Stock-Based Compensation Expense

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

12. Stock-Based Compensation Expense

The following two tables show stock-based compensation expense by award type and where the stock-based compensation expense is recorded in the Company’s consolidated statements of operations:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in thousands)				(in thousands)
Options	$	2,958	$	2,551	$	8,798	$	7,692
RSUs		96,638		66,520		287,575		182,773
PSUs		3,866		—		9,882		—
Employee stock purchase plan		4,044		3,142		12,290		8,616
Total stock-based compensation expense	$	107,506	$	72,213	$	318,545	$	199,081

In the first quarter of 2023, the Compensation Committee of the Board of Directors approved the grant of performance-based restricted stock units (“PSUs”) that are eligible to be earned upon the achievement of a pre-determined revenue growth metric. To the extent earned, 33% of the PSUs will vest in the first quarter of 2024 and the remaining 67% will vest in eight equal quarterly installments thereafter. No PSUs will be earned if the pre-determined revenue growth metric is not achieved, and the overall number of shares that may be earned shall not exceed 150% of the target award. Stock-based compensation costs for PSUs are recognized using the graded vesting attribution method over the requisite service period.

Effect of stock-based compensation expense on income by line item:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in thousands)				(in thousands)
Cost of revenue, subscription	$	3,157	$	2,311	$	9,110	$	6,516
Cost of revenue, professional services and other		1,201		1,168		3,748		3,251
Research and development		49,460		28,585		146,845		77,269
Sales and marketing		34,439		28,060		103,233		77,113
General and administrative		19,249		12,089		55,609		34,932
Total stock-based compensation expense	$	107,506	$	72,213	$	318,545	$	199,081

Capitalized software development costs excluded from stock-based compensation expense is $6.9 million for the three months ended September 30, 2023, $21.0 million for the nine months ended September 30, 2023, $3.4 million for the three months ended

September 30, 2022, and $9.0 million for the nine months ended September 30, 2022. Also excluded in the nine months ended September 30, 2023 is $1.0 million of stock-based compensation expense incurred in connection with the Restructuring Plan. See Note 15 for more details.