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Stockholders’ Equity | 9 Months Ended
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Sep. 30, 2023
Equity [Abstract] |
Stockholders’ Equity | 13. Stockholders’ Equity Common Stock On August 2, 2021, the Company’s common stock and warrants began trading on the New York Stock Exchange (“NYSE”) under the ticker symbols “HIPO” and “HIPO.WS,” respectively. Pursuant to Certificate of Incorporation, the Company is authorized to issue 80 million shares of common stock, with a par value of $0.0001 per share. Each share of common stock is entitled to one vote. The holders of the common stock are also entitled to receive dividends whenever funds are legally available and when declared by the board of directors. No dividends have been declared or paid since inception. Stock-Based Compensation Plans 2019 Stock Option and Grant Plan The Company’s 2019 Stock Option and Grant Plan (“the 2019 Stock Plan”) provides for the direct award or sale of shares, the grant of options to purchase shares, and the grant of restricted stock units (“RSUs”) to employees, consultants, and outside directors of the Company. Stock options under the plan may be either incentive stock options (“ISOs”) or non-qualified stock options (“NSOs”), with an exercise price of not less than 100% of fair market value on the grant date, with a term less than or equal to ten years. The vesting period of each option and RSU shall be as determined by a committee of the Company’s board of directors but is generally over four years. Upon the closing of the Business Combination, the remaining unallocated share reserve under the 2019 Plan was cancelled and no new awards will be granted under such plan. Awards outstanding under the 2019 Plan were assumed by the Company upon the Closing and continue to be governed by the terms of the 2019 Plan. 2021 Incentive Award Plan The Company’s 2021 Incentive Award Plan (the “2021 Plan”), which authorized for issuance 3.1 million shares of common stock. The 2021 Plan provides for the issuance of a variety of stock-based compensation awards, including stock options, stock appreciation rights (“SARs”), restricted stock awards, restricted stock unit awards, performance bonus awards, performance stock unit awards, dividend equivalents, or other stock or cash-based awards. The vesting period of each option and award shall be as determined by a committee of the Company’s board of directors but is generally over two to four years. This reserve increases on January 1 of each year through 2031, by an amount equal to the smaller of: (i) 5% of the number of shares of common stock issued and outstanding on the last day of the immediately preceding fiscal year, or (ii) an amount determined by the board of directors. Stock Options The following table summarizes option activity under the plans:
| Options Outstanding |  | Weighted-Average Remaining |  | Aggregate Intrinsic Value (In Millions)
| Number of Shares |  | Weighted Average Exercise Price |  | Contract Term (In Years) |
Outstanding as of December 31, 2022 | 1,986,978 |  | $ | 36.54 |  |  | 7.8 |  | $ | 1.3 |
Granted | — |  | — |  |  |  |  |
Exercised | (103,002) |  | 11.89 |  |  |  |  |
Cancelled/Expired | (257,719) |  | 25.30 |  |  |  |  |
Outstanding as of September 30, 2023 | 1,626,257 |  | 16.12 |  |  | 7.1 |  | $ | 0.1 |
Vested and exercisable as of September 30, 2023 | 1,273,336 |  | $ | 16.09 |  |  | 6.9 |  | $ | 0.1 |
The aggregate intrinsic value of options exercised during the nine months ended September 30, 2023 and 2022 was $0.5 million and $3.5 million, respectively, and is calculated based on the difference between the exercise price and the fair value of the Company’s common stock as of the exercise date. There were no options granted during the three months ended September 30, 2023 and 2022. Total unrecognized compensation cost of $6.8 million as of September 30, 2023 is expected to be recognized over a weighted-average period of 1.1 years. Valuation Assumptions of Stock Options The fair value of granted stock options are estimated as of the date of grant using the Black-Scholes-Merton option-pricing model, based on the following inputs: Expected Term – The expected term represents the period that the Company’s Stock-Based Awards are expected to be outstanding. The Company has opted to use the simplified method for estimating the expected term of options. Accordingly, the expected term equals the arithmetic average of the vesting term and the original contractual term of the option (generally 10 years). Expected Volatility – Due to the Company’s limited operating history and a lack of company specific historical and implied volatility data, the Company has based its estimate of expected volatility on the historical volatility of a group of peer companies that are publicly traded. The historical volatility data was computed using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of the Stock-Based Awards. Risk-Free Interest Rate – The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero coupon U.S. Treasury notes with maturities approximately equal to the grant’s expected term. Expected Dividend Yield – The Company has never paid dividends and does not currently expect to pay dividends. Fair value of common stock – The Company determined the value of its common stock based on the observable daily closing price of its common stock (ticker symbol “HIPO”). Early Exercises of Stock Options In 2020 and 2021, certain employees early exercised stock options with cash. On September 30, 2023 and December 31, 2022, the Company had $0.9 million and $1.4 million, respectively, recorded in accrued expenses and other liabilities related to early exercises of the stock options, and the related number of unvested shares subject to repurchase was 0.0 million and 0.1 million, respectively. Stock Option Repricing On March 1, 2023, the Board approved a one-time repricing of certain stock option awards. The repricing will impact out-of-the-money stock options held by all employees who remain employed through March 6, 2023 (the “Repricing Date”), including the Company’s executive officers. Each stock option was repriced to have a per share exercise price equal to the closing price of the Company’s common stock on the Repricing Date, except that the per share exercise price of each stock option held by any of the Company’s executive officers that was repriced is subject to a premium. The premium will be in effect from the Repricing Date through the first anniversary of the Repricing Date (the “Premium End Date”). In the event the applicable executive officer (i) exercises his/her stock options prior to the Premium End Date or (ii) does not provide services to the Company as an employee or a consultant through the Premium End Date, the per share exercise price applicable to his/her stock options will be two times the closing price of the Company’s common stock on the Repricing Date. There were no changes to the number of shares, the vesting schedule or the expiration date of the repriced stock options. As a result of the repricing, the Company recorded an incremental share-based compensation charge of $3.6 million, of which $1.4 million was recognized on the Repricing Date, and $2.2 million will be recognized over the remaining term of the repriced options. Restricted Stock Units and Performance Restricted Stock Units The Company grants service based RSUs and performance based RSUs (“PRSUs”) as part of the Company’s equity compensation plans. The Company measures RSU and PRSU expense for awards granted based on the estimated fair value of those awards at grant date. To estimate the fair value of PRSUs containing a market condition, the Company uses the Monte Carlo valuation model. The fair value of all other awards is based on the closing price of the Company’s common stock as reported on the NYSE on the date of grant. The RSUs generally vest over a period of two to four years. The PRSUs vest based on the level of achievement of the performance goals and continued employment with the Company over a one to four year performance period. Stock-based compensation expense for RSUs is recognized based on the straight-line basis over the employee requisite service period. Stock-based compensation expense for PRSUs is recognized on a graded accelerated basis over the employee requisite service period. The Company accounts for forfeitures as they occur. In June 2022, the Company began granting PRSUs. Half of the PRSUs granted are subject to the achievement of market-based performance goals, and the remaining PRSUs are subject to vesting pursuant to internal financial measures. The actual number of units that ultimately vest will range from 0% to 100% of the granted amount, based on the level of achievement of the performance goals and continued employment with the Company. During the nine months ended September 30, 2023 and 2022, 1.4 million and 2.3 million PRSUs were granted. The following table summarizes the RSU and PRSU activity for the nine months ended September 30, 2023:
| Number of Shares |  | Weighted Average Grant-Date Fair Value per Share
Unvested and outstanding as of December 31, 2022 | 2,881,984 |  | $ | 41.15 |
Granted | 1,372,585 |  | 17.97 |
Released | (861,292) |  | 40.81 |
Canceled and forfeited | (414,068) |  | 39.29 |
Unvested and outstanding as of September 30, 2023 | 2,979,209 |  |  | $ | 30.79 |
Total unrecognized compensation cost related to unvested RSUs and PRSUs is $65.8 million as of September 30, 2023, and it is expected to be recognized over a weighted-average period of 1.8 years. 2021 Employee Stock Purchase Plan The Company’s 2021 Employee Stock Purchase Plan (the “2021 ESPP”), which authorized 0.5 million shares of common stock for issuance. The 2021 ESPP became effective on October 25, 2021. The 2021 ESPP is designed to allow eligible employees of the Company to purchase shares of the Company’s common stock with their accumulated payroll deductions at a price equal to 85% of the lesser of the fair market value on the first business day of the offering period or on the designated purchase date of the offering period up to $25,000 during the calendar year. The ESPP offers a six-month look-back feature as well as an automatic reset feature that provides for an offering period to be reset to a new lower-priced offering if the offering price of the new offering period is less than that of the current offering period. During the nine months ended September 30, 2023, 80,990 shares have been issued under the 2021 ESPP for $1.0 million. During the nine months ended September 30, 2022, 46,000 shares have been issued under the 2021 ESPP for $1.6 million. In addition, the number of shares available for issuance under the 2021 ESPP will be annually increased on January 1 of each calendar year beginning in 2022 and ending in 2031, by an amount equal to the lesser of (i) one percent of the shares outstanding (on a converted basis) on the last day of the immediately preceding fiscal year and (ii) such number of shares as may be determined by the board of directors. Stock-Based Compensation Total stock-based compensation expense, classified in the accompanying consolidated statements of operations and comprehensive loss was as follows (in millions):
| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022 |  |
Losses and loss adjustment expenses | $ | 0.4 |  |  | $ | 0.7 |  |  | $ | 1.0 |  |  | $ | 1.9 |  |  |
Insurance related expenses | 1.1 |  |  | 1.4 |  |  | 3.7 |  |  | 3.9 |  |  |
Technology and development | 2.8 |  |  | 5.1 |  |  | 10.1 |  |  | 15.9 |  |  |
Sales and marketing | 3.3 |  |  | 4.0 |  |  | 11.2 |  |  | 9.3 |  |  |
General and administrative | 6.4 |  |  | 5.8 |  |  | 20.8 |  |  | 15.3 |  |  |
Total stock-based compensation expense | $ | 14.0 |  |  | $ | 17.0 |  |  | $ | 46.8 |  |  | $ | 46.3 |  |  |
Stock Repurchases In March 2023, the Company’s Board of Directors authorized the repurchase of up to $50.0 million of its common stock, with no expiration date. Repurchases under the program may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases to be determined at the Company’s discretion depending on market conditions and corporate needs. Open market repurchases will be structured to occur in accordance with applicable federal securities laws, including within the pricing and volume requirements of Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The Company may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of its common stock under this authorization. This program does not obligate the Company to acquire any particular amount of its common stock, and may be modified, suspended or terminated at any time at the Company’s discretion. During the nine months ended September 30, 2023, the Company repurchased 0.1 million shares of its common stock for $1.8 million under this program. As of September 30, 2023, $48.2 million of common stock remains available for repurchases. Shares repurchased by the Company are accounted for when the transaction is settled. As of September 30, 2023, there were no unsettled share repurchases. Direct costs incurred to acquire the shares are included in the total cost of the shares.

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