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Redeemable Convertible Preferred Stock, Common Stock, and Equity (Deficit) | 9 Months Ended
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Sep. 30, 2019
Equity [Abstract] |
Redeemable Convertible Preferred Stock, Common Stock, and Equity (Deficit) | Note 11 - Redeemable Convertible Preferred Stock, Common Stock, and Equity (Deficit) Redeemable Convertible Preferred Stock As of December 31, 2018, there were warrants to purchase 150,071 shares of Series E redeemable convertible preferred stock and 922,655 shares of Series G redeemable convertible preferred stock outstanding. During the first quarter of 2019, the warrant to purchase Series G redeemable convertible preferred stock was exercised in full and the fair value of the warrant was reclassified to redeemable convertible preferred stock. During the second quarter of 2019, the warrant to purchase Series E redeemable convertible preferred stock was exercised and automatically converted to shares of common stock as a result of the IPO. Upon closing of the IPO, all shares of the Company’s outstanding redeemable convertible preferred stock automatically converted into 905 million shares of common stock. The Company’s board of directors has the authority to issue up to 10 million shares of preferred stock and to determine the price, rights, preferences, privileges and restrictions, including voting rights, of those shares without any further vote or action by the stockholders. As of September 30, 2019, there was no preferred stock issued and outstanding. PayPal, Inc. (“PayPal”) Private Placement On May 16, 2019, the Company closed a private placement by PayPal, Inc. in which it issued and sold 11 million shares of its common stock at a purchase price of $45.00 per share and received aggregate proceeds of $500 million. Additionally, PayPal and the Company agreed to extend their global partnership, including a commitment to jointly explore certain commercial collaborations. Restricted Common Stock The Company has granted restricted common stock to certain continuing employees, primarily in connection with acquisitions. Vesting of this stock may be dependent on a combination of service and performance conditions that become satisfied upon the occurrence of a qualifying event. The Company has the right to repurchase shares for which the vesting conditions are not satisfied. The following table summarizes the activity related to the Company’s restricted common stock for the nine months ended September 30, 2019 (in thousands, except per share amounts):
|  | Number of Shares |  | Weighted-average Grant-Date Fair Value per Share
Unvested restricted common stock as of December 31, 2018 |  | 898 |  |  | $ | 34.81 |
Vested |  | (485 | ) |  | $ | 34.84 |
Canceled and forfeited |  | (61 | ) |  | $ | 34.57 |
Unvested restricted common stock as of September 30, 2019 |  | 352 |  |  | $ | 34.77 |
Equity Incentive Plans The Company maintains two equity incentive plans: the 2013 Equity Incentive Plan (“2013 Plan”) and the 2010 Stock Plan (“2010 Plan” and collectively, “Plans”). The 2013 Plan serves as the successor to the 2010 Plan and provides for the issuance of incentive stock options (“ISOs”), nonqualified stock options (“NSOs”), stock appreciation rights (“SARs”), restricted stock and RSUs to employees, consultants and advisors of the Company. In January 2019, the Company’s board of directors approved an amendment to the 2013 Plan to increase the number of shares of common stock reserved for issuance by 85 million shares, for a total of 293 million shares reserved. In March 2019, the Company’s board of directors adopted the 2019 Equity Incentive Plan (“2019 Plan”). The 2019 Plan was approved in April 2019 with 130 million shares of common stock reserved for future issuance. The 2019 Plan became effective on May 9, 2019 the date of the underwriting agreement between the Company and the underwriters for the IPO. The 2019 Plan is the successor to the 2013 Plan. The number of shares of the Company’s common stock available for issuance under the 2019 Plan automatically increases on January 1 of each year, for a period of not more than ten years, commencing on January 1, 2020 and ending on (and including) January 1, 2029 by the lesser of (a) 5% of the total number of the shares of common stock outstanding on December 31 of the immediately preceding calendar year, and (b) such number of shares determined by the Company’s board of directors. The Company’s 2019 Plan provides for the grant of ISOs, NSOs, SARs, restricted stock awards, RSUs, performance-based awards, and other awards (that are based in whole or in part by reference to the Company’s common stock) (collectively, “awards”). ISOs may be granted only to the Company’s employees, including the Company’s officers, and the employees of any parent or subsidiary. All other awards may be granted to the Company’s employees, including the Company’s officers, the Company’s non-employee directors and consultants, and the employees and consultants of the Company’s affiliates. Stock Option and SAR Activity A summary of stock option and SAR activity for the nine months ended September 30, 2019 is as follows (in millions, except share amounts which are reflected in thousands, per share amounts, and years):
|  | SARs Outstanding Number of SARs |  | Options Outstanding Number of Shares |  | Weighted-Average Exercise Price Per Share |  | Weighted-Average Remaining Contractual Life (in years) |  | Aggregate Intrinsic Value
