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Equity | 9 Months Ended
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Dec. 31, 2021
Share-based Payment Arrangement [Abstract] |
Equity | Equity Preferred Stock In connection with the IPO, the Company’s amended and restated certificate of incorporation became effective, which authorized the issuance of 100,000,000 shares of undesignated preferred stock with a par value of $0.001 per share with rights and preferences, including voting rights, designated from time to time by the Board of Directors. As of December 31, 2021, there were no shares of preferred stock issued and outstanding. Common Stock and Creation of Dual-Class Structure On June 8, 2021, the Company’s Board of Directors and stockholders approved an amendment to the Company’s amended and restated certificate of incorporation effecting a 2-for-1 forward split of the Company’s issued and outstanding stock, including outstanding stock-based instruments and redeemable convertible preferred stock. The par value of the common and redeemable convertible preferred stock was not adjusted as a result of the stock split. As such, the Company reclassified amounts from additional paid-in capital to common stock. All issued and outstanding shares of common stock, stock-based instruments, redeemable convertible preferred stock, and per-share amounts included in the accompanying condensed consolidated financial statements have been adjusted to reflect this stock split for all periods presented. The Company has two classes of common stock authorized: Class A common stock and Class B common stock, and are collectively referred to as common stock throughout the notes to the condensed consolidated financial statements, unless otherwise noted. On June 8, 2021, the Company’s Board of Directors and stockholders approved an amendment to the Company’s amended and restated certificate of incorporation which authorized 1,000,000,000 shares of Class A common stock with par value of $0.001 and one vote per share, and 500,000,000 shares of Class B common Stock with par value of $0.001 and ten votes per share. The holders of common stock are entitled to receive dividends, as may be declared by the board of directors. Each of the Company’s 85,523,836 shares of existing common stock outstanding was reclassified into Class B common stock. Each outstanding share of Class B common stock may be converted at any time at the option of the holder into one share of Class A common stock. As of December 31, 2021, there were 103,829,213 shares of Class A common stock, and 86,241,144 shares of Class B common stock outstanding. Common Stock Warrants In March 2017, the Company issued warrants to purchase 250,000 shares of common stock at an exercise price of $0.72 per share in connection with a contract signed between the Company and U.S. News & World Report, L.P. (“U.S. News”). The warrants vest on a monthly basis over a 5-year term starting on March 1, 2017. The Company recognizes the fair value of the warrants as stock-based compensation expense and additional paid-in capital over the vesting term of the warrants. On June 14, 2021, the Company issued a warrant (the “U.S. News Warrant”) to U.S. News to purchase 1,200,000 shares of Class A common stock with an exercise price of $12.56 per share, contingent on the execution of a commercial agreement with the U.S. News (the “Commercial Agreement”) prior to September 10, 2021. The U.S. News Warrant will vest on a monthly basis over 6 years, with the first tranche vesting on May 1, 2022. On September 3, 2021, the deadline to execute the Commercial Agreement was amended to October 10, 2021. On October 8, 2021, the Company signed an amended agreement to revise and extend the existing partnership with the U.S. News. The U.S. News Warrant was concurrently amended to remove the contingency related to the execution of the Commercial Agreement and the number of shares of Class A common stock issuable upon exercise of the U.S. News Warrant was revised from 1,200,000 shares to 516,000 shares. Other terms of the U.S. News Warrant remained the same. The grant-date fair value of the U.S. News Warrant was $34.7 million, which was determined using the Black-Scholes option-pricing model on the date of grant using the following assumptions: fair value of common stock of $76.50, volatility of 46.9%, risk-free interest