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Stockholders' Equity and Stock Based Compensation
 12 Months Ended
Dec. 31, 2021
Equity [Abstract]  
Stockholders' Equity and Stock Based Compensation Stockholders' Equity and Stock Based Compensation
Preferred Stock
In connection with the IPO, the Company’s amended and restated certificate of incorporation became effective, which authorized the issuance of 10,000,000 shares of undesignated preferred stock with a par value of $0.00001 per share with rights and preferences, including voting rights, designated from time to time by the board of directors.
Common Stock
The Company has two classes of common stock: Class A common stock and Class B common stock. In connection with the IPO, the Company’s amended and restated certificate of incorporation authorized the issuance of 1,000,000,000 shares of Class A common stock and 350,000,000 shares of Class B common stock. The shares of Class A common stock and Class B common stock are identical, except with respect to voting, conversion, and transfer rights. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to ten votes. Class A and Class B common stock have a par value of $0.00001 per share, and are referred to as common stock throughout these notes to the consolidated financial statements, unless otherwise noted. Holders of common stock are entitled to receive any dividends as may be declared from time to time by the board of directors.
Shares of Class B common stock may be converted to Class A common stock at any time at the option of the stockholder. Shares of Class B common stock automatically convert to Class A common stock upon the following: (1) sale or transfer of such share of Class B common stock, except for certain permitted transfers as described in our amended and restated certificate of incorporation; (2) the death of such Class B common stockholder (or nine months after the date of death if the stockholder is our founder); and (3) on the final conversion date, defined as the earlier of (a) the last trading day of the fiscal year following the seventh anniversary of the IPO; or (b) the date specified by a vote of the holders of a majority of the outstanding shares of Class B common stock, voting as a single class.
Shares of common stock reserved for future issuance were as follows (in thousands):
December 31,
20212020
Redeemable convertible preferred stock— 153,938 
2011 Stock Plan:
Options and RSUs outstanding48,749 36,024 
Shares reserved for future award issuances— 9,981 
2021 Equity Incentive Plan:
RSUs outstanding429 — 
Shares reserved for future award issuances36,019 — 
2021 Employee Stock Purchase Plan6,500 — 
Total shares of common stock reserved for issuance91,697 199,943 
Equity Incentive Plans
In 2011, the Company adopted the 2011 Stock Plan (the 2011 Plan) pursuant to which 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 and RSUs. The 2011 Plan was terminated in September 2021 in connection with the IPO but continues to govern the terms of outstanding awards that were granted prior to its termination. With the establishment of the 2021 Equity Incentive Plan (the 2021 Plan) as further discussed below, upon the expiration, forfeiture, cancellation, or reacquisition of any shares of Class B common stock underlying outstanding stock-based awards granted under the 2011 Plan, an equal number of shares of Class A common stock will become available for grant under the 2021 Plan.
In August 2021, the Board adopted the 2021 Plan, which became effective upon the IPO. Upon adoption, the 2021 Plan began with a reserve of 35,000,000 shares of Class A common stock for future issuance, with (i) an automatic increase occurring on January 1 of each year by 5% of the aggregate number of shares of common stock of all classes issued and outstanding on December 31 of the preceding calendar year, or (ii) a lesser number of shares determined by the Board prior to January 1 of each year. The reserve is reduced by the number of shares granted, and increased by the number of shares subject to stock options or other stock awards that would have otherwise returned to the 2011 Plan, up to a maximum of 51,178,920 shares, as well as the net number of shares withheld from the release of RSUs. As of December 31, 2021, the Company has granted 431,886 shares from the 2021 Plan, and a total of 1,439,884 shares comprising of cancellations from the 2011 Plan and withholding of net shares recirculated back to the reserve, resulting in 36,018,956 shares available for future issuance.
2021 Employee Stock Purchase Plan
In August 2021, the Board adopted the ESPP, which became effective upon the Company’s IPO. Initially, 6,500,000 Class A shares of common stock have been reserved for future issuance under the ESPP, with an automatic increase to such reserve on January 1 of each year.
The price at which Class A common stock is purchased under the ESPP is equal to 85% of the fair market value of a share of the Company’s Class A common stock on the first or last day of the offering period, whichever is lower. The ESPP provides an offering period of 24 months, with four purchase periods that are generally six months long ending on May 15 and November 15 of each year, except for the first purchase period, which began upon the completion of the IPO on September 22, 2021 and will end on May 13, 2022, with contributions from employees beginning on October 1, 2021.
As of December 31, 2021, the Company has withheld $4.2 million of contributions from its employees, and no shares have been purchased under the ESPP.
During the year ended December 31, 2021, the Company recognized $3.5 million of stock-based compensation expense related to the ESPP.
