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 to Class A common stock upon sale or transfer, subject to certain limited exceptions. During the year ended December 31, 2022, 24,517,506 shares of Class B common stock were converted into Class A common stock. As of December 31, 2022, 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 293,573,825 shares of Class A common stock and 25,616,018 shares of Class B common stock were issued and outstanding. As of December 31, 2022 and 2021, the Company had reserved shares of common stock for future issuance as follows: December 31, 2022 2021 Options and RSUs outstanding 30,930,540 29,453,830 Shares available for future option and RSU grants 63,291,013 54,279,321 Shares subject to the employee stock purchase plan 14,806,591 11,989,812 109,028,144 95,722,963 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 Company's initial public offering ("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, 2022, there were 18,523,300 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 stock units ("PSUs") 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, 2022, there were 63,291,013 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, 2022, 2021 and 2020: Year Ended December 31, 2022 (1) 2021 (1) 2020 Expected volatility n/a n/a 38.9% Risk-free interest rate n/a n/a 1.7% Expected dividend yield n/a n/a —% Expected term (in years) n/a n/a 6.1 Fair value of common stock n/a n/a $41.19 _____________________ 1) There were no stock options granted during the years ended December 31, 2022 and 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 —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, 2021 21,372,561 $ 3.31 5.5 $ 3,735,819 Options granted — — Options exercised (2,687,334) 3.71 Options forfeited or expired (133,370) 5.85 Balance—December 31, 2022 18,551,857 $ 3.24 4.4 $ 1,303,464 Exercisable—December 31, 2022 17,373,753 $ 2.74 4.3 $ 1,229,289 As of December 31, 2022, there were 28,557 shares of Class A common stock and 18,523,300 shares of Class B common stock issuable upon the exercise of options outstanding. 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. Total compensation cost related to unvested awards not yet recognized was approximately $10.1 million and $31.6 million as of December 31, 2022 and December 31, 2021, respectively. The weighted-average period over which this compensation cost related to unvested employee awards will be recognized is 0.6 years and 1.3 years as of December 31, 2022 and December 31, 2021, respectively. There were no options granted during the years ended December 31, 2022 and 2021. The weighted average grant-date fair value of options granted during the year ended December 31, 2020 was $16.55. The Company received approximately $10.0 million, $14.9 million and $16.0 million in cash proceeds from options exercised during the years ended December 31, 2022, 2021 and 2020, respectively. The intrinsic value of options exercised during the years ended December 31, 2022, 2021 and 2020 was approximately $301.6 million, $579.6 million and $554.3 million, respectively. The aggregate fair value of options vested during the years ended December 31, 2022, 2021 and 2020 was $23.9 million, $28.1 million and $27.6 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 no liability recorded related to early exercises of options as of December 31, 2022. As of December 31, 2021, the Company had recorded liabilities related to early exercises of options for 31,500 shares of Class B common stock. Restricted Stock Units, Restricted Stock Awards and Performance Stock Units The following table summarizes the activity for the Company’s unvested RSUs and PSUs: Shares Weighted-Average Aggregate Unvested and outstanding balance as of December 31, 2021 8,081,269 $ 101.21 $ 1,439,355 Awarded 7,639,262 106.51 Vested (2,492,535) 90.84 Forfeited/canceled (849,313) 106.74 Unvested and outstanding balance as of December 31, 2022 12,378,683 $ 106.19 $ 909,833 The Company granted a total of 1,130,999 restricted shares of Class A common stock in connection with acquisitions during the period of November 2019 to November 2022, which are subject to service-based vesting conditions over approximately four years from the respective grant dates. Total compensation cost related to unvested RSUs and restricted shares of common stock not yet recognized was approximately $1,151.1 million and $773.6 million as of December 31, 2022 and December 31, 2021, respectively. The weighted-average period over which this compensation cost related to unvested RSUs and restricted shares of common stock will be recognized is 2.9 years and 3.1 years as of December 31, 2022 and December 31, 2021, respectively. Total compensation cost related to unvested PSUs not yet recognized was approximately $19.0 million as of December 31, 2022. The weighted-average period over which this compensation cost related to unvested PSUs will be recognized is 1.4 years as of December 31, 2022. There were no PSUs outstanding during the year ended December 31, 2021. Stock-Based Compensation Stock-based compensation expense was included in the consolidated statement of operations as follows (in thousands): Year Ended December 31, 2022 2021 2020 Cost of revenue $ 10,827 $ 4,565 $ 1,794 Research and development 237,120 101,942 38,008 Sales and marketing 76,735 35,035 20,467 General and administrative 38,472 22,195 14,105 Stock-based compensation, net of amounts capitalized 363,154 163,737 74,374 Capitalized stock-based compensation expense 14,853 9,660 3,404 Total stock-based compensation expense $ 378,007 $ 173,397 $ 77,778 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 $11.2 million, $7.6 million, and $5.0 million of stock-based compensation expense related to the ESPP during the years ended December 31, 2022, 2021, and 2020, respectively. As of December 31, 2022, and 2021, $6.0 million and $4.2 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, 2022, 2021, and 2020 , the Company issued 316,875, 291,871, and 447,955 shares of Class A common stock under the ESPP. As of December 31, 2022, 14,806,591 shares of Class A common stock remain available for grant under the ESPP. Total compensation cost related to the ESPP not yet recognized was approximately $7.1 million and $3.5 million as of December 31, 2022 and 2021, respectively. The weighted average period over which this compensation cost will be recognized is 0.4 years as of December 31, 2022 and 2021, respectively. |