Quarterly report pursuant to Section 13 or 15(d)

Stock-based Compensation Plans and Awards

v3.10.0.1
Stock-based Compensation Plans and Awards
 9 Months Ended
Sep. 30, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-based Compensation Plans and Awards Stock-based Compensation Plans and Awards
 
Employee Stock-Based Awards
 
Our 2011 Equity Incentive Plan (the "2011 Plan") provides for the issuance of stock options, restricted stock units and other stock-based awards to our employees. The 2011 Plan is administered by the compensation committee of our board of directors.
 
Stock options
 
We measure stock-based compensation expense for stock options at the grant date fair value of the award and recognize expense on a straight-line basis over the requisite service period, which is generally the vesting period. We estimate the fair value of stock options using the Black-Scholes option-pricing model. During the three months ended September 30, 2017 and 2018, we recorded stock-based compensation expense from stock options of approximately $0.9 million and $1.5 million. During the nine months ended September 30, 2017 and 2018, we recorded stock-based compensation expense from stock options of approximately $6.9 million and $3.6 million.

The per-share fair value of each stock option was determined on the grant date using the Black-Scholes option pricing model using the following assumptions:

 
Three months ended September 30,
 
Nine months ended September 30,
 
2017
 
2018
 
2017
 
2018
Expected life (in years)
6.25

 
N/A
 
5.93 - 6.25

 
2.05 - 6.25

Risk-free interest rate
1.97
%
 
N/A
 
1.92 - 2.18%

 
2.49 - 2.79 %

Expected volatility
61
%
 
N/A
 
61
%
 
58 - 60%

Expected dividend yield
0
%
 
N/A
 
0
%
 
0
%


Restricted stock units ("RSUs")
 
The fair value of RSUs is expensed ratably over the vesting period. RSUs typically have an initial annual cliff vest and then vest quarterly thereafter over the service period, which is generally three to four years. During the three months ended September 30, 2017 and 2018, we recorded stock-based compensation expense from RSUs of approximately $27.7 million and $26.3 million. During the nine months ended September 30, 2017 and 2018, we recorded stock-based compensation expense from RSUs of approximately $86.5 million and $76.2 million.

ESPP
 
The ESPP allows eligible employees to purchase shares of our common stock through payroll deductions of up to 15% of their eligible compensation. The ESPP provides for six-month offering periods, commencing in February and August of each year.

We estimate the fair value of shares to be issued under the ESPP on the first day of the offering period using the Black-Scholes valuation model. The inputs to the Black-Scholes option pricing model are our stock price on the first date of the offering period, the risk-free interest rate, the estimated volatility of our stock price over the term of the offering period, the expected term of the offering period and the expected dividend rate. Stock-based compensation expense related to the ESPP is recognized on a straight-line basis over the offering period. Forfeitures are recognized as they occur.
 
The following assumptions for the Black-Scholes option pricing model were used to determine the per-share fair value of shares to be granted under the ESPP:

 
Three months ended September 30,
 
Nine months ended September 30,
 
2017
 
2018
 
2017
 
2018
Expected life (in years)
0.5

 
0.5

 
0.5

 
0.5

Risk-free interest rate
0.65 - 1.13%

 
1.83 - 2.24%

 
0.44 - 1.13%

 
1.13 - 2.24%

Expected volatility
39 - 45%

 
57
%
 
39 - 52%

 
45 - 57%

Expected dividend yield
0
%
 
0
%
 
0
%
 
0
%

 
During the three months ended September 30, 2017 and 2018, we withheld $1.9 million and $1.9 million in contributions from employees and recognized $1.0 million and $0.9 million of stock-based compensation expense related to the ESPP, respectively. During the nine months ended September 30, 2017 and 2018, we withheld $8.0 million and $5.5 million in contributions from employees and recognized $2.9 million and $2.5 million of stock-based compensation expense related to the ESPP, respectively. In the three months ended September 30, 2017 and 2018, 739,922 and 855,415 shares of common stock were issued under the ESPP. In the nine months ended September 30, 2017 and 2018, 1,287,687 and 1,651,405 shares of common stock were issued under the ESPP.
 
Stock-based Compensation Expense
 
Stock-based compensation expense related to all employee and non-employee stock-based awards was as follows:
 
 
Three months ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2017
 
2018
 
2017
 
2018
 
(in thousands)
 
(in thousands)
Stock-based compensation expense
 

 
 

 
 
 
 
Cost of revenue—Other
$
803

 
$
742

 
$
2,432

 
$
2,284

Cost of revenue—Ticketing service
6

 
—

 
69

 
—

Product development
8,428

 
8,884

 
25,765

 
23,329

Sales and marketing
14,059

 
11,300

 
42,657

 
34,209

General and administrative
6,805

 
7,912

 
27,404

 
22,980

Total stock-based compensation expense
$
30,101

 
$
28,838

 
$
98,327

 
$
82,802