Stock-Based Compensation
 12 Months Ended
Dec. 31, 2016
Stock-Based Compensation  
Stock-Based Compensation

9 — Stock-Based Compensation

 

In April 2014, our Board of Directors adopted and our shareholders approved the 2014 Equity Incentive Plan (“2014 Plan”). Upon adoption and approval of the 2014 Plan, the previous equity incentive plan was terminated and the remaining shares available for future awards were canceled. The 2014 Plan reserved 1,000,000 shares of our common stock for awards of incentive stock options, non-qualified stock option, stock appreciation rights, restricted stock, restricted stock units, performance awards and other stock-based and cash awards. As of December 31, 2016, there were 609,854 shares available for future awards under the 2014 Plan.

 

Stock-based compensation was recognized as follows in the Statements of Operations:

 

 

 

As of December, 31

 

 

 

2016

 

2015

 

2014

 

Cost of revenue

 

$
147,400 

 

$
77,771 

 

$
6,529 

 

General and administrative

 
1,144,207 

 
541,876 

 
266,167 

 

Sales and marketing

 
493,362 

 
555,478 

 
415,021 

 

Research and development

 
56,932 

 
44,993 

 
36,346 

 

 

 

 

 

 

 

 

 

Total stock-based compensation expense

 

$
1,841,901 

 

$
1,220,118 

 

$
724,063 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock Options

 

The following table presents a summary of our stock option activity as of and for the year ended December 31, 2016:

 

 

 

Options

 

Weighted-Average
Exercise Price
Per Share

 

Weighted-Average
Remaining
Contractual
Life (Yrs)

 

Aggregate
Intrinsic
Value

 

Outstanding beginning of period

 
1,629,342

 

$
2.58

 
7.2

 

$
41,474,962

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options granted

 
24,000

 
21.78

 

 

 

 

 

Options exercised

 
(111,763

)
1.85

 

 

 

 

 

Options cancelled

 
(59,375

)
8.60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding end of period

 
1,482,204

 

$
2.70

 
6.3

 

$
12,788,462

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercisable

 
1,200,199

 

$
1.85

 
6.0

 

$
11,151,738

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The weighted-average grant-date fair value of options granted during the years ended December 31, 2016, 2015 and 2014 was $12.64, $11.75 and $6.47, respectively. The estimated forfeiture rate used to determine stock-based compensation expense was 1.0%, 1.4% and 3.0% for the years ended December 31, 2016, 2015 and 2014, respectively.

 

As of December 31, 2016, we had $1,582,798 of unrecognized compensation expense related to unvested stock options, which is expected to be recognized over a weighted average period of 1.8 years. The total grant date fair value of stock options that vested during the year ended December 31, 2016 was $1,300,021. The total intrinsic value of options exercised during the year ended December 31, 2016, 2015 and 2014 was $2,112,426, $6,954,526 and $588,088, respectively.

 

The fair value of our stock option grants was estimated using the Black-Scholes model with the following weighted average assumptions:

 

 

 

Years Ended December, 31

 

 

 

2016

 

2015

 

2014

 

Volatility

 
61.5 

%
87.1 

%
104.3 

%

Expected term (years)

 
6.3 

 
6.7 

 
7.0 

 

Risk-free interest rate

 
1.6 

%
1.8 

%
2.1 

%

Dividend yield

 
0.0 

%
0.0 

%
0.0 

%

 

Prior to our IPO, historical valuations of our common stock were determined in accordance with the guidelines outlined in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. In the absence of a public trading market, we considered all relevant facts and circumstances known at the time of valuation, made certain assumptions based on future expectations and exercised significant judgment to determine the fair value of our common stock. The factors considered in determining the fair value include, but are not limited to, the following:

 

·

Retrospective and contemporaneous third-party valuation of our common stock;

 

·

Our historical financial results and estimated trends and projections of our future operating and financial performance;

 

·

The market performance of comparable, publicly traded companies; and

 

·

The overall economic and industry conditions and outlook.

 

Restricted Stock Units

 

The following table presents a summary of our restricted stock unit activity as of and for the year ended December 31, 2016:

 

 

 

Restricted
Stock
Units

 

Weighted-Average
Grant Date
Fair Value

 

Unvested at December 31, 2015

 

—

 

$

—

 

Granted

 
163,784

 

$
17.30

 

Vested

 

—

 

$

—

 

Cancelled

 
(4,138

)

$
26.33

 

 

 

 

 

 

 

 

Unvested at December 31, 2016

 
159,646

 

$
17.07

 

 

 

 

 

 

 

 

 

As of December 31, 2016, we had $2,234,847 of unrecognized compensation cost related to the unvested restricted stock units, which is expected to be recognized over a weighted-average period of 3.1 years.