Stock-Based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

2021 Equity Incentive Award Plan

In September 2021, the Company adopted the 2021 Equity Incentive Award Plan (the “2021 Plan”), which allows for the granting of stock options and stock purchase rights to the employees, members of the board of directors, and consultants of the Company. A total of 7,729,013 shares of common stock were reserved for issuance under the 2021 Plan. Options granted under the 2021 Plan may be either incentive stock options (“ISOs”) or nonqualified stock options (“NSOs”). ISOs may be granted only to the Company’s employees, including officers and directors who are also employees. NSOs may be granted to employees and consultants.

Options under the 2021 Plan may be granted for periods of up to 10 years and at prices no less than 100% of the estimated fair value of the shares on the date of grant as determined by the board of directors, provided, however, that the exercise price of an ISO and NSO granted to a 10% shareholder shall not be less than 110% of the estimated fair value of the shares on the date of grant.

Granted options for newly hired employees usually vest over four years monthly with a one-year cliff vesting, and follow-on options vest monthly over four years with no cliff vesting. Options granted to consultants have various vesting schedules depending on the underlying consulting arrangement and anticipated period of service. Granted restricted stock units usually vest over four years annually. As of December 31, 2023, there were 5.2 million shares available for grant and 2.3 million awards outstanding under the 2021 Plan.

2008 Stock Plan

The Company ceased making awards under the 2008 Stock Plan upon the effective date of the Company’s IPO. In 2008, the Company adopted the 2008 Stock Plan (the “2008 Plan”), which allows for the granting of stock options and stock purchase rights to the employees, members of the board of directors, and consultants of the Company. Options granted under the 2008 Plan may be either incentive stock options (“ISOs”) or nonqualified stock options (“NSOs”). ISOs may be granted only to the Company’s employees, including officers and directors who are also employees. NSOs may be granted to employees and consultants. Options granted under the 2008 Plan will start expiring in August 2021. Options outstanding under the 2008 Plan will expire upon forfeiture. As of December 31, 2023, 4.5 million options were outstanding under the 2008 Plan.

2021 Employee Stock Purchase Plan

In September 2021, the Company adopted the 2021 Employee Stock Purchase Plan (the “2021 ESPP”). The 2021 ESPP became effective on the effective date of the IPO. A total of 412,988 shares were initially reserved for issuance under the 2021 ESPP. Additionally, the number of shares of common stock reserved for issuance under the 2021 ESPP will increase automatically each year, beginning on January 1, 2022, and continuing through and including January 1, 2031, by the lesser of (1) 1% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year; or (2) such lesser number as determined by the Company’s board of directors. The number of shares that may be issued under the 2021 ESPP shall not exceed a total of 10,526,315 shares. As of December 31, 2023, approximately 245,000 shares have been issued under the 2021 ESPP. As of December 31, 2023, there were 1.1 million shares available for grant under the 2021 ESPP.

Total stock-based compensation recognized, before taxes, are as follows (in thousands):


	Year Ended December 31,
	2023		2022		2021

Cost of sales	$	2,493	$	1,053	$	253
Research and development	4,798		2,230		783
Sales, general and administrative	14,401		7,387		2,760
Stock-based compensation capitalized in inventory	$	(2,558)	$	(333)	—
Total stock-based compensation	$	19,134	$	10,337	$	3,796

Stock Options

A summary of the Company’s stock option activity and related information are as follows (options in thousands):


	Year Ended
	December 31, 2023

		Options	Weighted Average Exercise Price
Outstanding, beginning of period		5,353	$	6.93
Granted		398	36.83
Exercised		(520)	4.77
Forfeited		(16)	11.62
Outstanding, end of period		5,215	9.42
Vested and expected to vest		5,215	9.42
Exercisable		4,042	6.80

The weighted-average grant date fair value of options granted during the years of December 31, 2023 and 2022 was $21.02 and $19.15, respectively. As of December 31, 2023, the aggregate pre-tax intrinsic value of options outstanding and exercisable was $144.0 million and options outstanding were $169.5 million. The aggregate pre-tax intrinsic value of options exercised was $15.4 million and $29.8 million during the years ended December 31, 2023 and 2022, respectively. The aggregate pre-tax intrinsic value was calculated as the difference between the exercise prices of the underlying options and the estimated fair value of the common stock on the date of exercise. The total fair value of options vested was $5.8 million and $4.8 million during the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2023, total unrecognized stock-based compensation related to unvested stock options was $10.9 million, which the Company expects to recognize over a remaining weighted-average period of 2.4 years.

The fair value of the options granted to employees or directors was estimated as of the grant date using the Black-Scholes model assuming the weighted-average assumptions listed in the following table:


	Year Ended December 31,
	2023			2022			2021

Expected life (years)	6.0			5.9			6.0
Expected volatility	57		%	55		%	50		%
Risk-free interest rate	4.0		%	2.5		%	1.0		%
Expected dividend rate	—		%	—		%	—		%
Weighted-average fair value	$	21.02		$	19.15		$	4.36

Restricted Stock Units

A summary of the Company’s restricted stock unit or RSU activity and related information are as follows (RSUs in thousands):


	Year Ended
	December 31, 2023

		Restricted Stock Units	Weighted-Average Fair Value
Outstanding, beginning of period		742	$	36.35
Granted		1,144	36.16
Canceled/forfeited		(119)	35.31
Released		(202)	36.50
Outstanding, end of period		1,565	36.27

The weighted-average grant date fair value of RSUs granted during the years of December 31, 2023 and 2022 was $36.16 and $36.23, respectively.

As of December 31, 2023, the aggregate pre-tax intrinsic value of RSUs outstanding was $65.6 million, calculated based on the closing price of the Company’s common stock at the end of the period.

As of December 31, 2023, total unrecognized stock-based compensation related to unvested RSUs was $46.0 million, which the Company expects to recognize over a remaining weighted-average period of 3.0 years.

Employee Stock Purchase Plan

As of December 31, 2023, there was approximately $0.8 million of unrecognized cost related to employee stock purchases under the 2021 ESPP. This cost is expected to be recognized over a weighted average period of 0.4 years. As of December 31, 2023, a total of 1.1 million shares were available for issuance under the 2021 ESPP.

The fair value of the options granted under the 2021 ESPP to employees was estimated as of the grant date using the Black-Scholes model assuming the weighted-average assumptions listed in the following table:


	Year Ended December 31,
	2023			2022

Expected life (years)	0.7			0.7
Expected volatility	53		%	56		%
Risk-free interest rate	5.1		%	4.2		%
Expected dividend rate	—		%	—		%
Weighted-average fair value	$	11.20		$	15.11

There were no shares issued under the ESPP for the year ended December 31, 2021.