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Equity Incentive Plans | 12 Months Ended
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Jun. 30, 2022
Share-Based Payment Arrangement [Abstract] |
Equity Incentive Plans | Equity Incentive Plans 2012 Stock Plan Under our Amended and Restated 2012 Stock Plan (the “Plan”), we may grant incentive and nonqualified stock options, restricted stock, and restricted stock units (“RSUs”) to employees, officers, directors, and consultants. As of June 30, 2022, the maximum number of shares of common stock which may be issued under the Plan is 118,374,202 Class A shares. As of June 30, 2022 and June 30, 2021, there were 31,156,746 and 29,793,755 shares of Class A common stock, respectively, available for future grants under the Plan. Stock Options For stock options granted before our IPO in January 2021, the minimum expiration period is seven years after termination of employment or 10 years from the date of grant. For stock options granted after our IPO, the minimum expiration period is three months after termination of employment or 10 years from the date of grant. Stock options generally vest over a period of four years or with 25% vesting on the 12 month anniversary of the vesting commencement date, and the remainder vesting on a pro-rata basis each month over the next three years. The following table summarizes our stock option activity for the year ended June 30, 2022:
|  | Number of Options |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value (in thousands)
Balance as of June 30, 2021 |  | 31,662,750 |  |  | $ | 10.42 |  |  | 6.30 |  |
Granted |  | 2,428,616 |  |  | 25.69 |  |  |  |  |
Exercised |  | (13,519,561) |  |  | 5.13 |  |  |  |  |
Forfeited, expired or cancelled |  | (1,261,099) |  |  | 23.68 |  |  |  |  |
Balance as of June 30, 2022 |  | 19,310,706 |  |  | 15.22 |  |  | 6.94 |  |
Vested and exercisable, June 30, 2022 |  | 11,792,367 |  |  | $ | 7.61 |  |  | 5.98 |  | $ | 139,121 |
Vested and exercisable, and expected to vest thereafter(1) June 30, 2022 |  | 18,922,009 |  |  | $ | 14.53 |  |  | 6.91 |  | $ | 164,796 |
(1)Options expected to vest reflect the application of an estimated forfeiture rate. The weighted-average grant date fair value of employee options granted for the years ended June 30, 2022, 2021, and 2020, was $13.29, $59.83, and $3.26, respectively. The aggregate intrinsic value of options exercised was approximately $1.4 billion, $706.7 million, and $3.1 million for the years ended June 30, 2022, 2021, and 2020, respectively. The total fair value of stock options vested during the years ended June 30, 2022, 2021, and 2020 was $30.3 million, $97.4 million, and $53.9 million, respectively. The fair value of each option on the date of grant is determined using the Black Scholes-Merton option pricing model using the single-option award approach with the weighted-average assumptions set forth in the table below. Volatility is based on historical volatility rates obtained from certain public companies that operate in the same or related business as us since there is a limited period of historical market data for our common stock. The risk-free interest rate is determined using a U.S. Treasury rate for the period that coincides with the expected term set forth. We used the simplified method to determine an estimate of the expected term of an employee share option.
