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Stock-based Compensation | 12 Months Ended
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Dec. 31, 2023
Share-Based Payment Arrangement [Abstract] |
Stock-based Compensation | Stock-based Compensation 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. An aggregate of 18,946,871 shares of our common stock were 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. Under the terms of the 2021 Plan, both incentive and nonqualified stock options could be granted with exercise prices not less than the fair market value of our common stock on the date of grant. Options granted pursuant to the 2021 Plan will vest at the rate specified in the stock option agreement. Under the 2021 Plan, if an option holder’s service relationship with us or any of our affiliates ceases for any reason other than disability, death, or cause, the option holder may generally exercise any vested options for a period of three months following the cessation of service. If under our 2021 Plan, shares subject to stock awards expire or terminate without being exercised in full or are paid out in cash rather than in shares, such awards will not reduce the number of shares available for issuance under our 2021 Plan. Shares withheld under a stock award to satisfy the exercise, strike or purchase price of a stock award or to satisfy a tax withholding obligation will not reduce the number of shares available for issuance under our 2021 Plan. Under the 2021 Plan, RSU awards are granted under RSU award agreements adopted by the administrator. RSU awards may be granted for any form of legal consideration that may be acceptable to our board of directors and permissible under applicable law. An RSU award may be settled by cash, delivery of stock, a combination of cash and stock as deemed appropriate by the administrator, or in any other form of consideration set forth in the RSU award agreement. Additionally, dividend equivalents may be credited in respect of shares covered by a RSU award. Except as otherwise provided in the applicable award agreement, or other written agreement between us and the recipient, RSU awards that have not vested will be forfeited once the participant’s continuous service ends for any reason. 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, as well as any future automatic annual increases in the number of shares of common stock reserved for issuance under our 2021 Employee Stock Purchase Plan. 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 in 2023, 2022 and 2021 was $0.7 million, $0.7 million and $0.4 million, respectively. Our policy is to issue new common stock upon the exercise of stock options. 2016 Stock Option Plan Prior to the 2021 Plan, we granted stock options under our 2016 Stock Option Plan, or 2016 Plan. Under the terms of the 2016 Plan, both incentive and nonqualified stock options were granted with exercise prices not less than the fair value of the underlying common stock on the date of grant. Options granted pursuant to the 2016 Plan vest over periods of up to five years and expire ten years from the grant date. If a 2016 Plan option expires and is not exercised, such as if an employee does not exercise vested 2016 Plan options within thirty days of termination, then these options would revert back to the 2016 Plan’s option pool. The exercise price of all options granted was based on the estimated fair market value of our common stock as determined by the board of directors at the date of grant or date of modification. Stock-based Compensation Expense We recorded stock-based compensation expense in the following categories in the accompanying consolidated statements of operations and balance sheets (in thousands):
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Cost of revenue | $ | 4,318 |  |  | $ | 2,931 |  |  | $ | 1,733 |
Sales and marketing | 6,096 |  |  | 10,144 |  |  | 15,746 |
Technology and development | 18,899 |  |  | 16,574 |  |  | 38,796 |
General and administrative | 36,702 |  |  | 50,820 |  |  | 56,557 |
Total stock-based compensation expense | 66,015 |  |  | 80,469 |  |  | 112,832 |
Amount capitalized to internal-use software | 4,056 |  |  | 2,526 |  |  | 674 |
Total stock-based compensation | $ | 70,071 |  |  | $ | 82,995 |  |  | $ | 113,506 |
Stock Options Stock option activity for the year ended December 31, 2023 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, 2022 | 17,155 |  |  | $ | 11.13 |  |  | 7.1 |  | $ | 3,698 |
Granted | 4,181 |  |  | 8.54 |  |  |  |  |
Exercised | (743) |  |  | 8.20 |  |  |  |  |
Cancelled | (19) |  |  | 9.77 |  |  |  |  |
Forfeited | (88) |  |  | 9.44 |  |  |  |  |
Outstanding at December 31, 2023 | 20,486 |  |  | $ | 10.69 |  |  | 6.9 |  | $ | 34,571 |
Vested and expected to vest at December 31, 2023 | 20,486 |  |  | $ | 10.69 |  |  | 6.9 |  | $ | 34,571 |
Exercisable at December 31, 2023 | 14,021 |  |  | $ | 10.53 |  |  | 6.1 |  | $ | 22,332 |
The aggregate intrinsic values in the table above represents the difference, if any, between the fair value per share of our common stock and the option exercise prices multiplied by the number of options at the respective balance sheet dates. The total intrinsic value of stock options exercised in 2023, 2022 and 2021 was $2.2 million, $3.9 million and $13.5 million, respectively. During the years ended December 31, 2023, 2022, and 2021, the Company recorded stock-based compensation expense related to stock option awards of $22.0 million, $40.1 million, and $73.6 million, respectively. At December 31, 2023, total remaining stock-based compensation expense for unvested stock options was $25.5 million, which is expected to be recognized over a weighted-average period of 2.6 years. The weighted-average grant-date fair value per share of options granted using the Black-Scholes option pricing model for 2023, 2022 and 2021 was $4.40, $6.61 and $11.78, respectively. There was no tax benefit for 2023. There was a realized tax benefit of $2.6 million and $12.3 million for tax deductions from stock options exercised in 2022 and 2021, respectively. All tax effects related to stock-based compensation have been recorded in our provision for income taxes in the accompanying consolidated statements of operations. Vesting of the options granted to the members of our senior leadership team will be accelerated upon a qualifying termination that occurs during the change-in-control period, as defined in the option grant agreement, or immediately prior to the effective time of a change-in-control if the option award is not assumed, continued or substituted by the surviving or acquiring entity (or its parent) in connection with such change-in-control. The weighted-average assumptions that were used to calculate the grant-date fair value of our stock option grants using the Black-Scholes option pricing model were as follows:
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Expected life (years) | 5.9 |  | 5.6 |  | 5.4
Risk-free interest rate | 3.4%-3.8% |  | 2.6 | % |  | 1.0 | %
Expected volatility | 50.4%-50.7% |  | 48 | % |  | 46 | %
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. During the years ended December 31, 2023, 2022, and 2021, the Company recorded stock-based compensation expense for the IPO Options of $2.0 million, $4.5 million, and $3.2 million, respectively. At December 31, 2023, total remaining stock-based compensation expense for unvested stock options was $1.1 million, which is expected to be recognized over a weighted-average requisite service period of approximately 1.6 years. Restricted and Performance Stock Units A summary of RSUs and performance stock units, or PSUs, activity for the year ended December 31, 2023 is as follows (in thousands, except weighted-average grant-date fair value):
| Number of Units |  | Weighted- Average Grant- Date Fair Value
Unvested at December 31, 2022 | 8,879 |  |  | $ | 14.76 |
Granted | 9,974 |  |  | 8.87 |
Cancelled/forfeited | (1,405) |  |  | 10.72 |
Vested | (3,441) |  |  | 15.33 |
Unvested at December 31, 2023 | 14,007 |  |  | $ | 10.83 |
The fair value of vested RSUs in 2023, 2022 and 2021, were $36.6 million and $18.5 million and $18.1 million, respectively. Our RSUs consist of time-based RSUs and RSUs with performance conditions. For the years ended December 31, 2023, 2022 and 2021, total stock-based compensation expense related to RSUs was $47.3 million, $41.4 million and $38.6 million, respectively. At December 31, 2023, total remaining stock-based compensation expense for unvested RSU awards is $112.1 million, which is expected to be recognized over a weighted-average period of 2.7 years. There was no tax benefit for 2023 and 2022. There was a realized tax benefit of $3.5 million for tax deductions from RSU settlements in 2021. During the year ended December 31, 2023, we also granted 1.3 million PSUs to members of our senior leadership team. Vesting of the PSUs is contingent upon the recipient’s continuous employment over the requisite service period and is subject to fulfillment by the Company of predefined performance criteria. Such awards will be earned only if certain performance targets established by and under the direction of the compensation committee of the board of directors are met during the performance period. The number of PSUs subject to vesting is determined at the end of the performance period and may equal zero percent (0%) to one hundred and fifty percent (150%) of the target award based upon Company’s achievement of certain revenue, profitability, and market share targets. If the performance criteria are achieved, 75% of the PSUs will vest on the date the compensation committee of the board of directors certifies achievement of the performance criteria, and the remaining 25% of the PSUs will vest on the one year anniversary of such certification date. PSUs are measured based on the fair market value of the underlying stock on the date of grant and recognized as expense over the employee’s requisite service period using graded vesting attribution method to the extent it is probable that the performance conditions will be achieved. At December 31, 2023, the awards were not probable of vesting, and, consequently, no stock-based compensation expense related to these PSU awards was recognized during the year ended December 31, 2023. In the event of a change-in-control (as defined in the employment agreement between the Company and each recipient of the performance award), the vesting conditions of the PSUs will be modified resulting in a vesting of a greater of (i) one hundred percent (100%) of the target award, or (ii) the number of shares commensurate with the Company’s market share for the trailing 12-month period ending on the date that is the end of the nearest month prior to the date of the change of control, provided that 75% of such PSUs will vest on June 30, 2024 and the remaining 25% of such PSUs will vest on June 30, 2025, subject to the recipients continuing to be service providers through each such date and accelerated if the acquirer does not assume the awards in an economically equivalent manner. In November 2022, we granted 211,864 PSUs, with a grant date fair value of $2.0 million to certain employees where 25% and 50% of the PSUs vest upon the first and second anniversaries, respectively, from the Revv asset acquisition date should certain headcount thresholds be maintained, and 25% will vest upon the third anniversary from the Revv asset acquisition date. For the years ended December 31, 2023 and 2022, stock-based compensation expense for these PSUs was $0.8 million and $0.1 million, respectively, and was recognized on a graded vesting basis. At December 31, 2023, the remaining stock-based compensation expense for unvested PSUs is $0.9 million, which is expected to be recognized over a weighted-average requisite service period of approximately 1.4 years. In June 2021, we granted 388,389 RSUs with a grant date fair value of $10.9 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 for the IPO RSUs was recognized until our IPO registration statement was declared effective. Stock-based compensation expense for the years ended December 31, 2023, 2022 and 2021 was $1.9 million, $4.3 million, and $3.1 million, respectively. At December 31, 2023, the remaining stock-based compensation expense for unvested PSUs was $1.1 million, which is expected to be recognized over a weighted-average requisite service period of approximately 1.6 years. Upon the effectiveness of our IPO and through December 31, 2021, there were 550,091 RSUs that vested. Such shares of common stock were settled until after the lock-up period relating to our IPO that ended in the fourth quarter of 2021. In 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. 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. 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 May 2023, the compensation committee of the board of directors approved amendments to the terms of the stock option and RSU awards granted to members of our senior leadership team during the year ended December 31, 2022, whereby the vesting of such stock options and RSUs will be accelerated upon (i) a qualifying termination that occurs during the CIC period or (ii) the individual’s termination as a result of his or her death or disability (as each such term is defined in the employment agreement between the Company and applicable individual). Further, the amendments provide that such stock options, to the extent vested and outstanding on the date of the individual’s qualifying termination or the termination of the individual’s employment in the event of his or her death or disability, as applicable and after giving effect to the vesting acceleration, shall remain outstanding and exercisable until the earlier of: (x) the original expiration date of the stock options, (y) the one-year anniversary of the date of the individual’s termination of employment with the Company, and (z) immediately prior to the effective time of a change in control if such stock option is not assumed, continued or substituted by the surviving or acquiring entity (or its parent) in connection with such change in control. The modification to add the foregoing provisions did not result in an incremental fair value of the impacted awards because the original vesting conditions were expected to be satisfied as of the modification date and the termination of the individual’s employment in the event of change-in-control or as a result of his or her death or disability was not probable as of the date of this filing. 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 and we recognized stock-based compensation of $24.1 million during the six months ended December 31, 2021. Stock-based compensation expense for the years ended December 31, 2023 and 2022 was $5.9 million and $19.9 million, respectively. At December 31, 2023, remaining compensation of $0.9 million will be recognized over a remaining weighted-average service period of 0.7 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 years 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 and we recognized stock-based compensation of $6.7 million during the six months ended December 31, 2021. Stock-based compensation expense for the years ended December 31, 2023 and 2022 was $0.9 million and $5.0 million, respectively. There is no remaining compensation expense to be recognized as of December 31, 2023. 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 and we recognized stock-based compensation of $1.2 million during the six months ended December 31, 2021. Stock-based compensation expense for the years ended December 31, 2023 and 2022 was $0.3 million and $0.6 million, respectively. At December 31, 2023, remaining compensation expense of $0.1 million will be recognized over a remaining weighted-average service period of 0.8 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 and we recognized stock-based compensation of $15.8 million during the six months ended December 31, 2021. Stock-based compensation expense for the years ended December 31, 2023 and 2022 was $5.0 million and $13.0 million, respectively. At December 31, 2023, remaining compensation expense of $1.2 million will be recognized over a remaining weighted-average service period of 0.9 years. During 2021, we modified 63,235 vested options to extend the exercise period for terminated employees who were not able to exercise their options during the IPO lock-up period. We recognized $1.4 million in incremental stock-based compensation related to this modification during the year ended December 31, 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.

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