Quarterly report pursuant to Section 13 or 15(d)

Stockholders??? Equity and Equity Incentive Plan

v3.22.2.2
Stockholders’ Equity and Equity Incentive Plan
9 Months Ended
Sep. 30, 2022
Equity [Abstract]  
Stockholders’ Equity and Equity Incentive Plan Stockholders’ Equity and Equity Incentive Plan
Common Stock and Preferred Stock
In connection with the Company’s IPO in November 2021, the Company’s Restated Certificate of Incorporation became effective, which authorized the issuance of 2,000,000,000 shares of common stock with a par value of $0.0001 per share and 10,000,000 shares of preferred stock with a par value of $0.0001 per share.
The Company had the following shares of common stock reserved for future issuance (in thousands):
September 30,
2022
December 31,
2021
Outstanding stock awards to purchase common stock 26,021  25,181 
Stock awards available for future grants 20,538  16,154 
Shares available for issuance under 2021 ESPP 4,024  3,100 
50,583  44,435 
Equity Incentive Plan
In June 2007, the Company adopted the 2007 Equity Incentive Plan (the 2007 Plan). Under the 2007 Plan, the Company originally authorized the issuance of 500,000 shares. In March 2013, the board of directors adopted the 2013 Equity Incentive Plan (the 2013 Plan) and ceased granting awards under the 2007 Plan. Upon the effective date of the suspension of the 2007 Plan, all remaining shares available for issuance under the 2007 Plan became available for issuance under the 2013 Plan and any options that expired or were forfeited automatically become available under the 2013 Plan.
In October 2021, the Company’s board of directors and stockholders approved the adoption of the 2021 Equity Incentive Plan (2021 Plan), which became effective in connection with the IPO. Under the 2021 Plan, 15,700,000 shares of the Company’s common stock are initially reserved for future issuance. Upon the effective date of the 2021 Plan, any remaining shares available for issuance under the Company’s 2013 Plan were added to the shares of the Company’s common stock reserved for issuance under its 2021 Plan, and the Company ceased granting awards under the 2013 Plan. The number of shares reserved for issuance under the 2021 Plan will increase automatically on January 1 of each of the first ten calendar years during the term of the 2021 Plan by the number of shares equal to 5% of the aggregate number of shares of all classes of the Company’s common stock issued and outstanding as of the immediately preceding December 31, or a lesser number as may be determined by the Company’s board of directors.
The 2021 Plan authorizes the award of both incentive stock options and nonqualified stock options, as well as the award of RSAs, RSUs, stock appreciation rights, and performance and stock bonus awards. Pursuant to the 2021 Plan, incentive stock options may be granted only to employees. The exercise price of an option cannot be less than 100% of the fair value of one share of common stock on the date of grant and the exercise price of any incentive stock option granted to a 10% stockholder cannot be less than 110% of the fair value of one share of common stock on the date of grant. Options are exercisable over periods not to exceed ten years from the date of grant (five years for incentive stock options granted to stockholders owning greater than 10% of all classes). Vesting terms for options is generally four years. The Company may grant all other types of awards to its employees, directors, and consultants.
As of September 30, 2022 and December 31, 2021, 20,538,259 and 16,153,747 shares of common stock have been reserved for issuance under the 2021 Plan, respectively.
In October 2021, the Company’s board of directors and stockholders approved the adoption of the 2021 ESPP, which became effective in connection with the IPO. Under the 2021 ESPP, 3,100,000 shares of the Company’s common stock are initially reserved for future issuance. The number of shares reserved for issuance and sale under the 2021 ESPP will increase automatically on January 1 of each of the first ten calendar years during the term of the 2021 ESPP by the number of shares equal to 1% of the aggregate number of shares of all classes of the Company’s common stock issued and outstanding as of the immediately preceding December 31, or a lesser number as may be determined by the Company’s board of directors or compensation committee. Subject to stock splits, recapitalizations, or similar events, no more than 31,000,000 shares of the Company’s common stock may be issued over the term of the 2021 ESPP.
Under the 2021 ESPP, eligible employees will be offered the option to purchase shares of the Company’s common stock at a discount over a series of offering periods through accumulated payroll deductions over the period. Each offering period may itself consist of one or more purchase periods. No offering period may be longer than 27 months. The purchase price for shares purchased under the 2021 ESPP during any given purchase period will be 85% of the lesser of the fair market value of the Company’s common stock on (i) the first day of the applicable offering period or (ii) the last day of the purchase period.