rate of 1.61%, contractual term of 10 years, and an expected dividend of 0%. The fair value of the warrant will be recognized as expense in cost of revenue in the condensed consolidated statements of operations on a straight-line basis over its vesting term of 6.48 years. During the three and nine months ended December 31, 2021, $1.2 million was recognized as stock-based compensation expense relating to the U.S. News Warrant. As of December 31, 2021, unamortized compensation expense, net of estimated forfeitures, related to the unvested warrants was $33.5 million, which is expected to be recognized over a period of 6.25 years. Equity Incentive Plans In April 2010, the Company’s board of directors and stockholders approved the adoption of the 2010 Equity Incentive Plan (the “2010 Plan”). The 2010 Plan provides for the granting of incentive stock options, nonstatutory stock options, restricted stock units, and restricted stock awards to employees, non-employee directors, and consultants of the Company. Options may be granted at a price per share not less than 100% of the fair market value at date of grant. If the incentive stock option is granted to a 10% stockholder, then the purchase or exercise price per share shall not be less than 110% of the fair market value per share of common stock on the grant date. Options granted under the 2010 Plan continue to vest until the last day of employment and generally vest over four years and expire 10 years from the date of grant. Stock awards may also be granted for services performed by external consultants and vest according to an award-specific schedule as approved by the board of directors. In June 2021, the Company’s Board of Directors approved the adoption of the 2021 Stock Option and Incentive Plan (the “2021 Plan”), which became effective upon the Company’s initial public offering. The 2021 Plan provides for the granting of incentive stock options, nonstatutory stock options, restricted stock units, and restricted stock awards to employees, non-employee directors, and consultants of the Company. Any shares of Class B common stock that would have otherwise returned to the Company’s 2010 Plan as a result of forfeiture, expiration, cancellation, termination or net issuances of awards thereunder shall be returned to the share reserve under the 2021 Plan after being automatically converted from shares of Class B common stock to Class A common stock. The 2010 Plan and the 2021 Plan are collectively referred to as the “Plans” in the notes to the condensed consolidated financial statements, unless otherwise noted. The Company’s Board of Directors approved the adoption of the 2021 Employee Stock Purchase Plan (the “ESPP”), which became effective upon the Company’s initial public offering. A total of 4,500,000 shares of Class A common stock was initially reserved for the ESPP. The number of shares reserved and available for issuance for the ESPP will automatically increase each April 1, beginning on April 1, 2022 and continuing through April 1, 2031, by the lesser of 6,750,000 shares of Class A common stock, 1% of the outstanding number of shares of our Class A and Class B common stock on the immediately preceding March 31, or such lesser number of shares as determined by the Company’s compensation committee. The Company grants stock options under terms of the Plans, as well as options outside of the Plans as approved by the board of directors. The Company granted 4,682,582 options during the year ended March 31, 2018 outside of the Plans, of which 1,973,332 options were exercised as of December 31, 2021. As of December 31, 2021, 2,709,250 options issued outside of the Plans were outstanding. The Company has shares of common stock reserved for issuance as follows (in thousands):
| December 31, 2021 |  | March 31, 2021
Redeemable convertible preferred stock | — |  |  | 76,287 |
Common stock warrants | 766 |  |  | 250 |
2010 Equity Incentive Plan |  |  |
Options outstanding | 26,645 |  |  | 33,856 |
Shares available for future grant | — |  |  | 1,550 |
2021 Stock Option and Incentive Plan |  |  |
Performance-based restricted stock units outstanding | 14 |  |  | — |
Restricted stock units outstanding | 327 |  |  | — |
Shares available for future grant | 22,600 |  |  | — |
2021 ESPP | 4,500 |  |  | — |
Options outstanding outside the Plans | 2,709 |  |  | 2,720 |
Total | 57,561 |  |  | 114,663 |
