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Equity Incentive Plans | 3 Months Ended
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Mar. 31, 2021
Share-based Payment Arrangement [Abstract] |
Equity Incentive Plans | Equity Incentive Plans Equity Incentive Plans In 2012, the Company adopted the Equity Incentive Plan (“2012 Equity Incentive Plan”) authorizing the granting of incentive stock options (“ISOs”) and non-statutory stock options (“NSOs”) to eligible participants. Under the 2012 Equity Incentive Plan, the exercise price of an ISO and NSO shall not be less than 100% of the estimated fair value of the shares on the date of grant, as determined by the Board of Directors. The exercise price of an ISO granted to a 10% stockholder shall not be less than 110% of the estimated fair value of the shares on the date of grant, as determined by the Board of Directors. Options generally vest over four years and are exercisable for up to 10 years after the date of grant if the employee provides service to the Company for at least three years. In October 2020, our Board of Directors adopted, and in November 2020 our Board of Directors amended and our stockholders approved, our 2020 Equity Incentive Plan which was effective on December 14, 2020. The Company terminated the 2012 Equity Incentive Plan immediately prior to effectiveness of the 2020 Equity Incentive Plan with respect to the grant of future awards. However, our 2012 Equity Incentive Plan continues to govern the terms and conditions of the outstanding awards granted under our 2012 Equity Incentive Plan. The 2020 Equity Incentive Plan authorizes granting of ISOs, NSOs, stock appreciation rights, restricted stock, restricted stock units, or RSUs, and performance awards. As of March 31, 2021, the Company is authorized to issue up to 10,389,402 shares of common stock under the 2020 Equity Incentive Plan. In addition, the 2020 Equity Incentive Plan also includes any shares subject to awards granted under our 2012 Equity Incentive Plan that, on or after December 15, 2020, expire or otherwise terminate without having been exercised or issued in full, are tendered to or withheld by us for payment of an exercise price or for satisfying tax withholding obligations, or are forfeited to or repurchased by us due to failure to vest. The maximum number of shares that may be added to the 2020 Equity Incentive Plan pursuant to outstanding awards under the 2012 Equity Incentive Plan is 15,000,000 shares. The number of shares available for issuance under our 2020 Equity Incentive Plan also includes an annual increase on the first day of each fiscal year beginning with the 2021 in an amount equal to the least of 15,000,000 shares or 5% of the outstanding shares of our common stock on the last day of our immediately preceding fiscal year. Stock Options The following table summarized stock option activity for three months ended March 31, 2021:
|  | Number of Options |  | Weighted-Average Exercise Price Per Share |  | Weighted-Average Remaining Contractual Life (years) |  | Aggregate Intrinsic Value
Balances at December 31, 2020 |  | 19,600,223 |  |  | $ | 4.27 |  |  | 6.8 |  | $ 715,084
Options granted |  | 606,830 |  |  |  |  |  |  |
Options exercised |  | (521,511) |  |  |  |  |  |  |
Options cancelled and forfeited |  | (94,771) |  |  |  |  |  |  |
Balances at March 31, 2021 |  | 19,590,771 |  |  | $ | 7.42 |  |  | 6.6 |  | $ | 2,379,126 |
Options exercisable – March 31, 2021 |  | 11,309,977 |  |  | $ | 1.65 |  |  | 4.9 |  | $ | 1,438,789 |
Options vested and expected to vest – March 31, 2021 |  | 19,168,127 |  |  | $ | 6.95 |  |  | 6.5 |  | $ | 2,336,779 |
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the fair value of the Company’s stock as of March 31, 2021. The aggregate intrinsic value of options exercised for the three months ended March 31, 2020 and 2021, was $0.8 million and $65.7 million, respectively. The weighted-average grant date fair value of options granted during the three months ended March 31, 2020 and 2021, was $5.23 and $61.67 per share, respectively. The total fair value of options vested for the three months ended March 31, 2020 and 2021, was $1.0 million and $3.6 million, respectively. As of March 31, 2021, total unrecognized stock-based compensation expense related to unvested stock options was $77.3 million, which is expected to be recognized over a remaining weighted-average period of 2.4 years. Restricted Stock Units During the three months ended March 31, 2021, the Company began granting RSUs to employees and nonemployees. RSUs vest upon satisfaction of a service-based condition, which is generally satisfied over four years. The following table summarized RSU activity for three months ended March 31, 2021:
| Number of Shares |  | Weighted Average Grant Date Fair Value Per Share
Unvested at December 31, 2020 | — |  |
RSUs granted | 835,307 |  | $ | 101.56 |
RSUs vested | (342) |  | $ | 81.56 |
RSUs cancelled and forfeited | (7,773) |  | $ | 124.14 |
Unvested at March 31, 2021 | 827,192 |  |
