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Stock-Based Compensation | 3 Months Ended
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Mar. 31, 2024
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | NOTE 8. STOCK-BASED COMPENSATION 2018 Stock Plan Legacy SmartRent’s board of directors adopted, and its stockholders approved, the SmartRent.com, Inc. 2018 Stock Plan (the “2018 Stock Plan”), effective March 2018. The purpose of the 2018 Stock Plan was to advance the interests of Legacy SmartRent and its stockholders by providing an incentive to attract, retain and reward persons performing services for Legacy SmartRent and by motivating such persons to contribute to the growth and profitability of Legacy SmartRent. The 2018 Stock Plan seeks to achieve this purpose by providing awards in the form of stock options and restricted stock purchase rights. Awards granted as stock options under the 2018 Stock Plan generally expire no later than ten years from the date of grant and become vested and exercisable over a four-year period. All options are subject to certain provisions that may impact these vesting schedules. Amendment to the 2018 Stock Plan In April 2021, the board of directors of Legacy SmartRent executed a unanimous written consent to provide an additional incentive to certain employees of Legacy SmartRent by amending the 2018 Stock Plan to allow for the issuance of RSUs and granted a total of 1,533 RSUs to certain employees which vest over four years. The estimated fair value for each RSU issue d was approximately $21.55 per share and the total stock-based compensation expense to be amortized over the vesting period is $33,033. Effective upon the Business Combination in August 2021, the 2018 Stock Plan was replaced by the 2021 Plan. The 2018 Stock Plan continues to govern the terms and conditions of the outstanding awards previously granted thereunder. No new awards will be granted out of the 2018 Stock Plan. 2021 Equity Incentive Plan In connection with the Business Combination, the Board approved and implemented the SmartRent, Inc. 2021 Plan (the "2021 Plan"). The purpose of the 2021 Plan is to enhance the Company's ability to attract, retain and motivate persons who make, or are expected to make, important contributions to the Company by providing these individuals with equity ownership opportunities and equity-linked compensation opportunities. The 2021 Plan authorizes the administrator of the 2021 Plan (generally, the Board or its compensation committee) to provide incentive compensation in the form of stock options, restricted stock and stock units, performance shares and units, other stock-based awards and cash-based awards. Under the 2021 Plan, the Company is authorized to issue up to 15,500 shares of Class A common stock. Non-employee board member RSUs generally will vest either over one year or three years. The RSUs and options granted to employees are generally subject to a four-year vesting schedule and all vesting generally shall be subject to the recipient’s continued employment with the Company or its subsidiaries through the applicable vesting dates. The table below summarizes the activity pursuant to the 2021 Plan, for the three months ended March 31, 2024, and the shares available for future issuances as of March 31, 2024.
| Shares Available for Future Issuance |
Shares available as of December 31, 2023 |  | 8,310 |
Stock options issued, net |  | (2,527 | )
RSUs issued, net |  | (1,352 | )
Shares available as of March 31, 2024 |  | 4,431 |
The table below summarizes the activity related to stock options, pursuant to the 2018 Stock Plan and 2021 Plan, for the three months ended March 31, 2024.
| Options Outstanding |
| Number of Options |  |  | Weighted- Average Exercise Price ($ per share) |  |  | Weighted Average Remaining Contractual Life (years) |  |  | Aggregate Intrinsic Value |
December 31, 2023 |  | 9,158 |  |  | $ | 1.21 |  |  |  | 6.81 |  |  | $ | 18,112 |
Granted |  | 2,527 |  |  | $ | 3.36 |  |  |  |  |  |  |
Exercised |  | (192 | ) |  | $ | 0.47 |  |  |  |  |  |  |
March 31, 2024 |  | 11,493 |  |  | $ | 1.70 |  |  |  | 7.30 |  |  | $ | 13,504 |
Exercisable options as of March 31, 2024 |  | 6,531 |  |  | $ | 0.75 |  |  |  | 6.04 |  |  | $ | 12,706 |
During the three months ended March 31, 2024 and 2023, stock-based compensation expense of $692 and $431, respectively, was recognized in connection with the outstanding options. As of March 31, 2024, there is $9,653 of unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted-average period of 3.4 years. The table below summarizes the activity related to RSUs, pursuant to the 2018 Plan and 2021 Plan, for the three months ended March 31, 2024.
