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Stock-Based Compensation | 3 Months Ended
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Mar. 31, 2023
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | Stock-Based Compensation Equity Incentive Plan Share Reserve. The number of shares of common stock available for issuance under the 2021 Equity Incentive Plan (“2021 Plan”) equals the sum of 5,262,500 shares plus up to approximately 13,719,000 shares subject to awards granted under the 2011 Plan that expire, forfeit or are repurchased following the effective date of the 2021 Plan. The number of shares reserved for issuance under the 2021 Plan will be increased automatically on the first business day of each of the Company’s fiscal years, commencing in 2022 and ending in 2031, by a number equal to the lowest of (i) 4,784,100 shares, (ii) 5% of the shares of common stock outstanding on the last business day of the prior fiscal year; or (iii) the number of shares determined by the Board of Directors. Pursuant to this evergreen provision, the Company increased the number of shares reserved under the 2021 Plan by 809,916 and 1,519,241 during the three months ended March 31, 2023 and 2022, respectively. In general, to the extent that any awards under the 2021 Plan are forfeited, terminate, expire or lapse without the issuance of shares, or if the Company reacquires the shares subject to awards granted under the 2021 Plan, those shares will again become available for issuance under the 2021 Plan, as will shares applied to pay the exercise or purchase price of an award or to satisfy tax withholding obligations related to any award. Restricted Stock Units (“RSUs”) RSUs granted under the 2021 Equity Incentive Plan generally vest based on continued service over a three to four year period for employees, and over a one year period for non-employee directors. RSU’s granted pursuant to the Company’s bonus plan have immediate vesting, see the section titled Bonus Plan below. RSU activity for the three months ended March 31, 2023 was as follows:
| Shares |  | Weighted-average grant date fair value per share
Unvested balance as of December 31, 2022 | 3,716,061 |  | $ | 6.60 |
Granted | 989,283 |  | $ | 5.97 |
Vested | (626,772) |  | $ | 6.87 |
Forfeited | (91,575) |  | $ | 5.61 |
Unvested balance as of March 31, 2023 | 3,986,997 |  | $ | 6.42 |
Stock Options Stock Options. Stock options granted under the Company’s equity plans generally vest based on continued service over four years and expire ten years from the date of grant. The following table summarizes the Black-Scholes option pricing model weighted-average assumptions used in estimating the fair value of stock options granted to employees during the three months ended March 31, 2022. No stock options were granted during the three months ended March 31, 2023.
| Three Months Ended March 31, |  |
| 2023 |  | 2022 |  |  |  |
Expected term (in years) | - |  | 6.0 |  |  |  |
Expected volatility | — | % |  | 49.0 | % |  |  |  |
Risk-free interest rate | — | % |  | 1.20 | % |  |  |  |
Expected dividend yield | — | % |  | — | % |  |  |  |
Expected term. For stock options considered to be “plain vanilla” options, the Company estimates the expected term based on the simplified method, which is essentially the weighted average of the vesting period and contractual term, as the Company’s historical share option exercise experience does not provide a reasonable basis upon which to estimate the expected term. Expected volatility. The Company performed an analysis using the average volatility of a peer group of representative public companies with sufficient trading history over the expected term to develop an expected volatility assumption. Risk-free interest rate. Based upon quoted market yields for the United States Treasury debt securities for a term consistent with the expected life of the awards in effect at the time of grant. Expected dividend yield. Because the Company has never paid and has no intention to pay cash dividends on common stock, the expected dividend yield is zero. A summary of equity award activity under the Company’s equity plans and related information is as follows (in thousands, except share, price and year data):
| Shares available for grant |  | Outstanding stock options |  | Weighted- average exercise Price |  | Weighted- average remaining contractual life (years) |  | Aggregate intrinsic value
Balance as of December 31, 2022 | 1,836,566 |  |  | 12,371,281 |  |  | $ | 5.74 |  |  | 6.07 |  | $ | 32,385 |
Shares authorized | 809,916 |  |  |  |  |  |  |  |  |
Options granted | — |  |  | — |  |  | — |  |  |  |  |
Options exercised | — |  |  | (496,905) |  |  | 1.69 |  |  |  |  |
Options cancelled | 110,449 |  |  | (110,449) |  |  | 12.90 |  |  |  |  |
RSU award activity | (897,708) |  |  | — |  |  |  |  |  |  |
