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Common Stock and Employee Stock Plans | 12 Months Ended
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Dec. 31, 2022
Share-Based Payment Arrangement [Abstract] |
Common Stock and Employee Stock Plans | Common Stock and Employee Stock Plans Common Stock The Company’s amended and restated certificate of incorporation authorizes the issuance of Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion. Holders of Class A common stock are entitled to one vote per share and holders of Class B common stock are entitled to 20 votes per share. Shares of Class B common stock are convertible into an equivalent number of shares of Class A common stock and generally convert into shares of Class A common stock upon transfer. Any dividends paid to the holders of Class A common stock and Class B common stock will be paid on a pro rata basis. On a liquidation event, any distribution to common stockholders is made on a pro rata basis to the holders of the Class A common stock and Class B common stock. The following table summarizes the Company’s shares of common stock reserved for issuance as of December 31, 2022:
Options issued and outstanding under the 2008 Plan | 993,145 |
RSUs outstanding under the 2008 Plan, the 2018 Plan, and the 2019 Plan | 22,315,333 |
Remaining shares available for future issuance under the 2019 ESPP Plan and the 2019 Plan | 72,818,573 |
Equity Award Plans 2008 Equity Incentive Plan In July 2008, the board of directors of the Company adopted the 2008 Equity Incentive Plan (the 2008 Plan) under which the Company may grant options to purchase its common stock and offer to sell and issue restricted shares of its common stock and issue RSUs to selected employees, officers, directors and consultants of the Company. In June 2018, this plan was superseded by the 2018 Equity Incentive Plan (the 2018 Plan) and all reserved shares under the 2008 Plan were transferred to the 2018 Plan. Under the 2008 Plan, incentive stock options and nonqualified stock options are to be granted at a price that is not less than 100% of the fair value of the underlying common stock at the date of grant; provided, that incentive stock options granted to a person who directly or by attribution owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company are to be at a price not less than one hundred ten percent (110%) of the fair value of the underlying common stock at the date of grant. Stock options granted to newly hired employees typically vest 25% on the first anniversary of the date of hire and ratably each month over the ensuing 36-month period. The maximum term for stock options granted under the 2008 Plan might not exceed ten years from the date of grant. RSUs granted to newly hired employees typically vest 25% on the first Company-established vest date after the first anniversary of the employee’s date of hire and ratably each quarter over the ensuing 12-quarter period for purposes of the service condition. The maximum term for RSUs granted under the 2008 Plan might not exceed seven years from the date of grant. 2018 Equity Incentive Plan In June 2018, the board of directors and the stockholders of the Company adopted the 2018 Plan, which serves as the successor to the 2008 Plan and provides for the grant of stock options, stock appreciation rights, restricted stock, and RSUs to employees and consultants of the Company and its subsidiaries and non-employee directors of the Company. A total of 75,504,222 shares of the Company’s common stock initially was reserved for issuance under the 2018 Plan, which was increased in June 2018 by an additional 11,836,692 shares. In addition, the shares reserved for issuance under the 2018 Plan also will include any shares subject to stock options, RSUs or similar awards granted under its 2008 Plan that, after the date the Company’s board of directors initially approved its 2018 Plan, expire or otherwise terminate without having been exercised in full, are tendered to or withheld by the Company for payment of an exercise price or for satisfying tax withholding obligations or are forfeited to or repurchased by the Company due to failure to vest (provided that the maximum number of shares that may be added to its 2018 Plan from its 2008 Plan is 75,504,222 shares). Under the 2018 Plan, RSUs granted to newly hired employees typically vest 25% on the first Company-established vest date after the first anniversary of the employee’s date of hire and ratably each quarter over the ensuing 12-quarter period for purposes of the service condition. The maximum term for RSUs granted under the 2018 Plan might not exceed seven years from the date of grant. In March 2019, this plan was superseded by the 2019 Equity Incentive Plan (the 2019 Plan) and all reserved shares under the 2018 Plan were transferred to the 2019 Plan. 2019 Equity Incentive Plan In March 2019, the board of directors of the Company and the stockholders of the Company adopted the 2019 Plan which serves as the successor to the 2018 Plan and provides for the grant of stock options, stock appreciation rights, restricted stock, and RSUs to employees and consultants of