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Share-Based Compensation | 3 Months Ended
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Mar. 31, 2022
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
Share-based compensation | Note 10. Share-based compensation 2019 Share incentive plan In June 2019, the Company’s Board of Directors adopted, and its shareholders approved, the 2019 Share Incentive Plan (“2019 Plan”). The 2019 Plan provides for the grant of incentive share options, nonqualified share options, share appreciation rights, restricted share awards (“RSAs”), restricted share units (“RSUs”), other share-based awards and performance awards. The share reserve under the 2019 Plan is automatically increased on the first day of each fiscal year, beginning with the fiscal year ended December 31, 2020 and continuing until, and including, the fiscal year ending December 31, 2029. The number of shares added annually is equal to the lowest of 1,320,000 shares, 5% of the number of the Company’s shares outstanding on the first day of such fiscal year, or an amount determined by the Board of Directors. On February 25, 2022, the Company registered 1,320,000 additional shares that may be issued under the 2019 Plan. The Company’s employees, officers, directors, consultants, and advisors are eligible to receive awards under the 2019 Plan. Incentive share options, however, may only be granted to its employees. The following table summarizes changes in the number of shares available for grant under the Company’s equity incentive plans during the three-month period ended March 31, 2022 (unaudited):
|  | Number of shares |
Available for grant at December 31, 2021 |  |  | 1,853,240 |
Added to 2019 Share Incentive Plan |  |  | 1,320,000 |
RSUs granted |  |  | (8,606 | )
Options granted |  |  | — |
Shares withheld in settlement of taxes and/or exercise price |  |  | 18,200 |
Forfeitures |  |  | 4,916 |
Available for grant at March 31, 2022 |  |  | 3,187,750 |
Share-based compensation The following table shows total share-based compensation expense for the three-month periods ended March 31, 2021 and 2022 (unaudited and in thousands):
|  | Three Months Ended March 31, |
|  | 2021 |  |  | 2022 |
Cost of revenues |  | $ | 19 |  |  | $ | 57 |
Research and development |  |  | 517 |  |  |  | 1,022 |
Sales and marketing |  |  | 295 |  |  |  | 627 |
General and administrative |  |  | 579 |  |  |  | 714 |
Total share-based compensation expense |  | $ | 1,410 |  |  | $ | 2,420 |
For the three-month periods ended March 31, 2021 and 2022, the Company recorded corresponding income tax benefits of $1.3 million and $0.1 million, respectively. As of March 31, 2022, the Company estimates the pre-tax unrecognized compensation expense of $15.8 million, net of estimated forfeitures, related to all unvested share-based awards, including share options and restricted share units will be recognized through the first quarter of 2026. The Company expects to satisfy the exercise of share options and future distributions of shares for restricted share units by issuing new ordinary shares that have been reserved under the 2019 Plan. The Company uses the Black-Scholes option pricing model to estimate the fair value of share options. The Company utilized a forfeiture rate of 8.2% during the three-month period ended March 31, 2022 for estimating the forfeitures of share options and restricted share units granted. Share options The following is a summary of option activity for the Company’s share incentive plans for the three-month period ended March 31, 2022 (unaudited):
|  | Options |  |  | Weighted average exercise price |  |  | Weighted Average remaining contractual term (years) |  |  | Aggregate intrinsic value |
Outstanding at December 31, 2021 |  |  | 2,797,992 |  |  | $ | 12.64 |  |  |  | 7.9 |  |  | $ | 38,295,799 |
Options granted |  |  | — |  |  | $ | — |  |  |  | — |  |  | $ | — |
Options exercised |  |  | (14,268 | ) |  | $ | 10.23 |  |  |  | — |  |  | $ | — |
Options forfeited |  |  | (750 | ) |  | $ | 12.00 |  |  |  | — |  |  | $ | — |
Outstanding at March 31, 2022 |  |  | 2,782,974 |  |  | $ | 12.66 |  |  |  | 7.7 |  |  | $ | 32,758,640 |
Options exercisable at March 31, 2022 |  |  | 1,505,502 |  |  | $ | 11.88 |  |  |  | 7.6 |  |  | $ | 18,253,275 |
Options vested and expected to vest at March 31, 2022 |  |  | 2,740,776 |  |  | $ | 12.64 |  |  |  | 7.7 |  |  | $ | 32,237,845 |
Share options typically have a contractual term of ten years from grant date. At March 31, 2022, the aggregate intrinsic value of options exercisable under the Company’s share incentive plans was $18.3 million. The Company had 14,268 options exercised during the three-month period ended March 31, 2022. At March 31, 2022, there was $7.5 million in unrecognized pre-tax share-based compensation expense, net of estimated forfeitures, related to unvested share option awards. The unrecognized share-based compensation expense is expected to be recognized through the first quarter of 2025. The fair value of options granted are estimated on the date of grant using the Black-Scholes option pricing model. The fair value of share options is being amortized on a straight-line basis over the requisite service period of the awards. The fair value of share options is estimated using the following weighted-average assumptions (unaudited):
|  | Three Months Ended March 31, |
|  | 2021 |  |  | 2022 |
Expected dividend yield |  |  | — |  |  |  | — |
Risk-free interest rate |  |  | 1.14 | % |  | N/A |
Weighted-average expected volatility |  |  | 50.9 | % |  | N/A |
Expected term (in years) |  |  | 6.5 |  |  | N/A |
Weighted average grant-date fair value per share of options granted |  | $ | 21.36 |  |  | N/A |
For the three-month period ended March 31, 2022 the weighted-average assumptions are not applicable as there were no share options granted in the period. Restricted shares The following is a summary of restricted shares activity for the Company’s share incentive plan for the three-month period ended March 31, 2022 (unaudited):
|  | Units |  |  | Weighted average grant date fair value |
RSU balance at December 31, 2021 |  |  | 547,343 |  |  | $ | 22.47 |
RSUs granted |  |  | 8,606 |  |  | $ | 23.80 |
RSUs vested |  |  | (93,854 | ) |  | $ | 28.98 |
RSUs forfeited |  |  | (4,166 | ) |  | $ | 40.25 |
RSU balance at March 31, 2022 |  |  | 457,929 |  |  | $ | 21.00 |
During the three-month period ended March 31, 2022, 8,606 RSUs were granted under the Company’s 2019 Share Incentive Plan and 93,854 RSUs vested. The Company withheld 18,200 of those shares to pay the employees’ portion of the minimum payroll withholding taxes. As of March 31, 2022, there was $8.3 million in unrecognized pre-tax compensation expense, net of estimated forfeitures, related to unvested restricted share units. The unrecognized compensation expense is expected to be recognized through the first quarter of 2026. Employee share purchase plan In June 2019, the Company’s Board of Directors adopted, and its shareholders approved, the Employee Share Purchase Plan (“ESPP”). The ESPP was effective on June 25, 2019, and the initial offering period of six-months commenced on January 1, 2021. The current offering period of six months commenced on January 1, 2022 and runs through June 30, 2022. The purchase price of the shares is 85% of the lower of the fair market value of the Company’s ordinary shares on the first trading day of the offering period and the purchase date. The ESPP includes an annual increase to the shares available for sale on the first day of each fiscal year beginning in 2020, equal to the lesser of: 275,000 shares, 1% of the outstanding shares as of the last day of the immediately preceding fiscal year, or such other amount as the administrator may determine. The Company registered 267,352 additional shares on February 25, 2022. For both the three-month periods ended March 31, 2021 and 2022, the Company recognized $0.2 million of share-based compensation expense related to the ESPP.

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