Stock-Based Compensation

12 Months Ended

Dec. 31, 2023

Stock-Based Compensation

Stock-Based Compensation

13. 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, 2023, 1,506,580 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, 2024, the number of shares reserved and available for issuance under the 2020 Plan automatically increased by 1,300,761 shares.

In March 2023, the compensation committee of the Company’s board of directors granted an aggregate of 53,794 performance-based restricted stock units, (“PSUs”) under the 2020 Stock Option and Incentive Plan to the Company’s chief executive officer. Each PSU is equivalent in value to one share of the Company’s common stock. The maximum payout percentage for all PSUs granted by the Company is 100%.

The vesting of the shares underlying the PSUs is subject to the achievement of stock price levels pre-established by the compensation committee at the grant date. The PSUs are subject to the market and service conditions and valued using the Monte Carlo simulation model, which requires certain assumptions, including the risk-free interest rate, expected volatility, and the estimated dividend yield. The risk-free interest rate used in the Monte Carlo simulation model is based on zero-coupon yields implied by U.S. treasury issues with remaining terms similar to the performance period on the PSUs. The performance period of the PSUs represents the period of time between the PSU grant date and the end of the performance period. Expected volatility is based on historical data of the peers and certain indices over the most recent time period equal to the performance period.

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, 2023, 772,487 shares remained available for issuance under the 2020 ESPP. During the year ended December 31, 2023 and 2022, the Company issued 93,644 shares and 56,486 shares, respectively, under the 2020 ESPP plan. On January 1, 2024, the number of shares reserved and available for issuance under the 2020 ESPP did not increase pursuant to the determination of the administrator of the 2020 ESPP.

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,
	2023		2022
Risk-free interest rate	4.1	%	2.7	%
Expected volatility	69	%	67	%
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,
	2023		2022
Risk-free interest rate	5.3	%	3.2	%
Expected volatility	82	%	90	%
Expected dividend yield	—		—
Expected term (in years)	0.5		0.5

The following table summarizes the Company’s option activity for the fiscal year ended December 31, 2023:

		Weighted
		Average		Weighted	Aggregate
	Number	Exercise		Contractual	Intrinsic
	of Shares	Price		Term	Value
				(in years)	(in thousands)
Outstanding at beginning of period	2,471,365	$	5.78	6.7	$	10,311
Granted	411,512		8.80
Exercised	(264,971)		1.63
Forfeited	(190,489)		10.93
Outstanding at end of period	2,427,417	$	6.34	6.4	$	14,917
Vested and expected to vest at end of period		$	6.30	6.4	$	14,855
Exercisable at end of period		$	5.07	5.6	$	12,768

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, 2023 and 2022 was $1.7 million and $10.3 million, respectively. As of December 31, 2023, total unrecognized compensation cost related to unvested stock options was $3.4 million, which is expected to be recognized over a weighted average period of 2.1 years.

The weighted average grant-date fair value of stock options granted during the years ended December 31, 2023 and 2022 was $5.77 per share and $9.61 per share, respectively.

The following table summarizes the Company’s restricted stock units activity for the fiscal year ended December 31, 2023:

		Weighted
		Average
	Number	Grant Date
	of Shares	Fair Value
Outstanding at beginning of period	1,059,529	$	17.38
Granted	1,221,725		8.69
Vested and released	(299,845)		17.58
Forfeited	(140,728)		14.82
Unvested at end of period	1,840,681	$	11.77

The weighted average grant date fair value for RSUs granted for the years ended December 31, 2023 and 2022 was $8.69 and $15.21, respectively. The aggregate intrinsic value of the RSUs vested and released for the years ended December 31, 2023 and 2022 was $2.5 million and $0.9 million, respectively.

The remaining unrecognized compensation expense for outstanding restricted stock units as of December 31, 2023 was $15.4 million and the weighted-average period over which this cost is expected to be recognized is 2.6 years.

The weighted average grant date fair value for PSUs granted in March 2023 was $3.99. No PSUs were vested during the year ended December 31, 2023. The remaining unrecognized compensation expense for outstanding PSUs as of December 31, 2023 was $0.1 million and the weighted-average period over which this cost is expected to be recognized is 2.1 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,
	2023		2022
Cost of revenue	$	577	$	286
Research and development expenses		2,691		1,659
Selling, general and administrative expenses		6,519		5,262
	$	9,787	$	7,207