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Stock-Based Compensation Plan | 6 Months Ended
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Jun. 30, 2024
Share-Based Payment Arrangement [Abstract] |
Stock-based compensation plan | Stock-based compensation plan Stock Plans As of June 30, 2024, the Company had three stock-based compensation plans (the “Plans”) which are described below. 2015 Equity Incentive Plan In March 2015, the Board approved the 2015 Equity Incentive Plan (“2015 Plan”), which provided for the granting of stock options to employees, directors and consultants of the Company. As of the effective date of the 2021 Plan described below, the 2015 Plan was terminated and no further equity awards may be granted pursuant to the 2015 Plan. Outstanding stock options granted under the 2015 Plan will continue to be governed by the provisions of the 2015 Plan until expiration or exercise, whichever is earlier. 2021 Equity Incentive Plan In July 2021, the Board approved the 2021 Equity Incentive Plan (the “2021 Plan”), which provides for the granting of stock options, stock appreciation rights, restricted stock awards, restricted stock unit (“RSU”) awards, performance awards, and other awards to employees, directors and consultants of the Company. The 2021 Plan became effective on July 22, 2021 in connection with the IPO. Upon the 2021 Plan’s effective date, there were 18,000,000 shares of the Company’s common stock reserved for issuance thereunder. On January 1 of each year commencing after the effective date of the IPO and continuing through and including January 1, 2031, the number of shares of the Company’s common stock reserved for issuance under the 2021 Plan will increase automatically by an amount equal to 4% of the number of shares of the Company’s common stock outstanding on the preceding December 31, unless the Company’s Board of Directors elects to authorize a lesser number of shares prior to the applicable January 1. As of June 30, 2024, the total number of shares of common stock available for issuance under the 2021 Plan was 21,790,770 shares. 2021 Employee Stock Purchase Plan In July 2021, the Board approved the 2021 Employee Stock Purchase Plan (the “ESPP”). The ESPP became effective on July 22, 2021 in connection with the IPO. Upon the ESPP’s effective date, there were 2,000,000 shares of the Company’s common stock reserved for issuance thereunder. On January 1 of each year commencing after the effective date of the IPO and continuing through and including January 1, 2031, the number of shares of the Company’s common stock reserved for issuance under the ESPP will increase automatically by an amount equal to the lesser of (1) 1% of the number of shares of the Company’s common stock outstanding on the preceding December 31, (2) 5,000,000 shares and (3) a number of shares determined by the Board. During the six months ended June 30, 2024, 210,496 shares were issued pursuant to purchases under the ESPP. As of June 30, 2024, the total number of shares of common stock available for issuance under the ESPP was 5,298,874 shares. Stock option valuation assumptions The Company estimates the fair value of each stock option grant on the date of grant using the Black-Scholes option pricing model. The model assumptions include expected volatility, expected term, dividend yield, and the risk-free interest rate. The expected volatility was based on the volatility of a group of similar entities. The Company derived expected term by using the “simplified” method (the expected term is determined as the average of the time-to-vesting and contractual life of the option), as the Company has limited historical information to develop expectations about future exercise patterns and post vesting employment termination behavior. The Company based the risk-free rate on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term of the option. The Company has never paid any dividends and does not anticipate paying dividends in the foreseeable future, and therefore used an expected dividend yield of zero in the valuation model. Stock Options The following table shows stock option activity during the periods indicated (in thousands except share and per share data):
| Number of options outstanding |  | Weighted-average exercise price |  | Weighted-average remaining contractual term (in years) |  | Aggregate intrinsic value
Balance as of December 31, 2023 | 7,219,702 |  | $ | 8.74 |  |  | 6.90 |  | $ | 23,574 |
Options granted | 1,916,670 |  | 6.86 |  |  |  |  |
Options exercised | (483,157) |  | 1.51 |  |  |  |  |
Options forfeited | (95,210) |  | 13.25 |  |  |  |  |
Options expired | (133,785) |  | 16.18 |  |  |  |  |
Balance as of June 30, 2024 | 8,424,220 |  | $ | 8.56 |  |  | 7.28 |  | $ | 10,232 |
Options exercisable as of June 30, 2024 | 4,949,291 |  | $ | 7.95 |  |  | 6.19 |  | $ | 10,034 |
The weighted-average grant date fair value of options granted during the three months ended June 30, 2024 and 2023 were $4.07 and $5.28 per share, respectively. The weighted-average grant date fair value of options granted during the six months ended June 30, 2024 and 2023 were $4.61 and $6.72 per share, respectively. There was $22.1 million of unrecognized stock-based compensation expense related to unvested stock options as of June 30, 2024. The unrecognized stock-based compensation expense is estimated to be recognized over a period of 2.59 years as of June 30, 2024. The Company currently uses authorized and unissued shares to satisfy option exercises. The aggregate intrinsic value is calculated as the difference between the exercise price and the estimated fair value of the Company’s common stock as of June 30, 2024. RSU Awards The following table shows RSU awards activity during the periods indicated:
| Shares |  | Weighted-average grant date fair value per share |  | Weighted-average remaining contractual term (in years) |  | Aggregate intrinsic value (in thousands)
Unvested balance at December 31, 2023 | 2,608,257 |  | $ | 10.88 |  |  | 1.51 |  | $ | 23,787 |
Granted | 3,358,467 |  | 6.97 |  |  |  |  |
Vested | (582,543) |  | 10.18 |  |  |  |  |
Forfeited | (232,552) |  | 10.24 |  |  |  |  |
Unvested balance at June 30, 2024 | 5,151,629 |  | $ | 8.44 |  |  | 1.68 |  | $ | 28,746 |
There was $41.2 million of unrecognized stock-based compensation expense related to unvested RSU awards as of June 30, 2024. The unrecognized stock-based compensation expense is estimated to be recognized over a period of 3.21 years as of June 30, 2024. Stock-based compensation expense The following table shows the allocation of stock-based compensation expense related to the Company’s stock-based awards (in thousands):
| Three months ended June 30, |  | Six months ended June 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Cost of sales | $ | 1,200 |  |  | $ | 868 |  |  | $ | 2,145 |  |  | $ | 1,560 |
Research and development | 1,677 |  |  | 1,805 |  |  | 2,999 |  |  | 3,239 |
Sales and marketing | 1,280 |  |  | 1,171 |  |  | 2,287 |  |  | 2,107 |
General and administrative | 2,995 |  |  | 2,078 |  |  | 5,361 |  |  | 3,715 |
Total stock-based compensation | $ | 7,152 |  |  | $ | 5,922 |  |  | $ | 12,792 |  |  | $ | 10,621 |
The following table shows the weighted-average valuation assumptions used in determining the fair value of employee stock options:
| Three months ended June 30, |  | Six months ended June 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Expected term (in years) | 5.91 |  | 5.5 |  | 6.0 |  | 5.96
Expected volatility | 74 | % |  | 70 | % |  | 73 | % |  | 71 | %
Risk-free interest rate | 4 | % |  | 4 | % |  | 4 | % |  | 4 | %
Dividend yield | - |  |  | - |  |  | - |  |  | - |
The following table summarizes the weighted-average assumptions used in estimating the fair value of the ESPP for the current offering period using the Black-Scholes option-pricing model:
| Three months ended June 30, |  | Six months ended June 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Expected term (in years) | 0.5 |  | 0.5 |  | 0.5 |  | 0.5
Expected volatility | 63 | % |  | 70 | % |  | 58 | % |  | 76 | %
Risk-free interest rate | 5 | % |  | 4 | % |  | 5 | % |  | 4 | %
Dividend yield | - |  |  | - |  |  | - |  |  | - |

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