Stock-Based Compensation

12 Months Ended

Dec. 31, 2020

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

9. Stock-Based Compensation

The Company has outstanding awards under its 2008 Stock Incentive Plan, as amended (the “2008 Plan”), but is no longer granting awards under this plan. Shares of common stock issued upon exercise of stock options granted prior to September 8, 2017 will be issued as either Class A common stock or Class B common stock. Shares of common stock issued upon exercise of stock options granted after September 8, 2017 will be issued as Class A common stock.

The Company’s 2018 Equity Incentive Plan (the “2018 Plan” and, together with the 2008 Plan, the “Plans”) provides for the grant of incentive stock

options, non-qualified stock

options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards. The number of shares initially reserved for issuance under the 2018 Plan is the sum of 2,149,480 shares of Class A common stock, plus the number of shares (up to 5,028,832 shares) equal to the sum of (i) the 583,056 shares of Class A common stock and Class B common stock that were available for grant under the 2008 Plan upon the effectiveness of the 2018 Plan and (ii) the number of shares of Class A common stock and Class B common stock subject to outstanding awards under the 2008 Plan that expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right (subject, in the case of incentive stock options, to any limitations of the Internal Revenue Code). The number of shares of Class A common stock that may be issued under the 2018 Plan will automatically increase on the first day of each fiscal year until, and including, the fiscal year ending December 31, 2028, equal to the least of (i) 2,500,000 shares of Class A common stock; (ii) 5% of the sum of the number of shares of Class A common stock and Class B common stock outstanding on the first day of such fiscal year; and (iii) an amount determined by the Company’s board of directors. The shares of common stock underlying any awards that are forfeited, canceled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, repurchased or are otherwise terminated by the Company under the 2018 Plan will be added back to the shares of common stock available for issuance under the 2018 Plan. As of December 31, 2020, 1,026,673 shares remain available for future grants under the 2018 Plan. The number of authorized shares reserved for issuance under the 2018 Plan was increased by 1,410,678

shares effective as of January 1, 2021 in accordance with the provisions of the 2018 Plan described above.

Options and restricted stock units granted under the Plans vest over periods determined by the board of directors. Options granted under the Plans expire no longer than ten years from the date of the grant. The exercise price for stock options granted is not less than the fair value of common shares based on quoted market prices.

Stock Option Valuation

During the year ended December 31, 2020, the Company granted 531,108 options with service-based, market-based and performance-based vesting conditions. The fair value of these grants is estimated using a Monte Carlo simulation model. Assumptions and estimates utilized in the model include the risk-free interest rate, dividend yield, expected stock volatility and the estimated period to achievement of the performance and market condition.

The following table presents the assumptions used in the Monte Carlo simulation model to determine the fair value of these stock-based awards on their issuance date:


Risk-free interest rate	1.5	%
Expected volatility	49.0	%
Expected dividend yield	0	%
Derived service period (in years)	4.1

Stock-based compensation expense is recognized when the achievement of the performance-based vesting conditions is probable regardless of whether the market condition is achieved. The aggregate grant date fair value of these options was $8.1 million. As the Company has deemed achievement of the performance condition to be probable, the Company is recognizing stock-based compensation for these awards over the estimated service period using the graded-vesting method.

The Company did not grant stock options in the year ended December 31, 2019.

Stock Option Activity

The following table summarizes the Company’s option activity since December 31, 2019:


	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
						(in years)		(in thousands)
Outstanding as of December 31, 2019		2,827,868		$	7.17		6.5	$	76,850
Granted		531,108			45.17
Exercised		(776,914	)		6.32
Forfeited		(393,143	)		33.26

Outstanding as of December 31, 2020		2,188,919		$	12.01		5.72	$	57,538

Vested and expected to vest as of December 31, 2020		2,121,884		$	12.12		5.71	$	55,616

Options exercisable as of December 31, 2020		1,370,762		$	6.94		4.84	$	41,689

As of December 31, 2020, outstanding options of 1,032,613 were for the purchase of Class A common stock and outstanding options of 1,156,306 were for the purchase of either Class A common stock or Class B common stock.

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had strike prices lower than the fair value of the Company’s common stock.

The aggregate intrinsic value of options exercised during the years ended December 31, 2020 and 2019 was $26.6 million and $8.8 million, respectively.

Restricted Stock Units

The Company has granted restricted stock units (“RSUs”) with service-based vesting conditions and with both service-based and performance-based vesting conditions. RSUs with service-based and both service-based and performance-based vesting conditions are valued on the grant date using the grant date market price of the underlying shares.

The following table summarizes the Company’s RSU activity since December 31, 2019:


	Number of Shares			Weighted Average Grant- Date Fair Value
Unvested balance December 31, 2019		3,367,846		$	14.84
Granted		1,331,417			42.35
Vested		(998,478	)		16.30
Forfeited		(558,565	)		19.02

Unvested balance December 31, 2020		3,142,220		$	25.29

As of December 31, 2020, the Company had outstanding 270,131 unvested RSUs with performance-based vesting conditions for which achievement of the performance condition has not been deemed probable.

Stock-Based Compensation

The Company recorded stock-based compensation expense in the following expense categories of its statements of operations and comprehensive loss (in thousands):


	Year Ended December 31,
	2020		2019
Cost of revenue	$	361	$	193
Sales and marketing		10,246		3,805
Research and development		7,751		3,967
General and administrative		5,821		4,756

	$	24,179	$	12,721

Stock-based compensation expense for the year ended December 31, 2020 included a total of $2.0 million related to unvested RSUs and option awards with performance-based vesting conditions, including options with performance- and market-based vesting conditions, for which the performance-based condition has not yet been achieved but has been deemed probable of being achieved. As of December 31, 2020, unrecognized compensation expense for RSUs and option awards with service-based vesting conditions and RSUs and option awards with performance-based vesting conditions either achieved or deemed probable of being achieved was $50.1 million, which is expected to be recognized over a weighted average period of 3.6 years. Additionally, the Company had unrecognized compensation expense of $5.8 million related to unvested awards with performance-based vesting conditions, which have not been deemed probable.