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Stock-Based Compensation
 6 Months Ended
Jun. 30, 2022
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation
11. Stock-Based Compensation

Equity Incentive Plans
In May 2017, our Board of Directors adopted, and our stockholders approved, the 2017 Equity Incentive Plan (the “2017 Plan”), which became effective as of the date of the final prospectus for our initial public offering. The 2017 Plan provides for the grant of incentive stock options to employees and for the grant of nonstatutory stock options, restricted stock awards, RSUs, stock appreciation rights, performance-based stock awards, and other forms of equity compensation to employees, including officers, non-employee directors, and consultants. We initially reserved 6,421,442 shares of Class A common stock for issuance under the 2017 Plan, which included 421,442 shares that remained available for issuance under our 2007 Stock Option Plan (the “2007 Plan”) at the time the 2017 Plan became effective. The number of shares reserved under the 2017 Plan increases for any shares subject to outstanding awards originally granted under the 2007 Plan that expire or are forfeited prior to exercise. As a result of the adoption of the 2017 Plan, no further grants may be made under the 2007 Plan. As of June 30, 2022, there were 7,195,029 shares of Class A common stock reserved for issuance under the 2017 Plan, of which 2,964,435 were available to be issued.

Stock Options

We estimate the fair value of stock options containing only a service condition using the Black-Scholes option pricing model, which requires the use of subjective assumptions, including the expected term of the option, the current price of the underlying stock, the expected stock price volatility, expected dividend yield, and the risk-free interest rate for the expected term of the option. The expected term represents the period of time the stock options are expected to be outstanding. Due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected term of the stock options, we use the simplified method to estimate the expected term for our stock options. Under the simplified method, the expected term of an option is presumed to be the mid-point between the vesting date and the end of the contractual term. Expected volatility is based on historical volatilities for publicly traded stock of comparable companies over the estimated expected term of the stock options. We assume no dividend yield because dividends are not expected to be paid in the near future, which is consistent with our history of not paying dividends.

In June 2022, our Board of Directors granted a stock option to purchase 700,000 shares of our Class A common stock to our Chief Executive Officer (the “2022 CEO Grant”) under the 2017 Plan with an exercise price of $50.63 per share. The 2022 CEO Grant is eligible to vest based on the achievement of various stock price appreciation targets of our Class A common stock. Specifically, the 2022 CEO Grant vests in four installments of 25% each if the average closing price per share for a 365 day calendar period equals each of $175, $200, $225, and $250, respectively (the “Vesting Price Threshold”), prior to June 7, 2030. The option also vests if the Company engages in a Corporate Transaction, as defined in the Plan, in which the Company’s Class A common stock is valued at or above the Vesting Price Threshold. The fair value of the 2022 CEO Grant was determined using a Monte Carlo simulation. The fair value of the award at the grant date was $18.8 million and is being amortized over derived service periods ranging from 3.4 to 4.1 years.
The only stock option awarded during the three and six months ended June 30, 2022 and 2021 was the 2022 CEO Grant. The following table summarizes the assumptions used to estimate the fair value of the 2022 CEO stock option grant:

Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Risk-free interest rate3.01%*3.01%*
Expected term (in years) **4.1****
Expected volatility70%*70%*
Expected dividend yield—%*—%*
* Not applicable because no stock options were granted during the period.
** Each Vesting Price Threshold for the 2022 CEO grant has a unique expected term ranging from 3.4 to 4.1 years.

The following table summarizes stock option activity for the six months ended June 30, 2022:

Number of SharesWeighted Average Exercise PriceWeighted Average Remaining Contractual Term (Years)Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2021
2,953,356 $15.16 4.0$147,812 
Granted700,000 50.63 
Exercised(877,788)28.52 30,644 
Expired(6,780)3.63 
Forfeited(10,180)12.18 
Outstanding at June 30, 2022
2,758,608 $19.95 5.5$77,903 
Exercisable at June 30, 2022
2,057,108 $9.51 4.1$77,863 

The total fair value of stock options that vested during the six months ended June 30, 2022 and 2021 was $0.8 million and $10.5 million, respectively. As of June 30, 2022, the total compensation cost related to unvested stock options not yet recognized, which relates exclusively to the 2022 CEO Grant, was $18.6 million and will be recognized over a weighted average period of 3.7 years.

Restricted Stock Units

The following table summarizes RSU activity for the six months ended June 30, 2022:

Number of SharesWeighted Average Grant Date Fair Value
Non-vested and outstanding at December 31, 2021
1,209,529 $70.99 
Granted394,218 53.66 
Vested(99,672)68.03 
Forfeited(125,791)76.23 
Non-vested and outstanding at June 30, 2022
1,378,284 65.78 

As of June 30, 2022, total unrecognized compensation cost related to unvested RSUs was approximately $72.6 million, which will be recognized over a weighted average period of 1.8 years.

Stock-Based Compensation Expense
The following table summarizes the components of our stock-based compensation expense by instrument type for the three and six months ended June 30, 2022 and 2021 (in thousands):

Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
RSUs$8,747 $4,403 $15,533 $8,408 
Stock options244 40 245 3,773 
Common stock awards to the Board of Directors157 155 313 311 
Total stock-based compensation expense$9,148 $4,598 $16,091 $12,492 

Stock-based compensation expense for RSUs, stock options, and issuances of common stock to the Board of Directors is included in the following line items in the accompanying consolidated statements of operations for the three and six months ended June 30, 2022 and 2021 (in thousands):

Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Cost of revenue
Subscriptions$249 $295 $428 $592 
Professional services1,330 865 2,387 1,506 
Operating expenses
Sales and marketing2,266 1,197 4,054 2,305 
Research and development3,063 1,069 5,377 2,084 
General and administrative2,240 1,172 3,845 6,005 
Total stock-based compensation expense$9,148 $4,598 $16,091 $12,492