Stockholders' Equity | 13. Stockholders’ Equity Undesignated Preferred Stock In connection with our IPO in September 2020, we filed an Amended and Restated Certificate of Incorporation which authorizes the issuance of 100,000,000 shares of undesignated preferred stock, par value of $ 0.01 per share, with rights and preferences, including voting rights, designated from time to time by our board of directors. No shares of preferred stock were issued or outstanding as of December 31, 2023 and December 31, 2022. Common Stock In connection with the IPO, the Company filed an Amended and Restated Certificate of Incorporation which authorizes capital stock of 1,000,000,000 shares of Class A common stock, par value $ 0.01 per share, 100,000,000 shares of Class B common stock, par value $ 0.01 per share, and 200,000,000 shares of Class C common stock, par value $ 0.01 per share. Except for the rights noted below, each Class A, Class B and Class C common stock have the same rights, are equal in all respects and are treated by us as one class of shares. Each share of Class A and Class C common stock is entitled to one vote per share on all matters presented for a vote, except that Class C common stock does not have the right to vote for elections of directors. Subject to certain conditions, Class B common stock is collectively entitled to a number of votes equal to the product of (x) 1.0408163 and (y) the total number of votes that would be cast at such time by the holders of the Class A and Class C common stock and any other preferred stock entitled to vote under the certificate of incorporation at such time (resulting in the Class B common stock collectively holding 51% of the total outstanding voting power) , and each share of Class B common stock will be entitled to a number of votes equal to the total number of votes held by all Class B common stock divided by the total number of then outstanding shares of Class B common stock. Shares of Class B and Class C common stock will be converted into shares of Class A common stock on a one-for-one basis upon the occurrence of certain events. Shares of Class B common stock will automatically convert on the first business day (i) after the date on which the outstanding shares of Class B common stock constitutes less than 5% of the aggregate number of shares of common stock then outstanding, (ii) after the date on which neither founder is serving as an executive officer or (iii) following seven years after the date the amended and restate certificate of incorporation becomes effective, provided that, such period may, to the extent permitted by law and applicable stock exchange rules, be extended for three years upon the affirmative vote of the holders of a majority of the voting power of the then-outstanding shares of Class A common stock entitled to vote thereon, voting separately as a class. Shares of Class C common stock will be convertible at the option of the holder upon determination that a Hart-Scott-Rodino Antitrust Improvements Act (“HSR”) filing is not necessary prior to the holder’s conversion of such shares or, if required, upon expiration or termination of the HSR waiting period. Common stockholders are entitled to receive dividends, as may be declared by the board of directors, if any, subject to the preferential dividend right of the preferred stockholders. No dividends have been declared through December 31, 2023. In August 2021, the Company issued 4.7 million and 8.1 million shares of Class A common stock at a fair value of $ 11.20 and $ 10.51 per share in connection with the acquisitions of Conversa and SilverCloud, respectively (see Note 8). In the year ended December 31, 2022 the Company issued 1.0 million and 5.0 million shares of Class A common stock at a fair value of $ 4.21 and $ 2.61 per share in connection with the settlement of the earnouts for Conversa and SilverCloud, respectively (see Note 6). In the year ended December 31, 2022 the Company also issued 0.6 million shares of Class A common stock in relation to the early settlement of the bonus escrow. In the year ended December 31, 2023 no shares of Class B common stock were converted to Class A common stock. As of December 31, 2023 the par value of the Class A, Class B and Class C shares was $ 2,548 , $ 275 and $ 56 , respectively. Shares Shares Shares Class A 1,000,000,000 255,542,545 255,542,545 Class B 100,000,000 27,390,397 27,390,397 Class C 200,000,000 5,555,555 5,555,555 1,300,000,000 288,488,497 288,488,497 As of December 31, 2023 and 2022, the Company had reserved 74,506,099 and 68,617,245 shares of common stock for the exercise of outstanding stock options, the vesting of restricted stock units and the number of shares remaining available for future grant, respectively. Stock Plans and Stock Options The Company maintains the 2006 Employee, Director and Consultant Stock Plan as amended and restated (the “2006 Plan”) and 2020 Equity Incentive Plan (the “2020 Plan” together, the “Plans”) under which it has granted incentive stock options, non-qualified stock options, and restricted stock units to employees, officers, and directors of the Company. In connection with the adoption of the 2020 Plan, the then-remaining shares of common stock reserved for grant or issuance under the 2006 Plan became available for issuance under the 2020 Plan, and no further grants will be made under the 2006 Plan. The 2020 Plan is administered by the board of directors with respect to awards to non-employee directors and by the compensation committee, with respect to other participants, are collectively, referred to as the plan administrator. The exercise prices, vesting and other restrictions are determined at the discretion of the plan administrator. Options issued under the