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Stockholders' Equity (Deficit) and Equity Incentive Plans | 12 Months Ended
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Dec. 31, 2022
Equity [Abstract] |
Stockholders' Equity (Deficit) and Equity Incentive Plans | (5) Stockholders’ Equity (Deficit) and Equity Incentive Plans Preferred stock In connection with the Direct Listing, on September 21, 2021, an amended and restated certificate of incorporation of the Company was filed with the Secretary of State of the State of Delaware, which authorized the issuance of 20 million shares of undesignated preferred stock with a par value of $0.00001 per share and rights and preferences, including voting rights, designated from time to time by the board of directors. Common Stock The Company has two classes of common stock: Class A common stock and Class B common stock. The Company's amended and restated certificate of incorporation authorizes the issuance of 600 million shares of Class A common stock and 600 million shares of Class B common stock. The shares of Class A common stock and Class B common stock are identical, except with respect to voting, conversion, and transfer rights. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to five votes. Class A and Class B common stock each have a par value of $0.00001 per share and are referred to as common stock throughout the notes to the consolidated financial statements, unless otherwise noted. Holders of common stock are entitled to receive any dividends whenever funds are legally available and if declared by the board of directors. Shares of Class B common stock may be converted to Class A common stock at any time at the option of the stockholder. Shares of Class B common stock will also automatically convert into one share of Class A common stock upon any transfer, except for certain permitted transfers described in the Company's amended and restated certificate of incorporation. In addition, each share of Class B common stock held by the Company's three cofounders (or any of such founder’s affiliates) will convert automatically into one share of Class A common stock on the earlier of: (i) the death or incapacity of such founder or (ii) the date that is six months following the date on which such founder is no longer an employee or director of the Company (unless such founder has rejoined the Company during such six-month period). Each outstanding share of the Company's Class B common stock will also convert automatically into one share of Class A common stock on the date that is six months following the date on which no founder is an employee or director of the Company (unless a founder has rejoined the Company during such six-month period). In addition, any transfer by a founder (or such founder’s affiliates) to one or more of the other founders (or such founders’ affiliates) will not result in the automatic conversion of such shares of Class B common stock to Class A common stock. Once converted into Class A common stock, the Class B common stock may not be reissued. The Company has reserved shares of its common stock as follows:
|  | As of December 31, 2022 |  |  | As of December 31, 2021 |
2014 Stock Option and Grant Plan and 2021 Incentive Award Plan: |  |  |  |  |  |
Equity plan stock options outstanding |  |  | 16,767,752 |  |  |  | 21,214,155 |
RSUs outstanding |  |  | 9,914,125 |  |  |  | 1,716,614 |
Shares available for future issuance |  |  | 16,774,634 |  |  |  | 19,005,008 |
2021 Employee Stock Purchase Plan: |  |  |  |  |  |
Shares available for future issuance |  |  | 3,411,791 |  |  |  | 2,663,371 |
Total reserved shares |  |  | 46,868,302 |  |  |  | 44,599,148 |
Equity Incentive Plans 2014 Stock Option and Grant Plan In December 2014, the Company adopted its 2014 Stock Option and Grant Plan (as amended, the “2014 Plan”), pursuant to which shares of the Company’s common stock were reserved for the issuance of stock options (incentive and non-statutory), restricted stock units (“RSUs”), and restricted stock to employees, directors, and consultants under terms and provisions established by the board of directors and approved by the Company’s stockholders. The 2014 Plan was terminated in September 2021 in connection with the Direct Listing but continues to govern the terms of outstanding awards that were granted prior to the termination of the 2014 Plan. No further equity awards will be granted under the 2014 Plan. With the establishment of the 2021 Incentive Award Plan (the “2021 Plan”) as further discussed below, upon the expiration, forfeiture, cancellation, or reacquisition of any shares of Class A common stock underlying outstanding stock-based awards granted under the 2014 Plan, an equal number of shares of Class A common stock will become available for grant under the 2021 Plan. 2021 Incentive Award Plan In August 2021, the Company's board of directors adopted, and its stockholders approved, the 2021 Plan, which became effective in connection with the Direct Listing. The 2021 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, RSU awards, performance bonus awards, performance stock units, dividend equivalent awards and other forms of equity compensation (collectively, “equity awards”). As of December 31, 2022, a total of 16,774,634 shares of the Company's Class A common stock have been reserved for issuance under the 2021 Plan