Stock-Based Compensation Expense and Employee Benefit Plans

9 Months Ended

Sep. 30, 2023

Stock-Based Compensation Expense and Employee Benefit Plans

Stock-Based Compensation and Employee Benefit Plans

Stock-Based Compensation Expense

The following table summarizes the components of stock-based compensation expense in the condensed consolidated statements of operations (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022

Cost of revenue	$	5,581	$	4,982	$	14,809	$	13,609
Research and development	5,585		4,818		21,673		25,113
Sales and marketing	3,015		3,948		15,089		13,528
General and administrative	7,383		10,283		28,025		30,688
	$	21,564	$	24,031	$	79,596	$	82,938

Stock Option Activity

The following table summarizes the stock option activity under our stock plans during the reporting period:


	Outstanding Options
	Number of Shares	Weighted Average Exercise Price		Remaining Contractual Life (Years)	Aggregate Intrinsic Value
	(in thousands, except weighted average exercise price and remaining contractual life)
Balances at December 31, 2022	8,748,309	$	20.70	4.6	$	40,532

Exercised	(332,293)	7.94

Expired	(541,302)	26.95
Balances at September 30, 2023	7,874,714	20.81		3.8	17,890
Vested and expected to vest at September 30, 2023	7,873,962	20.81		3.8	17,885
Exercisable at September 30, 2023	7,844,713	$	20.86	3.8	$	17,707

Stock Options - For the three and nine months ended September 30, 2023, we recognized $0.1 million and $0.3 million of stock-based compensation costs for stock options, respectively. For the three and nine months ended September 30, 2022, we recognized $1.2 million and $6.7 million of stock-based compensation expense for stock options, respectively.

We did not grant options in the three and nine months ended September 30, 2023 and 2022.

As of September 30, 2023 and December 31, 2022, we had unrecognized compensation costs related to unvested stock options of $0.1 million and $0.4 million, respectively. This cost is expected to be recognized over the remaining weighted-average period of 0.5 years and 0.9 years, respectively. Cash received from stock options exercised totaled $1.1 million and $2.6 million for the three and nine months ended September 30, 2023, respectively. Cash received from stock options exercised totaled $2.2 million and $3.6 million for the three and nine months ended September 30, 2022, respectively.

Stock Award Activity

A summary of our stock awards activity and related information is as follows:


	Number of Awards Outstanding	Weighted Average Grant Date Fair Value

Unvested Balance at December 31, 2022	9,549,035	$	19.99
Granted	4,814,465	18.37
Vested	(3,496,491)	18.87
Forfeited	(1,428,026)	21.44
Unvested Balance at September 30, 2023	9,438,983	$	19.36

Stock Awards - The estimated fair value of restricted stock units (“RSUs”) and performance-based stock units (“PSUs”) is based on the fair value of our Class A common stock on the date of grant. For the three and nine months ended September 30, 2023, we recognized $19.3 million and $65.0 million of stock-based compensation costs for stock awards, respectively. For the three and nine months ended September 30, 2022, we recognized $18.4 million and $64.4 million of stock-based compensation expense for stock awards, respectively.

As of September 30, 2023 and December 31, 2022, we had $129.3 million and $135.7 million of unrecognized stock-based compensation expense related to unvested stock awards, expected to be recognized over a weighted average period of 2.0 years and 1.9 years, respectively.

Executive Awards

On February 15, 2023 and July 11, 2023, the Company granted RSU and PSU awards (the “2023 Executive Awards”) to certain executive staff pursuant to the 2018 Equity Incentive Plan. The RSUs have time-based vesting schedules, started vesting on February 15, 2023 and shall vest over a three year period. The PSUs which started vesting on February 15, 2023 have either a three-year or one-year cliff vesting period, and the PSUs which started vesting on July 11, 2023, cliff vest on February 15, 2024. The PSUs will vest based on a combination of time and achievement against performance metrics targets assuming continued employment and service through each vesting date. Stock-based compensation costs associated with the 2023 Executive Awards are recognized over the service period as we evaluate the probability of the achievement of the performance conditions.

The following table presents the stock activity and the total number of shares available for grant under our stock plans:


						Plan Shares Available for Grant

Balances at December 31, 2022						28,340,641
Added to plan						8,948,255
Granted						(4,734,700)

Cancelled/forfeited						1,899,563
Expired						(504,347)
Balances at September 30, 2023						33,949,412

2018 Employee Stock Purchase Plan (“2018 ESPP”)

For the three and nine months ended September 30, 2023, we recognized $0.1 million and $12.5 million of stock-based compensation costs for the 2018 ESPP, respectively. For the three and nine months ended September 30, 2022, we recognized $4.3 million and $11.2 million of stock-based compensation costs for the 2018 ESPP, respectively.

We issued 426,170 and 875,695 shares in the three and nine months ended September 30, 2023, respectively. We issued 339,055 and 759,744 shares in the three and nine months ended September 30, 2022, respectively.

During the nine months ended September 30, 2023 and 2022, we added an additional 2,239,563 and 12,055,792 shares, respectively, and there were 15,204,584 and 13,840,716 shares available for issuance as of September 30, 2023 and December 31, 2022, respectively.

As of September 30, 2023 and December 31, 2022, we had $12.1 million and $12.0 million of unrecognized stock-based compensation costs, respectively, expected to be recognized over a weighted average period of 1.1 years and 0.6 years, respectively.