| Restricted Stock Units
| Number of Restricted Stock Units |  |  | Weighted Average Grant Date Fair Value (per share) |  |
December 31, 2023 |  | 4,461 |  |  | $ | 4.24 |  |
Granted |  | 1,747 |  |  | $ | 3.32 |  |
Vested or distributed |  | (776 | ) |  | $ | 3.89 |  |
Forfeited |  | (579 | ) |  | $ | 3.69 |  |
March 31, 2024 |  | 4,853 |  |  | $ | 4.04 |  |
No right to any Class A Common Stock is earned or accrued until such time that vesting occurs, nor does the grant of the RSU award confer any right to continue vesting or employment. Compensation expense associated with the unvested RSUs is recognized on a straight-line basis over the vesting period. During the three months ended March 31, 2024 and 2023, respectively, stock-based compensation expense of $2,566 and $3,117 was recognized in connection with the vesting of all RSUs. As of March 31, 2024, there is $17,731 of unrecognized compensation expense related to restricted stock units, which is expected to be recognized over a weighted-average period of 2.4 years. Employee Stock Purchase Plan The Company has the ability to initially issue up to 2,000 shares of Class A Common Stock under the ESPP, subject to annual increases effective as of January 1, 2022, and each subsequent January 1 through and including January 1, 2030, in an amount equal to the smallest of (i) 1% of the number of shares of the Class A Common Stock outstanding as of the immediately preceding December 31, (ii) 2,000 shares or (iii) such amount, if any, as the Board may determine. The table below summarizes the activity related to the ESPP for the three months ended March 31, 2024.
ESPP Activity | Shares Available for Sale |
December 31, 2023 |  | 5,402 |
Annual additions to the plan |  | 2,000 |
Shares purchased |  | (134 | )
March 31, 2024 |  | 7,268 |
The ESPP allows employees to purchase shares of the Company's Class A Common Stock at 85 percent of its quoted market price. During the three months ended March 31, 2024 and 2023, stock-based compensation expense of $23 and $23, respectively, was recognized in connection with the ESPP. Stock-Based Compensation The fair value of stock option grants is estimated by the Company on the date of grant using the Black Scholes-Merton option pricing model with the following weighted-average assumptions for the three months ended March 31, 2024 and 2023. During the three months ended March 31, 2024 and 2023, there were options granted covering 2,527 and 3,070 shares, respectively.
| For the three months ended March 31, |
| 2024 |  |  | 2023 |
Risk free interest | 4.09% |  |  |  | 3.55 | %
Dividend yield | 0.00% |  |  | 0.00% |
Expected volatility | 75.00% |  |  |  | 75.00 | %
Expected life (years) |  | 6.25 |  |  |  | 6.08 |
The Company recorded stock-based compensation expense as follows.
| For the three months ended March 31,
| 2024 |  |  | 2023 |  |
Cost of revenue | $ | 298 |  |  | $ | 251 |  |
Research and development |  | 961 |  |  |  | 978 |  |
Sales and marketing |  | 131 |  |  |  | 236 |  |
General and administrative |  | 1,891 |  |  |  | 2,215 |  |
Total | $ | 3,281 |  |  | $ | 3,680 |  |
During the three months ended March 31, 2023, stock-based compensation expense of $109 was recognized for 844 shares granted in connection with the Company's February 2020 acquisition of a foreign supplier and are recorded as a component of general and administrative expense. There was no such stock-based compensation expense recording during the three months ended March 31, 2024.

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