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Stockholders' Equity and Stock Based Compensation
 6 Months Ended
Jun. 30, 2022
Equity [Abstract]  
Shareholders' Equity and Share-based Payments Stockholders' Equity and Stock-Based Compensation
Equity Compensation Plans
In August 2021, the board of directors (the Board) adopted the 2021 Equity Incentive Plan (the 2021 Plan) and the 2021 Employee Stock Purchase Plan (ESPP), effective upon the Company's initial public offering (IPO). Pursuant to the 2021 Plan, the Board may grant incentive stock options to purchase shares of the Company’s common stock, non-statutory stock options to purchase shares of the Company’s common stock, stock appreciation rights, restricted stock, RSUs, performance awards (PRSUs) and other awards. The ESPP enables eligible employees to purchase the Company's Class A common stock. Both the 2021 Plan and ESPP include an automatic increase to their shares reserve on January 1 of each year as set forth in the respective plan documents.
Shares of common stock reserved for future issuance were as follows (in thousands):
June 30, 2022
2011 Stock Plan:
Options and RSUs outstanding27,923 
2021 Equity Incentive Plan:
RSUs outstanding8,749 
Shares reserved for future award issuances50,412 
2021 Employee Stock Purchase Plan8,698 
Total shares of common stock reserved for issuance95,782 
2021 Employee Stock Purchase Plan
Under the ESPP, the price at which Class A common stock is purchased is equal to 85% of the fair market value of a share of the Company’s Class A common stock on the first day of the offering period or the applicable purchase date, whichever is lower. The fair market value of common stock will generally be the closing sales price on the determination date. The ESPP provides an offering period of 24 months, with four purchase periods that are generally six months long and begin on May 15 and November 15 of each year, except for the first purchase period, which began upon the completion of the IPO in September 2021 and ended on May 13, 2022. The Company issued 510,093 shares under the ESPP in the six months ended June 30, 2022, net of shares withheld and retired to satisfy withholding tax requirements for certain employees in jurisdictions outside the US, with a weighted average purchase price of $13.76 and aggregate net proceeds of $7.0 million.
The ESPP also includes a reset provision for the purchase price if the stock price on the purchase date is less than the stock price on the offering date. The reset provision under the ESPP was triggered on May 13, 2022, resulting in a new 24-month offering period that began on May 16, 2022. The reset is considered a modification in accordance with ASC 718, Stock Based Compensation, with the modification charge recognized on a straight-line basis over the new offering period. The modification did not have a material effect on the Company's stock-based compensation expense during the three and six months ended June 30, 2022.
During the three and six months ended June 30, 2022, the Company recognized $4.0 million and $7.2 million of stock-based compensation expense related to the ESPP, respectively.
Determination of Fair Value of the ESPP
The Company estimates the fair value of the ESPP using the Black-Scholes option-pricing model, which requires certain complex valuation assumption inputs such as expected term, expected stock price volatility, risk-free interest rate, and dividend yield. The fair value of each of the four purchase periods is estimated separately. The following table summarizes the range of valuation assumptions used in estimating the fair value of the ESPP during the period:
Valuation Assumption InputsThree and Six Months Ended June 30, 2022
Expected term (in years)
0.5 - 2.0
Stock price volatility
55.8% - 84.5%
Risk-free interest rate
1.54% - 2.58%
Dividend yield
—%
Expected term—The expected term is estimated based on the exercise term of the ESPP, which is the length of time from the grant date to the date on which the stock is purchased by the employees.
Stock price volatility—Since the Company's common stock lacks sufficient trading history, the stock price volatility over the expected term ranging from one to two years is estimated based on the average historical volatility of comparable companies with similar characteristics to those of the Company. For the stock price volatility over the expected term of six months, the Company estimates the stock price volatility using the combination of the average historical volatility of its own common stock and those of comparable companies with similar characteristics to it.
Risk-free interest rate—The risk-free interest rate is based on the yield of the U.S. Treasury debt securities commensurate with the expected term of the ESPP.
Dividend yield—Since the Company has never paid and has no intention to pay cash dividends on its common stock, the dividend yield is zero.
Fair value of underlying stock—The fair value of Company's common stock underlying the ESPP is determined by the closing market price of its Class A common stock on the grant date, which was May 16, 2022.
