Stockholders’ Equity

Capital Structure

The Company is authorized to issue 450,000,000 shares of common stock with a par value of $0.001 per share. As of June 30, 2018 and December 31, 2017, the Company had 58,275,511 and 56,631,647 shares of common stock issued and outstanding, respectively.

The Company 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 June 30, 2018 and December 31, 2017, the Company had no shares of preferred stock issued and outstanding.

Warrants

As of June 30, 2018 and December 31, 2017, the Company had outstanding warrants to purchase 13,013 shares of common stock with a weighted-average exercise price of $5.76 per share. The warrants outstanding as of June 30, 2018 will expire on October 18, 2023.

Common Stock Reserved for Future Issuance

Shares of common stock reserved for future issuance related to outstanding equity awards, common stock warrants, and employee equity incentive plans were as follows (in thousands):



		June 30, 2018
Stock options outstanding		3,333
Restricted stock units outstanding		2,705
Shares available for future grant under 2014 Plan		8,666
Shares available for future issuance under ESPP		1,801
Common stock warrants outstanding		13
Total shares of common stock reserved		16,518

Equity Incentive Plans

Prior to the initial public offering (“IPO”), the Company granted stock options under its Amended and Restated 2004 Equity Incentive Plan, as amended (the “2004 Plan”).

In March 2014, the Company’s board of directors and stockholders approved the 2014 Equity Incentive Plan (“2014 Plan”) and 5,300,000 shares of common stock were reserved 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, 2,831,582 additional shares were reserved under the 2014 Plan on January 1, 2018.

No further grants were made under the 2004 Plan once the 2014 Plan became effective on April 3, 2014. Upon the effectiveness of the 2014 Plan, all shares reserved for future issuance under the 2004 Plan became available for issuance 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 2004 Plan and the 2014 Plan are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

Stock Options

A summary of the Company’s stock option activity during the six months ended June 30, 2018 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
Outstanding as of December 31, 2017	4,047		$	8.00
Options granted (weighted average grant date fair value of $14.14 per share)	268		30.37
Options exercised	(974	)	5.93
Options forfeited or expired	(8	)	4.68
Outstanding as of June 30, 2018	3,333		$	10.41	6.4	$	80,524

The Company has computed the aggregate intrinsic value amounts disclosed in the above table based on the difference between the exercise price of the options and the closing market price of the Company’s common stock of $34.57 per share as of June 30, 2018 for all in-the-money stock options outstanding.

Restricted Stock Units

A summary of the Company’s restricted stock unit (“RSU”) activity during the six months ended June 30, 2018 is as follows (in thousands, except per share data):



	Number of Shares		Weighted Average Grant Date Fair Value Per Share
Outstanding as of December 31, 2017	2,033		$	12.81
RSUs granted	1,285		30.51
RSUs vested and released	(534	)	12.25
RSUs forfeited	(79	)	17.64
Outstanding as of June 30, 2018	2,705		$	21.18

Employee Stock Purchase Plan

The Company’s 2014 Employee Stock Purchase Plan (“ESPP”) became effective on April 3, 2014 and is described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. 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 the Company’s 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 the Company’s common stock); or (iii) such lesser number as determined by the Company’s board of directors. Pursuant to the automatic annual increase, 566,316 additional shares were reserved under the ESPP on January 1, 2018.

During the six months ended June 30, 2018, 136,321 shares were purchased on May 15, 2018 at a price of $21.16 per share under the ESPP.

Stock-Based Compensation

Stock-based compensation expenses were as follows (in thousands):



	Three Months Ended				Six Months Ended
	June 30, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Cost of revenue	$	853	$	575	$	1,531	$	1,009
Research and development	1,064		801		1,941		1,438
Sales and marketing	1,585		1,224		2,947		2,152
General and administrative	3,295		1,254		5,703		2,384
Total stock-based compensation	$	6,797	$	3,854	$	12,122	$	6,983

As of June 30, 2018, unrecognized stock-based compensation expenses by award type 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	$	11,366	$	56,023	$	708
Weighted-average amortization period	2.6 years		3.0 years		0.4 years

The Company recognizes stock-based compensation expense that is calculated based upon awards that have vested, reduced for actual forfeitures. 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 weighted-average assumptions used to value stock options granted during the periods presented were as follows:



Stock Options	Three Months Ended				Six Months Ended
	June 30, 2018		June 30, 2017		June 30, 2018	June 30, 2017
Expected term (years)	6.1		6.1		6.0	6.2
Volatility	44	%	49	%	45%	49%
Risk-free interest rate	2.7	%	2.0	%	2.7%	2.0%
Dividend yield ⁽¹⁾	—		—		—	—


(1)	The Company has not paid, and does not anticipate paying, cash dividends on its shares of common stock. Accordingly, the expected dividend yield is zero.