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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 10-Q
__________________
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 2020
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from _____ to _____
Commission file number 001-38600
__________________
TENABLE HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
__________________
Delaware 47-5580846
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
7021 Columbia Gateway Drive, Suite 500, Columbia, Maryland, 21046
(Address of principal executive offices, including zip code)
(410) 872-0555
(Registrant’s telephone number, including area code)
__________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareTENBThe Nasdaq Stock Market LLC
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes         No     
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes       No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer
Non-accelerated filer  
Emerging growth company Smaller reporting company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes         No   
The number of shares of the Registrant's common stock outstanding as of October 23, 2020 was 103,115,371.



TENABLE HOLDINGS, INC.
TABLE OF CONTENTS
Page
 

2

Table of Contents
PART I. FINANCIAL INFORMATION
Item 1.        Financial Statements
TENABLE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
September 30, 2020December 31, 2019
(in thousands, except per share data)(unaudited)
Assets
Current assets:
Cash and cash equivalents$141,387 $74,363 
Short-term investments
127,720 137,904 
Accounts receivable (net of allowance for doubtful accounts of $314 and $764 at September 30, 2020 and December 31, 2019, respectively)
87,502 94,827 
Deferred commissions30,131 28,499 
Prepaid expenses and other current assets34,236 27,369 
Total current assets 420,976 362,962 
Property and equipment, net 39,960 26,847 
Deferred commissions (net of current portion)41,753 43,766 
Operating lease right-of-use assets41,430 42,847 
Acquired intangible assets, net13,771 15,508 
Goodwill54,138 54,138 
Other assets 11,807 12,544 
Total assets $623,835 $558,612 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses$6,248 $10,168 
Accrued compensation28,244 36,634 
Deferred revenue296,360 274,348 
Operating lease liabilities6,312 5,209 
Other current liabilities1,126 1,284 
Total current liabilities 338,290 327,643 
Deferred revenue (net of current portion) 93,842 88,779 
Operating lease liabilities (net of current portion)55,645 40,663 
Other liabilities 4,931 2,622 
Total liabilities 492,708 459,707 
Stockholders’ equity:
Common stock (par value: $0.01; 500,000 shares authorized; 102,755 and 98,587 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively)
1,028 986 
Additional paid-in capital735,961 662,990 
Accumulated other comprehensive income54 50 
Accumulated deficit(605,916)(565,121)
Total stockholders’ equity131,127 98,905 
Total liabilities and stockholders’ equity$623,835 $558,612 
The accompanying notes are an integral part of these consolidated financial statements.
3

Table of Contents
TENABLE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share data)2020201920202019
Revenue$112,282 $91,852 $322,139 $257,537 
Cost of revenue19,394 15,245 57,237 42,389 
Gross profit92,888 76,607 264,902 215,148 
Operating expenses:
Sales and marketing53,045 56,699 168,343 165,403 
Research and development25,128 20,763 77,269 64,396 
General and administrative18,180 17,472 54,992 48,595 
Total operating expenses96,353 94,934 300,604 278,394 
Loss from operations(3,465)(18,327)(35,702)(63,246)
Interest (expense) income, net(12)1,527 1,177 4,677 
Other expense, net(561)(240)(1,819)(576)
Loss before income taxes(4,038)(17,040)(36,344)(59,145)
Provision for income taxes1,820 600 4,451 1,563 
Net loss$(5,858)$(17,640)$(40,795)$(60,708)
Net loss per share, basic and diluted
$(0.06)$(0.18)$(0.41)$(0.64)
Weighted-average shares used to compute net loss per share, basic and diluted
101,736 96,709 100,272 95,433 
The accompanying notes are an integral part of these consolidated financial statements.
4

Table of Contents
TENABLE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2020201920202019
Net loss$(5,858)$(17,640)$(40,795)$(60,708)
Other comprehensive (loss) income, net of tax:
Unrealized (losses) gains on available-for-sale securities(95)(20)4 60 
Other comprehensive (loss) income(95)(20)4 60 
Comprehensive loss$(5,953)$(17,660)$(40,791)$(60,648)
The accompanying notes are an integral part of these consolidated financial statements.

