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Stockholders’ Equity and Equity Incentive Plans
 12 Months Ended
Dec. 31, 2023
Equity [Abstract]  
Stockholders’ Notes Receivable, Redeemable Common Stock and Stock Option Plans Stockholders’ Equity and Equity Incentive Plans
Common Stock
The Company’s board of directors has authorized 1,000,000,000 shares of Class A common stock, $0.0001 par value per share, and 1,000,000,000 shares of Class B common stock, $0.0001 par value per share. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion rights. Holders of Class A common stock are entitled to one vote and holders of Class B common stock are entitled to ten votes and is convertible into one share of Class A common stock. Each share of Class B is convertible anytime at the option of the holder into one share of Class A common stock. Once converted or transferred and converted into Class A common stock, the Class B common stock will not be reissued.
Share Repurchases
In February 2023, the Company’s board of directors authorized the Company to repurchase up to $75 million of its Class A common stock (“2023 Repurchase Program”). As of December 31, 2023, $15.7 million remains available for repurchases. Shares are repurchased in a manner deemed in the best interest of the Company and its stockholders, dependent upon business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices and other considerations.
In accordance with the authorization of the Company’s board of directors, during the year ended December 31, 2023, the Company repurchased 4,040,129 aggregate shares of Class A common stock for $59.3 million. The Company recorded an additional $0.3 million related to the 1% excise tax on net share repurchases as a result of the Inflation Reduction Act of 2022 (“IRA”).
Repurchases are executed from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases or privately negotiated transactions, in accordance with Rule 10b-18 and/or Rule 10b5-1 of the Exchange Act. The 2023 Repurchase Program is scheduled to terminate on December 31, 2024.
Equity Incentive Plans
The Company maintains the 2020 Equity Incentive Plan (“2020 Plan”), pursuant to which the Company may grant stock options, restricted stock awards, stock appreciation rights, restricted stock units (“RSUs”), deferred stock units (“DSUs”) performance awards, and stock bonus awards. As of December 31, 2023, the Company has reserved 6,507,867 shares of Class A common stock for the issuance of awards under the 2020 Plan. These available shares will increase automatically on January 1 for each of the first ten calendar years during the term of the 2020 Plan by the number of shares equal to the lesser of five percent (5%) of the aggregate number of outstanding shares of all classes of the Company’s common stock outstanding as of the immediately preceding December 31, or a number as may be determined by the Company’s board of directors or compensation committee. No new awards were issued under the Company’s prior 2006 Plan or 2017 Plan (“Prior Plans”) after the effective date of the 2020 Plan. To the extent outstanding awards under the 2006 Plan and the 2017 Plan are forfeited, expire unexercised, or would otherwise have been returned to the share reserve under the Prior Plans, the shares of Class B common stock subject to such awards instead will be available for future issuance as Class A common stock under the 2020 Plan.
Stock Options
Stock options granted under the Company’s stock incentive plans generally vest over four years, subject to the holder’s continued service through the vesting date and expire no later than ten years from the date of grant.
The following table summarizes stock option activity and related information under the Company’s equity incentive plans (shares and aggregate intrinsic value in thousands):
Options Outstanding
Number of Shares Underlying Outstanding OptionsWeighted-Average Exercise PriceWeighted Average Remaining Contractual Term (Years)
Aggregate Intrinsic Value
Outstanding — December 31, 20226,476 $7.38 6.10$55,516 
Options granted1,375 15.33 
Options exercised(575)2.69 
Options canceled(180)16.09 
Options expired(17)32.14 
Outstanding — December 31, 20237,079 $9.02 5.78$67,418 
Vested and exercisable — December 31, 20235,594 $6.65 5.05$64,803 

The aggregate intrinsic value represents the difference between the exercise price of the options and the fair market value of our common stock on the date of exercise. The intrinsic value of options exercised was $7.5 million, $6.4 million and $80.7 million for the years ended December 31, 2023, 2022 and 2021, respectively.
As of December 31, 2023, unrecognized stock-based compensation of $14.7 million related to unvested stock options will be recognized on a straight-line basis over a weighted average period of 2.27 years.
The fair value of stock options granted under the Company’s equity incentive plans was estimated using the following assumptions:
Year Ended December 31,
202320222021
Fair market value of common stock
$12.56-$16.94
$18.63-$31.79
$39.75-$54.07
Expected term (in years)
5.0-7.0
5.0-7.0
5.8-6.7
Risk-free interest rate
3.5%-4.0%
1.8%-3.4%
0.6%-1.0%
Expected volatility
55%-59%
54%-57%
51%-54%
Dividend rate—%—%—%
Weighted-average grant date fair value of options granted$8.58$13.70$20.30
These assumptions and estimates were determined as follows:
Fair Value of Common Stock - The fair value of each share of underlying common stock was based on the closing price of the Company’s Class A common stock as reported on the date of the grant.