Stock Options
Stock options are granted with an exercise price equal to the stock’s fair market value at the date of grant, have 10-year contractual terms, and vest over a four-year period. As of June 30, 2022, 976,634 stock options were outstanding and exercisable with an aggregate intrinsic value of $12.6 million. All stock options are fully vested and exercisable and have a weighted-average exercise price of $0.27 per share. Aggregate intrinsic value represents the difference between the exercise price and the per share fair value of the Company's common stock as of the end of the period, multiplied by the number of stock options outstanding and exercisable.
Restricted Stock Units
RSUs are granted at fair market value at the date of the grant and vest over a four-year period.
RSU activity, which includes PRSUs, during the six months ended June 30, 2022 is as follows:
Share Information:Number of SharesWeighted-Average Grant Date Fair Value Per Share
(in thousands, except per share data)
Unvested, as of December 31, 202147,830 $14.47 
Granted8,519 $18.76 
Vested(19,030)$7.83 
Forfeited(1,603)$16.15 
Unvested, as of June 30, 202235,716 $18.95 
During the three and six months ended June 30, 2022, total shares that vested were 2.8 million and 19.0 million, of which 1.0 million shares and 7.6 million shares were withheld for tax withholding requirements, respectively. On February 14, 2022, the final lock-up period following the IPO expired, and the Company issued an aggregate of 9.3 million shares of its common stock, net of shares withheld for taxes, as settlement of all RSUs that had met the time-based service condition. Total cash paid related to the withholding taxes on net share settlement of equity awards amounted to $18.4 million and $138.3 million during the three and six months ended June 30, 2022, respectively.
Performance-Based Awards
In May 2019, the Board approved a grant of 166,390 shares of PRSUs to the Company’s CEO. The vesting of these PRSUs is contingent upon the satisfaction of certain milestones. The revenue-related milestone and the liquidity event condition were met prior to December 31, 2021. As of June 30, 2022, the time-based vesting was the only condition yet to be satisfied over the remaining requisite service period, and the number of shares to vest subject to this condition is insignificant.
In September 2021, the Board approved a grant of 6,000,000 PRSUs to the Company's CEO with a time-based service condition beginning January 1, 2022, and a market condition involving five separate stock price targets ranging from $70.00 to $200.00 per share for each of the five vesting tranches (CEO Performance Award). These stock price targets will be measured based on the average closing price over a consecutive 60-trading day period, beginning on the first trading day after the expiration of the final lock-up period in February 2022. The vesting of the CEO Performance Award is contingent upon the completion of the requisite service through January 1, 2029 and the achievement of the specified stock price target in each tranche on or before January 1, 2029. The stock price targets are not required to be achieved within the service period of each tranche, and accordingly, multiple tranches can vest at the same date if the specified stock price targets are achieved after December 31, 2025. The CEO Performance Award had a total grant date fair value of $131.0 million. The fair value of the CEO Performance Award was determined at grant date by using the Monte Carlo simulation model, which requires certain complex valuation assumption inputs such as measurement period, expected stock price volatility, risk-free interest rate and dividend yield.
For the three and six months ended June 30, 2022, the Company recognized $7.0 million and $13.9 million, respectively, of stock-based compensation expense associated with the CEO Performance Award described above which were recorded in general and administrative expense.
Stock-Based Compensation
Total stock-based compensation expense recorded for the three and six months ended June 30, 2022 and 2021 was as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Cost of revenue$1,914 $— $3,440 $— 
Research and development7,819 — 16,128 — 
Sales and marketing15,033 — 27,569 — 
General and administrative (1)
25,369 — 49,623 — 
Stock-based compensation, net of amounts capitalized50,135 — 96,760 — 
Capitalized stock-based compensation1,223 — 1,223 — 
Total stock-based compensation expense$51,358 $— $97,983 $— 
(1) For the three and six months ended June 30, 2022, general and administrative expense includes $13.9 million and $27.7 million of stock-based compensation expense associated with RSUs and PRSUs primarily granted to the CEO in September 2021, respectively.

As of June 30, 2022, unrecognized stock-based compensation expense related to unvested stock-based awards was as follows (in thousands, except for period data):
June 30, 2022
Unrecognized Stock-Based CompensationWeighted-Average Period to Recognize Expense
(in years)
RSUs and PRSUs$616,893 3.2
ESPP14,658 1.1
Total unrecognized stock-based compensation expense$631,551