5

Table of Contents
TENABLE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income
Total
Stockholders’
Equity
Common StockAccumulated Deficit
(in thousands)SharesAmount
Balance at June 30, 2020101,127 $1,011 $710,066 $149 $(600,058)$111,168 
Exercise of stock options
772 8 4,800 — — 4,808 
Vesting of restricted stock units566 6 (6)— —  
Issuance of common stock under employee stock purchase plan290 3 5,730 — — 5,733 
Stock-based compensation— — 15,371 — — 15,371 
Other comprehensive loss— — — (95)— (95)
Net loss— — — — (5,858)(5,858)
Balance at September 30, 2020102,755 $1,028 $735,961 $54 $(605,916)$131,127 
Balance at December 31, 201998,587 $986 $662,990 $50 $(565,121)$98,905 
Exercise of stock options2,366 24 15,758 — — 15,782 
Vesting of restricted stock units1,134 11 (11)— —  
Issuance of common stock under employee stock purchase plan668 7 13,033 — — 13,040 
Stock-based compensation— — 44,191 — — 44,191 
Other comprehensive income— — — 4 — 4 
Net loss— — — — (40,795)(40,795)
Balance at September 30, 2020102,755 $1,028 $735,961 $54 $(605,916)$131,127 
Balance at June 30, 201996,808 $968 $629,087 $80 $(509,176)$120,959 
Exercise of stock options
383 4 2,717 — — 2,721 
Vesting of restricted stock units431 5 (5)— —  
Issuance of common stock under employee stock purchase plan338 3 6,547 — — 6,550 
Stock-based compensation— — 10,618 — — 10,618 
Other comprehensive loss— — — (20)— (20)
Net loss— — — — (17,640)(17,640)
Balance at September 30, 201997,960 $980 $648,964 $60 $(526,816)$123,188 
Balance at December 31, 201893,126 $931 $586,940 $ $(466,108)$121,763 
Exercise of stock options3,625 36 15,412 — — 15,448 
Vesting of restricted stock units432 5 (5)— —  
Issuance of common stock under employee stock purchase plan777 8 15,121 — — 15,129 
Stock-based compensation— — 31,496 — — 31,496 
Other comprehensive income— — — 60 — 60 
Net loss— — — — (60,708)(60,708)
Balance at September 30, 201997,960 $980 $648,964 $60 $(526,816)$123,188 
The accompanying notes are an integral part of these consolidated financial statements.
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TENABLE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
(in thousands)20202019
Cash flows from operating activities:
Net loss$(40,795)$(60,708)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization7,980 4,604 
Stock-based compensation44,001 31,191 
Other1,009 (787)
Changes in operating assets and liabilities:
Accounts receivable7,774 (13,309)
Prepaid expenses and other current assets(6,690)820 
Deferred commissions381 (5,089)
Other assets17,691 (2,386)
Accounts payable and accrued expenses(3,873)3,892 
Accrued compensation(8,390)(5,350)
Deferred revenue27,075 39,472 
Other current and noncurrent liabilities135 (22)
Net cash provided by (used in) operating activities46,298 (7,672)
Cash flows from investing activities:
Purchases of property and equipment(19,073)(10,262)
Purchases of short-term investments(157,557)(179,703)
Sales and maturities of short-term investments168,175 174,485 
Net cash used in investing activities(8,455)(15,480)
Cash flows from financing activities:
Proceeds from loan agreement2,000  
Principal payments under finance lease obligations(11)(12)
Credit facility issuance costs(333) 
Proceeds from stock issued in connection with the employee stock purchase plan13,040 15,129 
Proceeds from the exercise of stock options15,782 15,448 
Net cash provided by financing activities30,478 30,565 
Effect of exchange rate changes on cash and cash equivalents and restricted cash(1,359)(1,226)
Net increase in cash and cash equivalents and restricted cash66,962 6,187 
Cash and cash equivalents and restricted cash at beginning of period74,665 165,378 
Cash and cash equivalents and restricted cash at end of period$141,627 $171,565 
Supplemental disclosure of cash flow information:
Cash paid for interest$254 $73 
Cash paid for income taxes4,195 1,507 
Supplemental cash flow information related to leases:
Operating cash payments for operating leases
$3,916 $3,297 
The accompanying notes are an integral part of these consolidated financial statements.
