Stock-Based Compensation and Employee Benefit Plan

2002 Stock Plan

Our 2002 Stock Plan (the "2002 Plan") was approved in April 2002 and amended in June 2011. In August 2012 and in connection with the adoption of the 2012 Equity Incentive Plan (the "2012 Plan"), shares authorized for issuance under the 2002 Plan were cancelled, except for those shares reserved for issuance upon exercise of outstanding stock options. As of September 30, 2019, options to purchase 2,014,974 shares of Class B common stock were outstanding and the weighted average exercise price of outstanding options was $22.82 per share.

2012 Equity Incentive Plan

Our 2012 Plan was approved in August 2012. In April 2018 and in connection with the adoption of the 2018 Equity Incentive Plan (the "2018 Plan"), any reserved shares not issued under the 2012 Plan were carried over to the 2018 Equity Incentive Plan. As of September 30, 2019, options to purchase 10,403,072 shares of Class B common stock were outstanding under the 2012 Plan and the weighted average exercise price of outstanding options under the 2012 Plan was $27.24 per share. As of September 30, 2019, we had outstanding RSU awards that may be settled for 8,921,221 shares of Class B common stock under the 2012 Plan.

2018 Equity Incentive Plan

The 2018 Plan was approved in April 2018. The 2018 Plan became effective upon the IPO and serves as the successor to the 2012 Plan.

The 2018 Plan authorizes the award of stock options, restricted stock awards, stock appreciation rights, RSUs, performance awards and stock bonuses. The 2018 Plan provides for the grant of awards to employees, directors, consultants, independent contractors and advisors, provided the consultants, independent contractors, directors and advisors render services not in connection with the offer and sale of securities in a capital-raising transaction. The exercise price of stock options is at least equal to the fair market value of Class A common stock on the date of grant.

As of September 30, 2019, options to purchase 2,549,816 shares of Class A common stock were outstanding under the 2018 Plan and the weighted average exercise price of outstanding options was $17.95 per share. As of September 30, 2019, we had outstanding RSUs that may be settled for 3,735,720 shares of Class A common stock, and 20,160,281 shares of Class A common stock were available for future grant.

2018 Employee Stock Purchase Plan

In April 2018, we adopted the 2018 Employee Stock Purchase Plan ("ESPP"). The ESPP is qualified under Section 423 of the Internal Revenue Code. As of September 30, 2019, there were 3,030,407 shares of Class A common stock available for future issuance.

Stock Option Activity

A summary of stock option activity under our stock plans during the nine months ended September 30, 2019 is as follows:



	Outstanding Options
	Number of Shares		Weighted Average Exercise Price		Remaining Contractual Life (Years)	Aggregate Intrinsic Value

						(in thousands)
Balances at December 31, 2018	14,558,420		$	25.93	6.78	$	3,084
Added to plan	—
Granted	1,433,064		11.19
Exercised	(336,572	)	4.28
Cancelled	(687,050	)	24.82
Balances at September 30, 2019	14,967,862		25.06		6.28	—
Vested and expected to vest at September 30, 2019	14,632,346		25.23		6.22	—
Exercisable at September 30, 2019	9,238,860		28.75		4.77	—

RSUs Activity

A summary of our restricted stock units ("RSUs") activity and related information during the nine months ended September 30, 2019 is as follows:



	Number of Awards Outstanding		Weighted Average Grant Date Fair Value

Unvested Balance at December 31, 2018	16,784,800		$	18.74
Granted	3,052,644		12.20
Vested	(6,341,441	)	18.27
Forfeited	(839,062	)	17.58
Unvested Balance at September 30, 2019	12,656,941		17.48

Stock-Based Compensation Expense

We used the following weighted-average assumptions in applying the Black-Scholes valuation model:



	Three Months Ended September 30,		Nine Months Ended September 30,
	2019	2018	2019	2018

Risk-free interest rate	1.9% - 2.0%	2.8% - 2.8%	1.9% - 2.6%	2.5% - 2.8%
Expected term (years)	6.4 - 6.7	6.2 - 6.7	6.4 - 6.7	6.2 - 6.7
Expected dividend yield	—	—	—	—
Expected volatility	45.7%	56.1%	45.7% - 50.2%	54.6% - 56.1%

Stock-based Compensation - No stock-based compensation costs were capitalized in the three months ended September 30, 2019 and 2018. The following table summarizes the components of stock-based compensation expense in the consolidated statements of operations (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018

Cost of revenue	$	6,793	$	16,156	$	31,557	$	20,025
Research and development	6,589		15,127		33,037		18,504
Sales and marketing	5,823		12,900		26,270		15,066
General and administrative	20,650		27,494		64,091		33,856
Total stock-based compensation	$	39,855	$	71,677	$	154,955	$	87,451

During the nine months ended September 30, 2019 and 2018, we recognized $155.0 million and $87.5 million of stock-based compensation expense, respectively. Our stock-based compensation expense is associated with stock options, RSUs, and our ESPP.

As of September 30, 2019, there was unrecognized compensation expense related to unvested stock options of $48.0 million. This expense is expected to be recognized over the remaining weighted-average period of 2.6 years. We had no excess tax benefits in the nine months ended September 30, 2019 and 2018.

As of September 30, 2019, there was $76.9 million of unrecognized stock-based compensation cost related to unvested RSUs. This expense is expected to be recognized over a weighted average period of 1.1 years.

As of September 30, 2019, there was $9.6 million of unrecognized stock-based compensation cost related to the ESPP. This expense is expected to be recognized over a weighted average period of 1.1 years.