Balance as of March 31, 2023 | 1,859,223 |  |  | 11,763,927 |  |  | $ | 5.84 |  |  | 5.85 |  | $ | 20,684 |
Vested and exercisable as of March 31, 2023 |  |  | 8,755,570 |  |  | $ | 4.15 |  |  | 5.08 |  | $ | 19,219 |
No stock options were granted during the three months ended March 31, 2023. The weighted-average grant-date fair value of options granted w as $13.29 during the three months ended March 31, 2022. The intrinsic value of options exercised for the three months ended March 31, 2023 and 2022 was $2.1 million and $4.1 million, respectively. Aggregate intrinsic value represents the difference between the exercise price of the options and the estimated fair value of the Company’s common stock at the time of exercise. The aggregate grant-date fair value of options vested was $2.3 million and $1.8 million during the three months ended March 31, 2023 and 2022, respectively. ESPP In October 2021, the Company’s Board of Directors adopted the 2021 Employee Stock Purchase Plan (“ESPP”), which became effective on the date of the IPO. As of December 31, 2022, the ESPP reserved and authorized the issuance of up to a total of 1,564,496 shares of Class A common stock to participating employees. Pursuant to its evergreen provision, the Company increased the number of shares reserved under the ESPP by 667,874 and 607,696 during the three months ended March 31, 2023 and 2022, respectively. There were no shares purchased during the three months ended March 31, 2023, as the first purchase date in 2023 will occur in May 2023. The fair value of the purchase rights under the ESPP was estima ted using the Black-Scholes option pricing model with a similar methodology for determining inputs as the Company’s stock options, as described above. The Company recorded stock-based compensation expense under this plan of $1.0 million and $0.8 million f or the three months ended March 31, 2023 and 2022, respectively, of which the Company capitalize d $0.2 million and less than $0.1 million, respectively, of stock-based compensation expense under this plan for the development of internal-use software. As of March 31, 2023, the total unrecognized stock-based compensation expense related to the ESPP was $3.7 million and is expected to be recognized over a weighted average period of one year. As of March 31, 2023, $1.2 million had been withheld on behalf of employees, respectively. The following table summarizes the Black-Scholes option pricing model assumptions used in estimating the fair value of the stock purchase rights under the ESPP during the three months ended March 31, 2023 and 2022, respectively.
| Three Months Ended March 31,
| 2023 |  | 2022
Expected term (in years) | 0.5 - 2.0 |  | 0.5 - 2.0
Expected volatility | 45% - 68% |  | 45% - 57%
Risk-free interest rate | 0.10% - 4.75% |  | 0.10% - 0.51%
Expected dividend yield | — | % |  | — | %
Stock-Based Compensation Expense Stock-based compensation expense included in the condensed consolidated statements of operations was as follows (in thousands):
| Three Months Ended March 31, |  |
| 2023 |  | 2022 |  |  |  |
Cost of revenue | $ | 416 |  |  | $ | 276 |  |  |  |  |
Research and development | 2,133 |  |  | 1,555 |  |  |  |  |
Sales and marketing | 2,152 |  |  | 1,134 |  |  |  |  |
General and administrative | 1,127 |  |  | 870 |  |  |  |  |
Total stock-based compensation expense | $ | 5,828 |  |  | $ | 3,835 |  |  |  |  |
During the three months ended March 31, 2023 and 2022, the Company capitalize d $1.0 million and $0.4 million, respectively, of stock-based compensation for the development of internal-use software. As of March 31, 2023, total compensation cost related to stock options and RSUs not yet vested was $18.2 million and $23.4 million, respectively, which will be recognized over a weighted-average period of two and three years for stock options and RSUs, respectively. Bonus Plan During March 2022, the Company’s Compensation Committee approved a new bonus structure (“Bonus Plan”) for its employees. The Bonus Plan is contingent upon the achievement of 2022 corporate performance targets. Pursuant to the Bonus Plan, during February 2023 the Company’s Compensation Committee approved the issuance of approximately 288,000 RSUs that immediately vested. The Company recognized $0.5 million in respective stock-based compensation during the three months ended March 31, 2022. During February 2023, the Company’s Board of Directors approved 2023 corporate performance targets under its Bonus Plan for its employees. If these performance targets are met during 2023, employees will be paid out under the plan in RSUs in 2024. As a result, the Company recognized $0.6 million in stock-based compensation during the three months ended March 31, 2023 based on progress made towards these performance targets.

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