XML 28 R18.htm IDEA: XBRL DOCUMENT
v3.21.2

Stock-Based Compensation | 6 Months Ended
--- | ---
Jul. 31, 2021
Share-based Payment Arrangement [Abstract] |
Stock-Based Compensation | STOCK-BASED COMPENSATION 2021 Equity Incentive Plan In May 2021, our board of directors and in June 2021, our stockholders approved our 2021 Equity Incentive Plan (2021 Plan) as a successor to our 2013 Equity Incentive Plan (2013 Plan) and 2011 Stock Incentive Plan (2011 Plan) with the purpose of granting stock-based awards to employees, directors, officers and consultants, including stock options, restricted stock awards and restricted stock units (RSUs). A total of 35,281,596 shares of Class A common stock were initially available for issuance under the 2021 Plan. Our compensation committee administers the 2021 Plan. The number of share of our Class A common stock available for issuance under the 2021 Plan is subject to an annual increase on the first day of each fiscal year beginning on February 1, 2022, equal to the lesser of: (i) five percent (5%) of the aggregate number of outstanding shares of all classes of our common stock as of the last day of the immediately preceding fiscal year or (ii) such other amount as our board of directors may determine. The 2013 Plan and 2011 Plan (together, the Prior Plans) were terminated in July 2021, in connection with the adoption of our 2021 Plan, and stock-based awards are no longer granted under the Prior Plans. However, the Prior Plans will continue to govern the terms and conditions of the outstanding awards previously granted thereunder. Any shares underlying stock options that are expired, canceled, forfeited or repurchased under the Prior Plans will be automatically transferred to the 2021 Plan and be available for issuance as Class A common stock. 2013 Equity Incentive Plan Our 2013 Plan was adopted by our board of directors in June 2013 and approved by our stockholders in July 2013. The 2013 Plan provides for the grant of stock-based awards to employees, officers, directors, and other service providers. As of July 31, 2021, we had 47,976,585 shares reserved for issuance pursuant to grants under our 2013 Plan. Options granted under the 2013 Plan expire ten years from the date of grant. The options generally vest 25% on the first anniversary of the grant date and monthly over the course of the following three years. A summary of our stock option plan activity under the 2013 Plan is as follows:
| Number of Options |  | Weighted-Average Exercise Price |  | Weighted-Average Remaining Contractual Term (in years) |  | Aggregate Intrinsic Value (in thousands)
Outstanding as of January 31, 2021 | 37,231,191 |  |  | $ | 1.68 |  |  | 8.34 |  | $ | 442,515 |
Granted | 14,048,623 |  |  | $ | 9.66 |  |  |  |  |
Exercised | (3,296,747) |  |  | $ | 1.24 |  |  |  |  |
Forfeited | (352,965) |  |  | $ | 3.86 |  |  |  |  |
Outstanding as of July 31, 2021 | 47,630,102 |  |  | $ | 4.04 |  |  | 8.44 |  | $ | 2,156,010 |
Expected to vest as of July 31, 2021 | 47,630,206 |  |  | $ | 4.04 |  |  | 8.44 |  | $ | 2,156,010 |
Vested and exercisable as of July 31, 2021 | 15,494,656 |  |  | $ | 1.51 |  |  | 7.28 |  | $ | 740,631 |
The weighted-average grant-date fair value of options granted during the three months ended July 31, 2021 and 2020 was $18.16 per share and $1.87 per share, respectively. The weighted-average grant-date fair value of options granted during the six months ended July 31, 2021 and 2020 was $13.14 per share and $1.28 per share, respectively. The aggregate grant-date fair value of options vested during the three months ended July 31, 2021 and 2020 was $8.1 million and $1.1 million, respectively. The aggregate grant-date fair value of options vested during the six months ended July 31, 2021 and 2020 was $12.3 million and $2.0 million, respectively. The aggregate intrinsic value is the difference between the exercise price and the estimated fair value of the underlying common stock. The aggregate intrinsic value of options exercised during the three months ended July 31, 2021 and 2020 was $53.8 million and $0.7 million, respectively. The aggregate intrinsic value of options exercised during the six months ended July 31, 2021 and 2020 was $80.9 million and $1.9 million, respectively. As of July 31, 2021, we had unrecognized stock-based compensation expense related to unvested options of $174.5 million that is expected to be recognized on a straight-line basis over a weighted-average period of 2.1 years. Restricted Stock Units A summary of our RSUs is as follows:
| Number of Shares |  | Weighted-Average Grant Date Fair Value
Outstanding as of January 31, 2021 | — |  |  | $ | — |
Granted | 346,483 |  |  | $ | 32.39 |
Forfeited | — |  |  | — |
Outstanding as of July 31, 2021 | 346,483 |  |  | $ | 32.39 |
