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Equity | 6 Months Ended
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Sep. 30, 2022
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 September 30, 2022 and March 31, 2022, there were no shares of preferred stock issued and outstanding. Common Stock and Creation of Dual-Class Structure 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 then-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 September 30, 2022, there were 111,262,831 shares of Class A common stock, and 81,039,460 shares of Class B common stock outstanding. Stock Repurchase Program On May 12, 2022, the Company’s board of directors authorized a program to repurchase up to $70 million of the Company’s Class A common stock. The repurchases could be executed from time to time for a period of 12 months through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans. Immediately upon the repurchase of any shares of Class A common stock, such shares were to be retired by the Company and automatically returned to the status of authorized but unissued shares of Class A common stock. During the six months ended September 30, 2022 the Company repurchased and retired 2,150,982 shares of Class A common stock, respectively, for an aggregate purchase price of $70.0 million. As of September 30, 2022, the Company has completed that share repurchase program. Common Stock Warrants In March 2017, the Company issued a warrant 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., or U.S. News. The warrant expires 10 years from the date of grant. As of September 30, 2022, the warrant was fully vested. During the six months ended September 30, 2022, the warrant for 125,000 shares were exercised with an intrinsic value of $4.0 million. The remaining warrant for 125,000 shares was outstanding as of September 30, 2022. In October 2021, the Company issued a warrant to U.S. News (the “U.S. News Warrant”) to purchase 516,000 shares of Class A common stock with an exercise price of $12.56 per share in connection with the execution of a commercial agreement with the U.S. News (the “Commercial Agreement”). The U.S. News Warrant expires 10 years from the date of grant. The first tranche of the U.S. News Warrant vested on May 1, 2022 and the remainder will vest on a monthly basis over approximately 6 years. 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 is 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 six months ended September 30, 2022, $2.7 million was recognized as stock-based compensation expense relating to the U.S. News Warrant. As of September 30, 2022, unamortized compensation expense, net of estimated forfeitures, related to the unvested warrants was $29.5 million, which is expected to be recognized over the remaining vesting period of 5.50 years. Equity Incentive Plans The Company maintains three equity incentive plans: the 2010 Equity Incentive Plan (the “2010 Plan”), the 2021 Stock Option and Incentive Plan (the “2021 Plan”), and the 2021 Employee Stock Purchase Plan (the “ESPP”). Upon IPO, the 2021 Plan became effective and the 2010 Plan was terminated. The 2010 Plan continues to govern the terms of outstanding awards that were granted prior to the termination of the 2010 Plan. 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. On May 27, 2022, the Company filed a Registration Statement on Form S-8 which registered an additional 9,619,921 shares of Class A common stock issuable under the 2021 Plan and 1,923,984 shares of its Class A common stock issuable under the ESPP. The Company grants stock options under the terms of the Plans and outside of the Plans, as approved by the board of directors. During fiscal 2018, the Company granted 4,682,582 options outside of the Plans, of which 2,027,917 options were exercised and 2,654,665 were outstanding as of September 30, 2022. The Company has shares of common stock reserved for issuance as follows (in thousands):
| September 30, 2022 |  |
Common stock warrants | 641 |  |  |
2010 Plan |  |  |
Options outstanding | 22,134 |  |  |
2021 Plan |  |  |
Awards outstanding | 1,491 |  |  |
Shares available for future grant | 31,480 |  |  |
2021 ESPP | 6,321 |  |  |
Options outstanding outside the plans | 2,655 |  |  |
Total | 64,722 |  |  |
Stock Options Stock options granted generally vest over four years with service-based, performance-based, and/or market-based conditions and expire ten years from the date of grant. Stock option activities within the Plans as well as outside of the Plans were as follows:
| Number of Shares (in thousands) |  | Weighted-Average Exercise Price |  | Average Remaining Contractual Term (in years) |  | Aggregate Intrinsic Value (in thousands)
Balance, March 31, 2022 | 26,983 |  |  | $ | 4.15 |  |  | 7.63 |  | $ | 1,293,545 |
Options exercised | (1,787) |  |  | 3.09 |  |  |  |  |
Options forfeited or expired | (407) |  |  | 5.78 |  |  |  |  |
Balance, September 30, 2022 | 24,789 |  |  | 4.20 |  |  | 7.17 |  | 644,960 |
Vested and exercisable as of September 30, 2022 | 11,186 |  |  | 2.12 |  |  | 6.05 |  | 314,388 |
Vested and expected to vest as of September 30, 2022 | 23,204 |  |  | 4.11 |  |  | 7.11 |  | 605,967 |
The aggregate intrinsic value of options exercised during the six months ended September 30, 2022 and 2021 was $60.2 million and $207.0 million, respectively. As of September 30, 2022, unamortized compensation expense, net of estimated forfeitures, related to unvested stock options was $45.5 million, which is expected to be recognized over a weighted-average period of 3.11 years. The weighted-average grant-date fair value of options granted for the six months ended September 30, 2021 was $10.73. The Company has not granted any stock options since the first quarter of fiscal 2022. 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:
|  |  |  |  |  |  | Six Months Ended September 30, 2021
Fair value of common stock |  |  |  |  |  |  |  |  |  |  |  |  | $18.41 - $21.41
Volatility |  |  |  |  |  |  |  |  |  |  |  |  | 46.5% - 47.0%
Risk-free interest rate |  |  |  |  |  |  |  |  |  |  |  |  | 0.77% - 1.02%
Expected term (in years) |  |  |  |  |  |  |  |  |  |  |  |  | 5.00 - 6.09
Expected dividend |  |  |  |  |  |  | —%
Restricted Stock Units ("RSUs") RSUs granted by the Company are valued using the closing stock price of the company’s Class A common stock, which is traded on the NYSE, on the day of grant and will generally vest over four years based on continued service. The following table summarizes RSU activity during the six months ended September 30, 2022 (in thousands, except per share information):
| Number of Shares |  | Weighted- Average Grant Date Fair Value
Unvested balance, March 31, 2022 | 534 |  |  | $ | 68.23 |
Granted | 900 |  |  | 34.78 |
Vested | (91) |  |  | 62.76 |
Forfeited | (47) |  |  | 41.14 |
Unvested balance, September 30, 2022 | 1,296 |  |  | 46.37 |
The total fair value of RSUs vested during the six months ended September 30, 2022 and 2021 was $3.3 million and $0.3 million, respectively. As of September 30, 2022, total unrecognized stock-based compensation cost, net of estimated forfeitures, related to unvested RSUs was $45.3 million, and is expected to be recognized over a weighted-average period of approximately 3.24 years. In September 2022, the Company announced a plan to grant RSUs with an aggregate value of $11.6 million to employees in November 2022, with the number of RSUs to be determined using the average closing market price of its common stock for the trailing 30-day period ending on the day immediately prior to the effective date of grant. The RSUs will vest quarterly over four years. Performance-Based Restricted Stock Units ("PSUs") As of September 30, 2022, the Company had 195,048 PSUs outstanding, of which 78,830 were probable of vesting. The PSUs have performance-based vesting conditions that are satisfied upon meeting certain financial performance targets. The PSUs are valued using the closing stock price of the Company’s Class A common stock, which is traded on the NYSE, on the day of grant. As of September 30, 2022, the remaining unrecognized compensation expense relating to the PSUs probable of vesting, net of estimated forfeitures, was $2.5 million. Stock-Based Compensation Expense Total stock-based compensation expense recognized in the condensed consolidated statements of operations was as follows (in thousands):
| Three Months Ended September 30, |  | Six Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Cost of revenue | $ | 2,392 |  |  | $ | 793 |  |  | $ | 4,514 |  |  | $ | 1,061 |
Research and development | 2,862 |  |  | 1,859 |  |  | 5,414 |  |  | 2,829 |
Sales and marketing | 3,982 |  |  | 1,866 |  |  | 7,056 |  |  | 2,894 |
General and administrative | 2,117 |  |  | 2,154 |  |  | 3,875 |  |  | 5,015 |
Total stock-based compensation expense | $ | 11,353 |  |  | $ | 6,672 |  |  | $ | 20,859 |  |  | $ | 11,799 |

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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 https://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 https://asc.fasb.org/topic&trid=2228938 + Details
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