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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 | (13) Stock-Based Compensation (a) General In connection with our IPO, our board of directors resolved not to make future grants under our 2011 Stock Option and Grant Plan (the “2011 Plan”). The 2011 Plan will continue to govern outstanding awards granted thereunder. The 2011 Plan provided for the grant of qualified incentive stock options and nonqualified stock options or other awards such as restricted stock awards (“RSAs”) to our employees, officers, directors and outside consultants. In July 2015, our board of directors adopted and our stockholders approved our 2015 Equity Incentive Plan (the “2015 Plan”). We initially reserved 800,000 shares of our common stock for the issuance of awards under the 2015 Plan plus the number of shares of common stock reserved for issuance under the 2011 Plan at the time the 2015 Plan became effective. The 2015 Plan also provides that (i) any shares subject to awards granted under the 2011 Plan that would have otherwise returned to the 2011 Plan (such as upon the expiration or termination of a stock award prior to vesting) will be added to, and available for issuance under, the 2015 Plan and (ii) the number of shares reserved and available for issuance under the 2015 Plan automatically increases each January 1, beginning on January 1, 2016, by 4% of the outstanding number of shares of our common stock on the immediately preceding December 31 (known as the “evergreen” provision) or such lesser number of shares as determined by our board of directors. Additionally, on October 8, 2015, our board of directors amended, the 2015 Plan to reserve an additional 1,500,000 shares of our common stock for issuance of inducement awards. As of December 31, 2023, the shares of common stock authorized to be issued under the 2015 Plan totaled 22,574,131 and there were 5,146,498 shares of common stock available for grant. We recognize stock-based compensation expense for all awards on a straight-line basis over the applicable vesting period, which is generally four years. Stock-based compensation expense for restricted stock units (“RSUs”), performance-based restricted stock units (“PSUs”), stock options and purchase rights issued under our employee stock purchase plan was classified in the accompanying consolidated statements of operations as follows:
|  |  | Year Ended December 31,
|  |  |  |  | 2023 |  | 2022 |  | 2021
|  |  |  |  | (in thousands)
Stock-based compensation expense: |  |  |  |  |  |  |  |  |
Cost of revenue |  |  |  |  | $ | 10,700 |  |  | $ | 10,367 |  |  | $ | 6,491 |
Research and development |  |  |  |  | 38,022 |  |  | 49,940 |  |  | 46,622 |
Sales and marketing |  |  |  |  | 29,325 |  |  | 31,217 |  |  | 23,828 |
General and administrative |  |  |  |  | 30,034 |  |  | 28,378 |  |  | 25,638 |
Total stock-based compensation expense |  |  |  |  | $ | 108,081 |  |  | $ | 119,902 |  |  | $ | 102,579 |
We recognize compensation cost of all awards on a straight-line basis over the applicable vesting period, which is generally four years. Our Compensation Committee adopted and approved the performance goals, targets and payout formulas for our 2023, 2022 and 2021 bonus plans, including permitting our executive officers and certain other employees the opportunity to receive payment of their earned bonuses in the form of common stock (in lieu of cash). During the years ended December 31, 2023, 2022, and 2021 we recognized stock-based compensation expense related to such bonuses in the amount of $1.6 million, $1.0 million and $4.7 million, respectively, based on the probable expected performance against the pre-established corporate financial objectives as of December 31, 2023, 2022 and 2021. For employees, including executive officers, who elect to receive their bonuses in the form of common stock (in lieu of cash), the payouts are expected to be made in the form of fully vested stock awards in the first quarter of the following year pursuant to our 2015 Equity Incentive Plan, as amended. The number of shares underlying such awards is determined by dividing the dollar value of the actual bonus award payment by the closing price per share of our common stock on the date of grant. (b)Restricted Stock, Restricted Stock Units and Performance-Based Restricted Stock Units RSUs and PSUs activity during 2023, 2022, and 2021 was as follows:
| Shares |  | Weighted- Average Grant Date Fair Value
Unvested balance as of December 31, 2020 | 2,941,914 |  |  | $ | 32.43 |
Granted | 1,957,794 |  |  | 92.74 |
Vested | (1,610,517) |  |  | 47.00 |
Forfeited | (510,314) |  |  | 66.67 |
Unvested balance as of December 31, 2021 | 2,778,877 |  |  | 74.40 |
Granted | 2,327,216 |  |  | 86.78 |
Vested | (1,481,333) |  |  | 69.80 |
Forfeited | (623,317) |  |  | 85.93 |
Unvested balance as of December 31, 2022 | 3,001,443 |  |  | 83.88 |
Granted | 2,304,140 |  |  | 41.76 |
Vested | (1,453,713) |  |  | 71.28 |
Forfeited | (1,137,444) |  |  | 67.81 |
Unvested balance as of December 31, 2023 | 2,714,426 |  |  | $ | 61.60 |
