Stock-Based Compensation

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

Equity Incentive Plans

On March 5, 2021, our board of directors adopted our 2021 Equity Incentive Plan (“2021 Plan”). Prior to that date, we had established our 2015 Equity Incentive Plan (“2015 Plan”) and the 2005 Equity Incentive Plan (“2005 Plan” and collectively, “Plans”). The 2021 Plan serves as the successor to the 2015 Plan and 2005 Plan and provides for the issuance of incentive and nonqualified stock options, stock appreciation rights, or SARs, restricted stock and restricted stock units (“RSUs”), to employees, directors, consultants and advisors.

Stock options under the Plans may be granted with contractual terms of up to ten years (or five years if granted to a 10.0% stockholder) and at prices no less than 100.0% of the estimated fair value of the shares on the date of grant as determined by the board of directors; provided, however, that (i) the exercise price of an incentive stock option (“ISO”) and nonqualified stock option (“NSO”) granted to a greater than 10.0% stockholder shall not be less than 110.0% of the estimated fair value of the shares on the date of grant. Awards granted under the Plans generally vest over four years and include the right of first refusal in favor of the Company in connection with any proposed sale or transfer of the related shares to third-parties.

Certain stock option recipients have an early exercise feature. Shares purchased pursuant to the early exercise of stock options are subject to repurchase until those shares vest; therefore, cash received in exchange for unvested shares exercised is recorded as a liability on the accompanying condensed balance sheets, and are reclassified to Class B common stock and additional paid-in capital as the shares vest. There were 183,651 and 204,850 early exercised shares outstanding as of March 31, 2021 and December 31, 2020, respectively. As of March 31, 2021, there is a liability in the amount of $0.5 million, of which $0.2 million was recorded in accrued expenses and other current liabilities in our balance sheet since vesting is within the next 12 months, and $0.3 million was recorded in other liabilities, non-current, since vesting is beyond the next 12 months.

On March 13, 2021, our board of directors adopted a non-employee director compensation policy that became effective upon our IPO. The policy provides for annual cash retainer for non-employee directors and an additional cash retainer for those non-employee directors that serve as chairpersons or members of our audit, compensation, nominating, and corporate governance committees. Additionally, directors will have the option to receive their annual retainer amounts in cash or equity. Each new non-employee director appointed to the board of directors after the IPO date will be granted an initial RSU award with a value of $0.3 million subject to vesting over a three-year period. Certain non-employee directors who have served for at least six months prior to the IPO effective date and did not have unvested equity awards, were granted 39,870 RSU awards on

March 17, 2021 with a total value of approximately $1.0 million, which will fully vest on the day immediately prior to our next annual meeting of stockholders. The weighted-average grant date fair value of the RSUs awarded for the three months ended March 31, 2021 was $25.00 per share. Future stock-based compensation for unvested RSUs awarded as of March 31, 2021 is approximately $1.0 million to be recognized over a weighted-average period of 1.17 years.

As of March 31, 2021 and December 31, 2020 the maximum number of shares available for issuance to participants under the Plans is 20,383,828 and 46,170,691, respectively.

The following table summarizes the shares available for future grants:


			Shares Available for Future Grant
Balances at December 31, 2020			1,687,947
Additions to plan			25,122,000
Options granted			(6,759,710)
RSUs awarded			(39,870)
Options forfeited and expired			333,591
Balance at March 31, 2021			20,343,958

During the three months ended March 31, 2021 and 2020, no SARs were granted to employees. The SARs are equity-classified and are measured at their grant date fair value. The SARs were vested and settled upon completion of the IPO and 1,642,570 shares of Class B common stock were issued in connection with this event. Compensation expense of $2.8 million was recognized for the three months ended March 31, 2021. The aggregate intrinsic value of the SARs as of December 31, 2020 was $17.7 million.

The classification of stock-based compensation by line item within the statements of operations and comprehensive loss is as follows (in thousands):


	Three Months Ended March 31,
	2021		2020

Cost of revenue - platform	$	436	$	107
Cost of revenue - professional services and other	115		21
Research and development	3,452		243
General and administrative	3,858		532
Sales and marketing	388		46
Total stock-based compensation expense	$	8,249	$	949

Stock Options

The following summarizes our stock option activity for the three months ended March 31, 2021:


	Number of options outstanding	Weighted- average exercise price (Per share)		Weighted- average remaining contractual term (In years)	Aggregate intrinsic value (In thousands)

As of December 31, 2020	39,161,438	$	1.93	5.89	$	347,574
Granted	6,759,710	9.72
Exercised	(1,965,824)	1.10
Forfeited	(333,591)	5.24
Vested and expected to vest as of March 31, 2021	43,621,733	$	3.15	6.32	$	1,013,813
Exercisable as of March 31, 2021	28,423,478	$	1.42	4.73	$	709,782

The weighted-average grant date fair value of options granted for the three months ended March 31, 2021 and 2020 was $10.50 and $2.22 per share, respectively. The aggregate intrinsic value of options exercised for the three months ended March 31, 2021 and 2020 was $53.4 million and $0.5 million, respectively. The total grant date fair value of options vested for the three months ended March 31, 2021 and 2020 was $6.0 million and $7.2 million, respectively.

Future stock-based compensation for unvested employee options granted and outstanding as of March 31, 2021 is $89.6 million to be recognized over a weighted-average period of 3.50 years. Future stock-based compensation for unvested employee options granted and outstanding as of December 31, 2020 is $29.6 million to be recognized over a weighted-average period of 3.12 years.

We estimated the fair value of stock options granted using the Black-Scholes option pricing model with the following weighted-average assumptions:


	Three Months Ended March 31,
	2021	2020

Expected term (in years)	5.48 - 6.07	5.56 - 6.07
Volatility	52%	43%
Risk-free interest rate	0.50% - 0.67%	1.60% - 1.63%
Dividend yield	0%	0%
Fair value of underlying common stock	$16.78 - $18.09	$4.06

We elected to use the midpoint practical expedient to calculate the expected term.

2021 Employee Stock Purchase Plan

On March 5, 2021, our board of directors and stockholders adopted our 2021 Employee Stock Purchase Plan (“ESPP”). The ESPP became effective immediately prior to the IPO. The ESPP authorized the issuance of 3,900,000 shares of our Class A common stock pursuant to purchase rights granted to our employees or to employees of any of our designated affiliates. The number of shares of our Class A common stock reserved for issuance will automatically increase on January 1 of each calendar year, commencing on January 1, 2022 through January 1, 2031, by the lesser of (1) 1.0% of the total number of shares of our Class A common stock outstanding on December 31 of the preceding calendar year, or (2) 11,700,000 Class A common shares; provided, that prior to the date of any such increase, our board of directors may determine that such increase will be less than the amount set forth in clauses (1) and (2). Employees may contribute, normally through payroll deductions, up to 15% of their earnings for the purchase of our Class A common stock under the ESPP. Our Class A common stock will be purchased for the accounts of employees participating in the ESPP at a price per Class A common share equal to the lower of

(a) 85% of the fair market value of our Class A common stock on the first trading date of an offering or (b) 85% of the fair market value of our Class A common stock on the date of purchase.