As of July 31, 2021, we had unrecognized stock-based compensation expense related to unvested RSUs of $10.3 million that is expected to be recognized on a straight-line basis over a weighted-average period of 2.1 years. Performance Milestone Options In February 2021, we granted 1,243,636 performance milestone options to purchase shares of common stock under the 2013 Plan. The performance milestone options are subject to service-based vesting conditions and achievements of certain milestones. We recognize compensation cost on a graded basis over the total requisite service period for each separately vesting portion of the performance tranches related to these performance milestone options. The grant-date fair value of the performance milestone options was $10.25, $10.37, and $10.49 per share for each of the performance tranches using the Black-Scholes option-pricing model. We assess the probability that the performance condition will be met for each of the performance tranches at the end of each reporting period, and recognize cumulative expense only for the performance tranches that are assessed to be probable of vesting. During the three and six months ended July 31, 2021, we recorded $5.6 million and $8.7 million of stock-based compensation expense, respectively. As of July 31, 2021, we had unrecognized stock-based compensation expense related to unvested performance milestone options of $4.2 million, that is expected to be recognized over the remaining vesting period of 0.4 years. Milestone Options In March 2021, we granted 1,404,605 options to purchase shares of common stock subject to service-based, performance-based, and market-based vesting conditions to our Chief Executive Officer and Chief Financial Officer under the 2013 Plan. These stock options will vest 100% upon the occurrence of our IPO (the performance-based vesting condition) and the achievement of certain milestone events and our share price targets (the market-based vesting conditions), subject to the executive’s continued service to us from the grant date through the milestone events. For these options, we used a Monte Carlo simulation to determine the fair value at the grant date and the implied service period. During both the three and six months ended July 31, 2021, we recorded $1.2 million of stock-based compensation expense. As of July 31, 2021, we had unrecognized stock-based compensation expense related to unvested milestone options of $18.1 million, that is expected to be recognized over the remaining vesting period of 5.1 years. Restricted Common Stock In connection with the Scalyr acquisition, we granted 1,315,099 shares of restricted common stock with a fair value of $14.59 per share at the time of grant, that vest over a period of two years. During the three and six months ended July 31, 2021, we recorded $3.1 million and $5.5 million of stock-based compensation expense, respectively. As of July 31, 2021, we had unrecognized stock-based compensation expense related to this unvested restricted common stock of $14.1 million that is expected to be recognized over the remaining vesting period of 1.1 years. 2011 Stock Incentive Plan As part of the Scalyr acquisition, we assumed 2,138,347 options to purchase shares of common stock under the 2011 Plan, at a weighted-average exercise price of $1.74 per share and weighted-average fair value of $13.10 per share, of which 755,368 options remained outstanding with a weighted-average exercise price of $1.72 per share as of July 31, 2021. As of July 31, 2021, 96,579 options were vested and exercisable with a weighted-average exercise price of $1.72 per share. The aggregate grant-date fair value of options vested during the three and six months ended July 31, 2021 was $4.7 million and $8.7 million, respectively. The total unrecognized stock-based compensation expense related to these options was $6.7 million, that is expected to be recognized on a straight-line basis over a weighted-average period of 1.1 years. During the three and six months ended July 31, 2021, 266,980 and 1,328,595 options, respectively, were exercised with an aggregate intrinsic value of $7.0 million and $22.7 million, respectively. Secondary Stock Sales In May 2021, we facilitated a secondary sale of our common stock. Under the terms of the sale, certain Preferred Stock investors purchased 85,403 shares of common stock from an employee at $23.00 per share for an aggregate purchase price of $2.0 million. We did not recognize any stock-based compensation expense during the three months ended July 31, 2021 in connection with this sale. In June 2021, we facilitated certain secondary sales of our common stock. Under the terms of the sales, certain Preferred Stock investors purchased 305,724 shares of common stock from certain employees at prices ranging from $21.00 to $52.00 per share for an aggregate purchase price of $8.7 million. The stock-based compensation expense recognized in connection with these sales were not material. Common Stock Subject to Repurchase Common stock purchased by employees pursuant to an early exercise of stock options are not deemed, for accounting purposes, to be outstanding until those shares vest according to their respective vesting schedules