Stock-Based Compensation

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

2012 Stock Incentive Plan

In October 2012, the Company adopted the 2012 Stock Incentive Plan (the “2012 Plan”). Under the 2012 Plan, employees and non-employees could be granted stock options, RSUs and other stock-based awards, including awards earned in connection with the Agent Equity Program. Generally, these awards were based on stock agreements with a maximum ten-year term for stock options and a maximum seven-year term for RSUs, subject to board approval.

2021 Equity Incentive Plan

In February 2021, the Company’s board of directors and stockholders adopted and approved the 2021 Equity Incentive Plan (the “2021 Plan”), with an initial pool of 29.7 million shares of common stock available for granting stock-based awards plus any reserved shares of common stock not issued or subject to outstanding awards granted under the 2012 Plan. In addition, on January 1st of each year beginning in 2022 and continuing through 2031, the aggregate number of shares of common stock authorized for issuance under the 2021 Plan shall be increased automatically by the number of shares equal to 5% of the total number of outstanding shares of common stock and outstanding shares of preferred stock (on an as converted to common stock basis) on the immediately preceding December 31st, although the Company’s board of directors or one of its committees may reduce the amount of such increase in any particular year. The 2021 Plan became effective on March 30, 2021 and as of that date, the Company ceased granting new awards under the 2012 Plan and all remaining shares available under the 2012 Plan were transferred to the 2021 Plan. Effective January 1, 2023, the shares available for future grants were increased by an additional 21.9 million shares as a result of the annual increase provision described above. As of March 31, 2023, there were 43.6 million shares available for future grants under the 2021 Plan, inclusive of those shares transferred from the 2012 Plan. In April 2023, the Company granted an additional 8.7 million RSUs under the 2021 Plan.

2021 Employee Stock Purchase Plan

In February 2021, the Company’s board of directors and stockholders adopted and approved the 2021 Employee Stock Purchase Plan (the “ESPP”), which authorized purchase rights to the Company’s employees or to employees of its designated affiliates. In addition, on January 1st of each year beginning in 2022 and continuing through 2031, the aggregate number of shares of common stock authorized for issuance under the ESPP shall be increased automatically by the number of shares equal to 1% of the total number of outstanding shares of common stock and outstanding shares of preferred stock (on an as converted to common stock basis) on the immediately preceding December 31st, although the Company’s board of directors or one of its committees may reduce the amount of the increase in any particular year. No more than 150.0 million shares of common stock may be issued over the term of the ESPP, subject to certain exceptions set forth in the ESPP. Effective January 1, 2023, the authorized shares increased by 4.2 million shares as a result of the annual increase provision described above. As of March 31, 2023, 14.5 million shares of Class A common stock remain available for grant under the ESPP.

The ESPP permits employees to purchase shares of the Company’s Class A common stock through payroll deductions accumulated during six-month offering periods up to a maximum value of $12,500 per offering period. The offering periods begin each February and August, or such other period determined by the Compensation Committee. On each purchase date, eligible employees may purchase the shares at a price per share equal to 85% of the lesser of (1) the fair market value of the Company’s Class A common stock on the first trading day of the offering period, or (2) the fair market value of the Company’s Class A common stock on the purchase date, as defined in the ESPP. During the three months ended March 31, 2023, the Company issued 0.4 million shares of Class A common stock under the ESPP.

The Company recognized $0.3 million and $0.4 million of stock-based compensation expense related to the ESPP during the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, $0.4 million has been withheld on behalf of employees for a future purchase under the ESPP.

