The Company’s 2016 Equity Incentive Plan (“2016 Plan”) became effective on September 15, 2016. The 2016 Plan provides for the grant of incentive stock options, non-qualified stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights and performance share awards to employees, directors and consultants of the Company. The number of shares of common stock reserved for issuance under the 2016 Plan will automatically increase on January 1 of each year by 3% of the number of shares of the Company’s capital stock outstanding on the immediately preceding December 31, or such lesser number of shares as determined by the Company’s board of directors.

The Company’s Employee Stock Purchase Plan (the “2016 ESPP”) became effective on September 15, 2016. The number of shares reserved for issuance under the 2016 ESPP will automatically increase on January 1 of each year by the lesser of 200,000 shares of the Company’s common stock, 1% of the number of shares of the Company’s common stock outstanding on the immediately preceding December 31, or such lesser number of shares as determined by the Company’s board of directors.

The 2016 ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount of up to 15% through payroll deductions of their eligible compensation, subject to any plan limitations. The 2016 ESPP provides for separate six-month offering periods beginning each March and September of each fiscal year.

On each purchase date, eligible employees will purchase the Company’s stock at a price per share equal to 85% of the lesser of (i) the fair market value of the Company’s common stock on the offering date or (ii) the fair market value of the Company’s common stock on the purchase date.

For the three months ended March 31, 2021 and 2020, 23,499 and 30,943 shares of common stock were purchased under the 2016 ESPP, respectively. The Company recorded stock-based compensation expense of $0.5 million and $0.3 million for the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021, unrecognized compensation cost related to the 2016 ESPP was $0.7 million which will be amortized over a weighted-average period of 0.46 years.

The fair value of shares issuable under the ESPP is determined using the Black-Scholes option pricing model with the following weighted average assumptions:

	Three Months Ended March 31,
	2021		2020
Employee Stock Purchase Plan:
Expected term (in years) ⁽¹⁾		0.50		0.50
Expected volatility ⁽²⁾	60%		55%
Risk-free interest rate ⁽³⁾	0.06%		0.29%
Dividend rate ⁽⁴⁾	0%		0%

Stock option awards are granted with an exercise price equal to the fair market value of the Company’s common stock at the date of grant based on the closing market price of its common stock as reported on The Nasdaq Global Market. The option awards generally vest over four years and are exercisable any time after vesting. The stock options expire ten years after the date of grant.

There were no stock options granted during the three months ended March 31, 2021 and 2020. The Company recorded stock-based compensation expense of $0.4 million and $0.9 million for the three months ended March 31, 2021 and 2020, respectively, attributed to stock options.

The total intrinsic value of options exercised for the three months ended March 31, 2021 and 2020 was $6.3 million and $9.2 million, respectively. This intrinsic value represents the difference between the fair market value of the Company’s common stock on the date of exercise and the exercise price of each option. Based on the fair market value of the Company’s common stock at March 31, 2021 and 2020, the total intrinsic value of all outstanding options was $21.5 million and $47.1 million, respectively.

Total unrecognized compensation cost related to nonvested stock options was approximately $0.9 million as of March 31, 2021 and is expected to be recognized over a weighted average period of 0.8 years. The amount of cash received from the exercise of stock options during the three months ended March 31, 2021 and 2020 was $1.6 million and $3.0 million, respectively.

	Stock options outstanding			Weighted average exercise price
Outstanding at December 31, 2020		279,021		$	25.55
Exercised		(52,955	)		30.30
Forfeited		(4,062	)		32.81
Outstanding at March 31, 2021		222,004			24.28

Stock options outstanding, vested and expected to vest and exercisable are as follows:

	As of March 31, 2021
	Number of shares		Remaining contractual life (years)		Weighted- average exercise price
Outstanding		222,004		5.95	$	24.28
Vested and expected to vest		221,120		5.94		24.24
Exercisable		150,286		5.56		19.96

Vested

Nonvested

Options

outstanding

Weighted

average

exercise

price

Options

outstanding

Weighted

average

exercise

price

Outstanding at March 31, 2021

150,286

19.96

71,718

33.34

During the three months ended March 31, 2021, the Company granted 29,366 restricted stock units (“RSUs”) to members of its senior management and certain other employees pursuant to the 2016 Plan. There were 57,409 RSUs that vested during the three months ended March 31, 2021. The Company accounts for RSUs issued to employees at fair value, based on the market price of the Company’s common stock on the date of grant. The weighted-average grant date fair values of RSUs granted during the three months ended March 31, 2021 and 2020 were $132.34 and $96.85, respectively. The fair values of RSUs that vested during the three months ended March 31, 2021 and 2020, were $4.0 million and $2.2 million, respectively. During the three months ended March 31, 2021 and 2020, the Company recorded $5.9 million and $4.5 million, respectively, of stock-based compensation related to the RSUs.

As of March 31, 2021, there was $47.1 million of unrecognized compensation expense related to unvested RSUs which is expected to be recognized over a weighted-average period of approximately 2.27 years. For RSUs subject to graded vesting, the Company recognizes compensation cost on a straight-line basis over the service period for the entire award.

During the three months ended March 31, 2021, the Company granted 30,907 performance-based restricted stock units (“PSUs”) to members of its management pursuant to the 2016 Plan. There were 6,895 PSUs that vested during the three months ended March 31, 2021. The PSUs generally vest based on the Company achieving certain revenue growth thresholds which ranged from 20% to 40% compounded annual growth for grants through 2020 and 15% to 35% compounded annual growth for grants starting in 2021 over a measurement period of two years for the first 50% of PSUs and three years for the remaining PSUs. The vesting of the PSUs is subject to the employee’s continued employment with the Company through the date of achievement. During the three months ended March 31, 2021, the share price of the Company’s common stock on the date of issuance of the PSUs ranged from $118.50 to $146.69 per share. The fair value is based on the value of the Company’s common stock at the date of issuance and the probability of achieving the performance metric. The Company has assessed the probability of achievement of the award at 100% based on past performance of achievement of the performance metric. Compensation cost is adjusted in future periods for subsequent changes in the expected outcome of the performance related conditions. The weighted-average grant date fair values of PSUs granted during the three months ended March 31, 2021 and 2020 were $133.06 and $97.23, respectively. During the three months ended March 31, 2021 and 2020, the Company recognized $5.9 million and $4.6 million, respectively, of stock compensation expense in connection with the PSU awards.

As of March 31, 2021, there was $33.8 million of unrecognized compensation expense related to unvested PSUs which is expected to be recognized over a weighted-average period of approximately 1.70 years. Compensation cost is recognized under the accelerated method and is adjusted in future periods for subsequent changes in the expected outcome of the performance related conditions.

	Number of Shares
Outstanding at December 31, 2020		1,420,541
Granted		60,273
Vested		(64,304	)
Forfeited		(35,677	)
Outstanding at March 31, 2021		1,380,833

The Company recorded the total stock-based compensation expense as follows (in thousands):

	Three Months Ended March 31,
	2021		2020
Cost of revenue	$	999	$	608
Sales and marketing		3,742		3,608
Research and development		2,028		1,874
General and administrative		5,916		4,220
Total	$	12,685	$	10,310

Stock-based compensation expense is recognized over the award’s expected vesting schedule, which is reduced for forfeitures.