Employee benefit plans

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

Equity incentive plans. The Company has outstanding equity grants from its three stock-based employee compensation plans: the 2014 Equity Incentive Plan (2014 Plan), the 2010 Equity Incentive Plan (2010 Plan) and the 2014 Employee Stock Purchase Plan (ESPP). No new options or awards have been granted under the 2010 Plan since June 2014. Outstanding options and awards under the 2010 Plan continue to be subject to the terms and conditions of the 2010 Plan.

The 2014 Plan serves as a successor to the 2010 Plan and provides for the granting of incentive and nonqualified stock options, restricted stock awards (RSAs), restricted stock units (RSUs), stock appreciation rights, stock bonus awards and performance awards to qualified employees, non-employee directors and consultants. Options granted under the 2014 Plan generally expire within ten years from the date of grant and generally vest over one to four years. Restricted stock units (RSUs) granted under the 2014 Plan generally vest over two to four years based upon continued service and are settled at vesting in shares of the Company’s Class A common stock. Performance stock units (PSUs) granted under the 2014 Plan generally vest over three years based upon continued service and the Company achieving certain targets, and are settled at vesting in shares of the Company’s Class A common stock. The Company accounts for forfeitures of stock-based payment awards in the period they occur.

The ESPP allows eligible employees to purchase shares of the Company’s Class A common stock through payroll deductions at a price equal to 85% of the lesser of the fair market value of the stock as of the first date or the ending date of each six-month offering period. The 2014 Plan and the ESPP also provide for automatic annual increases in the number of shares reserved for future issuance.

Employee retirement plan. The Company has a defined contribution retirement plan covering the United States and other international full-time employees that provides for voluntary employee contributions from 1% to 100% of annual compensation, subject to a maximum limit allowed by Internal Revenue Service guidelines. The Company matched 100% of each employee’s contributions up to a maximum of 4% of the employee’s eligible compensation until May 2020, at which point the Company suspended matching contributions. The Company’s matching contributions to the plan were $1.4 million, $4.0 million and $4.3 million in 2020, 2019 and 2018, respectively.

Stock options

A summary of the Company’s stock option activity is as follows:


	Shares (in thousands)	Weighted-average exercise price		Weighted-average remaining contractual term (in years)	Aggregate intrinsic value (in thousands)




Outstanding at December 31, 2019	3,963	$	10.16	6.35	$	374
Granted	1,025	4.01
Exercised	(357)	5.50
Forfeited/Cancelled	(1,200)	10.20
Outstanding at December 31, 2020	3,431	$	8.79	6.50	$	6,259

Vested and expected to vest at December 31, 2020	3,431	$	8.79	6.50	$	6,259
Exercisable at December 31, 2020	2,195	$	11.06	5.18	$	1,893

The weighted-average grant date fair value of all options granted and assumed was $2.03, $3.70 and $2.95 per share in 2020, 2019 and 2018, respectively. The total fair value of all options vested was $1.7 million, $3.5 million and $6.1 million in 2020, 2019 and 2018, respectively. The aggregate intrinsic value of the stock options outstanding as of December 31, 2020 represents the value of the Company’s closing stock price on the last trading day of the year in excess of the exercise price multiplied by the number of options outstanding.

Restricted stock units

A summary of the Company’s RSU activity is as follows:


	Shares (in thousands)	Weighted-average grant date fair value




Non-vested shares at December 31, 2019	8,225	$	6.11
Granted	8,759	4.59
Vested	(3,962)	6.04
Forfeited	(2,383)	5.40
Non-vested shares at December 31, 2020	10,639	$	5.04

The weighted-average grant date fair value of all RSUs granted was $4.59, $5.70 and $5.83 per share in 2020, 2019 and 2018, respectively. The total fair value of all RSUs vested was $23.9 million, $34.9 million and $41.6 million in 2020, 2019 and 2018, respectively.

Performance stock units

A summary of the Company’s PSU activity is as follows:


	Shares (in thousands)	Weighted-average grant date fair value
Non-vested shares at December 31, 2019	788	$	7.51
Granted	1,231	4.05
Vested	(247)	7.50
Forfeited	(453)	6.92
Non-vested shares at December 31, 2020	1,319	$	4.48

The weighted-average grant date fair value of all PSUs granted was $4.05, $7.51 and $5.76 in 2020, 2019 and 2018, respectively. The total fair value of all PSUs vested was $1.9 million in 2020. No PSUs vested in 2019 or 2018.

Employee stock purchase plan. In 2020, 2019 and 2018, the Company issued 1 million, 958 thousand and 981 thousand shares under its ESPP, respectively, at weighted-average prices of $3.42, $4.13 and $4.78, respectively.

Fair value disclosures. The Company measures compensation expense for all stock-based payment awards based on the estimated fair values on the date of the grant. The fair value of RSUs and PSUs are determined using the Company’s closing stock price on the date of grant. The Company recognizes compensation expense for PSUs when it is probable that the vesting conditions will be met. The fair value of stock options granted and purchases under the Company’s ESPP is estimated using the Black-Scholes option pricing model. Expected term of stock options granted was estimated based on the simplified method. Expected stock price volatility was estimated by taking the Company’s average historic volatility and if applicable, the historical volatility for industry peers based on daily price observations over a period equivalent to the expected term. Risk-free interest rate was based on the yields of U.S. Treasury securities with maturities similar to the expected term. Dividend yield was zero as the Company does not have any history of, nor plans to make, dividend payments.

The fair value of stock options granted was estimated as of the grant date using the following assumptions:


	Year ended December 31,
	2020	2019	2018
Volatility	51%-64%	50%-52%	51%
Expected term (years)	6.1	6.1	5.4-6.1
Risk-free interest rate	0.4%-1.5%	1.5%-2.2%	2.7%-3.0%
Dividend yield	—%	—%	—%

The fair value of stock purchase rights granted under the ESPP was estimated using the following assumptions:


	Year ended December 31,
	2020	2019	2018
Volatility	60%-98%	41%-54%	48%-53%
Expected term (years)	0.5	0.5	0.5
Risk-free interest rate	0.1%-1.6%	1.9%-2.5%	1.8%-2.2%
Dividend yield	—%	—%	—%

Stock-based compensation expense. The following table summarizes stock-based compensation expense included in the Consolidated Statements of Operations:


	Year ended December 31,
(in thousands)		2020		2019		2018
Cost of revenue		$	1,548	$	1,902	$	1,954
Research and development		13,415		17,167		19,636
Sales and marketing		5,779		8,043		9,459
General and administrative		9,221		10,076		9,838
Total stock-based compensation expense		$	29,963	$	37,188	$	40,887

The income tax benefit related to stock-based compensation expense was zero for 2020, 2019 and 2018 due to a full valuation allowance on the Company’s United States net deferred tax assets (see Note 8 Income taxes).

At December 31, 2020, total unearned stock-based compensation of $47.7 million related to stock options, RSUs, PSUs and ESPP shares is expected to be recognized over a weighted-average period of 2.2 years.