Stock-Based Compensation

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

10. Stock-Based Compensation

Compensation expense related to stock-based awards is accounted for using the estimated fair value of the award on the grant date. We calculate the fair value of stock options containing only a service condition using the Black-Scholes option pricing model. The fair value of restricted stock units (“RSUs”) is based on the closing market price of our common stock on the Nasdaq Global Market on the date of grant. For service-based awards such as RSUs, stock-based compensation expense is recognized on a straight-line basis over the requisite service period.

In June 2022, our Board of Directors granted to our Chief Executive Officer (“CEO”) a stock option award that is eligible to vest based on the achievement of various stock price appreciation targets. This option grant (the “2022 CEO option grant”) is our only outstanding stock-based award that vests based on the achievement of market conditions. For awards with market-based conditions, compensation expense is measured using a Monte Carlo simulation, and expense is recognized using the accelerated attribution method over the derived service period based on the expected market performance as of the grant date.

We account for forfeitures of our stock-based awards as they occur rather than estimating expected forfeitures. As of March 31, 2024, the total compensation cost related to unvested stock options not yet recognized, which relates exclusively to the 2022 CEO option grant, was $9.7 million and will be recognized over a weighted average period of 2.0 years. Total unrecognized compensation cost related to unvested RSUs was approximately $42.6 million, which will be recognized over a weighted average period of 1.3 years.

The following table summarizes the components of our stock-based compensation expense for the three months ended March 31, 2024 and 2023 (in thousands):


	Three Months Ended March 31,
	2024		2023
Cost of revenue
Subscriptions	$	213	$	272
Professional services	1,578		1,591
Operating expenses
Sales and marketing	2,527		2,445
Research and development	3,001		3,626
General and administrative	3,287		3,122
Total stock-based compensation expense	$	10,606	$	11,056