shares accelerated in connection with the termination of employment of a shareholder and the remaining 21,384 unvested shares were forfeited as a result of terminations of employment of the remaining employee-shareholders. As of December 31, 2016, there was no restricted common stock outstanding. For the years ended December 31, 2016 and 2015, stock-based compensation expense related to these shares was immaterial. For the year ended December 31, 2014, $0.7 million was included as stock-based compensation expense related to these shares. Warrants As of December 31, 2016, the Company had outstanding warrants to purchase shares of common stock as follows (in thousands, except per share data):
Expiration Date |  | Exercise Price |  | Warrants Outstanding at December 31, 2016
October 2023 |  | $ | 5.76 |  |  | 13 |
February 2024 |  | $ | 10.12 |  |  | 119 |
Total |  |  |  | 132 |
The table below is a summary of the Company’s common stock warrant activity during the year ended December 31, 2016 (in thousands, except per share data).
|  | Shares |  | Weighted Average Exercise Price
Outstanding as of December 31, 2015 |  | 191 |  |  | $ | 9.96 |
Issued |  | — |  |  | — |
Exercised |  | — |  |  | — |
Canceled |  | (59 | ) | (1) | $ | 10.31 |
Outstanding as of December 31, 2016 |  | 132 |  |  | $ | 9.80 |
(1) In February 2016, warrants to purchase 59,288 shares of common stock issuable pertaining to the undrawn $10.0 million under the 2014 Loan and Security Agreement did not vest and were no longer exercisable, and were therefore canceled (See Note 6). Fair Value of Warrants Prior to the IPO, the Company had outstanding warrants to purchase shares of its convertible preferred stock and common stock that were classified as liabilities. These warrants were subject to re-measurement at each balance sheet date, and any change in fair value was recognized as a component of other expense, net. The Company estimated the fair value of each liability-classified warrant using the Black-Scholes option-pricing model and using the assumptions noted in the table below. Expected volatility is based upon the historical and implied volatility of a peer group of publicly traded companies. The expected term of warrants represents the contractual term of the warrants. The risk-free rate for the expected term of the warrants is based on the U.S. Treasury Constant Maturity at the time of issuance.
|  | IPO Date April 3, 2014 |  | December 31, 2013 |
Fair value of Series A-2 preferred stock |  | $ | 1.75 |  | (1) | $ | 2.69 |  | (2)
Fair value of Series D-2 preferred stock |  | $ | 1.75 |  | (1) | $ | 2.81 |  | (2)
Fair value of common stock |  | $ | 7.00 |  | (1) | * |
Risk-free interest rate |  | 0.13% to 2.73% |  | 0.33% to 2.60% |
Expected life |  | Remaining contractual life |  | Remaining contractual life |
Expected dividends |  | — |  | — |
Volatility |  | 40% - 50% |  | 45 % |
(1) Fair value of the underlying stock is based on the Company's IPO price of $7.00 per share calculated on a pre-reverse split basis for preferred stock and post-reverse split basis for common stock.
(2) The per share data is on a pre-reverse split basis for preferred stock.
* There were no liability-classified common stock warrants at December 31, 2013.
Upon the conversion of the convertible preferred stock to common stock and the effectiveness of the reverse stock split of the Company's common stock, the outstanding convertible preferred stock warrants became warrants to purchase common stock and, upon the IPO, the Company’s outstanding common stock warrant liabilities became indexed to the Company's common stock and accordingly have been reclassified to additional paid-in capital. Common Stock Reserved for Future Issuance As of December 31, 2016, shares of common stock reserved for future issuance related to outstanding equity awards, warrants, and employee equity incentive plans were as follows (in thousands):
|  | December 31, 2016
Stock options outstanding |  | 5,556 |
Restricted stock units outstanding |  | 2,019 |
Shares available for future grant under 2014 Plan |  | 6,095 |
Shares available for future issuance under ESPP |  | 1,102 |
Common stock warrants outstanding |  | 132 |
Total shares of common stock reserved |  | 14,904 |