Expected Term - The expected term represents the period that the Company’s stock-based awards are expected to be outstanding. For option grants that are considered to be “plain vanilla,” the Company determines the expected term using the simplified method. The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the options. For other option grants, the Company estimates expected term using historical data on employee exercises and post-vesting employment termination behavior taking into account the contractual life of the award.
Risk-Free Interest Rate - The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero-coupon U.S. Treasury notes with maturities approximately equal to the option’s expected term.
Expected Volatility - Since the Company has a short trading history of its common stock, the expected volatility is derived from the average historical stock volatilities of several unrelated public companies within the Company’s industry that the Company considers to be comparable to its business over a period equivalent to the expected term of the stock option grants.
Dividend Rate - The expected dividend is assumed to be zero as the Company has never paid dividends and has no current plans to do so.
Restricted Stock Units
RSU awards generally vest over four years, subject to the holder’s continued service through the vesting date.
The following table summarizes RSU activity and related information under the Company’s 2020 Plan:
RSUs
Number of Shares (in thousands)
Weighted-Average Grant Date Fair Value per ShareAggregate Intrinsic Value (in thousands)
Unvested — December 31, 20221,582 $26.49 $20,264 
Granted2,573 15.98 
Vested(878)22.10 
Canceled/Forfeited(343)18.83 
Unvested — December 31, 20232,934 $19.49 $47,859 
As of December 31, 2023, unrecognized stock-based compensation of $51.5 million related to unvested RSUs will be recognized on a straight-line basis over a weighted average period of 2.67 years.
2020 Employee Stock Purchase Plan
In November 2020, the Company’s board of directors adopted, and its stockholders approved, the 2020 Employee Stock Purchase Plan (“ESPP”), which became effective in connection with the Company’s IPO. A total of 500,000 shares of the Company’s Class A common stock were initially reserved for issuance under the ESPP. The aggregate number of shares reserved for issuance under the ESPP will increase automatically on January 1st of each of the first ten calendar years during the term of the ESPP by the number of shares equal to the lesser of (a) 1% of the total outstanding shares of all classes of the Company’s common stock as of the immediately preceding December 31 and (b) such number of shares of common stock as determined by the Company’s board of directors. The aggregate number of shares issued over the term of the ESPP may not exceed 7,500,000 shares of Class A common stock. As of December 31, 2023, the Company has reserved 401,599 shares of its common stock for issuance under the ESPP.
Under the ESPP, Class A common stock will be purchased for the accounts of employees participating in the ESPP on each purchase date at a price per share equal to 85% of the lesser of: (a) the fair market value on the offering date or (b) the fair market value on the purchase date. The ESPP provides for, at maximum, 27 month offering periods and each offering period may consist of one or more six-month purchase periods, whereby the latest offering period commenced on June 1, 2022, and the offering periods thereafter consist of two six-month purchase periods ending May 31, 2023. As of December 31, 2023, $0.1 million has been withheld on behalf of employees for a future purchase under the ESPP due to the timing of payroll deductions and is included in accrued liabilities. For the twelve months ended December 31, 2023, 128,289 shares of our Class A common stock have been purchased under the ESPP.
As of December 31, 2023, unrecognized stock-based compensation expense related to the ESPP was $0.4 million, which is expected to be recognized over a weighted-average period of 0.42 years.
The fair value of purchase right granted the under the Company’s 2020 Employee Stock Purchase Plan was estimated using the following assumptions:
Year Ended December 31,
202320222021
Expected term (in years)
0.5-1.0
0.5-1.0
0.4-1.4
Risk-free interest rate
5.4%-5.1%
1.6%-2.2%
0.1%
Expected volatility
48%-59%
83%-79%
60%-76%
Dividend rate—%—%—%
Expected Term - The expected term of the ESPP represents the period of time that purchase rights are expected to be outstanding.
Risk-Free Interest Rate - The risk-free interest rate for the expected term of the awards was based on the U.S. Treasury yield curve in effect at the time of the grant.
Expected Volatility - The expected volatility is based on the historical volatility of the Company’s Class A common stock over a period equivalent to the expected term of the ESPP purchase rights. In 2021, since the Company had a short trading history of its common stock, the expected volatility was estimated by taking the average historic price volatility of several unrelated public companies within the Company’s industry that the Company considered to be comparable to its business over a period equivalent to the expected term of the awards.
Dividend rate - The expected dividend is assumed to be zero as the Company has never paid dividends and has no current plans to do so.
Stock-Based Compensation
Total stock-based compensation expense recognized in the consolidated statements of operations was as follows (in thousands):
Year Ended December 31,
202320222021
Cost of revenue$1,472 $1,135 $825 
Technology and development4,346 3,225 2,232 
Sales and marketing10,462 7,645 5,176 
General and administrative12,582 8,641 5,874 
Total stock-based compensation expense28,862 20,646 14,107 
Tax benefit from stock-based compensation(5,695)(3,537)(1,825)
Total stock-based compensation expense, net of tax effect$23,167 $17,109 $12,282