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Stock-based Compensation | 6 Months Ended
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Jun. 30, 2021
Share-based Payment Arrangement [Abstract] |
Stock-based Compensation | Note 9. Stock-based Compensation Stock-based Compensation Cost We recorded stock-based compensation cost in the following categories in the accompanying condensed consolidated statements of operations and balance sheets (in thousands):
|  | Three Months Ended June 30 |  |  | Six Months Ended June 30 |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Cost of revenue |  | $ | 762 |  |  | $ | 46 |  |  | $ | 821 |  |  | $ | 83 |
Sales and marketing |  |  | 5,143 |  |  |  | 144 |  |  |  | 5,350 |  |  |  | 787 |
Technology and development |  |  | 17,619 |  |  |  | 603 |  |  |  | 18,145 |  |  |  | 1,553 |
General and administrative |  |  | 21,430 |  |  |  | 2,568 |  |  |  | 24,580 |  |  |  | 5,265 |
Total stock-based compensation expense |  |  | 44,954 |  |  |  | 3,361 |  |  |  | 48,896 |  |  |  | 7,688 |
Amount capitalized to internal-use software |  |  | 13 |  |  |  | 8 |  |  |  | 26 |  |  |  | 23 |
Total stock-based compensation |  | $ | 44,967 |  |  | $ | 3,369 |  |  | $ | 48,922 |  |  | $ | 7,711 |
Stock Options Stock option activity for the six months ended June 30, 2021 is as follows (in thousands, except weighted-average exercise price and remaining contract life):
|  | Number of Options |  |  | Weighted- Average Exercise Price |  |  | Weighted- Average Remaining Contractual Life (in Years) |  |  | Aggregate Intrinsic Value |
Outstanding at December 31, 2020 |  |  | 15,235 |  |  | $ | 8.78 |  |  |  | 8.7 |  |  |  | 15,873 |
Granted |  |  | 971 |  |  |  | 28.00 |  |  |  |  |  |  |  |  |
Exercised |  |  | (456 | ) |  |  | 0.63 |  |  |  |  |  |  |  |  |
Cancelled/forfeited |  |  | (84 | ) |  |  | 4.81 |  |  |  |  |  |  |  |  |
Outstanding at June 30, 2021 |  |  | 15,666 |  |  | $ | 10.23 |  |  |  | 8.4 |  |  | $ | 432,727 |
Vested and expected to vest at June 30, 2021 |  |  | 15,628 |  |  | $ | 10.24 |  |  |  | 8.4 |  |  | $ | 431,496 |
Exercisable at June 30, 2021 |  |  | 5,637 |  |  | $ | 7.99 |  |  |  | 7.7 |  |  | $ | 168,307 |
At June 30, 2021, total unrecognized stock-based compensation expense is $93.3 million, which is expected to be recognized over a weighted-average period of 2.9 years. The weighted-average assumptions used to calculate the grant-date fair value of our stock option grants using the Black-Scholes Option Pricing Model were as follows:
|  | Three Months Ended June 30 |  |  | Six Months Ended June 30 |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Expected life (years) |  |  | 5.4 |  |  |  | — |  |  |  | 5.4 |  |  |  | 5.1 |
Risk-free interest rate |  |  | 0.97 | % |  |  | — |  |  |  | 0.97 | % |  |  | 1.62 | %
Expected volatility |  |  | 45.6 | % |  |  | — |  |  |  | 45.6 | % |  |  | 43.1 | %
Expected dividend yield |  |  | 0.0 | % |  |  | — |  |  |  | 0.0 | % |  |  | 0.0 | %
In June 2021, we granted 970,970 options to our executive officers that were contingent on the effectiveness of our IPO, which occurred on June 29, 2021, or IPO options. Because the number of options and exercise price of the IPO Options were based on the IPO price to the public, the grant date for accounting purposes was not established until the effective date of our IPO. As the IPO was a performance condition, no stock-based compensation expense was recognized until our IPO was declared effective. Stock-based compensation expense for the three months ended June 30, 2021 was $0.2 million and stock-based compensation of $11.2 million will be recognized over a weighted-average requisite service period of approximately 4.1 years. There were no awards granted for the three months ended June 30, 2020. Restricted Stock Units A summary of restricted stock unit, or RSU, activity for the six months ended June 30, 2021 is as follows (in thousands, except weighted-average grant-date fair value):
|  | Number of Options |  |  | Weighted- Average Grant- Date Fair Value |
Unvested at December 31, 2020 |  |  | 2,499 |  |  | $ | 9.53 |
Granted |  |  | 1,771 |  |  |  | 16.51 |
Cancelled/forfeited |  |  | (145 | ) |  |  | 10.78 |
Vested |  |  | (330 | ) |  |  | 21.29 |
Unvested at June 30, 2021 |  |  | 3,795 |  |  | $ | 19.20 |