in addition to (i) the number of shares represented by awards outstanding under the Company's 2014 Plan (“Prior Plan Awards”) that become available upon the expiration, forfeiture, cancellation, or reacquisition of any shares of Class A common stock underlying outstanding stock awards granted under the 2014 Plan, and (ii) an annual increase on the first day of each fiscal year beginning in 2022 and ending in 2031, equal to the lesser of (A) 5% of the shares of the Company's common stock outstanding (on an as-converted basis) on the last day of the immediately preceding fiscal year and (B) such smaller number of shares of stock as determined by the Company's board of directors; provided, however, that no more than 88,000,000 shares of stock may be issued upon the exercise of incentive stock options. Stock Option Awards Stock options granted under the 2021 Plan and 2014 Plan (the “combined stock plans”) generally vest based on continued service over four years. Options issued outside of the combined stock plans were immaterial and therefore not discussed further below. Option activity under the Company's combined stock plans is set forth below:
|  |  |  |  |  |  |  | Weighted |  |  |  |
|  |  |  |  | Weighted |  |  | average |  |  | Aggregate |
|  | Outstanding |  |  | average |  |  | remaining |  |  | intrinsic |
|  | stock |  |  | exercise |  |  | contractual |  |  | value |
|  | options |  |  | price |  |  | life (years) |  |  | (in thousands) |
Balances as of December 31, 2021 |  |  | 21,214,155 |  |  | $ | 4.15 |  |  |  | 8.12 |  |  | $ | 1,035,039 |
Granted |  |  | 858,630 |  |  |  | 14.84 |  |  |  |  |  |  |
Exercised |  |  | (2,498,763 | ) |  |  | 2.77 |  |  |  |  |  |  |
Cancelled/forfeited |  |  | (2,806,270 | ) |  |  | 8.42 |  |  |  |  |  |  |
Balances as of December 31, 2022(1) |  |  | 16,767,752 |  |  | $ | 4.19 |  |  |  | 7.19 |  |  | $ | 132,298 |
Exercisable as of December 31, 2022(2) |  |  | 12,822,860 |  |  | $ | 3.29 |  |  |  | 6.89 |  |  | $ | 112,713 |
(1) As no forfeitures are estimated due to the Company's adoption of ASU No. 2016-09, all options are vested or expected to vest. As of December 31, 2022, no options were outstanding that were subject to a future performance condition (2) Exercisable shares include vested options as well as unvested shares that can be early exercised During December 2020, the Company granted 1,756,545 stock options to two executives which contain both a service condition and a performance condition. Based on the terms of the options, the vesting commencement date is defined as the date in which a Form S-1 filed with the SEC becomes effective (a “QPO Event”). In conjunction with the Direct Listing, a QPO Event occurred and therefore the options began to vest 1/24th each month subsequent to September 21, 2021. During fiscal 2022, the Company recognized $1.5 million in expense related to these awards using the accelerated attribution method. The unrecognized stock-based compensation expense was $0.3 million and $1.7 million as of December 31, 2022 and 2021, respectively. The aggregate intrinsic values of options are calculated as the difference between the exercise price of the options and the market price for shares of the Company’s common stock as of each period-end. The total intrinsic value of options exercised for the years ended December 31, 2022, 2021, and 2020 was $23.3 million, $519.1 million, and $15.0 million, respectively. Stock options granted during the years ended December 31, 2022, 2021, and 2020 had a weighted average grant date fair value of $8.27, $6.02, and $2.27 per share, respectively. With the exception of the performance options detailed above, the fair value is being expensed over the vesting period of the options on a straight-line basis as the services are being provided. The total fair value of shares vested during the years ended December 31, 2022, 2021, and 2020 was $17.6 million, $9.7 million, and $5.1 million, respectively. No tax benefits were realized from options during the periods. As of December 31, 2022, total unrecognized stock-based compensation expense related to the combined stock plans options was $21.8 million. This unrecognized expense as of December 31, 2022 is expected to be recognized over the weighted average remaining vesting period of 2.45 years. As of December 31, 2022, the Company had 354,500 shares of non-employee stock options outstanding under the combined stock plans. The fair value of each option granted to employees under the 2021 Plan is estimated on the grant date using the Black-Scholes pricing model. Based on the nature of the underlying options granted under the 2014 Plan, the fair value of each option granted to employees is estimated on the date of grant using the Monte Carlo simulation model. The following range of assumptions and data inputs were used i n the Black-Scholes option-pricing model to estimate the fair value of the options granted under the 2021 Plan:
|  | Year Ended December 31, 2022 |
Fair value of common stock |  | $14.62 - $15.63 |
Expected dividend yield |  |  | — |
Risk-free interest rate |  | 3.01% - 3.36% |
Expected volatility |  | 55.3% - 55.6% |
Expected term (years) |  | 6.0 - 6.3 |
