Stock-Based Compensation

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

Employee Stock Options Valuation

The fair value of employee and director stock options was estimated at the date of grant using the Black-Scholes option pricing model valuation model with the weighted average assumptions below.



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Expected term (in years)	0.0		6.1		6.1		6.1
Expected volatility	—	%	44.7	%	45.0	%	45.8	%
Risk-free interest rate	—	%	2.85	%	2.39	%	2.74	%
Dividend yield	—	%	—	%	—	%	—	%

The Company did not grant stock options during the three months ended September 30, 2019.

Stock-Based Compensation

The following table summarizes the total stock-based compensation expense included in the statements of operations and comprehensive loss for all periods presented (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Cost of revenue	$	—	$	86	$	225	$	224
Research and development	1,242		801		3,366		2,158
Selling, general and administrative	6,159		3,324		15,473		9,152
Total stock-based compensation expense	$	7,401	$	4,211	$	19,064	$	11,534

As of September 30, 2019, there was total unamortized compensation costs of $10.3 million, net of estimated forfeitures, related to unvested stock options which the Company expects to recognize over a period of approximately 1.9 years, $47.9 million, net of estimated forfeitures, related to unrecognized restricted stock unit (“RSU”) expense, which the Company expects to recognize over a period of 2.5 years, and $1.4 million unrecognized ESPP expense, which the Company will recognize over 0.7 years.

Performance based RSUs (“PRSU”)

In February 2019, the Company granted PRSUs to key executives of the Company. The performance equity program has a 2-year performance period measuring target revenue compound annual growth rate (“CAGR”) achievement for fiscal year 2020 compared to fiscal year 2018. There is a minimum performance threshold of 75% to earn 50% of target, and a maximum threshold of 125% achieved to earn 200% of target. The exact number of earned shares will be determined based on linear interpolation using the actual revenue CAGR as it falls between the minimum and maximum thresholds outlined above. The fair value of the PRSUs will be up to $18.5 million, depending on the actual achievement relative to the performance target. Based on management’s assessment at September 30, 2019 of the Company’s achievement of its performance targets, the Company has determined that it is probable that the performance targets will be achieved. As of September 30, 2019, management believes that it will achieve its performance targets at the 134% level, and has recognized cumulative PRSU expense of $3.3 million, for the nine months ended September 30, 2019.