The fair value of vested RSUs for the six months ended June 30, 2021 and 2020 was $8.4 million and $2.3 million, respectively. Our RSUs consist of time-based RSUs and various performance RSUs. For the three and six months ended June 30, 2021, total stock-based compensation expense related to RSU’s was $11.7 million and $12.2 million, respectively. For the three and six months ended June 30, 2020, total stock-based compensation expense related to RSU’s was $0.8 million and $2.4 million, respectively. At June 30, 2021, total remaining stock-based compensation expense for unvested RSU awards was $67.7 million, which is expected to be recognized over a weighted-average period of 3.4 years. In June 2021, we granted 388,389 RSUs with a value of $10.8 million to our executive officers that were contingent on the effectiveness of the registration statement of our IPO, or IPO RSUs. As the IPO was a performance condition, no stock-based compensation expense was recognized until our IPO was declared effective. Stock-based compensation expense for the three months ended June 30, 2021 was $0.2 million and stock-based compensation of $10.6 million will be recognized over a weighted-average requisite service period of approximately 4.1 years. In June 2021, we granted 14,284 RSUs to a new director of our board of directors. The RSUs have a grant-date fair value of $0.4 million. At June 30, 2021, there were 256,936 RSUs that vested upon the effectiveness of our IPO. Such shares of common stock will not be settled until after the lock-up period relating to our IPO ends in the fourth quarter of 2021. During the six months ended June 30, 2021, we granted 1,338,028 liquidity event RSUs, or LERSUs, to various employees, which only vest upon the achievement of up to four-years of service and upon the consummation of a change in control, or CIC event, which includes an IPO, merger, acquisition, or sale of more than 50% of our assets. Employees will be eligible to retain any vested awards up to a period of 6.5 years from their respective grant date. If the recipient employee terminates for any reason other than for cause, the employee shall retain any service-vested LERSUs until 6.5 years from the date of grant or the earlier settlement of the service-vested LERSUs upon the consummation of a CIC event. For the LERSUs, recognition of expense does not occur until the consummation of a CIC event and thereafter for any remaining service period, as such events are not considered probable of occurring prior to the CIC event for stock-based compensation purposes. Upon the effective date of our IPO on June 29, 2021, we commenced recognition of stock-based compensation for all LERSUs as the performance and service conditions for vested RSUs were satisfied. Stock-based compensation expense for these LERSUs of $ 10.6 million was recognized on a graded vesting basis during the three months ended June 30, 2021 for the portion of service completed by the employee from the grant date through June 30, 2021. In March 2021, we granted 30,434 RSUs to various employees where the RSUs will vest depending upon the appreciation of the fair value of our common stock compared to the grant-date fair value of our common stock upon the consummation of a CIC event, which includes an IPO, merger, acquisition, or sale of more than 50% of our assets, or performance RSUs. The performance RSUs vest on a linear basis, starting at 0% with a fair value of our common stock equal to $19.64 per share and ending at 100% upon reaching a fair value of our common stock of $29.46 per share. The performance options were subsequently modified in June prior to the effective date of our IPO as discussed below. Stock-option and RSU activity described above, including total stock-based compensation expense recognized and total remaining stock-based compensation expense is inclusive of awards modified during the period as discussed below. Modification of Stock-Based Compensation Awards In June 2021, we modified the vesting conditions of certain stock options and RSUs as described below. We modified the vesting conditions of 4,477,218 outstanding performance options of certain executive officers and employees so that the performance options do not fully vest immediately upon an IPO. Instead, subject to and contingent upon the effective date of an IPO, the modified performance options for executive officers will vest monthly over a four-year period from their original vesting commencement dates and the modified performance options of certain employees will vest 25% on the first anniversary from the vesting commencement date, and then vest monthly over the remaining service period, subject to continued employment through the applicable vesting dates. As the modified awards contain a performance condition that is satisfied upon an IPO, we remeasured the fair value of the performance options on the date of modification. This new fair value of $76.6 million will be recognized as stock-based compensation expense using the graded vesting method, with an immediate stock-based compensation expense recognized on the effective date of our IPO for the modified performance options for which the service vesting condition was satisfied through the effective date of the IPO, and all remaining compensation will be recognized thereafter over the remaining service period. We recognized stock-based compensation expense of $23.3 million from the effective date of our IPO through June 30, 2021, and remaining compensation of $53.3 million will be recognized over a remaining weighted-average service period of 3.0 years. We modified the vesting conditions of 3,627,936 outstanding 2019 performance options of an executive officer so that in the event of an IPO the modified 2019 performance options will vest monthly over a four-year period