LOGM 2017 Annual Report

The Company recognizes stock compensation expense on a straight-line basis over the requisite service period of the restricted stock unit, which is generally three years. Compensation cost for TSR-based restricted stock units is recognized on a straight-line basis over the requisite service period and is recognized regardless of the actual number of awards that are earned based on the market condition. The fair value of the TSR-based restricted stock units granted in 2016 and 2017 was determined using a Monte Carlo simulation model including assumptions used (but not limited to) a risk-free interest rate, an expected vola- tility and an expected dividend yield as follows: February 2016 Grant May 2016 Grant June 2017 Grant Risk-free interest rate . . . . . . . . . . . . . . . . . . . 0.89% 1.02% 1.43% Volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40% 37% 36% Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . — — 0.88% The following table summarizes restricted stock unit activity, including performance-based and market-based units (shares in thousands): Number of shares Underlying Restricted Stock Units Weighted Average Grant Date Fair Value Unvested as of January 1, 2017 . . . . . . . . . . . . . . . . . . . . . . . 1,445 $ 62.23 Restricted stock units granted . . . . . . . . . . . . . . . . . . . . . . . 884 108.71 Restricted stock units issued for Merger . . . . . . . . . . . . . . 446 108.10 Restricted stock units earned (1) . . . . . . . . . . . . . . . . . . . . . . 66 Restricted stock units vested . . . . . . . . . . . . . . . . . . . . . . . . (917) 72.23 Restricted stock units forfeited . . . . . . . . . . . . . . . . . . . . . . (235) 82.84 Unvested as of December 31, 2017 . . . . . . . . . . . . . . . . . . . . 1,689 $ 90.91 (1) In May 2017, a total of 65,500 target TSR-based restricted stock units, which were awarded in 2014 and 2015, vested at 200% of the target TSR-based restricted stock units granted (an additional 65,500 were earned and vested). These TSR-based restricted stock units were measured against the Russell 2000 Index for that same period. The Company recognized stock-based compensation expense within the accompanying consolidated statements of operations as summarized in the following table (in thousands): Years Ended December 31, 2015 2016 2017 Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,560 $ 2,289 $ 5,222 Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,188 6,201 22,103 Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,090 16,181 16,155 General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,661 13,679 23,812 Total stock-based compensation expense . . . . . . . . . . . . . . . . . . . $26,499 $38,350 $67,292 As of December 31, 2017, there was approximately $103.4 million of total unrecognized stock-based com- pensation cost related to unvested stock awards which are expected to be recognized over a weighted average period of 1.9 years. 11. Commitments and Contingencies Operating Leases — The Company has operating lease agreements for offices in the United States, Hungary, Germany, Australia, the United Kingdom, Ireland, Israel and India that expire at various dates through 2028. 81