Stock-based compensation | 11. Stock-based compensation 2018 Equity Incentive Plan On September 26, 2018, the board of directors adopted the 2018 Equity Incentive Plan (the 2018 Plan) as a successor to the 2013 Stock Plan (the 2013 Plan). The number of shares reserved for issuance under the 2018 Plan upon approval of the plan was 5,856,505 shares of the Company’s common stock. The number of shares reserved for issuance under the 2018 Plan will increase automatically on the first day of each fiscal year, following the fiscal year in which the 2018 Plan became effective, by a number equal to the least of 999,900 shares, 4% of the shares of common stock outstanding at that time, or such number of shares determined by the Company’s board of directors. The common shares issuable under the 2018 Plan were registered pursuant to a registration statement on Form S-8 on November 1, 2018. On September 1, 2020, the board of directors approved the implementation of a revised annual equity award program for executive officers and senior level employees to be granted as performance-based stock units (PSUs) under the 2018 Plan. The number of PSUs ultimately earned under these awards is calculated based on the achievement of certain total revenue threshold during the fiscal year ending September 30, 2022. The percentage of PSUs that vest will depend on the board of directors’ determination of total revenue at the end of the performance period and can range from 0% to 150% of the number of units granted. The provisions of the PSUs are considered a performance condition, and the effects of that performance condition are not reflected in the grant date fair value of the awards. The Company used the Black-Scholes method to calculate the fair value at the grant date without regard to the vesting condition and will recognize compensation cost for the units that are expected to vest. As of June 30, 2021, the Company determined that 264,900 shares are expected to vest based on the probability of the performance condition that will be achieved under this equity award program. The Company reassesses the probability of the performance condition at each reporting period and adjusts the compensation cost based on the probability assessment. During the period ended June 30, 2021, the Company changed its estimate of the probability of meeting the performance conditions for the PSU grants. The previous estimate was based on data and assumptions that were the best available information at the time. During the third quarter of 2021, the Company obtained new data, previously unavailable, from new, internal forecasts and projections. The new data indicate that the PSU grants are expected to be larger than previously estimated. As a result, the Company has changed its estimate of its PSU stock-based compensation on a prospective basis beginning in the third quarter of 2021. This change resulted in an increase of approximately $0.6 million in stock-based compensation expense for the three and nine months ended June 30, 2021. The weighted-average grant date fair value was determined to be $45.01 per share. As of June 30, 2021, the unrecognized compensation costs related to these awards were $7.2 million. The Company expects to recognize those costs over a weighted average period of 1.25 years. Any shares subject to outstanding awards under the 2013 Equity Incentive Plan that are canceled or repurchased subsequent to the 2018 Plan’s effective date are returned to the pool of shares reserved for issuance under the 2018 Plan. Awards granted under the 2018 Plan may be nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, and performance units. Activity under the equity incentive plans during the nine months ended June 30, 2021 is summarized below: Weighted Weighted average average exercise remaining Aggregate Shares Options price per contractual intrinsic (in thousands, except per share data) available outstanding share term (years) value Outstanding at September 30, 2020 1,034 3,913 $ 24.35 8.1 $ 204,365 Additional shares authorized 1,000 — — — — Stock options granted (157) 157 $ 46.59 — — Stock options exercised — (632) $ 18.62 — — Stock options forfeited 99 (99) $ 39.92 — — Restricted stock units granted (370) — — — — Forfeiture of restricted stock units 35 — — — — Shares withheld for payment of taxes 69 — — — — Outstanding at June 30, 2021 1,710 3,339 $ 26.35 7.5 $ 358,150 Vested or expected to vest at June 30, 2021 3,339 $ 26.35 7.5 $ 358,150 Vested and exercisable at June 30, 2021 1,586 $ 17.08 6.8 $ 184,229 Total stock-based compensation expense recognized was as follows: Three months ended Nine months ended June 30, June 30, (in thousands) 2021 2020 2021 2020 Cost of revenues $ 773 $ 279 $ 1,990 $ 890 Research and development 2,753 833 7,180 2,357 Selling, general and administrative 5,650 2,960 18,581 8,718 Total stock-based compensation $ 9,176 $ 4,072 $ 27,751 $ 11,965 As of June 30, 2021, there was $30.5 million of total unrecognized compensation cost related to non-vested stock options under the equity incentive plans that are expected to be recognized over a weighted average period of 1.8 years. The weighted-average grant date fair value of stock options granted during the three months ended June 30, 2021 was $38.74 per share. Restricted Stock Units Restricted stock primarily consists of restricted stock unit awards (RSUs) which have been granted to employees. The value of an RSU award is based on the Company’s stock price on the date of grant. The shares underlying the RSU awards are not issued until the RSUs vest. Upon vesting, each RSU converts into one share of the Company’s common stock. Activity with respect to the Company’s restricted stock units during the nine months ended June 30, 2021 was as follows: Weighted Weighted average average Number grant date remaining Aggregate of fair value contractual Intrinsic (in thousands, except per share data) Shares per share term (years) Value Outstanding at September 30, 2020 569 $ 32.96 3.2 $ 43,260 Restricted stock units granted 370 $ 112.31 — — Restricted stock units vested (178) $ 41.09 — — Restricted stock units forfeited (35) $ 83.71 — — Outstanding at June 30, 2021 726 $ 68.93 2.8 $ 96,756 Expected to vest at June 30, 2021 726 $ 68.93 2.8 $ 96,756 As of June 30, 2021, there was $45.7 million of total unrecognized compensation cost related to these issuances that is expected to be recognized over a weighted average period of 2.8 years. 2018 Employee Stock Purchase Plan On September 26, 2018, the board of directors adopted the 2018 Employee Stock Purchase Plan (the 2018 ESPP). The number of shares reserved for issuance under the 2018 ESPP upon approval was 275,225 shares of the Company’s common stock, and it increases automatically on the first day of each fiscal year, following the fiscal year in which the 2018 ESPP becomes effective, by a number equal to the least of 249,470 shares, 1% of the shares of common stock outstanding at that time, or such number of shares determined by the Company’s board of directors. The number of shares reserved for issuance as at June 30, 2021 is as follows: Shares (in thousands) available Outstanding at September 30, 2020 179 Additional shares authorized 250 Shares issued during the period (49) Outstanding at June 30, 2021 380 Subject to any plan limitations, the 2018 ESPP allows eligible service providers (through qualified and non-qualified offerings) to contribute, normally through payroll deductions, up to 15% of their earnings for the purchase of the Company’s common stock at a discounted price per share. The offering periods begin in February and August of each year, except for the initial offering period which commenced with the initial public offering in October 2018 and ended on August 20, 2019. The common shares issuable under the 2018 ESPP were registered pursuant to a registration statement on Form S-8 on November 26, 2018. Unless otherwise determined by the board of directors, the Company’s common stock will be purchased for the accounts of employees participating in the 2018 ESPP at a price per share that is the lesser of 85% of the fair market value of the Company’s common stock on the first trading day of the offering period. During the three and nine months ended June 30, 2021 and 2020, activity under the 2018 ESPP was immaterial. |