Equity Incentive Plans Prior to the IPO, the Company granted stock options under its Amended and Restated 2004 Equity Incentive Plan, as amended, or the 2004 Plan. Under the terms of the 2004 Plan, the Company had the ability to grant incentive and nonstatutory stock options. Incentive stock options could only be granted to Company employees. Nonstatutory stock options could be granted to Company employees, directors and consultants. Such options are exercisable at prices, as determined by the board of directors, generally equal to the fair value of the Company’s common stock at the date of grant. Options granted to employees generally vest over a four-year period, with an initial vesting period of 12 months for 25% of the shares, and the remaining 75% of the shares vesting monthly on a ratable basis over the remaining 36 months. Options generally expire ten years after the grant date and are generally exercisable upon vesting. Vested options generally expire 90 days after termination of the optionee’s employment or relationship as a consultant or director, unless otherwise extended by the terms of the stock option agreement. In March 2014, the Company’s board of directors and stockholders approved the 2014 Equity Incentive Plan, or 2014 Plan, and 5,300,000 shares of common stock were authorized for issuance under the 2014 Plan. In addition, on the first day of each year beginning in 2015 and ending in 2024, the 2014 Plan provides for an annual automatic increase to the shares reserved for issuance in an amount equal to 5% of the total number of shares outstanding on December 31st of the preceding calendar year or a lesser number as determined by the Company’s board of directors. Pursuant to the automatic annual increase, 2,668,150 and 2,558,231 additional shares were reserved under the 2014 Plan on January 1, 2017 and 2016. As of December 31, 2016, 6,094,657 shares of common stock were available for future grant under the 2014 Plan. Upon the effectiveness of the 2014 Plan on April 3, 2014, no grants were made under the 2004 Plan. All shares reserved under the 2004 Plan became available for grant under the 2014 Plan. After the IPO, any forfeited or expired shares that would have otherwise returned to the 2004 Plan instead return to the 2014 Plan. The 2014 Plan allows the Company to grant stock options, restricted stock units, or RSU, restricted stock awards, performance stock awards, stock appreciation rights, performance cash awards, and other stock awards. To date, the Company has granted stock options and RSUs under the 2014 Plan. Stock options granted under the 2014 Plan are in general at a price equal to the fair market value of the common stock on the date of grant and vest over four years. The Company's stock options expire ten years from the date of grant. Each RSU granted under the 2014 Plan represents a right to receive one share of the Company’s common stock when the RSU vests. RSUs generally vest over one to four years. Stock Options A summary of the Company’s stock option activity during the year ended December 31, 2016 is as follows (in thousands, except years and per share data):
|  | Number of Shares |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Life (Years) |  | Aggregate Intrinsic Value (1)
Outstanding as of December 31, 2015 |  | 6,092 |  |  | $ | 4.58 |  |  |  |  |
Options granted |  | 867 |  |  | 9.48 |  |  |  |  |
Options exercised |  | (982 | ) |  | 4.37 |  |  |  |  |
Options forfeited or expired |  | (421 | ) |  | 6.56 |  |  |  |  |
Outstanding as of December 31, 2016 |  | 5,556 |  |  | $ | 5.23 |  |  | 5.9 |  | $ | 49,895 |
Vested and expected to vest as of December 31, 2016 |  | 5,489 |  |  | 5.18 |  |  | 5.9 |  | 49,570 |
Exercisable as of December 31, 2016 |  | 4,065 |  |  | 4.13 |  |  | 5.0 |  | 40,996 |
(1) The aggregate intrinsic value amounts are computed based on the difference between the exercise price of the stock options and the fair market value of the Company’s common stock of $14.19 per share as of December 31, 2016 for all in-the-money stock options outstanding.
Following is additional information pertaining to the Company’s stock option activities (in thousands, except per share data):
|  | Year Ended December 31,
|  | 2016 |  | 2015 |  | 2014
Weighted-average grant date fair value per share of options granted |  | $ | 4.50 |  |  | $ | 2.38 |  |  | $ | 3.42 |
Intrinsic value of options exercised (1) |  | 5,865 |  |  | 3,233 |  |  | 9,808 |
Proceeds received from options exercised |  | 4,286 |  |  | 1,268 |  |  | 1,127 |
(1) Intrinsic value of options exercised is the difference between the fair market value of the Company’s common stock at the time of exercise and the exercise price paid.
