Stockholders' Equity

12 Months Ended

Jan. 28, 2023

Stockholders' Equity Note [Abstract]

Stockholders' Equity

12. Stockholders’ Equity

Equity-based compensation awards under the Company’s current equity incentive plan (the “2021 Equity Incentive Plan”) include restricted stock units (“RSUs,” which include performance-based stock units), restricted stock awards (“RSAs”), non-qualified stock options, and other equity compensation awards. The Company also has an employee stock purchase plan (“ESPP”).

The Company issues new shares of Class A common stock upon exercise of stock options and the vesting of restricted stock units. As of January 28, 2023, there were 26.8 million shares of Class A common stock available for issuance pursuant to future equity-based compensation awards under the 2021 Equity Incentive Plan.

The Company’s controlling parent, Scooby LP, also maintains an incentive plan (the “2016 Incentive Plan”) under which it has awarded partnership unit awards to certain current and former employees, consultants, and non-employee directors of the Company that are restricted profit interests in Scooby LP subject to a distribution threshold (“Series C Units”).

The following table summarizes the Company’s equity-based compensation expense by award type (in thousands):

	Fiscal years ended
	January 28, 2023		January 29, 2022		January 30, 2021
	(52 weeks)		(52 weeks)		(52 weeks)
RSUs and RSAs	$	38,146	$	25,459	$	1,991
Options		9,418		8,002		391
ESPP		1,274		1,034		—
Other awards		11,946		14,770		10,533
Total equity-based compensation expense	$	60,784	$	49,265	$	12,915
Total related tax benefit	$	8,160	$	5,033	$	329

RSUs and RSAs

The Company has both time-vested RSUs and performance-based RSUs. Time-vested RSUs are awarded to eligible employees and non-employee directors and entitle the grantee to receive shares of Class A common stock at the end of a vesting period, subject solely to the individual’s continued employment or service as a director. In most cases, 34% of the units becomes vested on the anniversary of the grant date, followed by 16.5% of the units in four equal semi-annual installments thereafter. Performance-based RSUs are awarded to eligible employees and entitle the grantee to receive shares of Class A common stock if the Company achieves specified performance goals during the performance period and the grantee remains employed through the vesting period.

RSU activity under the 2021 Equity Incentive Plan was as follows (in thousands, except per share and contractual life amounts):

	Shares			Weighted average grant date fair value per share		Weighted average remaining contractual life (years)		Aggregate intrinsic value
Nonvested, January 29, 2022		2,587		$	18.63		1.0	$	47,342
Granted		7,536			15.23
Vested and delivered		(1,402	)		18.63
Forfeited/expired		(919	)		18.52
Nonvested, January 28, 2023		7,802		$	15.36		1.2	$	91,596

As of January 28, 2023, unrecognized compensation expense related to unvested RSUs was $93.3 million, which is expected to be recognized over a weighted average period of approximately 2.0 years.

RSA activity has not been material and relates to an RSA of Class A common stock granted to an executive in March 2021. For this grant, 50% of the RSA becomes vested on each of the first two anniversaries of the grant date.

Options

The Company provides stock option grants, which are time-vested, as a form of employee compensation. In most cases, 34% of the options generally becomes vested on the anniversary of the grant date, followed by 16.5% of the options in four equal semi-annual installments thereafter. Stock options generally expire 10 years from the grant date.

Stock option activity under the 2021 Equity Incentive Plan was as follows (in thousands, except per share and contractual life amounts):

	Shares subject to options			Weighted average exercise price per share		Weighted average remaining contractual life (years)		Aggregate intrinsic value
Outstanding, January 29, 2022		3,327		$	18.00		9.0	$	998
Granted		5,125			11.97
Exercised		(45	)		18.00
Forfeited/expired		(593	)		18.36
Outstanding, January 28, 2023		7,814		$	14.02		9.1	$	3,512
Exercisable, January 28, 2023		1,853		$	18.00		7.9	$	—

No stock option awards were granted in fiscal 2021. The fair value of stock option awards granted in fiscal 2022 and 2020 was estimated at the grant dates using the Black-Scholes option pricing model with the following assumptions:

	Fiscal years ended
	January 28, 2023	January 30, 2021
	(52 weeks)	(52 weeks)
Dividend yield	0.0%	0.0%
Expected volatility (1)	38.0% - 48.4%	40.4%
Risk-free interest rate (2)	2.8% - 3.6%	0.7%
Expected term (3)	5.8 to 5.9 years	5.9 years
Grant date fair value per share	$10.98 - $21.06	$18.00
Estimated fair value per option granted	$5.46 - $8.64	$7.00

(1)The expected volatility was estimated based on the historical volatility of a select peer group of similar publicly traded companies for a term consistent with the expected term of the stock options.

(2)The risk-free interest rates were based on the U.S. Treasury constant maturity interest rate for a term consistent with the expected term of the stock options.

(3)The expected term of the stock options represents the estimated period of time until exercise and was calculated using the simplified method.

As of January 28, 2023, unrecognized compensation expense related to unvested options was $32.1 million, which is expected to be recognized over a weighted average period of approximately 1.8 years.

