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STOCK-BASED COMPENSATION | 6 Months Ended
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Jun. 30, 2022
Share-based Payment Arrangement [Abstract] |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Our 2018 Equity Incentive Plan ("2018 Plan") became effective in February 2018. Prior to the 2018 Plan, we granted awards under our 2008 Stock Plan ("2008 Plan"). Any awards granted under the 2008 Plan remain subject to the terms of our 2008 Plan and applicable award agreements, and shares subject to awards granted under our 2008 Plan that are forfeited, canceled or expired prior to vesting become available for use under our 2018 Plan. As of December 31, 2021, there were 2,033,227 shares of our common stock reserved for issuance under our 2018 Plan. The number of shares of our common stock reserved for issuance under our 2018 Plan will automatically increase on January 1 of each year, beginning on January 1, 2019 and continuing through and including January 1, 2028, by 5% of the total number of shares of our capital stock outstanding on December 31 of the preceding calendar year or a lesser number of shares determined by our board of directors. Accordingly, the number of shares of our common stock reserved for issuance under our 2018 Plan increased by 1,676,682 shares on January 1, 2022. The following table summarizes the allocation of stock-based compensation in the condensed consolidated statements of operations (in thousands):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2021 |  | 2022 |  | 2021 |  | 2022
Delivery costs | $ | 521 |  |  | $ | 914 |  |  | $ | 830 |  |  | $ | 1,496 |
Sales and marketing expense | 3,655 |  |  | 3,633 |  |  | 6,087 |  |  | 7,337 |
Research and development expense | 2,448 |  |  | 4,247 |  |  | 3,962 |  |  | 7,451 |
General and administration expense | 6,713 |  |  | 4,048 |  |  | 9,706 |  |  | 10,143 |
Total stock-based compensation expense | $ | 13,337 |  |  | $ | 12,842 |  |  | $ | 20,585 |  |  | $ | 26,427 |
During the six months ended June 30, 2021 and 2022, we capitalized $0.4 million and $0.8 million of stock-based compensation expense for software development, respectively. Common Stock Options Options to purchase shares of common stock generally vest over four years and expire 10 years following the date of grant. The following table summarizes changes in common stock options:
| Shares (in thousands) |  | Weighted-Average Exercise Price |  | Weighted Average Contractual Life (in years) |  | Aggregate Intrinsic Value(1) (in thousands)
Options outstanding — December 31, 2021 | 406 |  |  | $ | 25.17 |  |  |  |  |
Exercised | (16) |  |  | 23.77 |  |  |  |  | $ | 335 |
Options outstanding and exercisable — June 30, 2022 | 389 |  |  | $ | 25.22 |  |  | 4.35 |  | $ | 543 |
(1)For options exercised during the period, the aggregate intrinsic value represents the total pre-tax intrinsic value received by option holders based on the closing price of our common stock as reported on the Nasdaq Global Market on the exercise date. For options outstanding and exercisable at June 30, 2022, the aggregate intrinsic value represents the total pre-tax intrinsic value based on the $22.31 per share closing price of our common stock as reported on the Nasdaq Global Market on June 30, 2022, that would have been received by option holders had all in-the-money options been exercised on that date. As of June 30, 2022, all options were fully vested, and there is no unamortized stock-based compensation expense. Common Stock Options from Bridg Acquisition In connection with the acquisition of Bridg, each unvested option to purchase shares of Bridg common stock outstanding as of the acquisition date was converted to unvested options to purchase shares of our common stock. These awards were granted under the Ecinity, Inc. 2012 Equity Incentive Plan ("Bridg Plan") and were separately registered with the Securities and Exchange Commission on Form S-8 on August 3, 2021. The maximum aggregate number of shares of our common stock that may be issued upon exercise of these awards is 21,797 shares, and we do not expect to grant any additional awards under the Bridg Plan. The converted awards retain the same terms and conditions as the awards granted by Bridg prior to the acquisition. The awards have remaining vesting periods ranging from less than one year to four years. The following table summarizes changes in common stock options from the Bridg acquisition:
| Shares (in thousands) |  | Weighted-Average Exercise Price |  | Weighted Average Contractual Life (in years) |  | Aggregate Intrinsic Value (in thousands)(1)
Options outstanding — December 31, 2021 | 18 |  |  | $ | 8.45 |  |  |  |  |
Exercised | (2) |  |  | 8.49 |  |  |  |  | 86 |
Forfeited | (11) |  |  | 8.37 |  |  |  |  |
Options outstanding — June 30, 2022 | 3 |  |  | 8.73 |  |  | 8.85 |  | 47 |
Exercisable — June 30, 2022 | 3 |  |  | $ | 8.75 |  |  |  |  |