Restricted Stock Units The Company commenced granting RSUs to employees upon the effectiveness of the 2014 Plan on April 3, 2014. A summary of RSU activity during the year ended December 31, 2016 is as follows (in thousands, except years and per share data):
|  | Number of Shares |  | Weighted Average Grant Date Fair Value Per Share
Outstanding as of December 31, 2015 |  | 1,818 |  |  | $ | 5.01 |
RSUs granted |  | 1,308 |  |  | 9.71 |
RSUs vested and released |  | (896 | ) |  | 5.59 |
RSUs forfeited |  | (211 | ) |  | 6.47 |
Outstanding as of December 31, 2016 |  | 2,019 |  |  | $ | 7.65 |
The fair value of awards vested during the periods of 2016, 2015 and 2014 were $10.7 million, $2.9 million, and $0.1 million, respectively. Employee Stock Purchase Plan In March 2014, the Company’s board of directors and stockholders adopted the 2014 Employee Stock Purchase Plan, or ESPP, and the shares authorized for issuance thereunder. The ESPP became effective on April 3, 2014. The ESPP permits eligible employees to purchase shares of the Company’s common stock through payroll deductions with up to 15% of their pre-tax earnings subject to certain Internal Revenue Code limitations. The purchase price of the shares is 85% of the lower of the fair market value of the Company’s common stock on the first day of a six month offering period, except for the initial offering period, or the relevant purchase date. In addition, no participant may purchase more than 1,500 shares of common stock in each purchase period. The number of shares of common stock originally reserved for issuance under the ESPP was 880,000 shares, which increases automatically each year, beginning on January 1, 2015 and continuing through January 1, 2024, by the lesser of (i) 1% of the total number of shares of our common stock outstanding on December 31 of the preceding calendar year; (ii) 1,000,000 shares of common stock (subject to adjustment to reflect any split or combination of our common stock); or (iii) such lesser number as determined by the Company’s board of directors. As of December 31, 2016, 1,102,224 shares of common stock were available for future issuance under the ESPP Plan. Pursuant to the automatic annual increase, 533,630 and 511,646 additional shares were reserved under the ESPP on January 1, 2017 and 2016, respectively. During 2016, 320,528 shares were purchased by employees under the ESPP at a weighted-average price of $6.17 per share. Stock-Based Compensation Stock-based compensation expenses for the years ended December 31, 2016, 2015 and 2014 were as follows (in thousands):
|  | Year Ended December 31,
|  | 2016 |  | 2015 |  | 2014
Cost of revenue |  | $ | 1,375 |  |  | $ | 866 |  |  | $ | 542 |
Research and development |  | 2,059 |  |  | 1,790 |  |  | 1,931 |
Sales and marketing |  | 2,363 |  |  | 1,800 |  |  | 1,510 |
General and administrative |  | 3,846 |  |  | 3,274 |  |  | 2,770 |
Total stock-based compensation |  | $ | 9,643 |  |  | $ | 7,730 |  |  | $ | 6,753 |
As of December 31, 2016, unrecognized stock-based compensation expense by award type, net of estimated forfeitures, and their expected weighted-average recognition periods are summarized in the following table (in thousands, except years).
|  | Stock Option |  | RSU |  | ESPP
Unrecognized stock-based compensation expense |  | $ | 5,722 |  |  | $ | 12,619 |  |  | $ | 409 |
Weighted-average amortization period |  | 2.4 years |  |  | 2.9 years |  |  | 0.4 years |
The Company recognizes stock-based compensation expense that is calculated based upon awards ultimately expected to vest and, thus, stock-based compensation expense is reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. All stock-based compensation for equity awards granted to employees and non-employee directors is measured based on the grant date fair value of the award. The Company values RSUs at the fair value of the Company’s common stock on the date of grant. Prior to the IPO, the Company estimated the fair value of its common stock utilizing periodic contemporaneous valuations prepared by an independent third-party appraiser based upon several factors, including the Company's operating and financial performance, progress and milestones attained in its business, and past sales of convertible preferred stock. Upon the effectiveness of the IPO, the fair value of the Company's common stock is its closing market price as of the measurement date. The Company estimates the fair value of each stock option and purchase right under the ESPP granted to employees on the date of grant using the Black-Scholes option-pricing model and using the assumptions noted in the below table. Expected volatility is based upon the historical volatility of a peer group of publicly traded companies. The expected term of options granted is estimated using the simplified method by taking the average of the vesting term and the contractual term of the option. Starting in November 2014, the Company began estimating the expected volatility assumption for purchase rights under the ESPP based on the historical volatility of the Company's common stock as it had then been publicly traded for more than six months (i.e., the expected term of the purchase rights under the ESPP). The risk-free rate for the expected term of the awards is based on U.S. Treasury zero-coupon issues at the time of grant. The weighted-average assumptions used to value stock options and purchase rights under the ESPP granted during the years ended December 31, 2016, 2015 and 2014 were as follows:
Stock Options |  | Year Ended December 31,
|  | 2016 |  | 2015 |  | 2014
Expected term (years) |  | 5.7 |  | 6.1 |  | 6.1
Volatility |  | 46% |  | 49% |  | 55%
Risk-free interest rate |  | 1.4% |  | 1.6% |  | 1.8%
Dividend yield |  | — |  | — |  | —
ESPP |  | Granted In
|  | November 2016 |  | May 2016 |  | November 2015 |  | May 2015 |  | November 2014 |  | April 2014
Expected term (years) |  | 0.5 |  | 0.5 |  | 0.5 |  | 0.5 |  | 0.5 |  | 0.8
Volatility |  | 42% |  | 58% |  | 54% |  | 43% |  | 56% |  | 39%
Risk-free interest rate |  | 0.6% |  | 0.4% |  | 0.3% |  | 0.1% |  | 0.1% |  | 0.1%
Dividend yield |  | — |  | — |  | — |  | — |  | — |  | —

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- Definition The entire disclosure for accounts comprising shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income, and compensation-related costs for equity-based compensation. Includes, but is not limited to, disclosure of policies, compensation plan details, equity-based arrangements to obtain goods and services, deferred compensation arrangements, and employee stock purchase plan details. + References No definition available. + Details
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