Stock Options Stock option activities within the Plans as well as outside of the Plans were as follows for both service-based and performance-based options (in thousands, except per share information):
| Number of Shares |  | Weighted-Average Exercise Price |  | Average Remaining Contractual Term (in years) |  | Aggregate Intrinsic Value
Balance, March 31, 2021 | 36,576 |  |  | $ | 2.80 |  |  | 7.86 |  | $ | 357,366 |
Options granted | 1,966 |  |  | 12.56 |  |  |  |  |
Options exercised | (8,536) |  |  | 1.09 |  |  |  |  |
Options forfeited or expired | (652) |  |  | 3.14 |  |  |  |  |
Balance, December 31, 2021 | 29,354 |  |  | 3.94 |  |  | 7.74 |  | 1,355,890 |
Vested and exercisable as of December 31, 2021 | 8,755 |  |  | 1.34 |  |  | 5.99 |  | 427,159 |
Vested and expected to vest as of December 31, 2021 | 27,017 |  |  | 3.80 |  |  | 7.64 |  | 1,251,699 |
The aggregate intrinsic value of options exercised during the nine months ended December 31, 2021 and 2020 was $406.9 million and $19.0 million, respectively. The weighted-average grant-date fair value of options granted for the nine months ended December 31, 2021 and 2020 was $10.73 and $2.08, respectively. As of December 31, 2021, unamortized compensation expense, net of estimated forfeitures, related to unvested stock options was $59.0 million, which is expected to be recognized over a weighted-average period of 3.18 years. The fair value of each option on the date of grant is determined using the Black-Scholes option-pricing model with the assumptions set forth in the following table:
|  |  | Nine Months Ended December 31,
|  |  |  |  | 2021 |  | 2020
Fair value of common stock |  |  |  |  |  |  |  |  | $ | 18.41 |  | – | $ | 21.41 |  |  | $ | 2.06 |  | – | $ | 7.86 |
Volatility |  |  |  |  |  |  |  |  | 46.5 | % | – | 47.0 | % |  | 51.3 | % | – | 58.3 | %
Risk-free interest rate |  |  |  |  |  |  |  |  | 0.77 | % | – | 1.02 | % |  | 0.26 | % | – | 0.64 | %
Expected term (in years) |  |  |  |  |  |  |  |  | 5.00 | – | 6.09 |  | 5.00 | – | 8.00
Expected dividend |  |  |  |  | —% |  | —%
Performance-Based Options In March 2018, the Board of Directors of the Company granted 1,792,000 options to the Chief Executive Officer with an exercise price of $0.97 per share under the 2010 Plan (the “2018 CEO Grant”) with a liquidity-event performance-based vesting condition based on the occurrence of a qualifying liquidity event, including an IPO, as well as stock price target after the consummation of the IPO. In September 2020, the 2018 CEO Grant was modified to extend the stock price target achievement cutoff date. The fair value of the 2018 CEO Grant was determined using a Monte Carlo simulation approach on the modification date. The achievement of the qualifying event was not considered to be probable prior to the Company’s IPO. Upon the Company's IPO, the liquidity-event performance-based condition was met. During the three and nine months ended December 31, 2021, $0.3 million and $1.5 million was recognized as stock-based compensation expense relating to the 2018 CEO Grant. As the grant consists of a single tranche, the Company will amortize the remaining unrecognized compensation expense of $0.5 million on a straight-line basis over the remaining term of 0.41 years. As of December 31, 2021, the Company has 480,000 outstanding options with performance-based and service-based vesting conditions that have not yet been met. The performance conditions are satisfied upon meeting certain financial performance and sales targets. During the three and nine months ended December 31, 2021, $0.8 million and $1.0 million was recognized as stock-based compensation expense related to these performance-based options. For the options for which the achievement of the performance vesting conditions is considered probable, the remaining unrecognized compensation expense is $1.2 million, which will be amortized using accelerated attribution method over the remainder of the vesting periods. The amount to be recognized may change based upon actual performance achieved and updates to estimates of future performance. Restricted Stock Units ("RSUs") During the nine months ended December 31, 2021, the Company granted 347,121 RSUs under the 2021 Plan. 28,250 of the RSUs vested 50% on November 15, 2021 and 50% shall vest on February 15, 2022. The remaining RSUs granted during the nine months ended December 31, 2021 will generally vest over four years based on continued service. The RSUs are valued using the closing stock price of its common stock, which is traded on the NYSE, on the day of grant. The following table summarizes RSU activity during the nine months ended December 31, 2021 (in thousands, except per share information):
