Stock-based Compensation

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Stock-based Compensation Expense

We recorded stock-based compensation expense in the following categories in the accompanying unaudited condensed consolidated statements of operations and balance sheets (in thousands):


	Three Months Ended March 31,
		2023		2022
				(Restated)
Cost of revenue		$	874	$	277
Sales and marketing		1,532		3,125
Technology and development		4,320		4,298
General and administrative		9,741		14,165
Total stock-based compensation expense		16,467		21,865
Amount capitalized to internal-use software		911		481
Total stock-based compensation expense		$	17,378	$	22,346

Stock Options

In March 2023, we granted 3.9 million stock options to our executive officers. Fair value of the options was measured using the Black-Scholes option pricing model on the date of grant, and associated expense will be recognized over the requisite service period. Vesting of the options will be accelerated upon a qualifying termination that occurs during the change-in-control period, as defined in the option grant agreement, or immediately prior to the effective time of a change-in-control if the option award is not assumed, continued or substituted by the surviving or

acquiring entity (or its parent) in connection with such change-in-control. The assumptions that were used to calculate the grant-date fair value of our stock option grant using the Black-Scholes option pricing model were as follows:


	Three Months Ended March 31,
	2023
Expected life (years)	5.87
Risk-free interest rate	3.4	%
Expected volatility	50.7	%
Expected dividend yield	—

Restricted Stock Units

During three months ended March 31, 2023, we granted 7.3 million restricted stock units, or RSUs, with a value of $61.4 million to various employees. RSUs are measured based on the fair market value of the underlying stock on the date of grant and recognized as expense over the requisite service period.

During three months ended March 31, 2023, we also granted 1.3 million RSUs with performance conditions, or performance stock units, to members of our senior leadership team. Vesting of the performance stock units, or PSUs, is contingent upon the recipient’s continuous employment over the requisite service period and is subject to fulfillment by the Company of predefined performance criteria. Such awards will be earned only if certain performance targets over the performance periods established by and under the direction of the compensation committee are met. The number of PSUs subject to vesting is determined at the end of the performance period and may equal zero percent (0%) to one hundred and fifty percent (150%) of the target award based upon Company’s achievement of certain revenue, profitability, and market share targets. If the performance criteria are achieved, 75% of the PSUs will vest on the date the compensation committee of the board of directors certifies achievement of the performance criteria, and the remaining 25% of the performance stock units will vest on the one year anniversary of such certification date. Performance stock units are measured based on the fair market value of the underlying stock on the date of grant and recognized as expense over the employee’s requisite service period using graded vesting attribution method to the extent it is probable that the performance conditions will be achieved. We recognized $0.1 million in stock-based compensation expense during three months ended March 31, 2023 related to these awards. In the event of change-in-control (as defined in the employment agreement between the Company and each recipient of the performance award), the vesting conditions of performance stock units will be modified resulting in a vesting of a greater of (i) one hundred percent (100%) of the target award, or (ii) the number of shares commensurate with the Company’s market share for the trailing 12-month period ending on the date that is the end of the nearest month prior to the date of the change of control, provided that 75% of such performance stock units will vest on June 30, 2024 and the remaining 25% of such performance stock units will vest on June 30, 2025, subject to the recipients continuing to be service providers through each such date and accelerated if the acquirer does not assume the awards in an economically equivalent manner.

On May 5, 2023, the compensation committee of the board of directors approved amendments to the terms of the option and RSU awards granted to members of our senior leadership team during the year ended December 31, 2022, whereby the vesting of such options and RSUs will be accelerated upon (i) a qualifying termination that occurs during the change-in-control period or (ii) the individual’s termination as a result of his or her death or disability (as each such term is defined in the employment agreement between the Company and applicable individual). Further, the amendments provide that such stock options, to the extent vested and outstanding on the date of the individual’s qualifying termination or the termination of the individual’s employment in the event of his or her death or disability, as applicable and after giving effect to the vesting acceleration, shall remain outstanding and exercisable until the earlier of: (x) the original expiration date of the stock options, (y) the one-year anniversary of the date of the individual’s termination of employment with the Company, and (z) immediately prior to the effective time of a change in control if such option is not assumed, continued or substituted by the surviving or acquiring entity (or its parent) in connection with such change in control. The modification to add the foregoing provisions did not result in an incremental fair value of the impacted awards because the original vesting conditions were expected to be satisfied as of the modification date and the termination of the individual’s employment in the event of change-in-control or as a result of his or her death or disability was not probable as of the date of this filing.