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TENABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Business and Summary of Significant Accounting Policies
Business Description
Tenable Holdings, Inc. (the “Company,” “we,” "us," or “our”) is a provider of Cyber Exposure solutions, which is a discipline for managing, measuring and comparing cybersecurity risk in the digital era. Our enterprise software platform enables broad visibility into an organization’s cyber exposure across the modern attack surface and deep insights that help organizations translate technical data into business insights to understand and reduce their cybersecurity risk.
Basis of Presentation
The accompanying consolidated financial statements include the accounts of Tenable Holdings, Inc. and our wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
The consolidated financial statements have been prepared in conformity with United States generally accepted accounting principles (“GAAP”) for interim financial information. The consolidated statements are unaudited and should be read in conjunction with the consolidated financial statements and related notes included in our 2019 Annual Report on Form 10-K ("10-K") filed with the Securities and Exchange Commission on February 28, 2020. The consolidated financial statements have been prepared on a basis consistent with the audited annual consolidated financial statements included in the 10-K and, in the opinion of management, include all adjustments of a normal recurring nature necessary to fairly state our financial position, our results of operations, and cash flows.
The results for the nine months ended September 30, 2020 are not necessarily indicative of the operating results expected for the year ending December 31, 2020 or any other future period.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. These estimates include, but are not limited to, the determination of the estimated economic life of perpetual licenses for revenue recognition, the estimated period of benefit for deferred commissions, the useful lives of long-lived assets, the fair value of acquired intangible assets, the valuation of stock-based compensation, including the estimated underlying fair value of our common stock prior to our IPO, the incremental borrowing rate for operating leases, and the valuation of deferred tax assets. We base these estimates on historical experience and on various other assumptions that we believe to be reasonable. Actual results could differ significantly from these estimates.
Significant Accounting Policies
Our significant accounting policies are described in our 10-K. During the nine months ended September 30, 2020, there were no material changes to our significant accounting policies other than those described below.
Recently Adopted Accounting Pronouncements
We adopted Accounting Standards Update ("ASU") No. 2016-13 — Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, effective January 1, 2020 using the modified retrospective approach. The adoption of this guidance did not have a material impact on our condensed consolidated financial statements. The new standard replaces the previous incurred loss impairment methodology with a methodology that reflects current expected credit losses for financial assets, including trade receivables, which are not measured at fair value, through net income. Under the new standard, our allowance for doubtful accounts reflects our best estimate of expected future credit losses based on various factors, including our historical collection experience, age of accounts receivable balances, current conditions, reasonable and supportable forecasts of future economic conditions, as well as
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other factors that may impact our ability to collect our accounts receivable. However, given the uncertainty caused by the COVID-19 pandemic and other factors, these estimates may change and future credit losses may differ from our estimates. Additionally, the new standard requires us to evaluate impairments of available-for-sale debt securities due to credit-related and non-credit-related factors, including market risk, and if it is more-likely-than-not that we would have to sell the security before the recovery of the amortized cost basis. Identified credit-related impairments would be recognized as a charge in the statement of operations.
2. Revenue Recognition
Disaggregation of Revenue
The following table presents a summary of revenue:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2020201920202019
Subscription revenue$96,792 $75,503 $275,192 $209,610 
Perpetual license and maintenance revenue12,448 13,797 38,046 40,877 
Professional services and other revenue3,042 2,552 8,901 7,050 
Revenue$112,282 $91,852 $322,139 $257,537 
Concentrations
We sell and market our products and services through our field sales force that works closely with our channel partners, which includes a network of distributors and resellers, in developing sales opportunities. We use a two-tiered channel model whereby we sell our products and services to our distributors, which in turn sell to resellers, which then sell to end-users. We derived 92%, 91%, 91% and 90% of revenue through our channel network in the three months ended September 30, 2020 and 2019 and the nine months ended September 30, 2020 and 2019, respectively. One of our distributors accounted for 43% of revenue in each of the three and nine months ended September 30, 2020 and 2019. That same distributor accounted for 42% and 40% of accounts receivable at September 30, 2020 and December 31, 2019, respectively.