| Number of Shares |  | Weighted- Average Grant Date Fair Value
Unvested Balance, March 31, 2021 | — |  |  | $ | — |
Granted | 347 |  |  | 74.53 |
Vested | (19) |  |  | 60.58 |
Forfeited | (1) |  |  | 53.00 |
Unvested Balance, December 31, 2021 | 327 |  |  | 75.40 |
As of December 31, 2021, total unrecognized stock-based compensation cost, net of estimated forfeitures, related to non-vested RSUs was $18.0 million, and is expected to be recognized over a weighted-average period of approximately 3.56 years. Performance-Based Restricted Stock Units (“PSUs”) During the nine months ended December 31, 2021, the Company granted 15,239 PSUs under the 2021 Plan, which had a weighted-average grant date fair value of $80.00. During the nine months ended December 31, 2021, 966 PSUs were forfeited. The PSUs have performance-based vesting conditions that are satisfied upon meeting certain financial performance targets. As of December 31, 2021, 14,273 PSUs were unvested. During the three and nine months ended December 31, 2021, $0.7 million was recognized as stock-based compensation expense related to these PSUs. For the PSUs for which the achievement of the performance vesting conditions is considered probable, the remaining unrecognized compensation expense was $0.4 million, which will be recognized on a straight-line basis over the remaining term of 0.62 years, as the PSUs consist of a single tranche. The PSUs are valued using the closing stock price of its common stock, which is traded on the NYSE, on the day of grant. ESPP The Company’s first offering period under the ESPP began on November 1, 2021 and will end on February 15, 2022. Subsequent offering periods will begin on the first business day occurring on or after each February 16th and August 16th, and will end on the last business day occurring on or before the following August 15th and February 15th, respectively, unless and until otherwise determined by the Administrator of the ESPP. The price at which Class A common stock is purchased under the ESPP is equal to 85% of the fair market value of a share of the Company’s Class A common stock on the first or last day of the offering period, whichever is lower. The weighted-average grant-date fair value of ESPP stock purchase rights granted during the nine months ended December 31, 2021 was $27.27. The fair value of the ESPP stock purchase rights on the date of grant is determined using the Black-Scholes pricing model with the assumptions set forth in the following table:
| Nine Months Ended December 31, |  |  |  |
| 2021 |  |
Fair value of common stock | $ | 73.73 |  |  |  |  |  |  |
Volatility | 103.6 | % |  |  |  |  |  |
Risk-free interest rate | 0.05 | % |  |  |  |  |  |
Expected term (in years) | 0.29 |  |  |  |  |  |
Expected dividend | — | % |  |
During the three and nine months ended December 31, 2021, we withheld $0.8 million in contributions from employees under the ESPP, respectively. As of December 31, 2021, unamortized compensation expense, net of estimated forfeitures, related to the ESPP, was $0.3 million, which is expected to be recognized over a weighted-average period of 0.13 years. Stock-Based Compensation Expense Total stock-based compensation expense recognized in the condensed consolidated statement of operations for the three and nine months ended December 31, 2021 and 2020 was as follows (in thousands):
| Three Months Ended December 31, |  | Nine Months Ended December 31,
| 2021 |  | 2020 |  | 2021 |  | 2020
Cost of revenue | $ | 1,912 |  |  | $ | 179 |  |  | $ | 2,973 |  |  | $ | 368 |
Research and development | 2,035 |  |  | 634 |  |  | 4,864 |  |  | 1,179 |
Sales and marketing | 2,681 |  |  | 633 |  |  | 5,575 |  |  | 1,304 |
General and administrative | 3,206 |  |  | 774 |  |  | 8,221 |  |  | 1,531 |
Total stock-based compensation expense | $ | 9,834 |  |  | $ | 2,220 |  |  | $ | 21,633 |  |  | $ | 4,382 |

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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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