Determining Fair Value of Stock Options The fair value of each grant of stock option was determined by the Company using the methods as discussed above and the assumptions discussed below. The determination of each of these inputs is subjective and generally requires a level of judgment. Expected volatility – The expected stock price volatility assumption was determined by examining the historical volatilities of a group of industry peers over a period equal to the expected life of the options, as we do not have sufficient trading history for our common stock. Contractual term (Monte Carlo) – The contractual term of stock options is used to model the expected exercise behavior of the option holders with a 10-year exercise period. This method utilizes a Monte Carlo simulation based on historical exercise data as the options are not considered to be plain-vanilla where a simplified method is allowed as certain holders have up until option expiration to exercise regardless of employment status. The Monte Carlo simulation models expected exercise behavior utilizing an estimated stock price at which the holder of the option would choose to exercise an option prior to the end of the stated term. For this assumption, we utilized a value multiple on the strike price of 4.0 times. Expected term (Black-Scholes) – Expected term represents the period that our stock-based awards are expected to be outstanding. The expected term assumptions are determined based on the vesting terms, exercise terms, and contractual lives of the options. Expected dividend – The expected dividend assumption was based on our history and expectation that it will not declare dividend payout for the near future. Risk-free interest rate – The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the contractual terms. Fair value of common stock – Prior to the Direct Listing, the fair value of our common stock was determined by our board of directors, which intended all options granted to be exercisable at a price per share not less than the per share fair value of common stock underlying those options on the date of grant. The valuations of our common stock were determined in accordance with the guidelines outlined in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. The board of directors considered numerous objective and subjective factors to determine the fair value of our common stock at each meeting in which awards were approved. The factors considered included, but were not limited to: (i) the results of contemporaneous independent third-party valuations of our common stock; (ii) the prices, rights, preferences, and privileges of our redeemable convertible preferred stock relative to those of its common stock; (iii) the lack of marketability of our common stock; (iv) actual operating and financial results; (v) current business conditions and projections; (vi) the likelihood of achieving a liquidity event, such as an initial public offering, direct listing, or sale of our Company, given prevailing market conditions; and (vii) precedent transactions involving our shares. Restricted Stock Units RSUs granted under the 2021 Plan generally vest based on continued service, typically over a three- to four-year period. RSUs granted pursuant to the 2014 Plan vest according to a service condition as well as a performance condition, through a liquidity event, including (i) a change in control of the Company or (ii) the initial public offering of the Company’s equity securities, following which the securities shall be publicly traded, which includes a direct listing. As a result of the Direct Listing, the performance condition for all RSUs granted pursuant to the 2014 Plan has been met. During the years ended December 31, 2022 and 2021, the Company recorded $46.0 million and $15.4 million in expense related to RSUs, respectively. No RSUs were granted during year ended December 31, 2020. Additionally, no stock-based compensation expense was recognized during the year ended December 31, 2020 as the Company evaluated the performance condition being met as not probable as of December 31, 2020. As of December 31, 2022, total unrecognized stock-based compensation expense related to RSUs was $168.4 million. This unrecognized expense as of December 31, 2022 is expected to be recognized over the weighted average remaining vesting period of 2.76 years. As of December 31, 2022, the Company had 231,576 shares of non-employee RSUs outstanding under the combined stock plans. RSU activity for the year ended December 31, 2022 was as follows:
|  | Restricted stock units |  |  | Weighted-average grant date fair value per share |
Balance as of December 31, 2021 |  |  | 1,716,614 |  |  | $ | 38.40 |
Granted |  |  | 10,664,063 |  |  |  | 17.60 |
Vested |  |  | (1,482,082 | ) |  |  | 23.71 |
Cancelled/forfeited |  |  | (984,470 | ) |  |  | 29.15 |
Balance as of December 31, 2022 |  |  | 9,914,125 |  |  | $ | 19.14 |
