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Stock-based Compensation | 9 Months Ended
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Sep. 30, 2024
Share-Based Payment Arrangement [Abstract] |
Stock-based Compensation | Stock-based Compensation Stock-based Compensation Expense We recorded stock-based compensation expense in the following categories in the accompanying unaudited condensed consolidated statements of operations and balance sheets (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
Cost of revenue |  | $ | 1,165 |  |  | $ | 1,115 |  |  | $ | 4,505 |  |  | $ | 3,094 |
Sales and marketing |  | 1,864 |  |  | 1,623 |  |  | 5,349 |  |  | 4,602 |
Technology and development |  | 6,179 |  |  | 4,706 |  |  | 18,407 |  |  | 13,901 |
General and administrative |  | 6,507 |  |  | 8,138 |  |  | 21,225 |  |  | 29,408 |
Total stock-based compensation expense |  | 15,715 |  |  | 15,582 |  |  | 49,486 |  |  | 51,005 |
Amount capitalized to internal-use software |  | 1,536 |  |  | 1,054 |  |  | 4,580 |  |  | 3,039 |
Total stock-based compensation |  | $ | 17,251 |  |  | $ | 16,636 |  |  | $ | 54,066 |  |  | $ | 54,044 |
Restricted and Performance Stock Units During the nine months ended September 30, 2024, we granted 8.8 million restricted stock units, or RSUs, with a total grant date fair value of $94.6 million to various employees. RSUs are measured based on the fair market value of the underlying stock on the date of grant and recognized as expense over the requisite service period. During the nine months ended September 30, 2024, we granted 2.5 million RSUs with a performance condition, or 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 a predefined profitability target 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 two hundred percent (200%) of the target award. If the performance criteria are achieved, one third 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 awards will vest quarterly thereafter through February 2027. These PSU awards also include a modifier to the total number of shares earned based on the Company’s total shareholder return, or TSR, compared to the TSR of the Nasdaq Composite Index during the performance period. The total number of shares issued pursuant to the PSU award may be increased, decreased, or remain unchanged based on the TSR modifier. The TSR modifier applicable to the PSUs is considered a market condition and therefore is reflected in the respective grant-date fair values of the awards. A Monte Carlo simulation was used to account for this market condition in the grant-date fair value of the awards. Expense related to the PSUs is recognized 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. We recognized $2.9 million and $6.4 million in stock-based compensation expense during the three and nine months ended September 30, 2024, respectively, related to these awards. The assumptions that were used to calculate the grant-date fair value of our PSU grants during the nine months ended September 30, 2024 using a Monte Carlo simulation model were as follows:
|  | Nine Months Ended September 30,
|  | 2024
Expected life (years) |  | 0.4-0.8
Risk-free interest rate |  | 5.2%-5.4%
Expected volatility |  | 47.4%-66.1%
Expected dividend yield |  | — |
In July 2024, we granted 2.7 million RSUs with a market vesting condition. Vesting of this award is contingent upon the recipient’s continuous employment over the requisite service period and is subject to achievement of predetermined stock price targets during a five-year performance period. Achievement of the predetermined stock price targets is measured based on a 45-trading day volume weighted-average closing price of our common stock, subject to a 44-day extension in certain circumstances. The number of RSUs subject to vesting during the performance period may equal zero percent (0%) to two hundred percent (200%) of the target award. Upon the achievement of a stock price target during the performance period, one-half of the eligible RSUs will vest on the date the compensation committee of the board of directors certifies achievement of the stock price target and the other half will vest one year from such date, subject to the recipient’s continued employment through the vesting date. We recognized $2.4 million in stock-based compensation expense during the three and nine months ended September 30, 2024 related to these awards. The assumptions that were used to calculate the grant-date fair value of the RSUs with a market vesting condition during the nine months ended September 30, 2024 using a Monte Carlo simulation model were as follows:
|  | Nine Months Ended September 30,
|  | 2024
Expected life (years) |  | 5
Risk-free interest rate |  | 4.2 | %
Expected volatility |  | 59.4 | %
Expected dividend yield |  | — |

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