ESPP

The ESPP allows eligible employees to contribute up to 15% of their base earnings towards purchases of Class A common stock, subject to an annual maximum. The purchase price will be 85% of the lower of (i) the fair market value of the stock on the associated lookback date and (ii) the fair market value of the stock on the last day of the related purchase period. As of January 28, 2023, 7.3 million shares of Class A common stock were available for issuance under the ESPP.

Other Awards

Other awards primarily consist of partnership unit awards (“Series C Units”) issued by Scooby LP to eligible employees, consultants, and non-employee directors of the Company under the 2016 Incentive Plan, which was established in connection with the Acquisition. Series C Unit awards are restricted profit interests in Scooby LP subject to a distribution threshold and have generally been issued in the form of time-based units that vest in three to five equal annual installments following the grant date. In addition to acceleration upon a change in control, a portion of grantees’ Series C Units may vest upon certain levels of direct or indirect sales by Scooby LP of the Company’s Class A common stock, and all unvested Series C Units will fully accelerate in the event Scooby LP sells 90% of its direct or indirect holdings of the Company’s Class A common stock. No additional Series C Units have been or will be awarded following the Company’s initial public offering.

For the Series C Units granted during fiscal 2020, the weighted average fair value per unit was estimated to be $0.44.

The weighted average fair value per Series C Unit was estimated at the grant date using the Black-Scholes option pricing model with the following assumptions:

	Fiscal year ended
	January 30, 2021
	(52 weeks)
Dividend yield	0.0%
Expected volatility (1)	60.0 - 81.9%
Weighted average volatility (1)	81.1%
Risk-free interest rate (2)	0.1% - 1.3%
Expected term (3)	2.0 to 4.0 years

(1)The expected volatility was estimated based on the historical volatility of a select peer group of similar publicly traded companies for a term consistent with the expected term of the Series C Units.

(2)The risk-free interest rates were based on the U.S. Treasury constant maturity interest rate for a term consistent with the expected term of the Series C Units.

(3)The expected term of the Series C Units was based on estimated liquidity event timing.

Series C Unit activity under the 2016 Incentive Plan was as follows (in thousands):

	Units
Outstanding, January 29, 2022		207,178
Granted		—
Forfeited		(5,819	)
Outstanding, January 28, 2023		201,359
Vested, January 28, 2023		151,597

Charges with respect to awards issued pursuant to the 2016 Incentive Plan are reflected in the Company’s consolidated financial statements. Compensation expense related to Series C Units is generally not tax deductible.

As of January 28, 2023, unrecognized compensation expense related to the unvested portion of Scooby LP’s Series C Units was $9.3 million, which is expected to be recognized over a weighted average period of 1.3 years.

Earnings (Loss) Per Share

Shares of Class A common stock and Class B-1 common stock participate equally in the earnings and losses of the Company and have identical rights in distribution. Basic net income (loss) per Class A and B-1 common share is based on the weighted-average Class A and B-1 common shares outstanding during the relevant period. Diluted net income (loss) per Class A and B-1 common share is based on the weighted-average Class A and B-1 common shares outstanding during the relevant period adjusted for the effect of potentially dilutive securities.

Potentially dilutive securities include potential Class A common shares related to outstanding stock options and unvested RSUs, calculated using the treasury stock method. The calculation of diluted shares outstanding excludes options and RSUs where the combination of the exercise price (in the case of options) and the associated unrecognized compensation expense is greater than the average market price of Class A common shares because the inclusion of these securities would be antidilutive.

In fiscal 2022 and 2021, there were approximately 6.7 million and 3.3 million potential shares, respectively, that were anti-dilutive and excluded from the computation of diluted shares outstanding. In fiscal 2020, all outstanding stock options and unvested RSUs were excluded from the calculation of diluted loss per Class A and B-1 common share, as their effect would be antidilutive in a net loss period.

Shares of Class B-2 common stock are not included in the calculation of net income (loss) per share as they only possess voting rights. Unvested RSUs contain forfeitable rights to dividend equivalent units if dividends are paid to holders of Class A and B-1 common stock. Because the dividend equivalent units are forfeitable, unvested RSUs are not considered participating securities.

For periods prior to the Company’s conversion to a Delaware corporation, including fiscal 2020 for which a portion of the period preceded the conversion, the Company has retrospectively presented net loss per share as if the conversion had occurred at the beginning of the earliest period presented. The weighted average shares used in computing net loss per Class A and B-1 common share in these periods are based on the number of Common Series A and Common Series B Units held by members.

Prior to the conversion, the Company’s Series C Units met the definition of participating securities, as they would have participated in distributions after certain applicable thresholds had been met. However, such thresholds had not been met in the periods presented, and holders of Series C Units were not contractually obligated to participate in losses of the Company. Accordingly, losses were not allocated to participating securities under the two-class method in these periods. Following the conversion, the Company had no Series C Units outstanding. Scooby LP’s own Series C Units (such as those granted under the 2016 Incentive Plan) do not participate in the earnings and losses of the Company and are therefore not participating securities.