As of December 31, 2023, the unrecognized compensation expense related to our unvested RSUs and PSUs was $145.1 million. This unrecognized compensation expense will be recognized over an estimated weighted-average amortization period of 2.1 years. In February 2023, our Compensation Committee awarded 173,103 PSUs that required the achievement of an annualized recurring revenue (“ARR”) target for the 2023 full-year to earn any payout and include a non-GAAP operating income margin modifier. In addition, the portion of the PSUs that are earned would be capped at a maximum of 200% of the target level payout and if certain ARR or non-GAAP operating income margin goals were not met, no PSUs will be earned. The PSUs have a performance period of one year and the earned PSUs will vest in three equal installments following each of the first, second and third anniversary of the vesting commencement date, subject to the participant’s continuous service as of each such date. The 2023 targets for these PSUs were not met and therefore no stock-based compensation expense was recorded in 2023 related to these PSUs. (c)Stock Options The following tables summarizes information about stock option activity during the reporting periods:
| Shares |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Life (in years) |  | Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2020 | 1,933,013 |  |  | $ | 10.07 |  |  |  |  | $ | 154,816 |
Granted | — |  |  | — |  |  |  |  |
Exercised | (521,326) |  |  | 8.26 |  |  |  |  | $ | 49,522 |
Forfeited/cancelled | (300) |  |  | 7.73 |  |  |  |  |
Outstanding as of December 31, 2021 | 1,411,387 |  |  | 10.74 |  |  |  |  | $ | 150,951 |
Granted | — |  |  | — |  |  |  |  |
Exercised | (479,223) |  |  | 6.92 |  |  |  |  | $ | 20,764 |
Forfeited/cancelled | (38) |  |  | 21.15 |  |  |  |  |
Outstanding as of December 31, 2022 | 932,126 |  |  | 12.70 |  |  |  |  | $ | 19,837 |
Granted | — |  |  | — |  |  |  |  |
Exercised | (215,856) |  |  | 14.14 |  |  |  |  | $ | 6,519 |
Forfeited/cancelled | — |  |  | — |  |  |  |  |
Outstanding as of December 31, 2023 | 716,270 |  |  | 12.26 |  |  | 1.97 |  | $ | 32,115 |
Vested and exercisable as of December 31, 2023 | 716,270 |  |  | $ | 12.26 |  |  | 1.97 |  | $ | 32,115 |
The total fair value of stock options vested in 2022 and 2021 was $0.1 million, and $0.6 million, respectively. All outstanding stock options were fully vested as of December 31, 2022. (d)Employee Stock Purchase Plan The number of shares reserved and available for issuance under our 2015 Employee Stock Purchase Plan (“ESPP”) automatically increases each January 1, beginning on January 1, 2016, by 1% of the outstanding number of shares of our common stock on the immediately preceding December 31 (known as the “evergreen” provision) or such lesser number of shares as determined by our board of directors. As of December 31, 2023, the shares of common stock authorized to be issued under the ESPP totaled 4,752,999 and there were 2,751,211 shares of common stock available for grant. Under the ESPP, employees may set aside up to 15% of their gross earnings, on an after-tax basis, to purchase our common shares at a discounted price, which is calculated at 85% of the lesser of: (i) the market value of our common stock at the beginning of each offering period and (ii) the market value of our common stock on the applicable purchase date. The fair value of shares issued under our ESPP is estimated on the grant date using the Black-Scholes option pricing model. The expected term represents the term from the first day of the offering period to the purchase dates within each offering period. The expected volatility is based on the historical volatilities of our own common stock. The risk-free interest rate is based on U.S. Treasury zero-coupon securities with maturities consistent with the estimated expected term. We have not paid dividends on our common stock nor do we expect to pay dividends in the foreseeable future. The following table reflects the assumptions used in the Black-Scholes option pricing model to calculate the expense related to the ESPP:
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Expected term (in years) | 0.5 - 1.0 |  | 0.5 - 1.0 |  | 0.5 - 1.0
Expected volatility | 47 - 68% |  | 37 - 57% |  | 31 - 48%
Risk-free interest rate | 4.5 – 5.5% |  | 0.1 – 4.0% |  | 0.5 – 0.7%
Expected dividend yield | — |  | — |  | —
Grant date fair value per share | $11.70 – $20.07 |  | $15.50 – $29.58 |  | $20.32 –$34.98
The following table provides the number of common shares issued to employees, the purchase prices and aggregate proceeds for the purchase dates in the years ended December 31, 2023, 2022 and 2021:
| September 15, 2023 |  | March 15, 2023 |  | September 15, 2022 |  | March 15, 2022 |  | September 15, 2021 |  | March 15, 2021
Common shares issued | 152,419 |  | 177,886 |  | 218,314 |  | 80,747 |  | 73,676 |  | 147,837
Purchase prices | $33.78 |  | $34.71 |  | $45.31 |  | $67.59 and $81.37 |  | $52.60 and $67.59 |  | $28.39 and $52.60
Aggregate proceeds | $ | 5.1 | million |  | $ | 6.1 | million |  | $6.2 million |  | $5.7 million |  | $4.8 million |  | $4.5 million

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