STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2025

Prior to the IPO, the Company granted options to purchase shares of the Company’s common stock and restricted stock units (“RSU”) in respect of shares of the Company’s common stock to employees, directors and consultants under the Company’s 2011 Equity Incentive Plan. In connection with the IPO, the Company adopted the 2021 Incentive Award Plan (“2021 Plan”) and the 2021 Employee Stock Purchase Plan (“ESPP”), both of which became effective on July 26, 2021. The 2021 Plan and ESPP include an annual share increase provision through January 1, 2031, subject to limits and Board discretion. On January 1, 2025, the number of Class A shares available under the 2021 Plan was increased by 2,247 shares of common stock. No grants have been made under the ESPP, and in February 2025, the Board waived all future automatic share increases under the ESPP.

The Company’s stock options generally vest over four years based on continued service to the Company and its subsidiaries. Each option has a term of ten years. Any stock options granted under the 2021 Plan must generally have an exercise price of not less than the estimated fair market value of the underlying Class A common stock at the date of the grant, but as of March 31, 2025 no options had been granted under the 2021 Plan.

A summary of stock option activity as of March 31, 2025 is as follows:


(In thousands, except prices and years)	Number of options	Weighted- average exercise price		Weighted- average remaining contractual life (years)	Aggregate intrinsic value





Options outstanding at January 1, 2025	1,523	$	18.73	4.67	$	465,985
Granted (1)	—
Exercised	(276)	11.31

Forfeited and expired (2)	—	—
Options outstanding at March 31, 2025	1,247	$	20.37	4.64	$	362,445
Options exercisable at March 31, 2025	1,247	$	20.30	4.64	$	362,416

________________

(1) There were no stock options granted during the three months ended March 31, 2025.

(2) There was a nominal amount of forfeitures and expirations during the three months ended March 31, 2025.

The total intrinsic value of options exercised was approximately $90,743 and $64,343 for the periods ended March 31, 2025 and 2024, respectively.

The Company began to grant RSUs in November 2020. The fair value of RSUs is estimated based on the fair value of our Class A common stock on the date of grant. Each RSU vests based upon the satisfaction of length of service. The Company measures and recognizes stock-based compensation expense for all stock-based awards based on the estimated fair value of the award.

A summary of RSU activity as of March 31, 2025 is as follows:


(In thousands, except prices)	Restricted stock units	Weighted- average grant date fair value per share




Outstanding at January 1, 2025	1,802	$	143.96
Granted	80	432.69
Released	(204)	113.76
Forfeited	(34)	129.48
Outstanding at March 31, 2025	1,644	$	162.06

As of March 31, 2025, there was approximately $2 of unrecognized stock-based compensation expense related to stock options granted under the plans with a weighted-average period of approximately 1 month. The amount of unrecognized stock-based compensation expense for RSUs as of March 31, 2025 was $241,920 with a weighted-average period of approximately three years. Total unrecognized compensation expense as of March 31, 2025 was $241,922.

There were 8,905 shares available for grant at March 31, 2025.

Performance-based RSUs

In June 2021, the Company granted an aggregate of 1,800 performance-based RSUs (the “Founder Awards”) to its founders. Vesting is subject to both service- and performance-based conditions, with settlement occurring one year after vesting. The awards vest in 10 tranches based on stock-price hurdles measured over a ten year period from the grant date. The service condition vests 25% annually beginning on the IPO anniversary, July 30, 2021, subject to continued service.

The Company used a Monte Carlo simulation to estimate the fair value of the Founder Awards. The weighted-average grant date fair value was $61.56 per share, and total estimated expense to be recognized over the derived service periods (ranging from 3.58 to 5.92 years) is $110,817. Stock-based compensation expense is recognized over the derived service period, regardless of whether the stock-price hurdles are achieved, and is accelerated if hurdles are met earlier.

The Company recognized $4,114 and $5,540 of stock-based compensation expense related to the Founder Awards for the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, $12,822 of unrecognized stock-based compensation expense remains.

Total stock-based compensation expense was $31,018 and $24,985 for the three months ended March 31, 2025 and 2024, respectively.

Stock-based compensation expense is included in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income as shown in the following table:


	Three Months Ended March 31,
(In thousands)	2025		2024
Cost of revenues	$	20	$	16
Research and development	17,813		13,006
Sales and marketing	1,431		1,054
General and administrative	11,754		10,909
Total	$	31,018	$	24,985

Nominal amounts of stock-based compensation expense is capitalized into intangible assets for the three months ended March 31, 2025 and 2024.