

	Years Ended December 31,
	2019		2018		2017
Cost of revenues	$	426	$	420	$	316
Research and development	22,229		17,055		14,333
Sales and marketing	7,380		6,703		5,007
General and administrative	34,874		27,852		18,703
Total share-based compensation expense	$	64,909	$	52,030	$	38,359

Under the 2013 ESPP, rights to purchase shares are generally granted during the second and fourth quarter of each year. We estimate the fair value of each right to purchase shares under our 2013 ESPP using the Black-Scholes-Merton option-pricing model, which utilizes the fair value of our common stock based on active market and requires input on the following subjective assumptions:

Expected Dividends. The dividend assumption is based on our historical experience. To date we have not paid any dividends on our common stock.

Risk-Free Interest Rate. The risk-free interest rate used in the valuation method is the implied yield currently available on the United States treasury zero-coupon issues, with a remaining term equal to the expected term.



	Years Ended December 31,
	2019			2018			2017
Expected term (years)	0.50			0.50			0.50
Expected volatility	40.51%-41.81%			42.07%-44.97%			38.15%-45.57%
Dividend yield	—		%	—		%	—		%
Risk-free interest rate	1.59%-2.43%			2.09%-2.50%			1.04%-1.42%
Weighted-average grant-date fair value per share	$	9.88		$	7.14		$	3.55

RSUs and PSUs are converted into shares of our common stock upon vesting on a one-for-one basis. Vesting of RSUs is subject to the employee’s continuing service to us, while vesting of PSUs is subject to our achievement of specified corporate financial performance objectives in addition to the employee's continuing service to us. RSUs are typically fully vested at the end of three or four years while PSUs vest subject to the achievement of performance objectives and if achieved, typically vest over two to three years. We assess the achievement of performance objectives on a quarterly basis and adjust our share-based payment expense as appropriate.

There were 201,581 shares purchased under the 2013 ESPP for the year ended December 31, 2019 at an average price per share of $25.55 with cash proceeds from the issuance of shares of $5.1 million.

There were 253,301 shares purchased under the 2013 ESPP for the year ended December 31, 2018 at an average price per share of $15.77 with cash proceeds from the issuance of shares of $4.0 million.



	Options Outstanding
	Number of Options Outstanding		Weighted- Average Exercise Price per Share		Weighted-Average Remaining Contractual Term in Years	Aggregate Intrinsic Value
Balance at December 31, 2018	4,776,481		$	9.40	4.25	$	90,848,450
Exercised	(3,165,096	)	9.79
Balance at December 31, 2019	1,611,385		$	8.64	3.60	$	47,171,160

The total intrinsic value of options exercised during the years ended December 31, 2019, 2018 and 2017, was approximately $90.8 million, $57.2 million, and $16.8 million, respectively.



	RSUs and PSUs Outstanding
	Number of RSUs and PSUs Outstanding		Weighted Average Grant Date Fair Value
Balance at December 31, 2018	10,804,808		$	11.87
Granted	2,910,400		37.56
Released	(5,628,938	)	10.15
Canceled	(1,176,740	)	12.20
Balance at December 31, 2019	6,909,530		$	24.04

The weighted-average grant-date fair value of RSUs and PSUs granted during the years ended December 31, 2019, 2018, and 2017 was $37.56, $21.67, and $9.10, respectively. The total fair value of RSUs and PSUs vested as of the vesting dates during the years ended December 31, 2019, 2018, and 2017 was $222.3 million, $120.9 million, and $49.4 million, respectively.

As of December 31, 2019, we had a total of approximately $91.2 million of unrecognized compensation costs related to RSUs and PSUs that is expected to be recognized over the remaining weighted average period of 1.6 years.

In March 2019, we granted PSUs under the 2013 Plan to certain of our key executives. The PSUs entitle the executives to receive a certain number of shares of our common stock based on our satisfaction of certain financial and strategic performance targets during 2019. Based on the achievement of the performance conditions for the March 2019 grants, the final settlement met the target threshold based on a specified objective formula approved by the Compensation Committee. These PSUs will vest over a three-year period, with the initial vesting occurring in March 2020.

The number of shares underlying the March 2019 PSUs granted during the year ended December 31, 2019 totaled 436,042 shares and had a grant date fair value of $40.42 per share.

In August 2018, in conjunction with our acquisition of StudyBlue, we granted PSUs under the 2013 Plan to certain employees. The PSUs entitle the employees to receive a certain number of shares of our common stock based on our satisfaction of certain strategic performance targets during 2018 and 2019. Based on the achievement of the performance

conditions for the August 2018 grant, the final settlement exceeded the target threshold based on a specified objective formula approved by the Compensation Committee. These PSUs vest over a three-year period, with the initial vesting occurring in September 2019.

The number of shares underlying the August 2018 PSUs granted during the year ended December 31, 2018 totaled 45,756 shares and had a grant date fair value of $28.74 per share.

In March 2018, we granted PSUs under the 2013 Plan to certain of our key executives. The PSUs entitle the executives to receive a certain number of shares of our common stock based on our satisfaction of certain financial and strategic performance targets during 2018. Based on the achievement of the performance conditions for the March 2018 grant, the final settlement exceeded the target threshold based on a specified objective formula approved by the Compensation Committee. These PSUs vest over a three-year period, with the initial vesting occurring in March 2019.

The number of shares underlying the March 2018 PSUs granted during the year ended December 31, 2018 totaled 845,934 shares and had a grant date fair value of $19.70 per share.

In March 2017, we granted PSUs under the 2013 Plan to certain of our key executives. The PSUs entitle the executives to receive a certain number of shares of our common stock based on our satisfaction of certain financial and strategic performance targets during 2017. Based on the achievement of the performance conditions for the March 2017 grant, the final settlement met the maximum threshold based on a specified objective formula approved by the Compensation Committee. These PSUs vest over a three-year period, with the initial vesting occurring in March 2018.

The number of shares underlying the PSUs granted during the year ended December 31, 2017 totaled 1,822,284 shares and had a grant date fair value of $8.91 per share.