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Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2023
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | Note 10. S tock-Based Compensation The Company maintains the following equity incentive plans: 2011 Equity Incentive Plan In 2011, the Company established its 2011 Equity Incentive Plan (the “2011 Plan”) that provided for the granting of stock options to employees and nonemployees of the Company. Under the 2011 Plan, the Company had the ability to issue incentive stock options (“ISOs”), nonstatutory stock options (“NSOs”), stock appreciation rights, restricted stock awards, and restricted stock unit awards (“RSUs”). Options under the 2011 Plan could be granted for periods of up to 10 years. The ISOs could be granted at a price per share not less than the fair value at the date of grant. 2019 Equity Incentive Plan The Company’s board of directors adopted and the Company’s stockholders approved the 2019 Equity Incentive Plan (the “2019 Plan”) in May 2019 and June 2019, respectively. The 2019 Plan became effective in June 2019 in connection with the Company’s IPO, and no further grants were made under the 2011 Plan. Shares reserved and remaining available for issuance under the 2011 Plan were added to the 2019 Plan reserve upon its effectiveness. The 2019 Plan provides for the grant of ISOs, NSOs, stock appreciation rights, restricted stock awards, RSUs, performance-based stock awards, and other forms of equity compensation. Additionally, the 2019 Plan provides for the grant of performance cash awards. ISOs may be granted only to the Company’s employees and to any of the Company’s parent or subsidiary corporation’s employees. All other awards may be granted to employees, including officers, and to non-employee directors and consultants of the Company and any of the Company’s affiliates. The exercise price of a stock option generally cannot be less than 100% of the fair market value of the Company’s common stock on the date of grant. Options under the 2019 Plan may be granted for periods of up to 10 years. 2020 Inducement Plan The Compensation Committee of the Company’s board of directors adopted the 2020 Inducement Plan (the “Inducement Plan”) in May 2020, which became effective upon adoption. The Inducement Plan was adopted without stockholder approval, as permitted by the Nasdaq Stock Market rules. The Inducement Plan provides for the grant of equity-based awards, including NSOs, stock appreciation rights, restricted stock awards, RSUs, performance-based stock awards, and other forms of equity compensation, and its terms are substantially similar to the stockholder-approved 2019 Plan. In accordance with relevant Nasdaq Listing Rules, awards under the Inducement Plan may only be made to individuals not previously employees or non-employee directors of the Company (or following such individuals’ bona fide period of non-employment with the Company), as an inducement material to the individuals' entry into employment with the Company. 2019 Employee Stock Purchase Plan The Company’s board of directors adopted and the Company’s stockholders approved the 2019 Employee Stock Purchase Plan (the “ESPP”) in May 2019 and June 2019, respectively. Subject to any plan limitations, the ESPP allows eligible employees to contribute, normally through payroll deductions, up to 15% of their earnings for the purchase of the Company’s common stock at a discounted price per share. The price at which common stock is purchased under the ESPP is equal to 85% of the fair market value of the Company’s common stock on the first or last day of the offering period, whichever is lower. The ESPP provides for separate six-month offering periods beginning on May 1 and November 1 of each year. Shares of common stock available for issuance under the Company’s equity incentive plans at December 31, 2023 were as follows:
|  | December 31, 2023 |
Outstanding stock awards |  |  | 7,059,412 |
Reserved for future award grants |  |  | 5,239,303 |
Reserved for future ESPP |  |  | 83,756 |
Total common stock reserved for stock awards |  |  | 12,382,471 |
