Stock-Based Compensation

9 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

(9) Stock-Based Compensation

The Company maintains a 2008 Equity Incentive Plan (the “2008 Plan”) and a 2014 Equity Incentive Plan (the “2014 Plan”) pursuant to which the Company has reserved shares of its common stock for issuance to its employees, directors and non-employee third parties. The 2014 Plan serves as the successor to the 2008 Plan and permits the granting of restricted stock units and other equity incentives at the discretion of the compensation committee of the Company’s board of directors. No new awards have been or will be issued under the 2008 Plan since the effective date of the 2014 Plan. Outstanding awards under the 2008 Plan continue to be subject to the terms and conditions of the 2008 Plan. The number of shares of common stock reserved for issuance under the 2014 Plan may increase each calendar year, continuing through and including January 1, 2024. The number of shares added each year may be equal to the lesser of (a) four and five tenths percent (4.5%) of the number of shares of common stock of the Company issued and outstanding on the immediately preceding December 31, or (b) an amount determined by the Company’s board of directors. The Company's board of directors approved the increase in the number of common shares in reserve for issuance under the 2014 Plan by 2,400 shares, effective January 1, 2022.

As of March 31, 2022, the Company had 14,391 shares allocated to the plans, of which 1,999 shares were subject to outstanding options or awards. Generally, the Company issues previously unissued shares for the exercise of stock options or vesting of awards; however, shares previously subject to 2014 Plan grants or awards that are forfeited or net settled at exercise or release may be reissued to satisfy future issuances.

The following table summarizes changes in the number of shares available for grant under the Company’s equity incentive plans during the nine months ended March 31, 2022:


			Number of Shares
Available for grant at July 1, 2021			10,312
January 1, 2022 Evergreen provision increase			2,400
RSUs granted			(614)
MSUs granted			(47)
Shares withheld in settlement of taxes and/or exercise price			280
Forfeitures			120
Shares removed			(59)
Available for grant at March 31, 2022			12,392

Shares removed represents forfeitures of shares and shares withheld in settlement of taxes and/or payment of exercise price related to grants made under the 2008 Plan. As noted above, no new awards will be issued under the 2008 Plan.

Stock-based compensation expense related to restricted stock units (“RSUs”), market share units (“MSUs”) and the Employee Stock Purchase Plan is included in the following line items in the accompanying unaudited consolidated statements of operations and comprehensive income:


	Three Months Ended March 31,				Nine Months Ended March 31,
	2021		2022		2021		2022
Cost of revenues	$	1,972	$	2,936	$	5,773	$	8,860
Sales and marketing	3,938		5,119		11,783		15,994
Research and development	2,602		4,855		7,570		13,963
General and administrative	7,499		11,485		21,821		31,380
Total stock-based compensation expense	$	16,011	$	24,395	$	46,947	$	70,197

In addition, the Company capitalized $652 and $1,886 of stock-based compensation expense in its capitalized internal-use software costs in the three months ended March 31, 2021 and 2022, respectively, and $1,949 and $5,312 during the nine months ended March 31, 2021 and 2022, respectively.

In August 2020, the compensation committee of the Company’s board of directors approved the modification of the performance targets for vesting of the performance-based restricted stock units granted in fiscal 2020. The Company recorded $1,776 and $1,819 in stock-based compensation expense during the three months ended March 31, 2021 and 2022, respectively, and $4,560 and $4,877 during the nine months ended March 31, 2021 and 2022, respectively, related to these modified performance-based restricted stock units.

In March 2022, Michael Haske announced his intent to resign from his position effective September 1, 2022. In connection with his resignation, the Company’s board of directors approved a Transition and Separation Agreement and a Consulting Services Agreement whereby Mr. Haske will provide consulting services to the Company for a period of one year after the end of his employment on September 1, 2022. Pursuant to these agreements, the compensation committee of the Company's board of directors approved the modifications of certain of Mr. Haske's outstanding RSUs and MSUs to allow the awards to continue to vest after the end of his service period. As a result, the Company will record the cumulative effect of the modifications and accelerate the recognition of the remaining expense associated with certain of Mr. Haske's unmodified outstanding awards over his remaining substantive service period. The modifications of these awards did not have a material impact on the Company's financial statements.

There were no stock options granted during the nine months ended March 31, 2022. The table below presents stock option activity during the nine months ended March 31, 2022:


	Outstanding Options
	Number of shares	Weighted average exercise price		Weighted average remaining contractual term (years)	Aggregate intrinsic value
Balance at July 1, 2021	765	$	16.06	2.4	$	133,550
Options exercised	(204)	$	9.69
Balance at March 31, 2022	561	$	18.37	1.8	$	105,094
Options vested and exercisable at March 31, 2022	561	$	18.37	1.8	$	105,094

The total intrinsic value of options exercised was $20,975 and $1,819 during the three months ended March 31, 2021 and 2022, respectively, and $58,252 and $49,446 during the nine months ended March 31, 2021 and 2022, respectively.

The Company grants RSUs under the 2014 Plan with terms determined at the discretion of the compensation committee of the Company’s board of directors. RSUs generally vest over three or four years following the grant date. Certain RSU awards have time-based vesting conditions while other RSUs vest based on the achievement of certain revenue growth and/or Adjusted EBITDA margin targets. For these performance-based RSUs, the Company recognizes stock-based compensation expense based upon the probable or actual achievement of these aforementioned performance metrics.

The following table represents restricted stock unit activity during the nine months ended March 31, 2022:


	Units	Weighted average grant date fair value
RSU balance at July 1, 2021	1,388	$	100.33
RSUs granted	614	$	247.98
RSUs vested	(549)	$	84.83
RSUs forfeited	(115)	$	160.61
RSU balance at March 31, 2022	1,338	$	169.40

At March 31, 2022, there was $113,191 of total unrecognized compensation cost, net of estimated forfeitures, related to unvested restricted stock units granted. That cost is expected to be recognized over a weighted average period of 1.9 years.

The Company also grants MSUs under the 2014 Plan with terms determined at the discretion of the Committee. The actual number of MSUs that will be eligible to vest is based on the achievement of a relative total shareholder return (“TSR”) target as compared to the TSR realized by each of the companies comprising the Russell 3000 Index over an approximately three-year period. The MSUs cliff-vest at the end of the TSR measurement period, and up to 200% of the target number of shares subject to each MSU are eligible to be earned.

The following table represents market share unit activity during the nine months ended March 31, 2022:


	Units	Weighted average grant date fair value
MSU balance at July 1, 2021	58	$	178.04
MSUs granted	48	$	361.02
MSUs forfeited	(5)	$	178.04
MSU balance at March 31, 2022	101	$	263.83

The Company estimated the grant date fair value of the MSUs using a Monte Carlo simulation model that included the following assumptions:


	Nine Months Ended March 31,
	2021		2022
Valuation assumptions:
Expected dividend yield	—%		—%
Expected volatility	52.0	%	47.4 - 47.5%
Expected term (years)	3.04		2.92 - 3.04
Risk‑free interest rate	0.18%		0.43 - 0.47%

At March 31, 2022, there was $16,131 of total unrecognized compensation cost, net of estimated forfeitures, related to unvested MSUs. That cost is expected to be recognized over a period of 2.2 years.