3. Common Stock and Preferred Stock

Common Stock—We have one class of common stock outstanding as of December 31, 2013 and 2012. Our common stock is junior to our preferred stock, if and when issued. See “Post IPO Preferred Stock” below for additional information.

Our Third Amended and Restated Certificate of Incorporation authorizes a total of 500,000,000 shares of common stock with a par value of $0.0001 per share.

On June 20, 2013, we priced our IPO of 11,000,000 shares of common stock and such shares began trading on the NASDAQ Global Select Market on June 21, 2013. The public offering price of the shares sold in the offering was $17.00 per share. Upon consummation of the IPO, all of the then outstanding shares of convertible preferred stock converted into 66,235,473 shares of common stock, which includes 2,135,602 common shares issued in connection with the liquidation preference associated with our Class A Preferred Stock.

On December 23, 2011 we filed our initial registration statement to commence our initial public offering process. In the fourth quarter of 2012, primarily due to market conditions, we temporarily suspended our efforts to conduct an initial public offering and accordingly in 2012 wrote-off $5.0 million of deferred equity financing costs incurred through December 31, 2012.

Post IPO Preferred Stock—Effective upon the closing of the IPO in June 2013, our previously issued preferred stock was no longer outstanding as all such preferred stock was converted into common stock.

Our Third Amended and Restated Certificate of Incorporation authorizes 100,000,000 shares of new preferred stock with a par value of $0.01 per share. No shares of this new preferred stock have been issued. The preferred stock may be issued, from time to time, in one or more series as authorized by the Board of Directors, which has the authority to designate the terms of any series of preferred stock issued, including, without limitation, the number of shares to be included in the series of preferred stock, any dividend, redemption, conversion rights or voting powers and the designations, preferences and relative participating, optional or other special rights.

Pre IPO Preferred Stock—Prior to our IPO, we had three classes of preferred stock outstanding, all of which converted into common stock upon the IPO; Class A Preferred Stock, Class B Senior Convertible Preferred Stock (“Class B Preferred Stock”), and Junior Preferred Stock.

A summary of our preferred stock activity for the years ended December 31, 2013, 2012 and 2011, is as follows (in thousands):


	Preferred Stock
	Class A			Class B			Junior			Total
Balance at January 1, 2011	$	80,278		$	231,559		$	141,548		$	453,385
January 28, 2011 funding		38,095			—			—			38,095
June 30, 2011 funding		24,478			—			—			24,478
Allocation of embedded derivative upon issuance of preferred stock		(6,018	)		—			—			(6,018	)
Preferred stock return		13,943			17,388			—			31,331
Accretion of preferred stock		1,913			1,625			6,643			10,181

Balance at December 31, 2011		152,689			250,572			148,191			551,452
Preferred stock return		19,505			32,922			—			52,427
Accretion of preferred stock		2,005			1,541			6,953			10,499

Balance at December 31, 2012		174,199			285,035			155,144			614,378
Preferred stock return		11,219			18,058			—			29,277
Accretion of preferred stock		1,005			763			3,517			5,285
Conversion to common stock upon the IPO		(186,423	)		(303,856	)		(158,661	)		(648,940	)

Balance at December 31, 2013	$	—		$	—		$	—		$	—

Each class of preferred stock was measured at fair value upon issuance on December 31, 2009, and recorded outside of permanent equity because the investors could redeem the shares in the future outside of our control. All three classes of preferred stock were being accreted to stated value over the period from the date of issuance to the earliest redemption date using the effective interest method. The initial stated capital of each of the three classes of preferred stock was $10,000 per share. All classes of preferred stock had voting rights proportionate to their ownership interest in us and had participation rights in any dividends issued on the common stock. The Class A Preferred Stock and Class B Preferred Stock earned a quarterly preferred return of 6%, which we elected to pay in-kind, while the Junior Preferred Stock did not pay a quarterly preferred return. All three classes of our preferred stock included antidilution adjustment provisions, although during the period when the preferred stock was outstanding, only the Conversion Price of the Junior Preferred Stock was impacted by such provisions. The Conversion Price of the Junior Preferred Stock was adjusted from $1,087 at the date of issue to $1,075 as a result of the issuance of additional Class A Preferred Stock in 2011 and 2010.

The Class A Preferred Stock included a liquidation preference that provided for a minimum rate of investment return, which represented an embedded derivative and required bifurcation from the Class A Preferred Stock and separate accounting as a derivative liability. The liquidity feature, when classified as a derivative liability, was initially recorded at fair value and marked to fair value at the end of each reporting period. As noted above, upon consummation of the IPO, 2,135,602 shares of common stock were issued in connection with the liquidation preference associated with our Class A Preferred Stock resulting in a $36.3 million charge recorded in our consolidated statements of operations for the year ended December 31, 2013. Due to changes in the fair value of the derivative liability, $9.6 million and $25.7 million of income was recorded to fair value derivative adjustments in our consolidated statements of operations for the years ended December 31, 2012 and 2011.

The fair value of the Junior Preferred Stock at issuance was determined to be approximately $8,000 per share, a substantial discount to its stated capital of $10,000 per share. Accordingly, under ASC 815, Derivatives and Hedging, since the Junior Preferred Stock contained contingently exercisable put/call features, principally the Deemed Liquidation Event and Mandatory Conversion Option features, that could accelerate the repayment of the stated capital, such features were deemed not to be clearly and closely related to the host security and were required to be bifurcated from the Junior Preferred Stock and separately accounted for as a derivative liability. Due to changes in the fair value of the derivative liability, $33.1 million of income was recorded to fair value derivative adjustment in our consolidated statements of operations for the year ended December 31, 2011.

See Note 4, “Fair Value of Financial Assets and Liabilities,” for additional discussion regarding the fair value adjustments.