Stock Option Activity A summary of the Company’s stock option activity (excluding performance-based stock option activity summarized further below) for the years ended December 31, 2023, 2022, and 2021 is as follows:
|  | Outstanding Options |
(in thousands, except share and per share data) |  | Number of Shares |  |  | Weighted- Average Exercise Price |  |  | Weighted- Average Remaining Contractual Term (in years) |  |  | Aggregate Intrinsic Value |
Balance—December 31, 2020 |  |  | 4,948,306 |  |  | $ | 7.10 |  |  |  | 6.71 |  |  | $ | 146,044 |
Options granted |  |  | 1,026,276 |  |  |  | 21.26 |  |  |  |  |  |  |
Options exercised |  |  | (862,056 | ) |  |  | 2.43 |  |  |  |  |  |  |
Options forfeited or expired |  |  | (110,107 | ) |  |  | 13.88 |  |  |  |  |  |  |
Balance—December 31, 2021 |  |  | 5,002,419 |  |  | $ | 10.66 |  |  |  | 6.89 |  |  | $ | 28,308 |
Options granted |  |  | 1,429,295 |  |  |  | 4.80 |  |  |  |  |  |  |
Options exercised |  |  | (488,187 | ) |  |  | 2.07 |  |  |  |  |  |  |
Options forfeited or expired |  |  | (492,395 | ) |  |  | 10.57 |  |  |  |  |  |  |
Balance—December 31, 2022 |  |  | 5,451,132 |  |  | $ | 9.90 |  |  |  | 5.31 |  |  | $ | 7 |
Options granted |  |  | 2,638,500 |  |  |  | 2.61 |  |  |  |  |  |  |
Options exercised |  |  | (8 | ) |  |  | 2.44 |  |  |  |  |  |  |
Options forfeited or expired |  |  | (2,284,038 | ) |  |  | 7.84 |  |  |  |  |  |  |
Balance—December 31, 2023 |  |  | 5,805,586 |  |  | $ | 7.40 |  |  |  | 6.90 |  |  | $ | 64 |
Options vested and exercisable as of December 31, 2023 |  |  | 3,103,913 |  |  | $ | 9.69 |  |  |  | 5.57 |  |  | $ | 1 |
Options granted to new hires generally vest over a four-year period, with 25% vesting at the end of one year and the remaining vesting monthly thereafter. Options granted as merit awards generally vest monthly over a three- or four-year period. The aggregate intrinsic value of unexercised stock options is calculated as the difference between the closing price of the Company’s common stock of $2.10 on December 31, 2023 and the exercise prices of the underlying stock options. Out-of-the money stock options are excluded from aggregate intrinsic value. The weighted-average grant date fair value of options granted was $1.81, $3.21, and $13.14 per share for the years ended December 31, 2023, 2022, and 2021, respectively. As of December 31, 2023, the unrecognized stock-based compensation of unvested options was $7.2 million, which is expected to be recognized over a weighted-average period of 2.02 years. Valuation of Stock Options The Company estimated the fair value of stock options (excluding performance-based stock options discussed below) using the Black-Scholes option-pricing model. F air value of stock options is recognized as compensation expense on a straight-line basis over the requisite service periods of the awards. Fair value of stock options was estimated using the following range of assumptions:
|  | Year Ended December 31,
|  | 2023 |  | 2022 |  | 2021
Expected term (in years) |  | 5.50 - 6.08 |  | 5.50 - 6.08 |  | 5.50 - 6.27
Volatility |  | 78.47 - 79.31% |  | 68.37 - 77.68% |  | 67.97 - 69.90%
Risk-free interest rate |  | 3.47 - 4.66% |  | 1.62 - 4.23% |  | 0.62 - 1.39%
Dividend yield |  | –% |  | –% |  | –%
Performance-Based Stock Option Activity Performance-based stock options granted to the Company's then Chief Executive Officer in 2020, and vested in the same year due to fulfillment of the performance condition, expired at the end of 2023. A summary of the Company’s performance-based stock option activity for the years ended December 31, 2023, 2022 and 2021 is as follows:
|  | Outstanding Performance-Based Options |
(in thousands, except share and per share data) |  | Number of Shares |  |  | Weighted- Average Exercise Price |  |  | Weighted- Average Remaining Contractual Term (in years) |  |  | Aggregate Intrinsic Value |
Balance—December 31, 2020 |  |  | 421,000 |  |  | $ | 5.10 |  |  |  | 9.21 |  |  | $ | 13,266 |
No activities |  |  | — |  |  |  |  |  |  |  |  |  |
Balance—December 31, 2021 |  |  | 421,000 |  |  | $ | 5.10 |  |  |  | 8.21 |  |  | $ | 3,861 |
No activities |  |  | — |  |  |  |  |  |  |  |  |  |
Balance—December 31, 2022 |  |  | 421,000 |  |  | $ | 5.10 |  |  |  | 1.00 |  |  | $ | — |
