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Note 5 - Stock-based Compensation

9 Months Ended

Sep. 30, 2025

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

5. Stock-Based Compensation

Stock-based compensation includes expense charges for all stock-based awards to employees and directors. These awards include restricted stock awards, restricted stock units, and performance restricted stock units.

Stock-based compensation expense related to internal labor is capitalized to software and patent costs based on direct labor hours charged to capitalized software and patent costs.

Determining Fair Value

Restricted Stock Awards

The fair value of restricted stock awards (“RSA”) that vest upon meeting a service condition is based on the fair market value of the Company’s common stock on the date of the grant (measurement date) and is recognized on a straight-line basis over the service period of the award, which is generally three to four years for employee grants and one to three years for director grants.

Restricted Stock Units

The fair value of restricted stock unit (“RSU”) awards that vest upon meeting a service condition is based on the fair market value of the Company’s common stock on the date of the grant (measurement date) and is recognized on a straight-line basis over the service period of the award, which is generally three to four years for employee grants.

Performance Restricted Stock Units

The fair value of performance restricted stock unit (“PRSU”) awards that vest upon meeting a service condition and a performance condition, such as the Company exceeding a future annual recurring revenue target, is determined based on the fair market value of the Company’s common stock on the date of the grant (measurement date), adjusted for probability of achievement of the performance criteria as of each reporting date, and is recognized on a straight-line basis over the service period of the award, which is generally three years for employee grants. The probability of achievement is subject to judgment, and could change from period to period, impacting the amount of expense to be recognized.

The fair value of PRSU awards that vest upon meeting a service condition and a market condition, such as the Company exceeding shareholder returns as compared to an index of peer companies, is determined on the date of grant (measurement date) using the Monte Carlo valuation model. The Company recognizes the fair value of the award on a straight-line basis over the service period of the award, which is generally three years for employee grants.

The following inputs are used in the Monte Carlo valuation model to estimate the fair value:

Stock Price. The stock price represents the fair market value of the Company’s common stock on the date of the grant.

Expected Volatility. The Company estimates the volatility of its common stock at the date of grant based on the historical volatility of its common stock based on historical prices over the most recent period commensurate with the term of the award.

Risk-Free Interest Rate. The Company determines the risk-free interest rate using current U.S. treasury yields for bonds with a maturity commensurate with the term of the award.

Monte Carlo valuation inputs:

		*Three Months Ended September 30,*								*Nine Months Ended September 30,*
		*2025*				*2024*				*2025*				*2024*
Stock price		$	—			$	—			$	13.16			$	36.64
Expected volatility			—				—				70.9	%			66.3	%
Risk-free interest rate			—				—				3.8	%			4.3	%

Stock-Based Compensation

		*Three Months Ended September 30,*								*Nine Months Ended September 30,*
		*2025*				*2024*				*2025*				*2024*
Stock-based compensation:
Cost of revenue		$	336			$	154			$	726			$	563
Sales and marketing			577				688				1,727				2,198
Research, development and engineering			1,244				648				2,872				1,911
General and administrative			1,708				1,212				3,571				3,267
Stock-based compensation expense			3,865				2,702				8,896				7,939
Capitalized to software and patent costs			61				5				115				25
Total stock-based compensation		$	3,926			$	2,707			$	9,011			$	7,964

The following table sets forth total unrecognized compensation costs related to non-vested stock-based awards granted under the Company’s stock incentive plan:

		*September 30,*				*December 31,*
		*2025*				*2024*
Total unrecognized compensation costs		$	15,491			$	16,226

Total unrecognized compensation costs will be adjusted based on updates to the estimated future achievement of performance conditions on PRSU awards as well as for any future forfeitures if and when they occur.

The Company expects to recognize the total unrecognized compensation costs as of September 30, 2025, for all non-vested stock-based awards over weighted average periods through September 30, 2029, as follows:

		*RSAs*				*RSUs*				*PRSUs*
Weighted average period (in years)			1.06				1.47				1.41

As of September 30, 2025, under the Company’s stock incentive plan, an additional 2,347 shares remained available for future grants. The Company issues new shares upon the grants of RSAs and vesting of RSU and PRSU awards.

Restricted Stock Awards Activity

The following table presents the unvested RSA activity:

						*Weighted*
						*Average*
		*Number of*				*Grant Date*
Three Months Ended September 30, 2025:		*Shares*				*Fair Value*
Unvested balance at June 30, 2025			74			$	18.15
Granted			22			$	12.27
Vested			(5	)		$	19.52
Forfeited			—			$	—
Unvested balance at September 30, 2025			91			$	16.59

						*Weighted*
						*Average*
		*Number of*				*Grant Date*
Nine Months Ended September 30, 2025:		*Shares*				*Fair Value*
Unvested balance at December 31, 2024			59			$	29.98
Granted			69			$	12.69
Vested			(37	)		$	30.61
Forfeited			—			$	—
Unvested balance at September 30, 2025			91			$	16.59

The fair value of RSAs vested is as follows:

		*Three Months Ended September 30,*								*Nine Months Ended September 30,*
		*2025*				*2024*				*2025*				*2024*
Fair value of RSAs vested		$	73			$	308			$	668			$	2,069

Restricted Stock Units Activity

The following table presents the unvested RSU award activity:

						*Weighted*
						*Average*
		*Number of*				*Grant Date*
Three Months Ended September 30, 2025:		*Shares*				*Fair Value*
Unvested balance at June 30, 2025			679			$	16.25
Granted			98			$	8.98
Vested			(120	)		$	16.46
Forfeited			(41	)		$	19.69
Unvested balance at September 30, 2025			616			$	14.83

						*Weighted*
						*Average*
		*Number of*				*Grant Date*
Nine Months Ended September 30, 2025:		*Shares*				*Fair Value*
Unvested balance at December 31, 2024			406			$	28.27
Granted			673			$	13.09
Vested			(267	)		$	18.81
Forfeited			(196	)		$	26.30
Unvested balance at September 30, 2025			616			$	14.83

The fair value of RSU awards vested is as follows:

		*Three Months Ended September 30,*								*Nine Months Ended September 30,*
		*2025*				*2024*				*2025*				*2024*
Fair value of RSU awards vested		$	1,082			$	1,356			$	4,119			$	4,403

Performance Restricted Stock Units Activity

The following table presents the unvested PRSU award activity:

						*Weighted*
						*Average*
		*Number of*				*Grant Date*
Three Months Ended September 30, 2025:		*Shares*				*Fair Value*
Unvested balance at June 30, 2025			560			$	18.49
Change in units based on performance expectations			—			$	—
Granted			3			$	8.81
Vested			—			$	—
Forfeited			(39	)		$	18.18
Unvested balance at September 30, 2025			524			$	18.45

						*Weighted*
						*Average*
		*Number of*				*Grant Date*
Nine Months Ended September 30, 2025:		*Shares*				*Fair Value*
Unvested balance at December 31, 2024			215			$	32.08
Change in units based on performance expectations			(5	)		$	42.43
Granted			421			$	15.20
Vested			(49	)		$	42.43
Forfeited			(58	)		$	23.04
Unvested balance at September 30, 2025			524			$	18.45

The fair value of PRSU awards vested is as follows:

		*Three Months Ended September 30,*								*Nine Months Ended September 30,*
		*2025*				*2024*				*2025*				*2024*
Fair value of PRSU awards vested		$	—			$	—			$	1,707			$	2,370