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Share-based compensation | 9 Months Ended
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Sep. 30, 2023
Share-Based Payment Arrangement [Abstract] |
Share-based compensation | Share-based compensationThe Company’s equity incentive plans provide for granting various share-based awards to eligible employees, non-employee directors, and consultants of the Company. In addition, the Company offers an employee stock purchase plan to eligible employees. The Company recognized stock-based compensation expense for all equity arrangements as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
| (in thousands)
Cost of revenue: |  |  |  |  |  |  |
Subscription | $ | 2,653 |  |  | $ | 2,479 |  |  | $ | 7,635 |  |  | $ | 6,495 |
Services | 362 |  |  | 344 |  |  | 994 |  |  | 961 |
Sales and marketing | 8,493 |  |  | 6,955 |  |  | 25,068 |  |  | 26,625 |
Research and development | 6,429 |  |  | 5,130 |  |  | 17,863 |  |  | 19,620 |
General and administrative | 10,412 |  |  | 5,582 |  |  | 26,522 |  |  | 35,823 |
| $ | 28,349 |  |  | $ | 20,490 |  |  | $ | 78,082 |  |  | $ | 89,524 |
Equity Incentive Plans The maximum number of shares of common stock available for issuance under the 2020 Plan was 29,183,546 shares as of January 1, 2023. As of September 30, 2023, 14,093,923 shares of common stock were reserved for additional grants under the 2020 Plan and 128,928 shares of common stock were reserved for additional grants under the 2017 Option Plan. All stock options previously granted by the Company were at an exercise price at or above the estimated fair market value of the Company’s common stock as of the grant date. Return Target Options The table below summarizes return target option activity for the nine months ended September 30, 2023:
| Options |  | Weighted‑ Average Exercise Price |  | Weighted‑ Average Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value (in thousands)
Outstanding, December 31, 2022 | 3,272,920 |  |  | $ | 6.75 |  |  | 5.8 |  | $ | 47,623 |
Granted | — |  |  | — |  |  |  |  |
Exercised | (668,298) |  |  | 7.26 |  |  |  |  | 9,174 |
Forfeitures | — |  |  | — |  |  |  |  |
Outstanding, September 30, 2023 | 2,604,622 |  |  | $ | 6.62 |  |  | 4.6 |  | $ | 28,762 |
Options exercisable at September 30, 2023 | 2,604,622 |  |  | $ | 6.62 |  |  | 4.6 |  | $ | 28,762 |
Vested or expected to vest at September 30, 2023 | 2,604,622 |  |  | $ | 6.62 |  |  | 4.6 |  | $ | 28,762 |
The aggregate intrinsic value in the table above represents the total intrinsic value that would have been received by the optionholders had all optionholders exercised their options on the last day of the period. The return target options outstanding on June 27, 2022 were modified such that these options were deemed fully vested as of June 30, 2022. During the three months ended June 30, 2022, with the filing of a Form S-3 “shelf” registration statement, the market condition and the implied performance obligation were deemed to be satisfied and the Company recognized $33.0 million of stock-based compensation expense. There is no remaining unrecognized compensation expense related to these return target options as of September 30, 2023. The Company issues new shares when return target options are exercised. Service-Based Options The table below summarizes the service-based option activity for the nine months ended September 30, 2023:
| Options |  | Weighted‑ Average Exercise Price |  | Weighted‑ Average Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value (in thousands)
Outstanding, December 31, 2022 | 1,215,822 |  |  | $ | 5.70 |  |  | 5.1 |  | $ | 18,968 |
Granted | — |  |  | — |  |  |  |  |
Exercised | (110,291) |  |  | 7.13 |  |  |  |  | 1,490 |
Forfeitures | — |  |  | — |  |  |  |  |
Outstanding, September 30, 2023 | 1,105,531 |  |  | $ | 5.56 |  |  | 3.4 |  | $ | 13,381 |
Options exercisable at September 30, 2023 | 1,092,239 |  |  | $ | 5.52 |  |  | 3.3 |  | $ | 13,255 |
Vested or expected to vest at September 30, 2023 | 1,105,531 |  |  | $ | 5.56 |  |  | 3.4 |  | $ | 13,381 |
Restricted Stock Units RSU activity for the nine months ended September 30, 2023 was as follows:
| Units |  | Weighted-Average Grant Date Fair Value (per share)
Outstanding, December 31, 2022 | 8,417,357 |  |  | $ | 29.61 |
Granted | 4,931,937 |  |  | 19.86 |
Vested | (1,572,281) |  |  | 29.87 |
Forfeited | (685,324) |  |  | 28.32 |
Outstanding, September 30, 2023 | 11,091,689 |  |  | $ | 25.36 |
RSUs under the 2020 Plan generally vest ratably on an annual basis over four years. There was $220.8 million of unrecognized compensation expense related to unvested RSUs that is expected to be recognized over a weighted-average period of 2.7 years as of September 30, 2023. The total fair value of RSUs vested during the nine months ended September 30, 2023 was $47.0 million. In connection with the Company’s former CEO Dean Hager’s Transition and Retirement Agreement, dated May 2, 2023, and his retirement effective September 1, 2023, the Company recognized incremental stock-based compensation expense related to the modification of vested stock options and acceleration of expense of unvested RSUs through the retirement date of $4.3 million and $10.0 million during the three and nine months ended September 30, 2023, respectively. Employee Stock Purchase Plan As of September 30, 2023 and December 31, 2022, the Company withheld, at the employees’ request, $2.6 million and $1.1 million, respectively, of eligible employee compensation, which is included in accrued liabilities in the condensed consolidated balance sheets, for purchases of common stock under the 2021 ESPP. As of September 30, 2023, 4,925,810 shares of common stock were reserved for future issuance under the 2021 ESPP. During the nine months ended September 30, 2023, 204,962 shares of common stock were issued under the 2021 ESPP at a weighted-average purchase price of $15.76 per share. Total proceeds to the Company were $3.1 million during the nine months ended September 30, 2023. The average grant date fair value for the offering period under the 2021 ESPP that commenced on May 1, 2023 was $5.22 per share. The Company used the following assumptions in the Black-Scholes option pricing model to estimate the fair value:
| Three and Nine Months Ended September 30, 2023
Expected term | 0.5 years
Expected volatility | 51.25%
Risk-free interest rate | 5.14%
Expected dividend yield | —%
There was $0.2 million of unrecognized compensation expense related to the 2021 ESPP that is expected to be recognized over a period of one month as of September 30, 2023.

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