Stock-based Compensation

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Cost of revenue	$	764	$	48	$	1,585	$	131
Sales and marketing	6,356		163		11,706		950
Technology and development	14,446		600		32,591		2,153
General and administrative	16,499		2,118		41,079		7,383
Total stock-based compensation expense	38,065		2,929		86,961		10,617
Amount capitalized to internal-use software	9		12		35		35
Total stock-based compensation	$	38,074	$	2,941	$	86,996	$	10,652

Stock Options

Stock option activity for the nine months ended September 30, 2021 is as follows (in thousands, except weighted-average exercise price and remaining contractual 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	(539)	0.71
Cancelled/forfeited	(95)	4.40
Outstanding at September 30, 2021	15,572	$	10.28	8.2	$	252,542
Vested and expected to vest at September 30, 2021	15,544	$	10.29	8.2	$	251,962
Exercisable at September 30, 2021	6,501	$	8.31	7.6	$	117,605

At September 30, 2021, total unrecognized stock-based compensation expense is $71.4 million, which is expected to be recognized over a weighted-average period of 2.7 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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Expected life (years)	—		5.3		5.4		5.2
Risk-free interest rate	—	%	0.3	%	1.0	%	1.3	%
Expected volatility	—	%	47	%	46	%	44	%
Expected dividend yield	—	%	—	%	—	%	—	%

In June 2021, we granted 970,970 options to our executive officers that were contingent on the effectiveness of the registration statement 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 registration statement was declared effective. The related stock-based compensation expense for the three months ended September 30, 2021 was $1.5 million and stock-based compensation of $9.7 million will be recognized over a weighted-average requisite service period of approximately 3.9 years.

There were no awards granted for the three months ended September 30, 2021.

Restricted Stock Units

Restricted stock unit, or RSU, activity for the nine months ended September 30, 2021 is as follows (in thousands, except weighted-average grant-date fair value):


	Number of Shares	Weighted- Average Grant- Date Fair Value
Unvested at December 31, 2020	2,499	$	9.53
Granted	1,978	18.87
Cancelled/forfeited	(201)	11.29
Vested	(662)	19.34
Unvested at September 30, 2021	3,614	$	20.60

The fair value of vested RSUs for the nine months ended September 30, 2021 and 2020 was $20.0 million and $3.1 million, respectively. Our RSUs consist of time-based RSUs and various performance RSUs. For the three and nine months ended September 30, 2021, total stock-based compensation expense related to RSUs was $15.5 million and $27.7 million, respectively. For the three and nine months ended September 30, 2020, total stock-based compensation expense related to RSUs was $0.8 million and $3.2 million, respectively. At September 30, 2021, total remaining stock-based compensation expense for unvested RSU awards was $60.3 million, which is expected to be recognized over a weighted-average period of 3.2 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 registration statement was declared effective. Stock-based compensation expense for the three months ended September 30, 2021 was $1.4 million and stock-based compensation of $9.2 million will be recognized over a weighted-average requisite service period of approximately 3.9 years.

Upon the effectiveness of our IPO and through September 30,2021, there were 476,646 RSUs that vested. 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 nine months ended September 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 included an IPO. Employees will be eligible to retain any vested awards up to a period of 6.5 years from their respective grant dates. 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 expense is recognized 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 registration statement on June 29, 2021, we commenced recognition of stock-based compensation for all LERSUs as the CIC performance event and service conditions for vested RSUs were satisfied. Stock-based compensation expense for these LERSUs of $12.1 million and $22.8 million was recognized on a graded vesting basis during the three and nine months ended September 30, 2021, respectively, for the portion of service completed by the employee from the grant date through September 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 and upon the consummation of a CIC event, which included 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 2021, prior to the effective date of our IPO registration statement, 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 registration statement for the modified performance options for which the service vesting condition was satisfied on or prior to the effective date of the IPO registration statement, and all remaining compensation expense 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 registration statement through June 30, 2021. We recognized stock-based compensation of $14.6 million and $37.9 million for the three and nine months ended September 30, 2021, respectively. The remaining compensation of $38.7 million will be recognized over a remaining weighted-average service period of 2.7 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. Upon our IPO, we recognized stock-based compensation expense for the modified 2019 performance options for which the service vesting condition was satisfied on or prior to the effective date of the IPO registration statement, 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 registration statement through June 30, 2021. We recognized stock-based compensation of $4.1 million and $10.6 million for the three and nine months ended September 30, 2021, respectively. The remaining compensation expense of $8.5 million will be recognized over a remaining weighted-average service period of 2.0 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 registration statement, the modified performance RSUs vest 25% on the first anniversary from their respective vesting commencement dates, then 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 registration statement for the performance RSUs for which the service vesting condition was satisfied on or prior to the effective date of the IPO registration statement, 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 registration statement through June 30, 2021. We recognized stock-based compensation of $0.6 million and $0.9 million for the three and nine months ended September 30, 2021, respectively. The remaining compensation expense of $2.1 million will be recognized over a remaining weighted-average service period of 3.1 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 to remove the CIC event 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 our IPO registration statement for the modified LERSUs that have satisfied the service-vesting condition on or prior to the effective date of our IPO registration statement, 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 registration statement through June 30, 2021. We recognized stock-based compensation of $9.9 million and $17.3 million for the three and nine months ended September 30, 2021, respectively. The remaining compensation expense of $26.0 million will be recognized over a remaining weighted-average service period of 3.0 years.

We modified 63,235 vested options to extend the exercise period for terminated employees who are not able to exercise their options during the IPO lock-up period. We recognized $0.9 million in incremental stock-based compensation in June 2021 related to this modification, and we recognized stock-based compensation of $0.5 million and $1.4 million for the three and nine months ended September 30, 2021, respectively. In October 2021 we modified 51,404 vested options to extend the exercise period for terminated employees who are not able to exercise their options during the IPO lock-up period. We will recognize $1.3 million in incremental stock-based compensation in October 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 as part of our registration statement on Form S-1/A (File no. 333-256803).

2021 Equity Incentive Plan

In June 2021, our board of directors adopted our 2021 Equity Incentive Plan, or our 2021 Plan. All equity-based awards going forward will be granted under the 2021 Plan. An aggregate of 18,946,871 shares of our common stock are reserved for 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 the 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 rights to purchase shares of our common stock on specified dates during such offerings at a discounted price per share.

Under the 2021 ESPP our employees may purchase common stock through payroll deductions at a price equal to 85% of the lower of the fair market value of the stock at the beginning of the offering period or at the end of each applicable purchase period. The 2021 ESPP generally provides for offering periods of six months in duration with purchase periods ending on either May 15 or November 15. Contributions under the 2021 ESPP are limited to a maximum of 15% of an employee’s eligible compensation. ESPP purchases are settled with common stock from the ESPP’s previously-authorized and available pool of shares. The stock-based compensation expense incurred for the current offering period is immaterial.

Buyback program

In July 2021, we cancelled our buyback program for certain members of senior management for up to 60,405 outstanding RSUs. The RSUs will continue to vest over their remaining service period conditions.