Stock Options

A summary of stock option activity under the 2012 Plan and the 2021 Plan, including 1.1 million stock options that were granted outside of the 2012 Plan in 2019, is presented below (in millions, except share and per share amounts):


	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contract Term (in years)	Aggregate Intrinsic Value (1)
Balance as of December 31, 2022	46,694,237	$	5.44	5.9	$	8.5
Granted	95,287	3.77
Exercised	(697,149)	1.39
Forfeited	(920,345)	7.08
Balance as of March 31, 2023	45,172,030	$	5.46	5.6	$	18.1
Exercisable and vested at March 31, 2023	36,947,227	$	4.88	5.2	$	18.1

(1)The aggregate intrinsic values have been calculated using the Company’s closing stock prices of $3.23 and $2.33 as of March 31, 2023 and December 31, 2022, respectively.

During the three months ended March 31, 2023 and 2022, the intrinsic value of options exercised was $1.7 million and $15.9 million, respectively.

Restricted Stock Units

A summary of RSU activity under the 2012 Plan and the 2021 Plan is presented below:


	Number of Awards	Weighted Average Grant Date Fair Value
Balance as of December 31, 2022	47,189,837	$	7.10
Granted	19,815,425	3.61
Vested and converted to common stock (1)	(18,882,465)	4.56
Forfeited	(4,357,382)	8.18
Balance as of March 31, 2023	43,765,415	$	6.51

(1)During the three months ended March 31, 2023, the Company net settled all RSUs through which it issued an aggregate of 18.9 million shares of Class A common stock and withheld an aggregate of 1.7 million shares of Class A common stock to satisfy $6.0 million of tax withholding obligations on behalf of the Company’s employees.

Included in the table above are 17.2 million RSUs that only vest upon the satisfaction of both (i) a service-based vesting condition and (ii) the achievement of performance-based vesting conditions that remain outstanding as of March 31, 2023. The performance-based vesting conditions provide that 12.5% of the shares subject to the RSUs will vest subject to the achievement of a market price per share of $23.14 of the Company's Class A common stock. An additional 12.5% of the shares subject to the RSUs will vest upon the achievement of a market price per share of the Company's Class A common stock at each of 200%, 250%, 300%, 350%, 400%, 450% and 500% of the reference price.

Agent Equity Program

In connection with the 2021 Agent Equity Program, the Company recognized a total of $100.0 million in stock-based compensation expense of which $84.8 million was recognized during the year ended December 31, 2021 and $15.2 million was recognized during the three months ended March 31, 2022. In February 2022, the Company granted 13.6 million RSUs, which immediately vested and converted to Class A common stock in connection with the 2021 Agent Equity Program. Prior to the issuance of the underlying RSUs, the stock-based compensation expense associated with these awards was recorded as a liability and $100.0 million was ultimately reclassified to Additional paid-in capital at the end of the vesting period when the underlying RSUs were granted.

In connection with the 2022 Agent Equity Program, the Company recognized a total of $53.3 million in stock-based compensation expense of which $41.7 million was recognized during the year ended December 31, 2022 and $11.6 million

was recognized during the three months ended March 31, 2023. In January 2023, the Company granted 14.1 million RSUs, which immediately vested and converted to Class A common stock in connection with the 2022 Agent Equity Program. Prior to the issuance of the underlying RSUs, the stock-based compensation expense associated with these awards was recorded as a liability and $53.3 million was ultimately reclassified to Additional paid-in capital at the end of the vesting period when the underlying RSUs were granted. Following the issuance of these RSUs, the Company discontinued the Agent Equity Program.

Stock-Based Compensation Expense

Total stock-based compensation expense included in the condensed consolidated statements of operations for the three months ended March 31, 2023 and 2022 is as follows (in millions):


	Three Months Ended March 31,
		2023		2022
Commissions and other related expense		$	11.6	$	17.0
Sales and marketing		8.6		10.7
Operations and support		3.0		4.3
Research and development		10.4		16.9
General and administrative		11.3		14.9
Total stock-based compensation expense		$	44.9	$	63.8

As of March 31, 2023, unrecognized stock-based compensation expense totaled $240.6 million and is expected to be recognized over a weighted-average period of 2.4 years.

The Company has not recognized any tax benefits from stock-based compensation as a result of the full valuation allowance maintained on its deferred tax assets.