Stock-Based Compensation

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

2008 Stock Option Plan and 2018 Equity Incentive Plan

In April 2008, the Company adopted the 2008 Stock Option Plan (the “2008 SOP”), as amended, under which the Board of Directors may issue incentive and non-qualified stock options to employees, directors and consultants. In October 2018, the Company adopted the 2018 Equity Incentive Plan (the “2018 EIP”), which serves as the successor to the 2008 SOP, under which the Board of Directors may issue incentive and non-qualified stock options and RSUs to employees, directors and consultants. No new options have been granted under the 2008 SOP since August 2018. Outstanding options under the 2008 SOP continue to be subject to the terms and conditions of that plan.

The number of shares of common stock reserved for issuance under the 2018 EIP will automatically increase on January 1 of each year, beginning January 1, 2019, and continuing through and including January 1, 2028, by 5% of the total number of shares of the Company's capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by the Company's Board of Directors. On January 1, 2019 and 2020, the total number of shares of common stock reserved for issuance increased by 1,222,538 and 1,258,190 shares respectively. As of December 31, 2020, a total of 2,843,814 shares of common stock are available for future grants under the 2018 EIP. On January 1, 2021, the total number of shares of common stock reserved for issuance under the 2018 EIP automatically increased by 1,629,161 shares.

The Board of Directors has the authority to determine to whom options will be granted, the number of shares, the term and the exercise price. If an individual owns stock representing more than 10% of the outstanding shares, the price of each share shall be at least 110% of the fair market value, as determined by the Board of Directors. The exercise price of an incentive stock option and a non-qualified stock option shall not be less than 100% and 85%, respectively, of the fair market value on the date of grant.

Options granted have a term of 10 years, except, options granted to individuals holding more than 10% of the outstanding shares have a term of five years. Options generally vest over a four-year period. Certain stock options are exercisable immediately, but are subject to a right of repurchase by the Company for any unvested shares. RSUs granted under the 2018 EIP generally vest over two to four years based upon continued services and are settled at vesting in shares of the Company's common stock.

Stock Options

The following table summarizes stock option activity for the years ended December 31, 2020 and 2019:


	Options Outstanding
	Number of Shares	Weighted-Average Exercise Price	Weighted-Average Contractual Remaining Life (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2018	2,641,198	$4.27
Granted	638,983	$20.89
Exercised	(444,924)	$3.36
Canceled and forfeited	(116,286)	$11.30
Outstanding as of December 31, 2019	2,718,971	$8.02
Granted	26,236	$17.31
Exercised	(323,701)	$4.52
Canceled and forfeited	(15,549)	$17.07
Outstanding as of December 31, 2020	2,405,957	$8.54	5.80	$	51,402
Options vested and exercisable as of December 31, 2020	2,069,020	$6.85	5.40	$	47,689
Options vested and expected to vest as of December 31, 2020	2,390,755	$8.36	6.00	$	51,493

The aggregate intrinsic value of options exercised during the years ended December 31, 2020 and 2019 amounted to $5.6 million and $6.8 million, respectively, representing the difference between the fair value of the Company's common stock at the date of exercise and the exercise price paid. The aggregate intrinsic values of options outstanding, options vested and exercisable, and options vested and expected to vest as of December 31, 2020 represents the difference between the weighted average exercise price and the closing price of the Company’s common stock on the last trading day of the year.

Outstanding options and exercisable options information by range of exercise prices as of December 31, 2020 was as follows:


Exercise Price			Options Outstanding			Options Vested and Exercisable
			Number of Shares	Average Remaining Contractual Life (Years)	Weighted- Average Exercise Price	Number of Shares	Weighted- Average Exercise Price
$0.84	-	$3.69	465,071	3.40	$3.31	465,071	$3.31
$3.70	-	$4.41	689,903	4.80	$4.29	689,903	$4.29
$4.42	-	$5.31	458,812	6.40	$4.67	422,974	$4.67
$5.32	-	$20.51	356,271	7.50	$12.08	282,203	$11.00
$20.52	-	$22.00	435,900	8.00	$22.00	208,869	$22.00
			2,405,957	5.80	$8.54	2,069,020	$6.85

The table below summarizes the weighted average grant date fair value per share and the assumptions used to estimate the grant date fair value using the Black-Scholes option-pricing model of the stock options granted during the periods presented:


	Year ended December 31,
	2020			2019
Weighted average grant date fair value per share	$8.16			$9.78
Expected term (years)	5.5	to	7.0	5.0	to	7.0
Expected volatility	46.7%	to	47.2%	41.7%	to	47.3%
Risk-free interest rate	1.6%	to	1.6%	1.3%	to	2.6%
Dividend yield	—%			—%

As of December 31, 2020, there was $3.2 million of unrecognized compensation cost related to stock options granted. These costs are expected to be recognized over a period of approximately 1.9 years.