As of September 30, 2022 and December 31, 2021, 4,024,434 and 3,100,000 shares of common stock have been reserved for issuance under the 2021 ESPP, respectively.
The following table summarizes the stock option activity during the nine months ended September 30, 2022 (in thousands, except per share data):
Options Outstanding
Outstanding Stock options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life
(Years)
Aggregate Intrinsic Value
Balance as of December 31, 2021
22,690  $ 1.71  7.56 $ 153,883 
Exercised (1,680) 1.34  8,431 
Forfeited (1,013) 3.17 
Expired (53) 1.66 
Balance as of September 30, 2022
19,944  1.66  6.82 48,015 
Vested and exercisable:
September 30, 2022
14,435  $ 1.22  6.35 $ 39,336 
December 31, 2021
11,917  $ 0.96  6.66 $ 88,893 
No options were granted during the nine months ended September 30, 2022. The weighted-average grant date fair value of options granted during the nine months ended September 30, 2021 was $4.05.
The following table summarizes the RSU activity during the nine months ended September 30, 2022 (in thousands, except per share data):
Restricted Stock Units
Number of Shares Weighted-Average Grant Date Fair Value
Balance as of December 31, 2021
2,491  $ 16.11 
Granted 4,707  9.21 
Vested (207) 9.70 
Forfeited (914) 12.12 
Balance as of September 30, 2022
6,077  11.59 
There was no RSA activity during the nine months ended September 30, 2022.
In 2021, the Company began granting RSUs to its employees and directors. These RSUs generally vest upon the satisfaction of a service-based vesting condition with a vesting period of generally four years. In September 2021, the Company granted RSUs settleable for 2,490,942 shares of its common stock with a weighted average grant date fair value of $16.11 per share, which vested based upon the satisfaction of both a service-based condition and a liquidity event-based condition. The Company recognized compensation expense for these RSUs using an accelerated attribution method beginning in November 2021 when the liquidity event-based vesting condition applicable to these RSUs was satisfied upon the effectiveness of the Company’s IPO. The Company recognized stock-based compensation expense of $3.3 million and $11.9 million associated with these RSUs for the three and nine months ended September 30, 2022, respectively.
Stock-Based Compensation
The assumptions used under the Black-Scholes option pricing model to calculate the estimated fair value of stock options granted to employees are as follows:
Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Fair value of common stock *
$ 10.97 — 17.04
*
$ 3.88 — 17.04
Risk-free interest rate *
0.94% — 1.00%
*
0.94% — 1.05%
Expected term (years) *
5.84 — 6.08
*
5.73 — 6.08
Expected volatility *
55.24% — 56.82%
*
54.04% — 56.82%
Expected dividend yield * None * None
____________
* No stock options were granted during the periods presented.
The following table summarizes the assumptions used to calculate the estimated fair value of stock purchase rights granted under the 2021 ESPP using the Black-Scholes-Merton option pricing model:
Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Fair value of common stock * * $ 4.52 *
Risk-free interest rate * *
1.54% — 2.66%
*
Expected term (years) * *
0.49 — 1.99
*
Expected volatility * *
53.74% — 60.64%
*
Expected dividend yield * * None *
____________
* No stock purchase rights were granted under the 2021 ESPP during the periods presented.
The total stock-based compensation expense by line item in the accompanying condensed consolidated statements of operations is summarized as follows (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Cost of revenue:
Subscription $ 211  $ 11  $ 553  $ 30 
Professional services 239  78  701  160 
Operating expenses:
Sales and marketing 2,920  404  9,057  1,079 
Research and development 1,384  237  4,574  620 
General and administrative 2,562  2,057  7,811  3,030 
Total stock-based compensation expense $ 7,316  $ 2,787  $ 22,696  $ 4,919 
As of September 30, 2022, the unrecognized stock-based compensation expense related to outstanding unvested stock options was $12.1 million, which is expected to be recognized over a weighted-average period of 2.5 years.
As of September 30, 2022, the unrecognized stock-based compensation expense related to outstanding RSUs was $50.5 million which is expected to be recognized over the remaining weighted-average vesting period of approximately 3.0 years.
As of September 30, 2022, the unrecognized stock-based compensation expense related to outstanding stock purchase rights granted under the 2021 ESPP was $2.8 million which is expected to be recognized over 1.6 years.