(1)For options exercised during the period, the aggregate intrinsic value represents the total pre-tax intrinsic value received by option holders based on the closing price of our common stock as reported on the Nasdaq Global Market on the exercise date. For options outstanding and exercisable at June 30, 2022, the aggregate intrinsic value represents the total pre-tax intrinsic value based on the $22.31 per share closing price of our common stock as reported on the Nasdaq Global Market on June 30, 2022, that would have been received by option holders had all in-the-money options been exercised on that date. The total fair value of options vested during the six months ended June 30, 2022 was less than $0.1 million. As of June 30, 2022, unamortized stock-based compensation expense related to unvested common stock options was $0.1 million, and the weighted-average period over which such stock-based compensation expense will be recognized was 1.7 years. Common Stock Options from Dosh Acquisition In connection with the acquisition of Dosh, each unvested option to purchase shares of Dosh common stock outstanding as of the acquisition date was converted to unvested options to purchase shares of our common stock. These awards were granted under the Dosh Holdings, Inc. 2017 Stock Incentive Plan ("Dosh Plan") and were separately registered with the Securities and Exchange Commission on Form S-8 on April 9, 2021. The maximum aggregate number of shares of our common stock that may be issued upon exercise of these awards is 104,098 shares, and we do not expect to grant any additional awards under the Dosh Plan. The converted awards retain the same terms and conditions as the awards granted by Dosh prior to the acquisition. The awards have remaining vesting periods ranging from less than one year to four years. The following table summarizes changes in common stock options from the Dosh acquisition:
| Shares (in thousands) |  | Weighted-Average Exercise Price |  | Weighted Average Contractual Life (in years) |  | Aggregate Intrinsic Value (in thousands)(1)
Options outstanding — December 31, 2021 | 30 |  |  | $ | 3.06 |  |  |  |  |
Exercised | (5) |  |  | 3.06 |  |  |  |  | $ | 221 |
Forfeited | (4) |  |  | 3.06 |  |  |  |  |
Options outstanding — June 30, 2022 | 21 |  |  | 3.06 |  |  | 8.68 |  | $ | 395 |
Exercisable — June 30, 2022 | 6 |  |  | $ | 3.06 |  |  |  |  |
(1)For options exercised during the period, the aggregate intrinsic value represents the total pre-tax intrinsic value received by option holders based on the closing price of our common stock as reported on the Nasdaq Global Market on the exercise date. For options outstanding and exercisable at June 30, 2022, the aggregate intrinsic value represents the total pre-tax intrinsic value based on the $22.31 per share closing price of our common stock as reported on the Nasdaq Global Market on June 30, 2022, that would have been received by option holders had all in-the-money options been exercised on that date. The total fair value of options vested during the six months ended June 30, 2022 was $0.5 million. As of June 30, 2022, unamortized stock-based compensation expense related to unvested common stock options was $1.5 million, and the weighted-average period over which such stock-based compensation expense will be recognized was 1.8 years. Restricted Stock Units We grant restricted stock units ("RSUs") to employees and our non-employee directors. The following table summarizes changes in RSUs, inclusive of performance-based RSUs:
| Shares (in thousands) |  | Weighted-Average Grant Date Fair Value |  | Weighted-Average Remaining Contractual Term (in years) |  | Unamortized Compensation Costs (in thousands)
Unvested — December 31, 2021 | 2,294 |  |  | $ | 60.58 |  |  |  |  |
Granted | 2,072 |  |  | 51.90 |  |  |  |  |
Vested | (504) |  |  | 51.95 |  |  |  |  |
Forfeited | (281) |  |  | 73.54 |  |  |  |  |
Unvested — June 30, 2022 | 3,581 |  |  | $ | 55.75 |  |  | 3.00 |  | $ | 166,750 |
During the six months ended June 30, 2022, we granted 1,803,409 RSUs to employees and executives, which have vesting periods ranging from immediately vesting to four years. Subsequent to June 30, 2022, we granted 575,592 RSUs to employees and executives, which have vesting periods of one to four years. Unamortized stock-based compensation expense related to these RSUs totaled $7.6 million. Performance-based RSUs In April 2019, we granted 1,252,500 performance-based restricted stock units (“2019 PSUs”). The 2019 PSUs are composed of four equal tranches, each of which have an independent performance-based vesting condition. The vesting criteria for the four tranches are as follows: •a minimum growth rate in adjusted contribution over a trailing 12-month period ("Adjusted Contribution target"), •a minimum number of advertisers that are billed above a specified amount over a trailing 12-month period ("Number of Advertisers target"), •a minimum cumulative adjusted EBITDA target over a trailing 12-month period ("Adjusted EBITDA target"), and •a minimum trailing 30-day average closing price of our common stock ("Stock Price target"). The vesting conditions of each of the four tranches must be achieved within four years of the grant date. Upon a vesting event, 50% of the related tranche vests immediately, 25% of the related tranche vests six months after the achievement date and 25% of the related tranche vests 12 months after the achievement date. Adjusted EBITDA and adjusted contribution are performance metrics defined within Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations." The compensation committee of our board of directors certified the attainment of the Stock Price target, Adjusted EBITDA target, Number of Advertisers target and Adjusted Contribution target in August 2019, November 2019, October 2021 and December 2021, respectively, resulting in a vesting of 50% of each respective tranche upon the certifications. 