Stock-Based Compensation

12 Months Ended

Dec. 31, 2022

Stock-Based Compensation

Stock-Based Compensation

12. Stock-Based Compensation

2012 Stock Option and Grant Plan

The Company’s 2012 Stock Option and Grant Plan (the “2012 Plan”) provided for the Company to sell or issue incentive stock options or nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units

and other stock-based awards to employees, directors, and non-employee consultants of the Company. The 2012 Plan was administered by the board of directors or, at the discretion of the board of directors, by a committee of the board of directors. The exercise prices, vesting and other restrictions were determined at the discretion of the board of directors, or its committee if so delegated. Following the effectiveness of the Company’s 2020 Stock Option and Incentive Plan (the “2020 Plan”) in December 2020, no future awards will be made under the 2012 Plan. Additionally, shares underlying awards under the 2012 Plan that expire or are terminated, surrendered, or canceled without the delivery of shares will be available for future awards under the 2020 Plan.

2020 Stock Option and Incentive Plan

On November 23, 2020, the Company’s board of directors adopted, and on December 11, 2020, the Company’s stockholders approved the 2020 Stock Option and Incentive Plan (the “2020 Stock Plan”), which became effective on December 17, 2020. The 2020 Stock Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, unrestricted stock units, dividend equivalent rights and cash-based awards to employees, directors and consultants of the Company. The total number of shares of common stock that may be issued under the 2020 Plan is 1,843,771 shares plus the number of shares underlying awards under the 2012 Plan that expire or are terminated, surrendered, or cancelled without the delivery of shares, are forfeited to or repurchased or otherwise become available again for grant under the 2012 Plan. As of December 31, 2022, 1,598,660 shares remained available for future issuance under the 2020 Plan. The 2020 Plan provides that the number of shares reserved and available for issuance under the 2020 Plan will automatically increase on each January 1 by 4% of the outstanding number of shares of our common stock on the immediately preceding December 31 or such lesser number of shares as determined by the administrator of the 2020 Stock Plan. On January 1, 2023, the number of shares reserved and available for issuance under the 2020 Plan automatically increased by 1,274,394 shares.

2020 Employee Stock Purchase Plan

On November 23, 2020, the Company’s board of directors adopted, and on December 11, 2020, the Company’s stockholders approved the 2020 Employee Stock Purchase Plan (the “2020 ESPP”), which became effective on December 17, 2020. The 2020 ESPP provides that the number of shares reserved and available for issuance will automatically increase on each January 1 thereafter through January 1, 2030, by the least of (i) 307,295 shares of our common stock, (ii) 1% of the outstanding number of shares of common stock on the immediately preceding December 31, or (iii) such lesser number of shares of common stock as determined by the administrator of the 2020 ESPP. As of December 31, 2022, 558,836 shares remained available for issuance under the 2020 ESPP. During the year ended December 31, 2022 and 2021, the Company issued 56,486 shares and no shares, respectively, under the 2020 ESPP plan. On January 1, 2023, the number of shares reserved and available for issuance under the 2020 ESPP automatically increased by 307,295 shares.

Stock Option Valuation

The fair value of stock option grants and stock-based compensation associated with the 2020 ESPP is estimated using the Black-Scholes option-pricing model. For stock options valued, the Company estimated its expected stock volatility based on the historical volatility of a publicly traded set of peer companies due to limited company-specific historical and implied volatility information. For stock-based compensation associated with the 2020 ESPP, the Company estimated its expected stock volatility based on the volatility of its own traded stock price.

For options with service-based vesting conditions, the expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

The following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of stock options granted:

	Year Ended December 31,
	2022		2021
Risk-free interest rate	2.7	%	1.1	%
Expected volatility	67	%	65	%
Expected dividend yield	—		—
Expected term (in years)	6		6

The following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of 2020 ESPP granted:

	Year Ended December 31,
	2022
Risk-free interest rate	3.2	%
Expected volatility	90	%
Expected dividend yield	—
Expected term (in years)	0.5

The following table summarizes the Company’s option activity for the fiscal year ended December 31, 2022:

		Weighted
		Average		Weighted	Aggregate
	Number	Exercise		Contractual	Intrinsic
	of Shares	Price		Term	Value
				(in years)	(in thousands)
Outstanding at beginning of period	2,747,041	$	3.32	6.7	$	62,714
Granted	432,444		15.91
Exercised	(670,047)		1.46
Forfeited	(38,073)		19.19
Outstanding at end of period	2,471,365	$	5.78	6.7	$	10,311
Vested and expected to vest at end of period		$	5.73	6.7	$	10,188
Exercisable at end of period		$	3.56	5.8	$	8,061

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2022 and 2021 was $10.3 million and $24.0 million, respectively. As of December 31, 2022, total unrecognized compensation cost related to unvested stock options was $4.3 million, which is expected to be recognized over a weighted average period of 2.0 years.

The weighted average grant-date fair value of stock options granted during the years ended December 31, 2022 and 2021 was $9.61 per share and $20.34 per share, respectively.

The following table summarizes the Company’s restricted stock units activity for the fiscal year ended December 31, 2022:

		Weighted
		Average
	Number	Grant Date
	of Shares	Fair Value
Unvested at beginning of period	187,764	$	35.87
Granted	983,491		15.21
Vested and released	(58,605)		34.83
Forfeited	(53,121)		23.57
Unvested at end of period	1,059,529	$	17.38

The weighted average grant date fair value for RSUs granted for the years ended December 31, 2022 and 2021 was $15.21 and $36.43, respectively. The aggregate intrinsic value of the RSUs vested and released for the years ended December 31, 2022 and 2021 was $0.9 million and less than $0.1 million, respectively.

The remaining unrecognized compensation expense for outstanding restricted stock units as of December 31, 2022 was $13.8 million and the weighted-average period over which this cost will expected to be recognized is 3.1 years.

Stock-Based Compensation

The Company recorded stock-based compensation expense in the following expense categories of its consolidated statements of operations and comprehensive loss (in thousands):

	Year Ended December 31,
	2022		2021
Cost of revenue	$	286	$	97
Research and development expenses		1,659		448
Selling, general and administrative expenses		5,262		1,959
	$	7,207	$	2,504