As of December 31, 2018 |  | 758 |  |  | 42,936 |  |  | $ | 9.22 |  |  | 5.74 |  | $ | 1,456 |
Granted |  | 86 |  |  | 250 |  |  | $ | 43.00 |  |  |  |  |
Exercised |  | — |  |  | (1,272 | ) |  | $ | 2.55 |  |  |  |  |
Canceled and forfeited |  | (13 | ) |  | (1,382 | ) |  | $ | 33.19 |  |  |  |  |
As of September 30, 2019 |  | 831 |  |  | 40,532 |  |  | $ | 8.89 |  |  | 4.89 |  | $ | 934 |
Vested and expected to vest as of September 30, 2019 |  | 648 |  |  | 35,145 |  |  | $ | 4.58 |  |  | 4.63 |  | $ | 933 |
Exercisable as of September 30, 2019 |  | 648 |  |  | 35,145 |  |  | $ | 4.58 |  |  | 4.63 |  | $ | 933 |
RSU Activity The following table summarizes the activity related to the Company’s RSUs for the nine months ended September 30, 2019. For purposes of this table, vested RSUs represent the shares for which the service condition had been fulfilled during nine months ended September 30, 2019 (in thousands, except per share amounts):
|  | Number of Shares |  | Weighted-Average Grant-Date Fair Value per Share
Unvested and outstanding as of December 31, 2018 |  | 75,835 |  |  | $ | 37.20 |
Granted |  | 52,859 |  |  | $ | 43.67 |
Vested |  | (27,255 | ) |  | $ | 37.38 |
Canceled and forfeited |  | (10,440 | ) |  | $ | 40.40 |
Unvested and outstanding as of September 30, 2019 |  | 90,999 |  |  | $ | 42.47 |
Stock-Based Compensation Expense Stock-based compensation expense is allocated based on the cost center to which the award holder belongs. The following table summarizes total stock-based compensation expense by function for the three and nine months ended September 30, 2018 and 2019 (in millions):
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2018 |  | 2019 |  | 2018 |  | 2019
Operations and support |  | $ | 4 |  |  | $ | 26 |  |  | $ | 11 |  |  | $ | 431 |
Sales and marketing |  | 2 |  |  | 16 |  |  | 6 |  |  | 229 |
Research and development |  | 49 |  |  | 262 |  |  | 60 |  |  | 2,822 |
General and administrative |  | 9 |  |  | 97 |  |  | 70 |  |  | 871 |
Total |  | $ | 64 |  |  | $ | 401 |  |  | $ | 147 |  |  | $ | 4,353 |
During the nine months ended September 30, 2018, the Company modified the terms of stock-based awards for certain employees upon their termination or change in employment status. The Company recorded incremental stock-based compensation cost in relation to the modification of stock-based awards of $52 million during the nine months ended September 30, 2018. As of September 30, 2019, there was $2.4 billion of unamortized compensation costs related to all unvested awards. The unamortized compensation costs are expected to be recognized over a weighted-average period of approximately 2.4 years. The Company has granted RSAs, RSUs, SARs, and stock options that vest only upon the satisfaction of both time-based service and performance-based conditions. Through May 9, 2019, no stock-based compensation expense had been recognized for such awards with a performance condition based on the occurrence of a qualifying event (such as an IPO), as such qualifying event was not probable. Upon the Company’s IPO, the Company recognized $3.6 billion of stock-based compensation expense related to such awards. To meet the related tax withholding requirements, the Company withheld 29 million of the 76 million shares of common stock issued. The 29 million shares of common stock withheld for taxes were returned to the shares reserved for future issuance under the Company’s 2019 Plan. Based on the IPO public offering price of $45.00 per share, the tax withholding obligation was $1.3 billion. For additional information related to the Company’s IPO, refer to Note 1 - Basis of Presentation and Summary of Significant Accounting Policies. The tax benefits recognized in income for stock-based compensation arrangements were not material during the three and nine months ended September 30, 2018 and 2019, respectively. 2019 Employee Stock Purchase Plan In March 2019, the Company’s board of directors adopted the Company’s Employee Stock Purchase Plan (“ESPP”), and in April 2019, the Company’s stockholders approved its ESPP. The ESPP became effective on May 9, 2019, the date of the underwriting agreement between the Company and the underwriters for the IPO. There are 25 million shares of common stock reserved for issuance under the ESPP. The number of shares of the Company’s common stock available for issuance under the ESPP automatically increases on January 1 of each year, beginning in 2020 and continuing through 2029, by the lesser of (a) 1.0% of the total number of shares of common stock outstanding on December 31 of the immediately preceding calendar year, and (b) 25,000,000 shares. However, the Company’s board of directors or compensation committee may reduce the amount of the increase in any particular year. The stock-based compensation expense recognized for the ESPP was not material during the three and nine months ended September 30, 2019.

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- Definition The entire disclosure for shareholders' equity and share-based payment arrangement. Includes, but is not limited to, disclosure of policy and terms of share-based payment arrangement, deferred compensation arrangement, and employee stock purchase plan (ESPP). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + Details
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