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Stock Based Compensation | 6 Months Ended
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Jan. 28, 2023
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | Stock-Based Compensation 2011 Equity Incentive Plan In 2011, we adopted the 2011 Equity Incentive Plan (the “2011 Plan”). The 2011 Plan provided for the grant of stock-based awards to employees, directors, and nonemployees under terms and provisions established by the Board of Directors. The 2011 Plan allowed for the grant of incentive stock options or nonqualified stock options as well as restricted stock units, restricted stock, and stock appreciation rights. Only incentive and nonqualified stock options were granted under the 2011 Plan. Employee stock option awards generally vested 25% on the first anniversary of the grant date with the remaining shares subject to the option vesting ratably over the next three years subject to the employee’s continued service with the Company. Options generally expire after 10 years. Effective upon our initial public offering in 2017, the 2011 Plan was replaced by the 2017 Incentive Plan. 2017 Incentive Plan In November 2017, our Board of Directors and stockholders adopted our 2017 Incentive Plan (the “2017 Plan”). The remaining shares available for issuance under our 2011 Plan became reserved for issuance under the 2017 Plan. Our 2017 Plan provides for the grant of Class A incentive stock options to employees, including employees of our subsidiary, and for the grant of nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards (“RSU”), performance stock awards, performance cash awards, and other forms of stock awards to employees, directors, and consultants, including employees and consultants of our subsidiaries. Employee stock option awards generally begin to vest six months after the grant date with the remaining shares subject to the option vesting ratably over the next 30 months. Options generally expire after 10 years. RSU awards made to employees generally vest ratably on a quarterly basis subject to the employee’s continued service with the Company. The number of shares authorized for issuance under the 2017 Plan was 38,257,771 shares of Class A common stock as of January 28, 2023. 2019 Inducement Plan In October 2019, our Board of Directors adopted our 2019 Inducement Plan (the “2019 Plan”). Our 2019 Plan provides for the grant of Class A nonqualified stock options and RSU awards to individuals who satisfy the standards for inducement grants under the relevant Nasdaq Stock Market rules. The number of shares authorized for issuance under the 2019 Plan was 10,750,000 shares of Class A common stock as of January 28, 2023. Stock Options Stock option activity under the 2011 Plan, 2017 Plan, and 2019 Plan is as follows:
|  |  |  | Options Outstanding
|  |  |  | Number of Options |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contractual Life (in Years) |  | Aggregate Intrinsic Value (in thousands)
Balance – July 30, 2022 |  |  |  | 4,703,564 |  |  | $ | 21.07 |  |  | 7.58 |  | $ | 638 |
Granted |  |  |  | 1,486,774 |  |  | 3.79 |  |  |  |  |
Exercised |  |  |  | (117,607) |  |  | 1.31 |  |  |  |  |
Cancelled |  |  |  | (871,361) |  |  | 26.93 |  |  |  |  |
Balance – January 28, 2023 |  |  |  | 5,201,370 |  |  | $ | 15.59 |  |  | 7.84 |  | $ | 1,738 |
The aggregate intrinsic value is the difference between the current fair value of the underlying common stock and the exercise price for in-the-money stock options. Restricted Stock Units The following table summarizes the RSU award activity under the 2017 Plan and 2019 Plan:
| Unvested RSUs |  |  |  |
| Class A Common Stock |  | Weighted- Average Grant Date Fair Value |  |  |  |
Unvested at July 30, 2022 | 19,217,622 |  |  | $ | 16.09 |  |  |  |  |
Granted | 3,038,609 |  |  | 4.00 |  |  |  |  |
Vested | (3,099,038) |  |  | 14.25 |  |  |  |  |
Forfeited | (5,411,847) |  |  | 15.36 |  |  |  |  |
Unvested at January 28, 2023 | 13,745,346 |  |  | $ | 14.12 |  |  |  |  |
Performance-based Stock Awards The Company incurs stock-based compensation expense under compensation arrangements with certain of its employees under which the Company will settle bonuses for a fixed dollar amount by issuing a variable number of restricted stock units. The number of restricted stock units issued will be based on the Company’s trailing seven-day average share price following the Company’s public release of fiscal 2023 financial results. The awards have both service and performance conditions. These awards are classified as liability-based awards in accrued expenses in the accompanying condensed consolidated balance sheets, which are measured based on the fair value of the award at the end of each reporting period until settled. The Company records stock-based compensation related to accrued compensation in which it intends to settle in shares of the Company’s common stock. However, it is the Company’s discretion whether this compensation will ultimately be paid in stock or cash, as it has the right to dictate the form of these payments up until the date they are paid. Stock-based compensation expense is recorded over the fiscal year in which performance is assessed. Forfeitures are recorded in the period in which they occur. Stock-Based Compensation Expense Stock-based compensation expense for employees was $25.9 million and $57.6 million for the three and six months ended January 28, 2023 and $32.4 million and $64.7 million for the three and six months ended January 29, 2022. As a result of the January 2023 Reduction in Force, described in Note 11, stock-based compensation expense decreased by $4.4 million for the three months ended January 28, 2023 due to forfeitures of previously granted awards above our estimate. Stock-based compensation expense is included in selling, general, and administrative expenses in our condensed consolidated statements of operations and comprehensive loss. As of January 28, 2023, the total unrecognized compensation expense related to unvested options and RSUs, net of estimated forfeitures, was $175.3 million, which we expect to recognize over an estimated weighted average period of 2.2 years. The weighted-average grant date fair value of options granted during the six months ended January 28, 2023, was $2.42 per share. The weighted-average grant date fair value of options granted during the six months ended January 29, 2022, was $9.11 per share. We record stock-based compensation of stock options granted to employees by estimating the fair value of stock-based awards using the Black-Scholes option pricing model and amortizing the fair value of the stock-based awards granted over the applicable vesting period of the awards on a straight-line basis. The fair value of stock options granted to employees was estimated at the grant date using the Black-Scholes option-pricing model with the following assumptions:
| For the Three Months Ended |  | For the Six Months Ended
| January 28, 2023 |  | January 29, 2022 |  | January 28, 2023 |  | January 29, 2022
Expected term (in years) | 3.2 - 5.5 |  | 3.2 - 5.5 |  | 3.2 - 5.5 |  | 3.2 - 5.5
Volatility | 87.3% |  | 62.1% |  | 87.3% |  | 62.1%
Risk free interest rate | 4.2% - 4.4% |  | 0.8% - 1.3% |  | 4.2% -4.4% |  | 0.8% - 1.3%
Dividend yield | — | % |  | — | % |  | — | % |  | — | %

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