As of March 31, 2021, total unrecognized stock-based compensation expense related to outstanding unvested RSUs was $82.1 million, which is expected to be recognized over a remaining weighted-average period of 3.5 years. 2020 Employee Stock Purchase Plan In October 2020, our Board of Directors adopted, and in November 2020 our Board of Directors amended and our stockholders approved, our ESPP which was effective on December 14, 2020. Our ESPP provides for consecutive six-month offering periods. The offering periods are scheduled to start on the first trading day on or after February 15 and August 15 of each year, except the first offering period commenced on December 16, 2020 and will end on the first trading day on or before August 15, 2021. The second offering period will commence on the last trading day on or after August 15, 2021. The ESPP permits participants to purchase shares in the amount of 85% of the lower of the fair market value of our shares of common stock on the first trading day of the offering period or on the exercise date. As of March 31, 2021, the maximum number of shares of common stock that can be issued under the employee stock purchase plan was 2,113,140 shares, in addition to any automatic annual evergreen increase. As of March 31, 2021, no shares of common stock have been purchased under the ESPP. As of March 31, 2021, total unrecognized stock-based compensation expense related to ESPP was $3.1 million, which is expected to be recognized over a remaining weighted-average period of 0.4 years. Fair Value of Awards Granted In determining the fair value of the stock-based awards, the Company uses the Black-Scholes option-pricing model and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment. Fair Value of Common Stock - Prior to the completion of the IPO, the fair value of the shares of common stock was determined by the Company’s Board of Directors as there was no public market for the Company’s common stock. After the completion of the IPO, the fair value of the Company’s common stock is determined by the closing price, on the date of grant, of its common stock, which is traded on the Nasdaq Global Select Market. Expected Term - The expected term represents the period that the Company’s stock options are expected to be outstanding. The Company determined the expected term for employee stock options based on historical terminations and exercise behavior, which factors in an extended post-termination exercise provision for vested awards for certain employees that provide more than three years of service to the Company. The Company uses the contractual term for all nonemployee awards. Volatility - Because the Company does not have an active trading market for its common stock for a sufficient period of time, the expected volatility is estimated based on the average volatility for comparable publicly-traded companies, over a period equal to the expected term of the stock option grants. Risk-free Interest Rate - The risk-free interest rate assumption is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of the option. Dividends - The Company has never paid dividends on its common stock and does not anticipate paying dividends on common stock. Therefore, the Company uses an expected dividend yield of zero. The following assumptions were used to estimate the fair value of options granted:
|  |  | Three Months Ended March 31,
|  |  | 2020 |  | 2021
Expected term (in years) |  |  | 5.4 – 10.0 |  | 5.3 – 6.9
Expected volatility |  |  | 53.23% – 55.35% |  | 63.12% – 65.01%
Risk-free interest rate |  |  | 1.34% – 1.50% |  | 0.62% – 1.14%
Dividend yield |  |  | — % |  | — %
The following assumptions were used to estimate the fair value of the Company’s ESPP for the initial offering period:
|  |  |  |  | Three Months Ended March 31,
|  |  |  |  | 2021
Expected term (in years) |  |  |  |  | 0.6
Expected volatility |  |  |  |  | 61.65%
Risk-free interest rate |  |  |  |  | 0.09%
Dividend yield |  |  |  |  | — %
Stock-Based Compensation The Company recorded stock-based compensation in the following expense categories in its condensed consolidated statements of operations and comprehensive income for employees and nonemployees:
|  |  | Three Months Ended March 31,
|  |  | 2020 |  | 2021
Sales and marketing |  |  | $ | 284 |  |  | $ | 753 |
Customer operations |  |  | 199 |  |  | 752 |
Engineering and product development |  |  | 926 |  |  | 4,307 |
General, administrative, and other |  |  | 556 |  |  | 2,810 |
Total |  |  | $ | 1,965 |  |  | $ | 8,622 |
Stock-based compensation expense by award type was as follows:
|  |  | Three Months Ended March 31,
|  |  | 2020 |  | 2021
Stock options |  |  | $ | 1,965 |  |  | $ | 5,120 |
RSUs |  |  | — |  |  | 1,445 |
ESPP |  |  | — |  |  | 2,057 |
Total |  |  | $ | 1,965 |  |  | $ | 8,622 |

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- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: 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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