Plans are exercisable for periods not to exceed ten years, and vest and contain such other terms and conditions as specified in the applicable award document. Options to buy common stock are issued under the Plans, with exercise prices equal to the closing price of shares of the Company’s common stock on the New York Stock Exchange on the date of award. Stock options granted under the Plan typically vest over four years and expire ten years after the grant date. The Company had 8,454,180 shares available for grant as of December 31, 2023. Activity under the Plans is as follows: Number of Weighted Weighted Average Aggregate Outstanding as of January 1, 2023 11,039,551 $ 5.23 5.5 $ 996 Granted — $ — Forfeited ( 757,743 ) $ 5.44 Expired ( 6,160 ) $ 1.77 Exercised ( 286,599 ) $ 1.99 Outstanding as of December 31, 2023 9,989,049 $ 5.09 4.6 $ — Vested and expected to vest as of December 31, 2023 9,978,545 $ 5.09 4.6 $ — Options exercisable as of December 31, 2023 9,906,925 $ 5.08 4.6 $ — The aggregate intrinsic value of stock options exercised during the years ended December 31, 2023, 2022 and 2021, was $ 206 , $ 5,167 and $ 106,407 , respectively. The aggregate intrinsic value of common 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. There were no options granted during the years ended December 31, 2023, 2022 and2021. The Company received cash proceeds from the exercise of common stock options of $ 569 , $ 5,740 and $ 20,806 during the years ended December 31, 2023, 2022 and 2021, respectively. Restricted Stock Units The following table summarizes the unvested restricted stock unit activity for the year ended December 31, 2023: Shares Weighted Average Unvested as of January 1, 2023 19,316,459 $ 10.78 Granted 15,980,943 2.47 Vested ( 8,956,584 ) 7.16 Forfeited ( 3,917,923 ) 4.22 Unvested as of December 31, 2023 22,422,895 $ 7.45 The total grant date fair value of RSU’s granted for the years ended December 31, 2023, 2022 and 2021 was $ 39,419 , $ 63,987 and $ 152,550 , respectively. The aggregate intrinsic value of restricted stock units vested for the years ended December 31, 2023, 2022 and 2021 was $ 18,773 , $ 22,218 and $ 90,726 , respectively. Restricted Stock Units with a Market Condition In the year ended December 31, 2023 the Company granted performance-based market condition share awards to certain members of the Company’s management team (excluding the co-CEOs), which entitle these employees with the right to receive shares of common stock upon achievement of certain stock price milestones measured over a rolling thirty day trading-period, subject to the satisfaction of the applicable service vesting conditions. These performance-based market condition share awards consist of three tranches with three separate specified award values t hat become payable upon the achievement of certain stock price milestones, which can result in a vesting range of up to 2,654,598 shares. These performance-based market condition share awards have a performance period of three years . As of December 31, 2023 , 1,146,310 of the performance-based market condition share awards granted in the prior year have satisfied both the applicable market capitalization milestones and the service vesting conditions. None of the performance-based market condition share awards granted in 2023 have vested. The total grant-date fair value of performance-based market condition share awards granted during the year ended December 31, 2023 and 2022 was $ 5,805 and $ 63,157 , respectively. No performance-based market condition share awards were granted during the year ended December 31, 2021 . Shares Weighted Average Unvested as of January 1, 2023 25,602,405 $ 2.30 Granted 2,654,598 2.19 Vested ( 1,146,310 ) 2.12 Cancelled/Forfeited ( 394,387 ) 2.41 Unvested as of December 31, 2023 26,716,306 $ 2.29 The weighted average estimated fair value of the performance-based market condition share awards granted during the year ended December 31, 2023 and December 31, 2022 was determined using a Monte-Carlo valuation simulation, with the following most significant weighted-average assumptions: Years Ended December 31, 2023 2022 2021 Risk-free rate 4.61 % 2.34 % N/A Term to end of performance period (yrs) 3 years 3 years N/A Weighted average valuation date stock price $ 2.76 $ 3.50 N/A Expected volatility 70 % 75 % N/A Expected dividend yield 0 % 0 % N/A 2020 Employee Stock Purchase Plan In July and August 2020, the Company’s board of directors adopted, and the Company’s stockholders approved, the 2020 Employee Stock Purchase Plan (“ESPP”). Rights granted under the ESPP will be issued only with respect to shares of Class A common stock. The purchase price of the shares will not be less than 85 % of the fair market value of Class A common stock on the lower of the purchase date, which will be the final trading day of the purchase period, or the enrollment date, which will be the first trading day of the offering period. During the years ended December 31, 2023, 2022 and 2021 the Company issued 1,224,312 , 703,148 and 178,021 shares under the ESPP. As of December 31, 2023 6,923,669 shares remained available for issuance. Stock-Based Compensation Stock-based compensation expense was classified in the consolidated statements of operations and comprehensive loss as follows: Years Ended December 31, 2023 2022 2021 Cost of revenues $ 1,681 $ 1,605 $ 1,655 Research and development 10,348 10,236 7,613 Selling and marketing 8,613 7,182 7,666 General and administrative 51,398 50,121 26,875 Total $ 72,040 $ 69,144 $ 43,809 As of December 31, 2023, total unrecognized compensation cost related to the unvested common stock-based awards was $ 65,125 , which is expected to be recognized over a weighted-average period of 2.2 years. |