Stockholder's Equity

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stockholder's Equity

9. Stockholders’ Equity

Stock-based Compensation

Stock-based compensation expense is associated with restricted stock units (“RSUs”), RSUs with performance conditions (“PSUs”), stock options, and the Company’s Employee Stock Purchase Plan.

Certain RSUs granted to senior management during the three months ended March 31, 2023, will vest subject to the achievement of pre-established financial performance targets for the year ending December 31, 2023, and continued service. The fair value of these PSUs is based on the closing price of the Company's common stock on the date of grant. Stock-based compensation costs associated with these PSUs are recognized over the requisite service period of 4.25 years using graded

vesting which results in more accelerated expense recognition compared to traditional time-based vesting over the same vesting period. Each reporting period, the Company monitors the probability of achieving the performance targets and may adjust periodic stock-based compensation expense based on its determination of the likelihood of achieving these performance targets and the estimated number of shares of common stock that will vest. The actual number of PSUs awarded is based on the actual performance during the performance period compared to the performance targets.

The following table sets forth the stock-based compensation expense included in the Company’s condensed consolidated statements of operations for the three and six months ended June 30, 2023 and 2022 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Cost of revenue	$	1,281	$	880	$	2,472	$	1,736
Research and development	2,431		1,514		4,709		2,900
Sales, general and administrative	9,111		6,392		18,408		13,043
Total	$	12,823	$	8,786	$	25,589	$	17,679

As of June 30, 2023, total unrecognized compensation cost related to unvested share-based compensation arrangements, excluding PSUs, was $71.4 million, which is expected to be recognized over a weighted average period of 2.8 years.

As of June 30, 2023, total unrecognized compensation cost related to unvested PSU share-based compensation arrangements was $15.8 million, which is expected to be recognized over a weighted average period of 3.7 years.

The total stock-based compensation cost capitalized in inventory was $2.1 million and $2.2 million as of June 30, 2023 and December 31, 2022, respectively.