Stock-Based Compensation and Employee Benefit Plans

Share-based grants are designed to reward employees for their long-term contributions to us and provide incentives for them to remain with Bloom.

2002 Stock Plan

As of March 31, 2020, options to purchase 1,767,487 shares of Class B common stock were outstanding with a weighted average exercise price of $24.13 per share.

2012 Equity Incentive Plan

As of March 31, 2020, options to purchase 9,805,266 shares of Class B common stock were outstanding with a weighted average exercise price of $27.14 per share and no shares were available for future grant. As of March 31, 2020, we had outstanding RSUs that may be settled for 4,093,230 shares of Class B common stock under the plan.

2018 Equity Incentive Plan

As of March 31, 2020, options to purchase 5,933,885 shares of Class A common stock were outstanding with a weighted average exercise price of $9.31 per share and 2,919,204 shares of outstanding RSUs that may be settled for Class A common stock which were granted pursuant to the plan. As of March 31, 2020, we had 23,519,848 shares of Class A common stock available for future grant. No stock options were granted during the three months ended March 31, 2020.

Stock-Based Compensation Expense

We used the following weighted-average assumptions in applying the Black-Scholes valuation model for determination of options:



	Three Months Ended March 31,
	2020	2019

Risk-free interest rate	—%	2.60% - 2.64%
Expected term (years)	0	6.3 - 6.6
Expected dividend yield	—	—
Expected volatility	—%	50.2%

The following table summarizes the components of stock-based compensation expense in the consolidated statements of operations (in thousands):



	Three Months Ended March 31,
	2020		2019
			As Restated

Cost of revenue	$	5,507	$	18,312
Research and development	6,096		14,230
Sales and marketing	3,890		11,512
General and administrative	7,526		23,768
	$	23,019	$	67,822

Stock-based Compensation - During the quarters ended March 31, 2020 and 2019, we recognized $23.0 million and $67.8 million of total stock-based compensation costs, respectively. During the quarters ended March 31, 2020 and 2019, we recognized $0.2 million and $3.9 million, respectively, of stock-based compensation expense previously capitalized in inventory and property, plant and equipment.

Stock Option and RSU Activity

The following table summarizes the stock option activity under our stock plans during the reporting period (in thousands), except per share amounts:



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

						(in thousands)
December 31, 2019	17,837,316		$	20.76	6.94	$	14,964
Exercised	(110,949	)	6.14
Cancelled	(219,729	)	25.79
Balances at March 31, 2020	17,506,638		20.79		6.66	6,814
Vested and expected to vest at Current period end	16,856,937		21.20		6.57	6,071
Exercisable at Current period end	9,499,310		28.59		4.76	9

Stock Options - During the quarters ended March 31, 2020 and 2019, we recognized $5.6 million and $9.2 million of stock-based compensation costs for stock options, respectively.

We did not grant options for Class A common stock during the quarter ended March 31, 2020, and we granted 743,705 options for Class A and Class B common stock during the quarter ended March 31, 2019 and the weighted-average grant-date fair value of those awards was $11.38 per share.

As of March 31, 2020 and 2019, we had unrecognized compensation costs related to unvested stock options of $36.3 million and $65.8 million, respectively. This cost is expected to be recognized over the remaining weighted-average period of 2.4 years and 2.7 years, respectively. We had no excess tax benefits in the quarters ended March 31, 2020 and 2019. Cash received from stock options exercised totaled $0.7 million and $0.6 million ended March 31, 2020 and 2019, respectively.

A summary of our RSUs activity and related information is as follows:



	Number of Awards Outstanding		Weighted Average Grant Date Fair Value

Unvested Balance at December 31, 2019	10,112,266		$	17.29
Granted	78,338		10.88
Vested	(3,010,606	)	19.80
Forfeited	(167,564	)	15.77
Balances at March 31, 2020	7,012,434		16.18

Restricted Stock Units (RSUs) - The estimated fair value of RSU awards is based on the fair value of our common stock on the date of grant.

During the quarters ended March 31, 2020 and March 31, 2019, we recognized $13.2 million and $51.0 million of stock-based compensation costs for RSUs, respectively.

As of March 31, 2020, we had $37.6 million of unrecognized stock-based compensation cost related to unvested RSUs. This cost is expected to be recognized over a weighted average period of 1.3 years. As of March 31, 2019, we had $145.5 million of unrecognized stock-based compensation cost related to unvested RSUs. This expense was expected to be recognized over a weighted average period of 1.3 years.

The following table presents the stock activity and the total number of RSUs available for grant under our stock plans as of March 31, 2020:



	Plan Shares Available for Grant


Balances at December 31, 2019	17,233,144
Added to plan	6,263,315
Granted	(78,338	)
Cancelled	385,766
Expired	(284,039	)
Balances at March 31, 2020	23,519,848

2018 Employee Stock Purchase Plan

During the quarter ended March 31, 2020, we added an additional 1,494,819 shares for use under the 2018 ESPP. During the quarters ended March 31, 2020 and 2019, we recognized $2.9 million and $2.8 million of stock-based compensation costs for the ESPP, respectively. We issued 992,846 shares in the quarter ended March 31, 2020 and there were 3,532,380 shares available for issuance under the ESPP as of March 31, 2020. We use the Black-Scholes option pricing model to determine the fair value of shares purchased under the 2018 ESPP with the following weighted average assumptions on the date of grant:



	Three Months Ended March 31,
	2020	2019

Risk-free interest rate	1.51%	2.60% - 2.64%
Expected term (years)	0.5 - 2.0	0.5 - 2.0
Expected dividend yield	—	—
Expected volatility	61.0%	50.2%

2019 Executive Awards

In November 2019, the Board of Directors approved stock option awards ("2019 Executive Awards") to certain executive staff. The 2019 Executive Awards consist of three vesting tranches with a vesting schedule based on the attainment of market conditions and assuming continued employment and service through each vesting date. Stock-based compensation costs associated with the 2019 Executive Awards is recognized over the service period, even though no tranches of the 2019 Performance Awards vest unless a market condition is achieved. The grant date fair value of the options is determined using a Monte Carlo simulation.