The Company has two equity incentive plans: the 2011 Equity Incentive Plan (the “2011 Plan”) and the 2018 Equity Incentive Plan (the “2018 Plan”). To the extent that grants outstanding under the 2011 Plan terminate, cancel or are forfeited, the shares reserved for issuance under such grants are automatically transferred to the 2018 Plan and become available for subsequent grant thereunder.

Under the 2018 Plan, the Board or a committee of the Board, may grant incentive and nonqualified stock options, stock appreciation rights, restricted or unrestricted stock awards, restricted stock units (“RSUs”), phantom stock, performance awards or other stock-based awards to employees, directors and other individuals providing services to the Company. The purpose of the 2018 Plan is to promote the long-term growth and profitability of the Company by (i) providing employees with incentives to improve stockholder value and to contribute to the growth and financial success of the Company through their future services, and (ii) enabling the Company to attract, retain and reward the best‑available persons. The options granted under the 2018 Plan, may be granted at a price not less than the fair market value on the grant date.

The Board, or a committee of the Board, has granted options with an exercise price at or which approximates the fair value on the grant date to new hires, except for the out-of-the-money options granted to certain employees as discussed below. Grants of time-based awards generally vest over a four-year period for new hires and over a three-year period for subsequent grants to existing employees. The service condition for the majority of these awards is satisfied generally over the applicable vesting period. Options expire as determined by the Board, or committee of the Board, but not more than ten years after the date of the grant. In the second quarter of 2015, the Company began granting restricted stock units that contain both a service condition and Performance Vesting Condition. Both the service condition and Performance Vesting Condition must be met in order for these awards to vest and issue. The Performance Vesting Condition occurred upon the effectiveness of the registration statement for the Company's IPO, which was September 25, 2018.

As of September 30, 2019, 8,371,369 shares of common stock remain available for grant under the 2018 Plan.

The following is a summary of stock option activity for the current year period:

	Stock Options
	Number of Shares			Weighted Average Exercise Price		Aggregate Intrinsic Value (in thousands)		Weighted Average Remaining Contractual Term (in years)
Outstanding at December 31, 2018		18,452,375		$	14.39	$	8,482		7.5
Granted		3,128,591		$	13.95
Exercised		(3,319,196	)	$	12.65
Forfeited		(1,240,835	)	$	14.05
Expired		(934,413	)	$	15.88
Outstanding, vested and expected to vest at September 30, 2019		16,086,522		$	14.60	$	41,101		7.5
Vested and exercisable at September 30, 2019		9,412,266		$	14.86	$	21,157		6.6

The following is a summary of restricted stock awards for the current year period:

	Restricted Stock Awards
	Number of Shares		Weighted Average Grant-Date Fair Value		Weighted Average Remaining Contractual Term (in years)
Unvested at December 31, 2018		—	$	—		0.0
Granted		299,798	$	18.30
Unvested at September 30, 2019		299,798	$	18.30		2.5

The following is a summary of restricted stock units for the current year period:

	Restricted Stock Units
	Number of Shares			Weighted Average Grant-Date Fair Value		Weighted Average Remaining Contractual Term (in years)
Unvested at December 31, 2018		5,752,046		$	12.77		1.2
Granted		5,449,311		$	15.01
Vested		(2,859,765	)	$	12.93
Forfeited		(1,147,189	)	$	13.42
Unvested at September 30, 2019		7,194,403		$	14.30		2.2

The Company used the Black-Scholes-Merton option pricing model to estimate the fair value of stock options granted using the following assumptions:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2019	2018	2019	2018
Expected life (in years)	5.2 to 6.1	5.8 to 6.0	5.2 to 6.1	5.8 to 6.0
Risk-free interest rate	1.5% - 1.6%	2.8% - 3.0%	1.5% - 2.5%	2.7% - 3.0%
Volatility	44% - 45%	44% - 60%	44% - 46%	43% - 60%
Dividend yield	—%	—%	—%	—%
Fair value of common stock	$18.11 to $18.41	$12.00 to $13.65	$12.35 to $18.41	$12.00 to $13.65

The Company sponsors the ESPP that allows employees to purchase shares of common stock at a discounted price from the fair market value of Company’s common stock at each purchase date. Except for the initial offering period, the ESPP provides for 24-month offering periods beginning May 22 and November 22 of each year, and each offering period will consist of four six-month purchase periods. The initial offering period began on September 25, 2018 and will end on November 22, 2020. On each purchase date, eligible employees will purchase the shares at a price per share equal to 85% of the lesser of (1) the fair market value of the Company’s common stock on the offering date, or (2) the fair market value of its common stock on the purchase date. During the nine months ended September 30, 2019, the Company’s employees purchased 260,991 shares of its common stock under the ESPP at a weighted average purchase price of $10.20 with proceeds of $2.7 million. As of September 30, 2019, 2,412,453 shares of common stock remain available for grant under the ESPP.

The Company used the Black-Scholes-Merton option pricing model to estimate the fair value of ESPP purchase rights granted using the following assumptions:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2019	2018	2019	2018
Expected life (in years)	n/a	n/a	0.5 to 2.0	n/a
Risk-free interest rate	n/a	n/a	2.1% - 2.4%	n/a
Volatility	n/a	n/a	40% - 45%	n/a
Dividend yield	n/a	n/a	—%	n/a
Fair value of common stock	n/a	n/a	$16.98	n/a

Stock-based compensation expense recognized in the condensed consolidated financial statements is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2019		2018		2019		2018
Cost of revenue	$	718	$	6,472	$	2,805	$	7,776
Research and development		5,468		37,490		15,863		43,903
Sales and marketing		2,918		14,496		8,714		16,411
General and administrative		5,678		40,354		17,665		48,014
Stock-based compensation expense, net of amounts capitalized		14,782		98,812		45,047		116,104
Capitalized stock-based compensation expense		858		495		2,889		1,251
Stock-based compensation expense	$	15,640	$	99,307	$	47,936	$	117,355

	Unrecognized stock-based compensation (in thousands)		Weighted average vesting period (in years)
Stock options	$	39,378		2.3
Restricted stock awards		4,575		2.5
Restricted stock units (service-based)		65,870		2.9
Restricted stock units (performance-based)⁽¹⁾		9,260		1.2
ESPP		3,428		1.3
Total unrecognized stock-based compensation	$	122,511

(1)

The Performance Vesting Condition occurred upon the effectiveness of the registration statement for the Company's IPO, which was September 25, 2018. The remaining unrecognized stock-based compensation expense is recognized on an accelerated basis over the weighted-average remaining requisite service period.

In the United States, the Company offers its employees a defined contribution plan that qualifies as a deferred salary arrangement under Section 401 of the U.S. Internal Revenue Code (“401(k) Plan”). Under the 401(k) Plan, participating employees may defer a portion of their pretax earnings not to exceed the maximum amount allowed by the Internal Revenue Service. The Company currently provides a matching contribution of 25% of deferrals for eligible employees. Compensation expense for the Company's matching contributions was $0.7 million and $2.3 million during the three and nine months ended September 30, 2019, respectively, and $0.5 million and $1.8 million during the three and nine months ended September 30, 2018, respectively.