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:
Year Ended December 31,
Valuation Assumption Inputs2021
Expected term (in years)
0.6 - 2.1
Stock price volatility
47.7% - 58.5%
Risk-free interest rate
0.06% - 0.29%
Dividend yield0.00%
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 is estimated based on the average historical volatility of comparable companies with similar characteristics to those of the Company.
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 date that the Company began withholding the contributions from its employees, which was October 1, 2021.
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.
Stock option activity during the year ended December 31, 2021 is as follows (in thousands, except per share data):
Share Information:Number of SharesWeighted-Average Exercise PriceWeighted-Average Remaining Contractual Term (in years)
Aggregate Intrinsic Value (1)
Balance as of December 31, 20202,096 $0.23 4.1$33,947 
Stock options granted— $— 
Stock options exercised(537)$0.18 
Stock options cancelled / forfeited / expired(211)$0.07 
Balance as of December 31, 20211,348 $0.27 3.6$35,020 
(1)Aggregate intrinsic value for stock options 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, exercisable, or vested.
(2)The ending balance as of December 31, 2021 represents options that were fully vested and exercisable.
Total intrinsic value of options exercised during the years ended December 31, 2021, 2020, and 2019 was $14.0 million, $9.8 million, and $9.5 million, respectively.
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 during the year ended December 31, 2021 is as follows (in thousands, except per share data):
Share Information:Number of SharesWeighted-Average Grant Date Fair Value
Unvested, as of December 31, 202033,928 $5.41 
Granted26,808 $22.02 
Vested(9,928)$5.17 
Forfeited(2,978)$9.81 
Unvested, as of December 31, 202147,830 $14.47 
Performance-Based Awards
In May 2019, the Board approved a grant of 166,390 shares of performance-based RSUs (PRSUs) to the Company’s CEO. The vesting of these PRSUs is contingent upon the satisfaction of all three of the following: (i) the achievement of certain revenue related milestones on or before December 31, 2019, (ii) vesting over the requisite service period in accordance with the Plan, and (iii) a liquidity event. The revenue-related milestone was met as of December 31, 2019, and the liquidity event condition was met upon the completion of the IPO as described in Note 1—Initial Public Offering. As of December 31, 2021, 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 with the following valuation assumptions:
Year Ended December 31,
Valuation Assumption Inputs2021
Measurement period (in years)7.0
Stock price volatility60.0%
Risk-free interest rate1.12%
Dividend yield—%
Measurement period—This is the period over which simulated stock prices of the Company are used to evaluate the possibility of achieving the specified stock price targets (as described above).
Stock price volatility—Since the Company's common stock lacks sufficient trading history, the stock price volatility over the measurement period is estimated based on the average historical volatility of comparable companies with similar characteristics to those of the Company.
Risk-free interest rate—The risk-free interest rate is based on the yield of the U.S. Treasury debt securities commensurate with the measurement period.
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 CEO Performance Award on is based on an independent third-party valuation as there was no public market on the date of the grant.
For the year ended December 31, 2021, the Company recognized $9.0 million of stock-based compensation expense associated with performance-based awards described above, of which $8.4 million was related to the CEO Performance Award.
Stock-Based Compensation
For the year ended December 31, 2021, stock-based compensation expense of $173.4 million included a cumulative charge associated with certain RSUs for which the service-based vesting condition has been satisfied upon the completion of the liquidity event, as further described in Note 1—Initial Public Offering.
During the year ended December 31, 2020, stock-based compensation included expenses recognized from employee stock-based awards, and the excess value of $43.2 million paid to repurchase shares in a secondary transaction. The excess value was comprised of $10.8 million recorded in general and administrative expense for the repurchase of redeemable convertible preferred stock (as described in Note 10), and $32.4 million for the repurchases of shares of common stock from the Company’s founders and a number of employees, of which $16.5 million and $15.9 million were recorded in general and administrative expense and research and development, respectively.
Total stock-based compensation expense recorded for the years ended December 31, 2021, 2020, and 2019 was as follows (in thousands):
Year Ended December 31,
202120202019
Equity awards:
Cost of revenue$5,604 $— $13 
Research and development45,162 8 151 
Sales and marketing53,169 7 104 
General and administrative69,508 29 5 
Total employee awards173,443 44 273 
Secondary transaction— 43,236 — 
Stock-based compensation, net of amounts capitalized173,443 43,280 273 
Capitalized stock-based compensation585 — — 
Total stock-based compensation expense$174,028 $43,280 $273 
Stock-based compensation expense recorded to research and development in the consolidated statements of operations excludes amounts that were capitalized for internal-use software for the year ended December 31, 2021.
As of December 31, 2021, unrecognized stock-based compensation expense related to unvested stock-based awards was as follows (amount in thousands):
December 31, 2021
Unrecognized Stock-Based CompensationWeighted-Average Period to Recognize Expense
(in years)
RSUs$574,916 3.6
ESPP19,928 1.2
Total unrecognized stock-based compensation expense$594,844