from the original vesting commencement date in 2019, subject to continued employment of the executive officer, rather than vesting upon the fourth anniversary of the original date of grant based on achieving certain stock price thresholds. Incremental stock-based compensation expense as a result of this modification was $11.4 million and was measured using a Monte Carlo simulation immediately prior to the modification date and a Black-Scholes Option Pricing Model immediately after the modification date. Upon an IPO, we recognize stock-based compensation expense for the modified 2019 performance options for which the service vesting condition was satisfied through the effective date of the IPO, and all remaining compensation will be recognized thereafter over the remaining service period using the graded vesting method. We recognized stock-based compensation expense of $6.6 million from the effective date of our IPO through June 30, 2021, and remaining compensation of $12.6 million will be recognized over a remaining weighted-average service period of 2.3 years. We modified the vesting conditions of 111,902 outstanding performance RSUs of certain employees so that the modified performance RSUs do not vest immediately upon an IPO. Instead, subject to and contingent upon the effective date of an IPO, the modified performance RSUs will vest 25% on the first anniversary from their respective vesting commencement dates, then vest monthly over the remaining service period, subject to the continued employment through the applicable vesting dates. As the modified RSUs contain a performance condition that is satisfied upon an IPO, we remeasured the fair value of the performance RSUs on the date of modification. This new fair value of approximately $2.9 million will be recognized as stock-based compensation expense using the graded vesting method, with an immediate stock-based compensation expense recognized on the effective date of our IPO for the performance RSUs for which the service vesting condition was satisfied through the effective date of the IPO, and all remaining compensation will be recognized thereafter over the remaining service period. We recognized stock-based compensation expense of $0.2 million from the effective date of our IPO through June 30, 2021, and remaining compensation of $2.7 million will be recognized over a remaining weighted-average service period of 3.3 years. We modified the vesting conditions of 1,725,942 outstanding LERSUs and 1,706,888 outstanding time-based options of certain executive officers to amend the severance vesting acceleration benefit applicable for the LERSUs and remove the CIC vesting acceleration benefit for the time-based options. There was no incremental stock-based compensation associated with the modification of the time-based options. We remeasured the fair value of the LERSUs on the date of modification and this new fair value of approximately $43.3 million will be recognized using the graded vesting method, with an immediate stock-based compensation expense recognized on the effective date of an IPO for the modified LERSUs that have satisfied the service-vesting condition through the effective date, and all remaining compensation will be recognized thereafter over the remaining service period. We recognized stock-based compensation expense of $7.4 million from the effective date of our IPO through June 30, 2021, and remaining compensation of $35.9 million will be recognized over a remaining weighted-average service period of 3.2 years. We modified 48,300 vested options to extend the exercise period for terminated employees who are not able to exercise during the IPO lock-up period. We recognized $0.9 million in incremental stock-based compensation in June 2021. The fair value of the modified 2020 performance options, 2019 performance option, performance RSUs and LERSUs were remeasured using the fair value of our common stock, as approved by the Pricing Committee of our board of directors, which was $25.50 per share, the midpoint of the price range set forth on the cover page of the preliminary prospectus filed with the SEC on June 21, 2021. 2021 Equity Incentive Plan In June 2021, our board of directors adopted our 2021 Equity Incentive Plan, or 2021 Plan. All equity-based awards going forward will be granted under the 2021 Plan. 18,946,871 shares of our common stock are reserved for future issuance under our 2021 Plan, as well as any future automatic annual increases in the number of shares of common stock reserved for issuance under our 2021 Plan. 2021 Employee Stock Purchase Plan In June 2021, our board of directors adopted our 2021 Employee Stock Purchase Plan, or 2021 ESPP. We authorized the issuance of 3,552,538 shares of common stock under the 2021 ESPP. Our 2021 ESPP is implemented through a series of offerings under which eligible employees are granted purchase rights to purchase shares of our common stock on specified dates during such offerings at a discounted price per share.

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