2021 Employee Stock Purchase Plan In August 2021, the Company’s board of directors adopted, and its stockholders approved, the 2021 Employee Stock Purchase Plan (the “ESPP”), which became effective in connection with the Direct Listing. The ESPP authorizes the issuance of shares of Class A common stock pursuant to purchase rights granted to employees. A total of 3,411,791 shares of the Company’s Class A common stock have been reserved for future issuance under the ESPP, in addition to any annual automatic evergreen increases in the number of shares of Class A common stock reserved for future issuance under the ESPP. The ESPP offers employees the option to purchase shares through a series of consecutive 12-month offering periods on each May 15th and November 15th (with two six-month purchase periods during each offering period). The price at which Class A common stock is purchased under the ESPP is equal to the lower of (i) 85% of the closing trading price per share of the Company's Class A common stock on the first trading date of an offering period in which a participant is enrolled or (ii) 85% of the closing trading price per share on the purchase date, which will occur on the last trading day of each purchase period, or such other price designated by the administrator. The initial offering period under the ESPP was longer than 12 months, commencing on September 28, 2021 and ending on November 14, 2022. The first purchase period commenced on September 28, 2021 and ended on May 14, 2022. The ESPP offers a rollover feature pursuant to which, if the fair market value of a share of Class A common stock on the first purchase date is lower than the fair market value on the first trading day of the offering period, the respective offering period will terminate and each participant will be automatically enrolled in the offering period that commences immediately following the purchase date. In accordance with the rollover feature, immediately following the conclusion of the first and second purchase periods on May 14, 2022 and November 14, 2022, respectively, the corresponding offering period was terminated and participants were automatically enrolled in a new 12-month offering period commencing on May 15, 2022 and November 15, 2022 and ending on May 14, 2023 and November 14, 2023, respectively. The impact of the rollover feature did not result in material incremental compensation cost for the year ended December 31, 2022. The following assumptions were used to calculate the fair value of shares to be granted under the ESPP during the period utilizing the Black-Scholes option-pricing model:
|  | Year Ended December 31, 2022 |
Fair value of common stock |  | $14.77 - $17.04 |
Expected dividend yield |  |  | — |
Risk-free interest rate |  | 1.54% - 4.63% |
Expected volatility |  | 60% |
Expected term (years) |  | 0.50 - 1.0 |
The expected term for the ESPP purchase rights is based on the duration of the offering period. Estimated volatility for ESPP purchase rights is based on the historical volatility of a group of industry peers as sufficient history is not available for our common stock. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time the ESPP purchase right was granted at the beginning of the offering period. We have not declared, nor do we expect to declare dividends. As of December 31, 2022, 350,341 shares have been purchased under the ESPP. During the year ended December 31, 2022, the Company recognized $5.7 million of stock-based compensation expense related to the ESPP. As of December 31, 2022, total unrecognized compensation costs related to the ESPP was $1.9 million, which will be amortized over a weighted average period of 0.87 years. Stock-based compensation expense, net of actual forfeitures is reflected in the consolidated statement of operations and comprehensive loss (in thousands):
|  | Year Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Cost of revenue |  | $ | 6,468 |  |  | $ | 1,951 |  |  | $ | 590 |
Research and development |  |  | 27,855 |  |  |  | 13,613 |  |  |  | 5,582 |
Sales and marketing |  |  | 17,143 |  |  |  | 7,871 |  |  |  | 6,512 |
General and administrative |  |  | 15,757 |  |  |  | 10,959 |  |  |  | 3,869 |
Total stock-based compensation expense |  | $ | 67,223 |  |  | $ | 34,394 |  |  | $ | 16,553 |
During 2021 and 2020, the Company facilitated secondary transactions with select executives in which common stock was sold above fair value. Therefore, the Company has recorded $1.1 million and $11.1 million as compensation expense included in the above table in the years ended December 31, 2021 and 2020, respectively. No related expense was recorded in the year ended December 31, 2022.

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- Definition The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI https://asc.fasb.org/topic&trid=2208762 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 14 -Subparagraph (c) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 14 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.3-04) -URI https://asc.fasb.org/extlink&oid=120397183&loc=d3e187085-122770 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 18 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (g) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 18 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (h) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 14 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 18 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 16 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496180-112644 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (i) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644 Reference 15: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(e)(1)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 Reference 16: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 6 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126731327&loc=SL126733271-114008 + Details
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