the Company and its subsidiaries and non-employee directors of the Company. RSUs granted with only service conditions under the 2019 Plan to employees generally vest in a period up to four years. A total of 44,000,000 shares of the Company’s Class A common stock were reserved for issuance pursuant to the 2019 Plan. In addition, the shares reserved for issuance under the Company’s 2019 Plan also included (i) those shares reserved but unissued under our 2018 Plan as of immediately prior to the termination of the 2018 Plan and (ii) any shares subject to stock options, RSUs or similar awards granted under the 2018 Plan or 2008 Plan that, after the date the Company’s board of directors approved the 2019 Plan, expire or otherwise terminate without having been exercised in full, are tendered to or withheld by the Company for payment of an exercise price or for satisfying tax withholding obligations or are forfeited to or repurchased by the Company due to failure to vest (provided that the maximum number of shares that may be added to the Company’s 2019 Plan pursuant to (i) and (ii) is 80,604,678 shares). The number of shares available for issuance under the 2019 Plan will be increased on January 1 of each year, beginning on January 1, 2020, in an amount equal to the least of (i) 35,000,000 shares, (ii) five percent of the outstanding shares of all classes of the Company’s common stock on the last day of the immediately preceding fiscal year or (iii) such number of shares determined by the administrator. On January 1, 2020, an additional 15,129,789 shares of Class A common stock were reserved for issuance under the 2019 Plan. On January 1, 2021, an additional 16,186,855 shares of Class A common stock were reserved for issuance under the 2019 Plan. On January 1, 2022, an additional 17,246,911 shares of Class A common stock were reserved for issuance under the 2019 Plan. The summary of stock option activity is as follows (in thousands, except per share data):
| Options Outstanding
| Number of Shares |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contractual Life |  | Aggregate Intrinsic Value
|  |  |  |  | (in years) |  |
Balance as of December 31, 2021 | 1,105 |  |  | $ | 4.79 |  |  | 1.83 |  | $ | 41,916 |
Exercises | (112) |  |  | 4.09 |  |  |  |  |
Forfeitures | — |  |  | — |  |  |  |  |
Cancellations | — |  |  | — |  |  |  |  |
Balance as of December 31, 2022 | 993 |  |  | $ | 4.87 |  |  | 1.89 |  | $ | 6,109 |
There were no stock options granted during the year ended December 31, 2022 and 2021. As of December 31, 2022, all outstanding options were fully vested and exercisable. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2022, 2021 and 2020 was $2.9 million, $41.9 million and $36.1 million, respectively. The aggregate intrinsic value disclosed in the above table is based on the difference between the original exercise price of the stock option and the fair value of the Company’s common stock of $11.02 and $42.73 per share as of December 31, 2022 and 2021, respectively. In the first quarter of 2019, the Company issued 3,162,797 shares of its common stock, valued at $205.6 million, pursuant to the exercise by the Company’s co-founders of all their respective vested and outstanding options (after withholding an aggregate of 3,617,460 shares of common stock subject to such options for payment of the exercise price and satisfaction of the aggregate tax withholding obligations, totaling $223.5 million, in connection with the exercise of certain of those options). In the second quarter of 2019, these shares of common stock were reclassified into shares of Class A common stock and subsequently exchanged for shares of Class B common stock. Restricted Stock Units The summary of restricted stock unit activity (“RSU”) is as follows (in thousands, except per share data):
| Number of Shares |  | Weighted- Average Grant Date Fair Value |  | Aggregate Intrinsic Value
Nonvested units as of December 31, 2021 | 17,116 |  |  | $ | 45.75 |  |  | $ | 730,528 |
Granted | 35,189 |  |  | 24.57 |  |  |
Vested | (23,928) |  |  | 33.78 |  |  |
Canceled | (6,062) |  |  | 34 |  |  |
Nonvested units as of December 31, 2022 | 22,315 |  |  | $ | 28.15 |  |  | $ | 244,926 |
Expected to vest as of December 31, 2022 | 21,165 |  |  |  |  | $ | 233,242 |
Included in the grants for the year ended December 31, 2022 are approximately 942,428 performance based restricted stock units (“PSUs”). The weighted average grant date fair value per share of the PSUs granted in the year ended December 31, 2022 was $36.72. Included in these PSUs were the following: i. PSUs that have performance criteria tied to the Company’s stock performance. The Company valued these PSUs using a Monte Carlo valuation model and took into consideration the likelihood of the market criteria being achieved. The resulting fair value expense is amortized over the life of the PSU award. ii. PSUs that have performance criteria tied to the achievement of certain performance milestones. Compensation cost associated with these PSUs are recognized based on the estimated number of shares that the Company ultimately expects will vest and amortized on a straight-line