Stockholders' Equity | Stockholders’ Equity Class A and Class B Common Stock The Company has two classes of common stock, Class A and Class B. The rights of the holders of Class A and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to ten votes per share. Shares of Class B common stock may be converted into Class A common stock at any time at the option of the stockholder and are automatically converted upon the sale or transfer to Class A common stock, subject to certain limited exceptions. During the year ended December 31, 2021, 38,379,141 shares of Class B common stock were converted into Class A common stock. As of December 31, 2021, the Company had authorized 2,000,000,000 shares of Class A common stock and 310,000,000 shares of Class B common stock, each at a par value per share of $0.00001, of which 263,339,585 shares of Class A common stock and 50,025,852 shares of Class B common stock were issued and outstanding. As of December 31, 2021 and 2020, the Company had reserved shares of common stock for future issuance as follows: December 31, 2021 2020 Options and RSU's outstanding 29,453,830 32,235,043 Shares available for future option and RSU grants 54,279,321 42,797,432 Shares subject to the employee stock purchase plan 11,989,812 9,222,883 95,722,963 84,255,358 Equity Incentive Plans The Company has two equity incentive plans, the 2012 Equity Incentive Plan (the “2012 Plan”) and the 2019 Equity Incentive Plan (the “2019 Plan”). In connection with the IPO, the Company ceased granting awards under the 2012 Plan, and all shares that remained available for issuance under the 2012 Plan at that time were transferred to the 2019 Plan . Additionally, as of December 31, 2021, there were 21,340,890 shares of Class A common stock issuable upon conversion of Class B common stock underlying options outstanding under the 2012 Plan. Under the 2019 Plan , the Board and any other committee or subcommittee of the Board may grant stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), and performance-based and other awards, each equity award valued or based on the Company’s Class A common stock, to employees, directors, consultants, and advisors of the Company. As of December 31, 2021, there were 54,279,321 shares available for grant under the 2019 Plan. Stock Options The Company uses the Black-Scholes option pricing model to value stock options. The fair value of each award is recognized on a straight-line basis over the vesting or service period, which is typically four years. The Black-Scholes model requires specified inputs to determine the fair value of stock-based awards, consisting of (i) the expected volatility of the Company’s common stock over the expected option life, (ii) the risk-free interest rate, (iii) the expected dividend yield, and (iv) the expected option life. The following table summarizes the assumptions used during the years ended December 31, 2021, 2020 and 2019: Year Ended December 31, 2021 (1) 2020 2019 Expected volatility n/a 38.9% 38.9% - 39.5% Risk-free interest rate n/a 1.7% 1.4% - 2.6% Expected dividend yield n/a —% —% Expected term (in years) n/a 6.1 5.2 - 6.3 Fair value of common stock n/a $41.19 $6.16 - $38.21 _____________________ 1) There were no stock options granted during the year ended December 31, 2021. Expected volatility —The Company performed an analysis of its peer companies with similar expected lives to develop an expected volatility assumption. Expected term —Derived from the life of the options granted under the option plan and is based on the simplified method which is essentially the weighted average of the vesting period and contractual term. Risk-free interest rate —Based upon quoted market yields for the United States Treasury debt securities. Expected dividend yield —Since the Company has never paid and has no intention to pay cash dividends on common stock, the expected dividend yield is zero. Fair value of the common stock —Prior to the IPO, the fair value of common stock underlying the stock-based awards was determined by the Company’s Board of Directors. The Board of Directors considered numerous objective and subjective factors to determine the fair value of the Company’s common stock at each meeting in which awards were approved. The factors considered included, but were not limited to: (i) the results of contemporaneous independent third-party valuations of the Company’s common stock; (ii) the prices, rights, preferences, and privileges of the Company’s redeemable convertible Preferred Stock relative to those of its common stock; (iii) the lack of marketability of the Company’s common stock; (iv) actual operating and financial results; (v) current business conditions and projections; (vi) the likelihood of achieving a liquidity event, such as an initial public offering or sale of the Company, given prevailing market conditions; and (vii) precedent transactions involving the Company’s shares. Since the Company’s IPO, the fair value of the underlying common stock is determined by the closing price, on the date of grant, of the Company’s Class A common stock, which is traded publicly on The Nasdaq Global Select Market. The following table summarizes the Company's stock option activity and weighted-average exercise prices: Number of Weighted- Weighted- Aggregate Balance—December 31, 2019 36,384,767 $ 2.96 7.6 $ 1,266,938 Options granted 14,600 41.19 Options exercised (8,753,274) 1.83 Options forfeited or expired (577,770) 4.93 Balance—December 31, 2020 27,068,323 $ 3.31 6.7 $ 2,575,069 Exercisable—December 31, 2020 16,545,562 $ 1.39 5.9 $ 1,605,723 Balance—December 31, 2020 27,068,323 $ 3.31 6.7 $ 2,575,069 Options granted — — Options exercised (5,109,688) 2.92 Options forfeited or expired (586,074) 6.40 Balance—December 31, 2021 21,372,561 $ 3.31 5.5 $ 3,735,819 Exercisable—December 31, 2021 16,682,455 $ 2.07 5.0 $ 2,936,715 As of December 31, 2021, there were 31,671 shares of Class A common stock and 21,340,890 shares of Class B common stock issuable upon the exercise of options outstanding. As of December 31, 2020, there were 34,759 shares of Class A common stock and 27,033,564 shares of Class B common stock issuable upon the exercise of options outstanding. Total compensation cost related to unvested awards not yet recognized was approximately $31.6 million and $60.6 million as of December 31, 2021 and December 31, 2020, respectively. The weighted-average period over which this compensation cost related to unvested employee awards will be recognized is 1.3 years and 2.0 years as of December 31, 2021 and December 31, 2020, respectively. There were no options granted during the year ended December 31, 2021. The weighted average grant-date fair value of options granted during the years ended December 31, 2020 and 2019 was $16.55 and $8.69, respectively. The Company received approximately $14.9 million, $16.0 million and $7.9 million in cash proceeds from options exercised during the years ended December 31, 2021, 2020 and 2019, respectively. The intrinsic value of options exercised in during the years ended December 31, 2021, 2020 and 2019 was approximately $579.6 million, $554.3 million and $121.3 million, respectively. The aggregate fair value of options vested during the years ended December 31, 2021, 2020 and 2019 was $28.1 million, $27.6 million and $10.8 million, respectively. Common stock purchased pursuant to an early exercise of stock options is not deemed to be outstanding for accounting purposes until those shares vest. The consideration received for an exercise of an option is considered to be a deposit of the exercise price and the related dollar amount is recorded as a liability. The shares issued upon the early exercise of these unvested stock option awards, which are reflected as exercises in the table above, are considered to be legally issued and outstanding on the date of exercise. Upon termination of service, the Company may repurchase unvested shares acquired through early exercise of stock options at a price equal to the price per share paid upon the exercise of such options. The Company has recorded liabilities related to early exercises of options for 31,500 shares and 438,750 shares of Class B common stock as of December 31, 2021 and 2020, respectively.` Restricted Stock Units The following table summarizes the activity for the Company’s unvested RSUs: Shares Weighted-Average Aggregate Unvested and outstanding balance as of December 31, 2020 5,166,720 $ 59.50 $ 508,612 Awarded 5,208,252 124.47 Vested (1,483,639) 54.89 Forfeited/canceled (810,064) 69.53 Unvested and outstanding balance as of December 31, 2021 8,081,269 $ 101.21 $ 1,439,355 The Company granted 244,445, 96,210, 117,538, 245,761, and 98,593 restricted shares of Class A common stock in November 2019, June 2020, February 2021, April 2021, and December 2021, respectively, in connection with acquisitions which are subject to service-based vesting conditions over approximately four years. Total compensation cost related to unvested RSUs and restricted shares of common stock not yet recognized was approximately $773.6 million and $281.5 million as of December 31, 2021 and December 31, 2020, respectively. The weighted-average period over which this compensation cost related to unvested RSUs and restricted shares will be recognized is 3.1 years and 3.4 years as of December 31, 2021 and December 31, 2020, respectively. Stock-Based Compensation Stock-based compensation expense was included in the consolidated statement of operations as follows (in thousands): Year Ended December 31, 2021 2020 2019 Cost of revenue $ 4,565 $ 1,794 $ 582 Research and development 101,942 38,008 7,972 Sales and marketing 35,035 20,467 5,538 General and administrative 22,195 14,105 4,942 Stock-based compensation, net of amounts capitalized 163,737 74,374 19,034 Capitalized stock-based compensation expense 9,660 3,404 201 Total stock-based compensation expense $ 173,397 $ 77,778 $ 19,235 Employee Stock Purchase Plan In September 2019, the Board adopted and approved the 2019 ESPP, which became effective on the date of the final prospectus for the Company’s IPO. The ESPP is implemented through a series of offerings under which eligible employees are granted purchase rights to purchase shares of the Company’s Class A common stock on specified dates during such offerings. Under the ESPP, the Company may specify offerings with durations of not more than 27 months and may specify shorter purchase periods within each offering. On each purchase date, eligible employees will purchase the shares at a price per share equal to 85% of the lesser of (1)the fair market value of the Company’s Class A common stock on the first trading day of the offering period, or (2)the fair market value of the Company’s Class A common stock on the purchase date, as defined in the ESPP. The Company recognized $7.6 million, $5.0 million, and $1.2 million of stock-based compensation expense related to the ESPP during the years ended December 31, 2021, 2020, and 2019, respectively. As of December 31, 2021, and 2020, $4.2 million and $2.8 million, respectively has been withheld on behalf of employees for a future purchase under the ESPP due to the timing of payroll deductions. During the years ended December 31, 2021 and 2020 the Company issued 291,871 and 447,955 shares of Class A common stock under the ESPP. As of December 31, 2021, 11,989,812 shares of Class A common stock remain available for grant under the ESPP. |