Earnout Interests Liability

12 Months Ended

Dec. 31, 2023

Earnout Interests Liability [Abstract]

In connection with the consummation of the Business Combination as further described in Note 1, (i) 1,212,813 shares of Class A Common Stock held by the independent directors of dMY, consisting of Darla Anderson, Francesca Luthi and Charles E. Wert, together with the Sponsor (collectively, the “Founder Holders”) that formerly constituted shares of Class B common stock of dMY held by the Founder Holders, (ii) 1,212,813 Issued RSILP Units issued to the Company in connection with the Business Combination, (iii) 15,000,000 Retained RSILP Units held by the Sellers, and (iv) 15,000,000 shares of Class V Common Stock issued to the Sellers by the Company in connection with the Business Combination (collectively, the “Earnout Interests”), became subject to certain restrictions on transfer and voting and potential forfeiture pending the achievement (if any) of certain earnout targets. The earnout targets included (a) a change of control within three years of the Closing, (b) achieving certain revenue targets for the 2021 year, and (c) achieving certain VWAPs within three years of the Closing.

Earnout interests represented a freestanding financial instrument initially classified as liabilities on the accompanying consolidated balance sheets as the Company determined that these financial instruments were not indexed to the Company’s own equity in accordance with ASC 815, Derivatives and Hedging. Earnout interests were initially recorded at fair value and were adjusted to fair value at each reporting date with changes in fair value recorded in change in fair value of earnout interests liability in the consolidated statements of operations.

The range and weighted-average of the significant inputs used to fair value Level 3 recurring liabilities during the year ended December 31, 2020, along with the valuation techniques used, are shown in the following table:

Fair Value
(in thousands)

Valuation
Technique

Observable (O) or
Unobservable (U) Input

Range
(Weighted-Average)

Earnout interests liability

351,048

Option pricing model

Share price (O)

$21.51 - $21.65

Volatility (U)

54.6%

Term (U)

2.99 years

Risk-free rate (O)

0.17%

The share price input is based on the Class A Common Stock trading price at the valuation date. The volatility input was determined using the Guideline Public Companies’ daily trading activity. Daily volatilities were calculated based on the daily trading activity using a historical lookback period commensurate with the maturity. The selected volatility was the average of the Guideline Public Companies’ volatility for the period. The term input represents the time to expiration of the earnout interests. The risk-free rate input is based on the 3-year U.S. Treasury bond rate in effect at the date of the grant.

On January 13, 2021, the earnout interests were fully earned and no longer subject to the applicable restrictions on transfer and voting because the VWAP exceeded $14.00 per share for 10 trading days within a 20 consecutive trading day period following the Closing. As a result, the earnout interests liability was reclassed to equity resulting in 1,212,813 shares of Class A Common Stock held by the Founder Holders (as defined below) and 15,000,000 shares of Class V Common Stock and RSILP Units issued to the Sellers (i.e., non-controlling interests) that were no longer subject to the applicable restrictions.

The Company recorded $13.7 million to change in fair value of earnout interests liability on the Company’s consolidated statement of operations, representing the change in fair value of the earnout interests from December 31, 2020 through January 13, 2021, when the earnout interests were no longer subject to the restrictions.


Earnout Interests Liability
($ in thousands)	Total
December 31, 2020	$	351,048
Change in fair value of earnout interests liability	13,740
Settlement of earnout interests liability	(364,788)
December 31, 2021	$	—