basis over the requisite service period of each performance milestone. Each reporting period, the Company assesses the probability that the performance criteria will be met and records expense for those shares for which vesting is probable. All PSUs are subject to a continuous service condition in addition to certain performance criteria. The fair value as of the respective vesting dates of RSUs that vested during the years ended December 31, 2022, 2021 and 2020 was $354.3 million, $1.0 billion and $700.9 million, respectively. In connection with RSUs that vested in the year ended December 31, 2022, the Company withheld 358,330 shares and remitted cash payments of $6.7 million on behalf of the RSU holders to the relevant tax authorities. In connection with RSUs that vested in the year ended December 31, 2021, the Company withheld 508,934 shares and remitted cash payments of $26.3 million on behalf of the RSU holders to the relevant tax authorities. In connection with RSUs that vested in the year ended December 31, 2020, the Company withheld 551,372 shares and remitted cash payments of $20.2 million on behalf of the RSU holders to the relevant tax authorities. The Company’s default tax withholding method for RSUs is the sell-to-cover method with the exception of RSUs held by Section 16 officers, as set forth in Rule 16a-1 of the the Securities Exchange Act of 1934, of the Company that will use the net settlement method. 2019 Employee Stock Purchase Plan In March 2019, the Company’s board of directors adopted, and the Company’s stockholders approved, the 2019 Employee Stock Purchase Plan (the “ESPP”). The initial ESPP went into effect on March 27, 2019 and was amended on July 18, 2022. Subject to any limitations contained therein, the ESPP allows eligible employees to contribute, through payroll deductions, up to 15% of their eligible compensation to purchase the Company’s Class A common stock at a discounted price per share. The ESPP provides for consecutive, overlapping 12-month offering periods, subject to certain reset provisions as defined in the plan. The initial offering period ran from March 28, 2019 through June 30, 2020. A total of 6,000,000 shares of Class A common stock were initially reserved for issuance under the ESPP. On January 1, 2020, an additional 3,025,957 shares of Class A common stock were reserved for issuance under the ESPP. On January 1, 2021, an additional 3,237,371 shares of Class A common stock were reserved for issuance under the ESPP. On January 1, 2022, an additional 3,449,382 shares of Class A common stock were reserved for issuance under the ESPP. As of December 31, 2022, 3,803,504 shares of Class A common stock have been purchased under the 2019 ESPP. The number of shares reserved under the 2019 ESPP will automatically increase on the first day of each calendar year beginning on January 1, 2020 in a number of shares equal to the least of (i) 7,000,000 shares of Class A common stock, (ii) one percent of the outstanding shares of all classes of the Company’s common stock on the last day of the immediately preceding fiscal year, or (iii) an amount determined by the administrator of the 2019 ESPP. Stock-Based Compensation The Company recorded stock-based compensation expense on the consolidated statements of operations for the periods indicated as follows (in thousands):
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
Cost of revenue | $ | 44,132 |  |  | $ | 39,491 |  |  | $ | 28,743 |
Operations and support | 25,442 |  |  | 24,083 |  |  | 15,829 |
Research and development | 391,983 |  |  | 414,324 |  |  | 325,624 |
Sales and marketing | 49,867 |  |  | 38,243 |  |  | 23,385 |
General and administrative | 239,343 |  |  | 208,419 |  |  | 172,226 |
Total stock-based compensation expense | $ | 750,767 |  |  | $ | 724,560 |  |  | $ | 565,807 |
In conjunction with one of the acquisitions in 2018, the Company issued 241,390 shares of restricted stock awards to executives of an acquired company with an aggregate grant-date fair value of $11.4 million. These restricted stock awards are fully vested as of the year ended December 31, 2020. The Company recorded $4.2 million as compensation related to these vested restricted stock awards which is included in research and development expense on the consolidated statement of operations for the year ended December 31, 2020. As of December 31, 2022, 2021, and 2020 there are no remaining unrecognized compensation costs related to unvested stock options and restricted stock awards. As of December 31, 2022, the total unrecognized compensation cost was $499.5 million. The Company expects to recognize this expense over the remaining weighted-average period of approximately 1.0 year. The Company recognizes compensation expense on the RSUs granted prior to the effectiveness of its IPO registration statement on March 28, 2019 using the accelerated attribution method. All RSUs granted after March 28, 2019 vest on the satisfaction of a service-based condition only. The Company recognizes compensation expense for such RSUs upon a straight-line basis over their requisite service periods.

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