and accordingly, the consideration received for early exercises are initially recorded as a liability and reclassified to common stock and additional paid-in capital as the underlying awards vest. These unvested shares may be repurchased by us in case of employment termination at the price paid by the purchaser for such shares. As of July 31, 2021, the balance of common stock subject to repurchase was not material. Stock-Based Compensation Expense We estimate the fair value of stock options granted using the Black-Scholes option pricing model based on the following assumptions: Expected term – We determine expected term based on the average period the options are expected to remain outstanding using the simplified method, calculated as the midpoint of the options’ vesting term and contractual expiration period, until sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior becomes available. Expected volatility – Since there is little trading history of our common stock, expected volatility is estimated based on the historical volatilities of a group of comparable publicly traded companies. Risk-free interest rate – The risk-free interest rate is based on U.S. Treasury yields for a period that corresponds with the expected term of the award. Dividend yield – As we do not currently issue dividends and do not expect to issue dividends on our common stock in the foreseeable future, the expected dividend yield is zero. Fair value of underlying common stock – Prior to the completion of our IPO, the fair value of our common stock was determined by the board of directors by considering a number of objective and subjective factors including input from management and contemporaneous third-party valuations. After the completion of our IPO, the fair value of our common stock is determined by the closing price, on the date of grant, of our Class A common stock, which is traded on the New York Stock Exchange.
| Three Months Ended July 31, |  | Six Months Ended July 31,
| 2021 |  | 2020 |  | 2021 |  | 2020
Expected term (in years) | 6.0 |  | 6.0 |  | 6.0 |  | 6.0
Expected volatility | 62.3 | % |  | 48.3 | % |  | 62.3% - 66.0% |  | 48.3%- 48.5%
Risk-free interest rate | 1.1 | % |  | 0.4 | % |  | 0.8% - 1.1% |  | 0.4% - 0.5%
Dividend yield | — | % |  | — | % |  | — | % |  | — | %
The components of stock-based compensation expense recognized in the consolidated statements of operations consisted of the following (in thousands):
| Three Months Ended July 31, |  | Six Months Ended July 31,
| 2021 |  | 2020 |  | 2021 |  | 2020
Cost of revenue | $ | 840 |  |  | $ | 65 |  |  | $ | 1,223 |  |  | $ | 135 |
Research and development | 8,823 |  |  | 261 |  |  | 15,962 |  |  | 3,024 |
Sales and marketing | 3,905 |  |  | 606 |  |  | 5,952 |  |  | 1,067 |
General and administrative | 7,825 |  |  | 656 |  |  | 11,693 |  |  | 1,013 |
Total | $ | 21,393 |  |  | $ | 1,588 |  |  | $ | 34,830 |  |  | $ | 5,239 |
Employee Stock Purchase Plan In May 2021, our board of directors, and in June 2021, our stockholders approved our 2021 Employee Stock Purchase Plan (ESPP), which became effective on the date of effectiveness of our Final Prospectus, or June 29, 2021. The ESPP initially reserved and authorized the issuance of up to a total of 7,056,319 shares of common stock to eligible employees. The number of shares reserved for issuance and sale under the ESPP will automatically increase on the first day of each fiscal year, starting on February 1, 2022 for the first ten calendar years after the first offering date, in an amount equal to (i) 1% of the aggregate number of outstanding shares of all class our common stock on the last day of the immediately preceding fiscal year, or (ii) such other amount as the administrator of the ESPP may determine. The ESPP generally provides for six-month offering periods beginning January 6 and July 6 of each year, with each offering period consisting of single six-month purchase periods, except for the initial offering period which began on July 1, 2021, and will end on July 5, 2023 and the second offering period will begin on January 6, 2022. On each purchase date, eligible employees will purchase the shares at a price per share equal to 85% of the lesser of (1) the fair market value of our common stock as of the beginning of the offering period or (2) the fair market value of our common stock on the purchase date, as defined in the ESPP except for the initial offering period that has a 24-months look back to the IPO price of $35. The Company recognized stock-based compensation expense related to ESPP of $1.0 million during both the three and six months ended July 31, 2021. As of July 31, 2021, $2.6 million amount has been withheld on behalf of employees for a future purchase under the ESPP due to the timing of payroll deductions. There were no purchases for the three or six months ended July 31, 2021 related to the ESPP.

X
- 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
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration