Stock Based Compensation

6 Months Ended

Jan. 27, 2024

Share-Based Payment Arrangement [Abstract]

Stock Plans

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 non-employees 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 (“RSU”), restricted stock awards (“RSA”), 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, RSAs, RSU awards, 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 thirty 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. As of January 27, 2024, the number of shares authorized for issuance under the 2017 Plan was 44,038,883 shares of Class A common stock, and the number of shares available for grant was 3,093,161.

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. As of January 27, 2024, the number of shares authorized for issuance under the 2019 Plan was 10,750,000 shares of Class A common stock and the number of shares available for grant was 913,496.

Stock Options

Stock option activity under the 2011 Plan, 2017 Plan, and 2019 Plan was as follows:


	Options Outstanding
	Number of Options	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (in thousands)
Balance at July 29, 2023	8,106,110	$	7.06	8.78	$	4,770

Granted	2,450,951	4.00
Exercised	—	—
Cancelled	(545,451)	10.18
Balance at January 27, 2024	10,011,610	$	6.14	8.67	$	13

Restricted Stock Units

RSU award activity under the 2017 Plan and 2019 Plan was as follows:


	Unvested RSUs
	Class A Common Stock	Weighted- Average Grant Date Fair Value
Unvested at July 29, 2023	11,455,577	$	10.47

Granted	12,073,155	3.27
Vested	(4,549,301)	7.07
Forfeited	(3,790,619)	8.38
Unvested at January 27, 2024	15,188,812	$	6.29

Performance-Based Stock Awards

In fiscal 2023, the Company incurred stock-based compensation expense under compensation arrangements with certain of its employees under which the Company settled bonuses for a fixed dollar amount by issuing a variable number of restricted stock units. The awards had both service and performance conditions. During the first quarter of fiscal 2024, the Company issued 848,489 RSUs based on the Company’s trailing seven-day average share price, following the Company’s public release of fiscal 2023 financial results. Stock-based compensation expense for these awards was recorded in fiscal 2023.

Stock-Based Compensation Expense

Stock-based compensation expense for options and RSUs granted to employees was $21.1 million and $41.0 million for the three and six months ended January 27, 2024, and $25.3 million and $56.4 million for the three and six months ended January 28, 2023. Stock-based compensation expense is included in selling, general, and administrative expenses in the condensed consolidated statements of operations and comprehensive loss.

As of January 27, 2024, the total unrecognized compensation expense related to unvested options and RSUs, net of estimated forfeitures, was $96.5 million, which we expect to recognize over an estimated weighted average period of 1.8 years. The weighted-average grant date fair value of options granted during the six months ended January 27, 2024, was $2.51 per share. The weighted-average grant date fair value of options granted during the six months ended January 28, 2023, was $2.42 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 27, 2024		January 28, 2023		January 27, 2024		January 28, 2023
Expected term (in years)	4 - 5.5		3.2 - 5.5		4 - 5.5		3.2 - 5.5
Volatility	77.3% - 78.0%		87.3	%	77.3% - 78.0%		87.3	%
Risk free interest rate	4.8%		4.2% - 4.4%		4.8%		4.2% - 4.4%
Dividend yield	—	%	—	%	—	%	—	%