Contract Balances
We generally bill our customers in advance and accounts receivable are recorded when we have the right to invoice the customer. Contract liabilities consist of deferred revenue and include customer billings and payments received in advance of performance under the contract. In the three months ended September 30, 2020 and 2019 and the nine months ended September 30, 2020 and 2019, we recognized revenue of $102.8 million, $84.6 million, $235.2 million and $184.3 million, respectively, that was included in the deferred revenue balance at the beginning of each of the respective periods.
Remaining Performance Obligations
At September 30, 2020, the future estimated revenue related to unsatisfied performance obligations was $399.7 million, of which approximately 76% is expected to be recognized as revenue over the succeeding twelve months, and the remainder is expected to be recognized over the four years thereafter.
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Deferred Commissions
The following summarizes the activity of deferred incremental costs of obtaining a contract:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2020201920202019
Beginning balance$71,768 $61,866 $72,265 $59,434 
Capitalization of contract acquisition costs8,301 9,612 23,314 24,846 
Amortization of deferred contract acquisition costs(8,185)(6,955)(23,695)(19,757)
Ending balance$71,884 $64,523 $71,884 $64,523 
3. Cash and Cash Equivalents and Short-Term Investments
The following tables summarize the amortized cost, unrealized gain and loss and estimated fair value of cash equivalents and short-term investments:
September 30, 2020
(in thousands)Amortized CostUnrealized GainUnrealized LossEstimated Fair Value
Cash equivalents:
Money market funds$51,409 $— $— $51,409 
Total cash equivalents$51,409 $— $— $51,409 
Short-term investments:
Commercial paper$70,641 $ $ $70,641 
Corporate bonds11,741 28  11,769 
U.S. Treasury and agency obligations45,284 26  45,310 
Total short-term investments$127,666 $54 $ $127,720 
December 31, 2019
(in thousands)Amortized CostUnrealized GainUnrealized LossEstimated Fair Value
Cash equivalents:
Money market funds$13,588 $— $— $13,588 
Commercial paper8,987 — — 8,987 
Total cash equivalents$22,575 $— $— $22,575 
Short-term investments:
Commercial paper$61,371 $ $ $61,371 
Corporate bonds23,856 14 (1)23,869 
U.S. Treasury and agency obligations52,627 38 (1)52,664 
Total short-term investments$137,854 $52 $(2)$137,904 
At September 30, 2020, all of our short-term investments had maturities within the next twelve months.
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4. Fair Value Measurements
We measure certain financial instruments at fair value using a fair value hierarchy. In the hierarchy, assets are classified based on the lowest level inputs used in valuation into the following categories:
Level 1 — Quoted prices in active markets for identical assets and liabilities;
Level 2 — Observable inputs including quoted market prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in inactive markets, or inputs that are corroborated by observable market data; and
Level 3 — Unobservable inputs.
The following tables summarize assets that are measured at fair value on a recurring basis:
September 30, 2020
(in thousands)Level 1Level 2Level 3Total
Cash and cash equivalents
Money market funds$51,409 $ $ $51,409 
$51,409 $ $ $51,409 
Short-term investments
Commercial paper$ $70,641 $ $70,641 
Corporate bonds 11,769  11,769 
U.S. Treasury and agency obligations 45,310  45,310 
$ $127,720 $ $127,720 
December 31, 2019
(in thousands)Level 1Level 2Level 3Total
Cash and cash equivalents
Money market funds$13,588 $ $ $13,588 
Commercial paper 8,987  8,987 
$13,588 $8,987 $ $22,575 
Short-term investments
Commercial paper$ $61,371 $ $61,371 
Corporate bonds 23,869  23,869 
U.S. Treasury and agency obligations 52,664  52,664 
$ $137,904 $ $137,904 
We did not have any liabilities measured and recorded at fair value at September 30, 2020 or December 31, 2019.
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5. Property and Equipment, Net
Property and equipment, net consisted of the following:
(in thousands)
September 30, 2020December 31, 2019
Computer software and equipment
$23,327$21,234
Furniture and fixtures
7,0234,504
Leasehold improvements
29,95116,953
Right-of-use assets under finance leases
1,5711,866
Total
61,87244,557
Less: accumulated depreciation and amortization
(21,912)(17,710)
Property and equipment, net
$39,960$26,847
Depreciation and amortization related to property and equipment was $2.1 million, $1.4 million, $6.1 million and $4.2 million in the three months ended September 30, 2020 and 2019 and the nine months ended September 30, 2020 and 2019, respectively.
6. Goodwill and Acquired Intangible Assets
On December 2, 2019, we acquired Indegy, Ltd and recorded $53.9 million of goodwill and $15.7 million of intangible assets. We have not yet finalized the allocation of the purchase price, which may change as additional information becomes available related to any working capital adjustment and income taxes.
Acquired intangible assets subject to amortization are as follows:
September 30, 2020December 31, 2019
(in thousands)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
Acquired technology$17,325 $(3,670)$13,655 $17,325 $(2,009)$15,316 
Trade name200 (84)116 200 (8)192 
$17,525 $(3,754)$13,771 $17,525 $(2,017)$15,508 
Amortization of acquired intangible assets was $0.5 million, $0.1 million, $1.7 million and $0.4 million in the three months ended September 30, 2020 and 2019 and the nine months ended September 30, 2020 and 2019, respectively.
At September 30, 2020, estimated future amortization of acquired intangible assets is as follows:
(in thousands)
Year ending December 31,
2020(1)
$577 
2021
2,306 
2022
2,214 
2023
2,214 
2024
2,214 
Thereafter
4,246 
Total
$13,771 
_______________
(1)    Represents the three months ending December 31, 2020.
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7. Leases
We have operating leases for office facilities and finance leases for computer and office equipment. The components of lease expense were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)
2020201920202019
Operating lease cost
$2,231 $1,763 $7,042 $3,844 
Finance lease cost
Amortization of ROU assets
$49 $157 $235 $465 
Interest on lease liabilities
2 2 5 5 
Total finance lease cost
$51 $159 $240 $470 
Rent expense for short-term leases in the three and nine months ended September 30, 2020 and 2019 was not material.
Supplemental information related to leases was as follows:
September 30, 2020December 31, 2019
Operating leases
Weighted average remaining lease term
10.2 years10.0 years
Weighted average discount rate
5.6%5.8%
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)
2020201920202019
ROU assets obtained in exchange for lease obligations
Operating leases
$2,484 $32,292 $3,188 $34,490 
Finance leases
   11 
During the three months ended September 30, 2020, we determined that we would not execute our option to terminate one of our operating leases that we previously assumed would be terminated in 2021. This resulted in recognizing $2.5 million of right-of use assets, with an offsetting increase to the lease liability.
In the three and nine months ended September 30, 2020, we received proceeds from lease incentives of $5.6 million and $14.2 million, respectively. The proceeds from lease incentives received are included with the change in the right-of-use assets and lease liabilities under the Other assets caption in the operating activities section of the statement of cash flows.
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Maturities of operating lease liabilities at September 30, 2020 were as follows:
(in thousands)
Year ending December 31,
2020(1)
$1,211 
2021
7,612 
2022
7,945 
2023
7,632 
2024
7,786 
Thereafter
51,879 
Total lease payments
84,065 
Less: Imputed interest
(22,108)
Total
$61,957 
_______________
(1)    Represents the three months ending December 31, 2020.
8. Debt
In July 2020, we entered into a new $45.0 million senior secured credit facility (“2020 Credit Facility”) with Silicon Valley Bank in connection with the expiration of our $25.0 million revolving credit facility ("2017 Credit Facility"). The 2020 Credit Facility bears interest at either LIBOR plus 2%, with a 1% LIBOR floor, or the base rate plus 1%, and terminates on July 24, 2022. A commitment fee of 0.35% per annum is payable quarterly in arrears based on the unused portion. The 2020 Credit Facility includes a $45.0 million uncommitted expansion, including a $10.0 million sublimit for the issuance of letters of credit and a swingline sub-facility of up to $10.0 million, and has a financial covenant requiring a minimum consolidated quick ratio of at least 1.5:1.0 on the last day of each quarter.
In the nine months ended September 30, 2020, there were no amounts outstanding under the 2020 Credit Facility or, prior to its expiration, the 2017 Credit Facility. At September 30, 2020, we were in compliance with the financial covenant and our borrowing capacity was reduced by $5.5 million related to standby letters of credit.
9. Stock-Based Compensation
Under the evergreen provision in our 2018 Equity Incentive Plan ("2018 Plan"), in January 2020 we reserved an additional 4,929,361 shares of our common stock for issuance. At September 30, 2020, there were 17,836,584 shares available for grant under the 2018 Plan.
Stock-based compensation expense included in the consolidated statements of operations was as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)
2020201920202019
Cost of revenue
$826$694$2,403$2,088
Sales and marketing
4,8063,52114,67711,102
Research and development
3,9532,12410,7946,595
General and administrative
5,7154,16016,12711,406
Total stock-based compensation expense
$15,300$10,499$44,001$31,191
At September 30, 2020, the unrecognized stock-based compensation expense related to unvested restricted stock units was $115.3 million, which is expected to be recognized over an estimated remaining weighted average period of 3.0 years.
At September 30, 2020, the unrecognized stock-based compensation expense related to outstanding stock options was $13.3 million, which is expected to be recognized over an estimated remaining weighted average period of 1.5 years.
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At September 30, 2020, the unrecognized stock-based compensation expense related to unvested awards of restricted stock was $0.4 million, which is expected to be recognized over an estimated remaining period of 0.3 years.
Restricted Stock and Restricted Stock Units
A summary of our restricted stock and restricted stock units activity is presented below:
Restricted StockRestricted Stock Units
(in thousands, except for per share data)
Number
of Shares
Weighted
Average
Grant Date Fair Value
Number
of Shares
Weighted
Average
Grant Date Fair Value
Unvested balance at December 31, 2019495$4.25 2,894$26.34 
Granted
 3,45328.01 
Vested
(297)4.25 (1,134)24.78 
Forfeited
 (424)26.70 
Unvested balance at September 30, 20201984.25 4,78927.88 
Stock Options
A summary of our stock option activity is presented below:
(in thousands, except for exercise prices and years)
Number
of Shares
Weighted
Average
Exercise Price
Weighted-Average Remaining Contractual Term (in years)
Aggregate Intrinsic Value
Outstanding at December 31, 201912,939$8.38 7.1$201,608
Granted
 
Exercised
(2,366)6.67 55,734
Forfeited/canceled
(541)10.80 
Outstanding at September 30, 202010,0328.65 6.6291,925
Exercisable at September 30, 20206,2816.62 6.3195,518
At September 30, 2020, there were 10.0 million stock options that were vested and expected to vest.
2018 Employee Stock Purchase Plan
Under the evergreen provision in our 2018 Employee Stock Purchase Plan ("2018 ESPP"), in January 2020 we reserved an additional 1,478,808 shares of our common stock for issuance. At September 30, 2020, there were 5,431,176 shares reserved for issuance under the 2018 ESPP.
In the nine months ended September 30, 2020, employees purchased 667,719 shares of our common stock at a weighted average price of $19.53 per share, resulting in $13.0 million of cash proceeds.
At September 30, 2020, there was $2.7 million of employee contributions to the 2018 ESPP included in accrued compensation. At September 30, 2020, the unrecognized stock-based compensation expense related to our 2018 ESPP was $5.9 million, which is expected to be recognized over the remaining weighted average period of 0.7 years.
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The fair value of the 2018 ESPP purchase rights was estimated on the offering or modification dates using a Black-Scholes option-pricing model and the following assumptions:
Nine Months Ended September 30,
20202019
Expected term (in years)
0.52.0
0.52.0
Expected volatility
41.6% — 60.1%
34.4% — 44.6%
Risk-free interest rate
0.1% — 0.9%
1.5% — 2.5%
Expected dividend yield
10. Net Loss Per Share