|  | Year ended June 30,
|  | 2022 |  | 2021 |  | 2020
Volatility |  | 54% |  | 46% |  | 45%
Risk-free interest rate |  | 1.47% - 3.01% |  | 0.70% - 1.05% |  | 0.28% - 1.76%
Expected term (in years) |  | 5.56 |  | 6.35 |  | 5.87
Expected dividend yield |  | — |  | — |  | —
As of June 30, 2022, unrecognized compensation expense related to unvested stock options was approximately $67.0 million. The weighted-average period over which such compensation expense will be recognized is approximately 1.9 years. When an employee exercises stock options, we collect and remit taxes on the employee’s behalf to applicable taxing authorities. As of June 30, 2022 and June 30, 2021, the balance of equity exercise taxes payable was $10.9 million and $23.7 million, respectively, which is included in accounts payable on the consolidated balance sheets. Stock Options with Early Exercise Rights In accordance with the Plan, for certain stock options issued prior to the IPO, we allow for early exercise of the options while retaining the right to repurchase any unvested options upon termination of employment at the original exercise price. The proceeds received from early exercise of stock options have been recorded within accrued expenses and other liabilities on the consolidated balance sheets. As of June 30, 2022 and June 30, 2021, the early exercise liability totaled $0.3 million and $0.9 million, respectively. Value Creation Award In November 2020, in connection with an overall review of the compensation of Max Levchin, our Chief Executive Officer, in advance of the IPO, and taking into account Mr. Levchin’s leadership since the inception of the Company, the comparatively modest level of cash compensation he had received from the Company during his many years of service, and that he did not hold any unvested equity awards, the Company's Board of Directors approved a long-term, multi-year performance-based stock option grant providing Mr. Levchin with the opportunity to earn the right to purchase up to 12,500,000 shares of the Company's Class A common stock (the “Value Creation Award”). As discussed below, the Value Creation Award will only be earned, if at all, in the event the price of our Class A common stock attains stock price hurdles that are significantly in excess of the Company's IPO price per share, over a period of five years, subject to Mr. Levchin’s continued service to the Company. The Value Creation Award is divided into ten tranches, each of which Mr. Levchin may earn by satisfying a performance condition within a five-year period following the IPO. The performance condition for each tranche will be satisfied on the date the 90 average trading day volume weighted share price of the Company’s Class A common stock exceeds certain specified stock price hurdles, presented in the table below, which were determined based on a target percentage of share price appreciation from the IPO price. Once earned as a result of satisfying the performance condition, the options will vest and become exercisable over a five-year period that commenced at the time of the IPO, subject to Mr. Levchin’s continued service to the Company, in annual amounts equal to 15%, 15%, 20%, 25% and 25%, respectively. The per share exercise price of the Value Creation Award is $49.00, the price to the public in the IPO.
Tranche |  | Stock Price Hurdle |  | Number of Options
1 |  | $ | 65.66 |  |  | 1,000,000 |
2 |  | $ | 82.32 |  |  | 1,000,000 |
3 |  | $ | 98.98 |  |  | 1,000,000 |
4 |  | $ | 115.64 |  |  | 1,000,000 |
5 |  | $ | 132.30 |  |  | 1,000,000 |
6 |  | $ | 148.47 |  |  | 1,000,000 |
7 |  | $ | 165.13 |  |  | 1,000,000 |
8 |  | $ | 181.79 |  |  | 1,000,000 |
9 |  | $ | 247.94 |  |  | 2,250,000 |
10 |  | $ | 371.91 |  |  | 2,250,000 |
Total |  |  |  | 12,500,000 |
We estimated the fair value of the Value Creation Award granted with market conditions on the grant date using a Monte Carlo simulation model. We recognize stock-based compensation on these awards based on the grant date fair value using an accelerated attribution method over the requisite service period, and only if performance-based conditions are considered probable of being satisfied. During the years ended June 30, 2022 and June 30, 2021, we incurred stock-based compensation expense of $140.7 million and $83.9 million, respectively, associated with the Value Creation Award as a component of general and administrative expense within the consolidated statements of operations and comprehensive loss. During the year ended June 30, 2022, based on achievement of the stock price hurdles and time-based service conditions, 1,875,000 shares vested. As of June 30, 2022, none of these awards have been exercised. As of June 30, 2022, unrecognized compensation expense related to the Value Creation Award was approximately $207.5 million. The period over which such compensation expense will be recognized is approximately 3.5 years. Restricted Stock Units RSUs granted prior to the IPO were subject to two vesting conditions: a service-based vesting condition (i.e., employment over a period of time) and a performance-based vesting condition (i.e., a liquidity event in the form of either a change of control or an initial public offering, each as defined in the Plan), both of which must be met in order to vest. The performance-based condition was met upon the IPO. We record stock-based compensation expense for those RSUs on an accelerated attribution method over the requisite service period, which is generally four years. RSUs granted after IPO are subject to a service-based vesting condition. We record stock-based compensation expense for service-based RSUs on a straight-line basis over the requisite service period, which is generally one to four years. The following table summarizes our RSU activity during the year ended June 30, 2022:
|  | Number of Shares |  | Weighted Average Grant Date Fair Value
Non-vested as of June 30, 2021 |  | 14,242,111 |  |  | $ | 36.69 |
Granted |  | 15,903,666 |  |  | 42.53 |
Vested |  | (6,251,519) |  |  | 40.00 |
Forfeited, expired or cancelled |  | (2,506,666) |  |  | 36.94 |
Non-vested as of June 30, 2022 |  | 21,387,592 |  |  | $ | 38.41 |
As of June 30, 2022, unrecognized compensation expense related to unvested RSUs was approximately $690.0 million. The weighted-average period over which such compensation expense will be recognized is approximately 2.0 years. 2020 Employee Stock Purchase Plan On November 18, 2020, our Board of Directors adopted and approved the 2020 Employee Stock Purchase Plan (“ESPP”). The purpose of the ESPP is to secure the services of new employees, to retain the services of existing employees and to provide incentives for such individuals to exert maximum effort towards the success of the Company and that of its affiliates. A total of 8.9 million shares of Class A common stock were reserved and available for issuance under the ESPP and 149,137 shares have been issued as of June 30, 2022. The ESPP provides for six-month offering periods beginning December 1 and June 1 of each year. The first offering period began on December 1, 2021, and the second offering period began on June 1, 2022. At the end of each offering period, shares of our Class A common stock are purchased on behalf of each ESPP participant at a price per share equal to 85% of the lesser of (1) the fair market value of the Class A common stock on first day of the offering period (the grant date) or (2) the fair market value of the Class A common stock on the last day of the offering period (the purchase date). We use the Black-Scholes-Merton option pricing model to measure the fair value of the purchase rights issued under the ESPP at the first day of the offering period, which represents the grant date. The Black-Scholes-Merton model incorporates assumptions including the dividend yield, expected stock price volatility, expected term, and risk-free interest rates. We utilized the following assumptions: a dividend yield of zero; a 0.5 year expected term based on the six-month offering period; the historical stock price volatility of comparable publicly-traded companies in our industry group; and a risk-free rate corresponding to a U.S. Treasury rate which coincides with the expected term. We record stock-based compensation expense on a straight-line basis over each six-month offering period, the requisite service period of the award. Stock-Based Compensation Expense The following table presents the components and classification of stock-based compensation (in thousands):
|  | Year ended June 30,
|  | 2022 |  | 2021 | 2020
General and administrative |  | $ | 248,797 |  |  | $ | 196,554 |  | $ | 13,682 |
Technology and data analytics |  | 116,531 |  |  | 76,643 |  | 12,285 |
Sales and marketing |  | 23,224 |  |  | 17,092 |  | 4,040 |
Processing and servicing |  | 2,431 |  |  | 2,218 |  | 82 |
Total stock-based compensation in operating expenses |  | 390,983 |  |  | 292,507 |  | 30,089 |
Capitalized into property, equipment and software, net |  | 54,542 |  |  | 13,999 |  | 2,921 |
Total stock-based compensation expense |  | $ | 445,525 |  |  | $ | 306,506 |  | $ | 33,010 |
In connection with the acquisition of Returnly on May 1, 2021, we issued 304,364 shares of our Class A common stock, which are held in escrow. Because the future payment of the escrowed shares is contingent on continued employment of certain employees, the arrangement represents stock-based compensation in the post combination period. The grant-date fair value was estimated based on the value of the shares at the date of closing. The escrowed shares have a requisite service period of two years and contain a performance-based vesting condition (i.e., the achievement of certain revenue targets). We record stock-based compensation expense on a straight-line basis for each tranche over the requisite service period, as long as the performance-based conditions are considered probable of being satisfied. As of June 30, 2022, we have not recognized any stock-based compensation expense for these awards. We estimate the grant date fair value based on the probability of achievement of the revenue targets at each reporting period.

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