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STOCK-BASED COMPENSATION | 3 Months Ended
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Mar. 31, 2022
Share-based Payment Arrangement [Abstract] |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Non-cash compensation related to equity awards is included in the following line items in the accompanying consolidated statements of operations and comprehensive income (in thousands):
|  |  | Three Months Ended March 31,
|  |  |  |  | 2022 |  | 2021
Cost of revenue |  |  |  |  | $ | 393 |  |  | $ | 397 |
Selling and marketing expense |  |  |  |  | 2,039 |  |  | 1,802 |
General and administrative expense |  |  |  |  | 9,600 |  |  | 12,171 |
Product development |  |  |  |  | 1,965 |  |  | 2,066 |
Restructuring and severance |  |  |  |  | 1,083 |  |  | — |
Total non-cash compensation |  |  |  |  | $ | 15,080 |  |  | $ | 16,436 |
Stock Options A summary of changes in outstanding stock options is as follows:
| Number of Options |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Term |  | Aggregate Intrinsic Value(a)
|  |  | (per option) |  | (in years) |  | (in thousands)
Options outstanding at January 1, 2022 | 676,293 |  |  | $ | 169.71 |  |  |  |  |
Granted (b) | 130,428 |  |  | 114.28 |  |  |  |  |
Exercised | — |  |  | — |  |  |  |  |
Forfeited | (10,010) |  |  | 258.09 |  |  |  |  |
Expired | (811) |  |  | 278.83 |  |  |  |  |
Options outstanding at March 31, 2022 | 795,900 |  |  | 159.41 |  |  | 5.85 |  | $ | 25,773 |
Options exercisable at March 31, 2022 | 485,638 |  |  | $ | 126.88 |  |  | 3.77 |  | $ | 24,985 |
(a)The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $119.67 on the last trading day of the quarter ended March 31, 2022 and the exercise price, multiplied by the number of shares covered by in-the-money options) that would have been received by the option holder had the option holder exercised these options on March 31, 2022. The intrinsic value changes based on the market value of the Company's common stock. (b)During the three months ended March 31, 2022, the Company granted stock options to certain employees with a weighted average grant date fair value per share of $58.60, calculated using the Black-Scholes option pricing model, with a vesting period of three years from grant date. For purposes of determining stock-based compensation expense, the weighted average grant date fair value per share of the stock options was estimated using the Black-Scholes option pricing model, which requires the use of various key assumptions. The weighted average assumptions used are as follows:
Expected term (1) | 6.00 years
Expected dividend (2) | — |
Expected volatility (3) | 53 - 56%
Risk-free interest rate (4) | 1.62 - 1.79%
(1)The expected term of stock options granted was calculated using the "Simplified Method," which utilizes the midpoint between the weighted average time of vesting and the end of the contractual term. This method was utilized for the stock options due to a lack of historical exercise behavior by the Company's employees. (2)For all stock options granted in 2022, no dividends are expected to be paid over the contractual term of the stock options, resulting in a zero expected dividend rate. (3)The expected volatility rate is based on the historical volatility of the Company's common stock. (4)The risk-free interest rate is specific to the date of grant. The risk-free interest rate is based on U.S. Treasury yields for notes with comparable expected terms as the awards, in effect at the grant date. Stock Options with Market Conditions A summary of changes in outstanding stock options with market conditions at target is as follows:
| Number of Options with Market Conditions |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Term |  | Aggregate Intrinsic Value(a)
|  |  | (per option) |  | (in years) |  | (in thousands)
Options outstanding at January 1, 2022 | 700,209 |  |  | $ | 236.01 |  |  |  |  |
Granted | — |  |  | — |  |  |  |  |
Exercised | — |  |  | — |  |  |  |  |
Forfeited | — |  |  | — |  |  |  |  |
Expired | (13,163) |  |  | 378.95 |  |  |  |  |
Options outstanding at March 31, 2022 | 687,046 |  |  | 233.27 |  |  | 6.51 |  | $ | — |
Options exercisable at March 31, 2022 | — |  |  | $ | — |  |  | 0.00 |  | $ | — |
(a)The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company's closing stock price of $119.67 on the last trading day of the quarter ended March 31, 2022 and the exercise price, multiplied by the number of shares covered by in-the-money options) that would have been received by the option holder had the option holder exercised these options on March 31, 2022. The intrinsic value changes based on the market value of the Company's common stock. A maximum of 1,147,367 shares may be earned for achieving superior performance up to 167% of the target number of shares. As of March 31, 2022, performance-based nonqualified stock options with a market condition of 481,669 had been earned, which have a vest date of September 30, 2022. Restricted Stock Units A summary of changes in outstanding nonvested restricted stock units ("RSUs") is as follows:
| RSUs
| Number of Units |  | Weighted Average Grant Date Fair Value
|  |  | (per unit)
Nonvested at January 1, 2022 | 308,068 |  |  | $ | 226.55 |
Granted | 321,998 |  |  | 113.55 |
Vested | (75,786) |  |  | 280.44 |
Forfeited | (26,687) |  |  | 215.35 |
Nonvested at March 31, 2022 | 527,593 |  |  | $ | 150.41 |
Restricted Stock Awards with Market Conditions A summary of changes in outstanding nonvested RSAs with market conditions at target is as follows:
| RSAs with Market Conditions
| Number of Awards |  | Weighted Average Grant Date Fair Value
|  |  | (per unit)
Nonvested at January 1, 2022 | 26,674 |  |  | $ | 340.25 |
Granted | — |  |  | — |
Vested | — |  |  | — |
Forfeited | — |  |  | — |
Nonvested at March 31, 2022 | 26,674 |  |  | $ | 340.25 |
A maximum of 44,545 shares may be earned for achieving superior performance up to 167% of the target number of shares. As of March 31, 2022, performance-based restricted stock awards with a market condition of 29,601 had been earned, which have a vest date of September 30, 2022. Employee Stock Purchase Plan In 2021, the Company implemented an employee stock purchase plan ("ESPP"), under which a total of 262,731 shares of the Company's common stock were reserved for issuance. As of March 31, 2022, 257,188 shares of common stock were available for issuance under the ESPP. The ESPP is a tax-qualified plan under Section 423 of the Internal Revenue Code. Under the terms of the ESPP, eligible employees are granted options to purchase shares of the Company's common stock at 85% of the lesser of (1) the fair market value at time of grant or (2) the fair market value at time of exercise. The offering periods and purchase periods are typically six-month periods ending on June 30 and December 31 of each year. No shares were issued under the ESPP during the first quarter of 2022. During the three months ended March 31, 2022, the Company granted employee stock purchase rights to certain employees with a grant date fair value per share of $35.43, calculated using the Black-Scholes option pricing model. For purposes of determining stock-based compensation expense, the grant date fair value per share estimated using the Black-Scholes option pricing model required the use of the following key assumptions:
Expected term (1) | 0.50 years
Expected dividend (2) | — |
Expected volatility (3) | 49 | %
Risk-free interest rate (4) | 0.19 | %
(1)The expected term was calculated using the time period between the grant date and the purchase date. (2)No dividends are expected to be paid, resulting in a zero expected dividend rate. (3)The expected volatility rate is based on the historical volatility of the Company's common stock. (4)The risk-free interest rate is specific to the date of grant. The risk-free interest rate is based on U.S. Treasury yields for notes with comparable expected terms as the employee stock purchase rights, in effect at the grant date.

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