Early Exercise of Unvested Stock Options

Early exercises of stock options under the Company's 2008 SOP are subject to a right of repurchase by the Company of any unvested shares. The repurchase rights lapse over the original vesting period of the options. The Company accounts for the cash received in consideration for the early exercised options as a liability included in accrued liabilities, which is then reclassified to stockholders’ equity as the options vest. As of December 31, 2020 and 2019, the Company had a total of 5,836 and 21,404 shares of common stock, respectively, subject to repurchase under the 2008 SOP.

Restricted Stock Units

The following table summarizes restricted stock units activity for the years ended December 31, 2020 and 2019:


	Number of Shares	Weighted- Average Grant Date Fair Value
Outstanding as of December 31, 2018	53,436	$11.69
Granted	639,726	$20.14
Vested	(108,631)	$19.10
Canceled and forfeited	(41,490)	$18.48
Outstanding as of December 31, 2019	543,041	$19.72
Granted	1,016,432	$20.17
Vested	(344,779)	$19.87
Canceled and forfeited	(49,399)	$19.73
Outstanding as of December 31, 2020	1,165,295	$20.07

As of December 31, 2020, there was a total unrecognized compensation cost of $19.3 million. These costs are expected to be recognized over a period of approximately 2.9 years.

Employee Stock Purchase Plan

The Company's 2018 Employee Stock Purchase Plan (the “ESPP”) allows eligible employees to purchase shares of the Company's common stock through payroll deductions at the 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 offering period generally commences in May and November. On March 26, 2020, the Company's Compensation Committee approved the amendment of the terms of future offerings under the ESPP which, among other things, increased the maximum number of shares that may be purchased on any single purchase date, provided for automatic enrollment in a new offering, and provided that the offering which commenced in May 2020 be twelve months in duration and consist of two purchase periods. There were 515,307 shares of common stock originally reserved for issuance under the ESPP. Under the ESPP, the number of shares reserved for issuance under the ESPP automatically increases on January 1st of each year, starting on January 1, 2019, and continuing through January 1, 2029, by an amount equal to (i) the lesser of 1% of the total number of shares of the Registrant’s common stock outstanding on December 31st of the preceding calendar year, and (ii) 555,555 shares of common stock. As of December 31, 2020, a total of 705,618 shares of common stock are available for future grants under the 2018 EIP. On January 1, 2021, the total number of shares of common stock reserved for issuance under the ESPP Plan increased by 325,832 shares.

The fair value of the ESPP shares is estimated using the Black-Scholes option pricing model, which is being amortized over the requisite service period. The Company issued 137,377 shares and 168,457 shares under the ESPP during the years ended December 31, 2020 and 2019, respectively, representing approximately $1.9 million and $2.2 million in employee contributions. As of December 31, 2020 and 2019, total accumulated ESPP related employee payroll deductions amounted to $0.4 million and $0.2 million, respectively, which were included within accrued compensation and related expenses in the consolidated balance sheets. For the years ended December 31, 2020 and 2019, the Company recognized $1.2 million and $0.8 million, respectively, of stock-based compensation expense related to ESPP. As of December 31, 2020, the unrecognized compensation cost for the ESPP was $0.2 million.

The Company estimated the fair value of ESPP purchase rights during the offering period using a Black-Scholes option pricing model with the following assumptions:


	Year ended December 31,
	2020			2019
Expected term (years)	0.5	to	1.0	0.5
Expected volatility	38.3%	to	79.4%	38.3%	to	58.4%
Risk-free interest rate	0.1%	to	1.6%	1.6%	to	2.4%
Dividend yield	—%			—%

Stock-Based Compensation

The following table sets forth stock-based compensation expense recognized for the periods presented:


	Year ended December 31,
	2020		2019
	(in thousands)
Cost of goods sold	$	331	$	185
Sales and marketing	5,527		3,335
Research and development	1,139		516
General and administrative	4,930		3,428
	$	11,927	$	7,464