25% of each respective tranche has vested or will vest upon the six month anniversary of the achievement date, and 25% of each respective tranche has vested or will vest upon the 12 month anniversary of the achievement date, subject to the continued service of the participant. In April 2020, we granted 476,608 performance-based restricted stock units ("2020 PSUs"), of which 443,276 units have a performance-based vesting condition based on a minimum average revenue per user ("ARPU") target over a trailing 12-month period and 33,332 units have the same performance-based vesting conditions as the 2019 PSUs described above that were unmet at the time. ARPU is a performance metric defined within Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations." The ARPU vesting condition must be achieved within four years of the grant date. Upon the vesting event, 50% of the award vests immediately, 25% of the award vests six months after achievement date and 25% of the award vests 12 months after the achievement date. In April 2021, we granted 110,236 performance-based restricted stock units ("2021 PSUs") consisting of two tranches. The first tranche consists of 55,118 units that have a performance-based vesting condition based on a minimum revenue target over a trailing 12-month period. The units in this first tranche fully vest upon achievement. The second tranche consists of 55,118 units with a performance-based vesting condition based on a different minimum revenue target over a trailing 12-month period. Half of the units in the second tranche vest upon achievement and the remaining units vest six months after the achievement date, subject to continued service. Each performance-based vesting condition within the two tranches must be achieved within four years of the grant date and are subject to certification by the compensation committee of our board of directors. In July 2021, we granted 34,344 performance-based restricted stock units ("Bridg PSUs") which have performance-based vesting conditions based on the achievement of a minimum ARR target by the first anniversary of the Bridg acquisition. Vesting is tied to the percentage of the ARR target achieved during the specified period with 50% of the units vesting between 80% - 99.999% achievement and 100% of the units vesting upon 100% achievement. If these percentages are not met, no Bridg PSUs will vest. In September 2021, we granted 6,666 PSUs which have the same unmet vesting condition of the 2020 PSUs, 6,667 PSUs which have the same unmet revenue target vesting condition of the 2021 PSUs and 6,667 PSUs which have the same unmet different revenue target vesting condition of the 2021 PSUs as described above. In March 2022, we granted 269,202 performance-based restricted stock units ("2022 PSUs") consisting of three tranches. The first two tranches each represent 25% of the grant, and each vest upon the achievement of certain milestones related to the installation of our Ad Server at our FI Partners. 50% of the third tranche vests upon the achievement of a certain number of advertisers purchasing both the Cardlytics and Bridg platforms at a target incremental billings amount over 2021, and the remaining 50% of the tranche vests six months after this target is achieved. Subsequent to June 30, 2022, we granted 100,990 PSUs to employees and executives, which vest on the achievement of specific revenue-based performance metrics. Unamortized stock-based compensation expense related to these PSUs totaled $1.3 million. We believe that the achievement of all of the above referenced performance-based vesting conditions are probable before the awards' respective expiration dates. Employee Stock Purchase Plan Our 2018 Employee Stock Purchase Plan ("2018 ESPP") enables eligible employees to purchase shares of our common stock at a discount. Purchases are accomplished through participation in discrete offering periods. On each purchase date, participating employees purchase our common stock at a price per share equal to 85% of the lesser of the fair market value of our common stock on the first trading day of the offering period or the date of purchase. As of December 31, 2021, 711,255 shares of common stock were reserved for issuance pursuant to our 2018 ESPP. Additionally, the number of shares of our common stock reserved for issuance under our 2018 ESPP will automatically increase on January 1 of each year, which began on January 1, 2019 and will continue through and including January 1, 2026, by the lesser of (i) 1% of the total number of shares of our common stock outstanding on December 31 of the preceding calendar year, (ii) 500,000 shares of our common stock or (iii) such lesser number of shares of common stock as determined by our board of directors. Accordingly, the number of shares of our common stock reserved for issuance under our 2018 ESPP increased by 335,336 shares on January 1, 2022. Shares subject to purchase rights granted under our 2018 ESPP that terminate without having been issued in full will not reduce the number of shares available for issuance under our 2018 ESPP. During the six months ended June 30, 2022, we issued 55,144 shares under the 2018 ESPP.

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