Stockholders' Equity | 10. Stockholders’ Equity Convertible Preferred Stock The authorized, issued and outstanding shares, liquidation preference, and carrying value of the Company’s convertible preferred stock as of December 31, 2019 were as follows: Shares Authorized Shares Issued Shares Outstanding Liquidation Preference Carrying Value Series A 3,200,000 3,178,650 3,130,077 51,741 28,889 Series B 833,334 787,725 787,725 37,060 23,632 Series C 13,711,111 10,095,133 10,095,133 519,648 603,278 17,744,445 14,061,508 14,012,935 608,449 655,799 In February 2020, the Company issued and sold 170,000 shares of Series C preferred stock at a price of $75 per share for gross proceeds of $12,750. The Company incurred $261 of issuance costs in connection with the issuance of the Series C preferred stock In May 2020, the Company issued and sold 1,342,750 shares of Series C preferred stock at a price of $100 per share for gross proceeds of $134,275. The Company incurred $750 of issuance costs in connection with the issuance of the Series C preferred stock. In conjunction with the Company’s IPO in September 2020, all shares of convertible preferred stock then outstanding, totaling 15,525,685 shares (pre-split), were automatically converted into an equivalent number of shares of Class A common stock on an 8.8-to-1.0 basis pursuant to a stock split and their carrying value, totaling $801,813 was reclassified into stockholders’ equity on the condensed consolidated balance sheet. In connection with the IPO, the Company 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 the board of directors. Common Stock In September 2020, upon completion of the IPO, the Company sold 45,681,499 shares of Class A common stock at an offering price of $18.00 per share, including 4,459,277 shares of Class A common stock pursuant to the exercise in full of the underwriters’ option to purchase additional shares. The Company received net proceeds of $767,568, after deducting underwriting discounts and commissions of $49,336 and offering costs of approximately $4,906. In September 2020, the Company sold 5,555,555 shares of Class C common stock in connection with the stock purchase agreement with Google, LLC for net proceeds of $99,100, after deducting offering costs of $900. Concurrently with the IPO, the Company used $24,157 of the proceeds from the IPO to repurchase 1,340,354 shares of Class A and Class B common stock from certain executive officers and other employees, to permit such executive officers and other employees to pay taxes owed in connection with the vesting of equity awards, including the repayment of third-party loans incurred to finance the payment of such taxes. 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 share of 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 restated 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. In the six months ended June 30, 2021, 3,351,035 shares of Class B common stock were converted to Class A common stock. As of June 30, 2021, the par value of the Class A, Class B and Class C shares was $2,099, $267, and $56, respectively. Shares Authorized Shares Issued Shares Outstanding Class A 1,000,000,000 209,875,389 209,875,389 Class B 100,000,000 26,687,959 26,687,959 Class C 200,000,000 5,555,555 5,555,555 1,300,000,000 242,118,903 242,118,903 As of June 30, 2021 and December 31, 2020, the Company had reserved 66,187,346 and 61,392,747 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. Activity under the Plans is as follows: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding as of January 1, 2021 23,167,514 $ 4.37 6.2 $ 487,758 Granted — $ — Forfeited (317,894 ) $ 5.70 Expired — $ — Exercised (5,286,866 ) $ 3.25 Outstanding as of June 30, 2021 17,562,754 4.68 6.2 $ 140,880 Vested and expected to vest as of December 31, 2020 21,744,937 $ 4.14 6.0 $ 460,712 Vested and expected to vest as of June 30, 2021 16,685,854 $ 4.46 6.1 $ 135,479 Options exercisable as of December 31, 2020 17,640,827 $ 3.71 5.5 $ 381,511 Options exercisable as of June 30, 2021 13,809,991 $ 4.13 5.7 $ 116,756 No options were granted in the six months ended June 30, 2021. The weighted-average grant date fair value of common stock options granted during the six months ended June 30, 2020 was $3.88. The weighted-average of assumptions that the Company used to determine the fair value of the common stock options granted to employees and directors were as follows: Six Months Ended June 30, 2021 2020 Risk-free interest rate N/A 1.32 % Expected term (in years) N/A 6.1 Expected volatility N/A 51 % Expected dividend yield N/A 0 % Executive Equity Awards Each CEO has received restricted stock units, equaling 1.5% of the Company’s fully-diluted outstanding capital stock as a result of the IPO (“IPO RSUs”), 50% of the IPO RSUs (representing 0.75% of the Company’s fully diluted outstanding capital stock immediately prior to the IPO or 3,230,750 shares of Class A common stock) were granted on the closing date of the IPO based on the closing price per share on the IPO closing date, and 50% (representing 0.75% of the Company’s fully diluted outstanding capital stock immediately prior to the IPO or 3,230,750 shares of Class A common stock) was granted on the 180-day anniversary of the IPO, based on a specific range of the price per share of the Company’s publicly traded common stock prior March 16, 2021, and will vest over a three-year period, with one-third vesting on the first anniversary of the IPO’s closing date and the remaining vesting in equal quarterly installments thereafter. As the issuance of the second 50% tranche was based upon events that are probable the expense related to both tranches of the IPO RSUs was recognized in the three months ended September 30, 2020. The grant-date fair value of each of the awards issued on the IPO closing date and issued on the 180-day anniversary of the IPO was estimated using a binomial lattice approach. The main inputs to valuing the IPO RSUs include the fair value of Class A common stock ($9.96 post-split), expected volatility (60%) and the expected date of the IPO (September 30, 2020). The Company recognized a total of $23,644 in stock-based compensation expense, which included both tranches of the IPO RSUs for each CEO, on the date of the IPO as the requisite future service of the awards is not substantive for accounting purposes. Restricted Stock Units During the year ended December 31, 2020, the Company granted 13,816,885 restricted stock units which vest over the service period of one to four years. During the six months ended June 30, 2021, the Company granted 6,409,182 restricted stock units which vest over the service period of one to four years. Activity for the restricted stock units is as follows: Shares Weighted Average Grant Date Fair Value Unvested as of January 1, 2021 11,014,450 $ 14.43 Granted 6,409,182 19.95 Vested (1,698,742 ) 9.56 Forfeited (108,946 ) 15.75 Unvested as of June 30, 2021 15,615,944 $ 17.22 The total grant date fair value of RSU’s granted for the six months ended June 30, 2021 was $127,834. During the six months ended June 30, 2020 the Company granted 2,616,345 restricted stock units. The aggregate intrinsic value of restricted stock units vested for the six months ended June 30, 2021 and 2020 was $35,223 and $1,693, respectively. 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”). A total of 3,084,218 shares of Class A common stock were reserved for issuance under the ESPP. The ESPP became effective March 1, 2021. 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. As of June 30, 2021, the Company had not issued any shares under the ESPP and the total 3,084,218 shares remained available for issuance. For the three and six months ended June 30, 2021, the Company recorded stock-based compensation expense related to the ESPP of $281 and $384, respectively, based on elections made under the plan to-date. There was no expense for the three and six months ended June 30, 2020. Stock-Based Compensation Stock-based compensation expense was classified in the condensed consolidated statements of operations and comprehensive loss as follows: Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Cost of revenues $ 521 $ 168 $ 910 $ 359 Research and development 2,171 988 3,678 1,436 Selling and marketing 2,100 756 3,989 1,546 General and administrative 5,934 65,726 10,791 68,755 Total $ 10,726 $ 67,638 $ 19,368 $ 72,096 As of June 30, 2021, the unrecognized stock-based compensation expense related to unvested common stock-based awards was $88,396, which is expected to be recognized over a weighted-average period of 3 years. |