Options expired |  |  | (421,000 | ) |  |  | 5.10 |  |  |  |  |  |  |
Balance—December 31, 2023 |  |  | — |  |  |  |  |  |  |  |  |  |
RSU Activity and Valuation A summary of the Company’s RSU activity for the years ended December 31, 2023, 2022 and 2021 is as follows:
|  | Unvested Restricted Stock Units |
(in thousands, except share and per share data) |  | Number of Shares |  |  | Weighted- Average Grant Date Fair Value |  |  | Aggregate Fair Value |
Balance—December 31, 2020 |  |  | 619,218 |  |  | $ | 10.41 |  |  | $ | 22,670 |
RSUs granted |  |  | 1,387,656 |  |  |  | 18.05 |  |  |  |
RSUs vested |  |  | (266,119 | ) |  |  | 10.93 |  |  |  | 5,521 |
RSUs forfeited |  |  | (61,059 | ) |  |  | 18.45 |  |  |  |
Balance—December 31, 2021 |  |  | 1,679,696 |  |  | $ | 16.35 |  |  | $ | 23,969 |
RSUs granted |  |  | 2,071,201 |  |  |  | 4.86 |  |  |  |
RSUs vested |  |  | (897,871 | ) |  |  | 11.74 |  |  |  | 3,189 |
RSUs forfeited |  |  | (231,544 | ) |  |  | 10.94 |  |  |  |
Balance—December 31, 2022 |  |  | 2,621,482 |  |  | $ | 9.33 |  |  | $ | 5,191 |
RSUs granted |  |  | 24,500 |  |  |  | 2.18 |  |  |  |
RSUs vested |  |  | (839,194 | ) |  |  | 9.91 |  |  |  | 1,520 |
RSUs forfeited |  |  | (552,962 | ) |  |  | 8.89 |  |  |  |
Balance—December 31, 2023 |  |  | 1,253,826 |  |  | $ | 8.99 |  |  | $ | 2,633 |
The Company grants RSUs to employees to receive shares of the Company’s common stock. The RSUs awarded are subject to the individual’s continued service to the Company through each applicable vesting date. RSUs granted to new hires generally vest annually over a four-year period. RSUs granted as merit awards generally vest semi-annually over a three- or four-year period. The Company accounts for the fair value of RSUs using the closing market price of the Company’s common stock on the date of grant. The aggregate fair value of unvested RSUs is calculated using the closing price of the Company’s common stock of $2.10 on December 31, 2023. As of December 31, 2023, the unrecognized stock-based compensation cost of unvested RSUs was $9.5 million, which is expected to be recognized over a weighted-average period of 1.87 years. The Company’s default tax withholding method for RSUs is the sell-to-cover method, in which shares with a market value equivalent to the tax withholding obligation are sold on behalf of the holder of the RSUs upon vesting and settlement to cover the tax withholding liability and the cash proceeds from such sales are remitted by the Company to taxing authorities. ESPP Activity and Valuation During the years ended December 31, 2023, 2022 and 2021, 999,194, 416,514, and 128,289 shares of common stock were purchased under the ESPP, respectively. The fair value of stock purchase rights granted under the ESPP was estimated using the following range of assumptions:
|  | Year Ended December 31,
|  | 2023 |  | 2022 |  | 2021
Expected term (in years) |  | 0.5 |  | 0.49 - 0.5 |  | 0.49
Volatility |  | 69.23 - 84.88% |  | 82.35 - 112.07% |  | 55.92 - 74.88%
Risk-free interest rate |  | 5.14 - 5.51% |  | 1.49 - 4.58% |  | 0.04 - 0.06%
Dividend yield |  | –% |  | –% |  | –%
Fair value |  | $0.33 - $0.91 |  | $1.26 - $2.23 |  | $6.30 - $8.21
Stock-based Compensation Expense The following is a summary of stock-based compensation expense by function (in thousands):
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Cost of revenue |  | $ | 1,761 |  |  | $ | 1,922 |  |  | $ | 1,414 |
Research and development |  |  | 4,870 |  |  |  | 5,256 |  |  |  | 4,064 |
Selling, general and administrative |  |  | 7,420 |  |  |  | 12,255 |  |  |  | 8,900 |
Total stock-based compensation expense |  | $ | 14,051 |  |  | $ | 19,433 |  |  | $ | 14,378 |
The following is a summary of stock-based compensation expense by award type (in thousands):
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Stock options |  | $ | 5,746 |  |  | $ | 8,560 |  |  | $ | 8,585 |
RSUs |  |  | 7,539 |  |  |  | 9,990 |  |  |  | 4,765 |
ESPP |  |  | 766 |  |  |  | 883 |  |  |  | 1,028 |
Total stock-based compensation expense |  | $ | 14,051 |  |  | $ | 19,433 |  |  | $ | 14,378 |

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