Share-based compensation | Share-based compensation The Company’s equity incentive plans provide for granting various share-based awards to eligible employees, non-employee directors, and consultants of the Company. In addition, the Company offers an employee stock purchase plan to eligible employees. The Company recognized stock-based compensation expense for all equity arrangements as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 (in thousands) Cost of revenue: Subscription $ 2,479 $ 1,716 $ 6,495 $ 2,384 Services 344 229 961 381 Sales and marketing 6,955 4,833 26,625 6,763 Research and development 5,130 5,145 19,620 7,076 General and administrative 5,582 3,913 35,823 6,170 $ 20,490 $ 15,836 $ 89,524 $ 22,774 Equity Incentive Plans The maximum number of shares of common stock available for issuance under the 2020 Plan was 24,256,740 shares as of January 1, 2022 . As of September 30, 2022, 13,868,695 shares of common stock are reserved for additional grants under the 2020 Plan. As of September 30, 2022, 128,928 shares of common stock are reserved for additional grants under the 2017 Option Plan. All stock options previously granted by the Company were at an exercise price at or above the estimated fair market value of the Company’s common stock as of the grant date. No options were granted during the nine months ended September 30, 2022. Return Target Options The table below summarizes return target option activity for the nine months ended September 30, 2022: Options Weighted‑ Weighted‑ Aggregate Outstanding, December 31, 2021 3,687,664 $ 6.75 6.8 $ 115,278 Granted — — — Exercised (384,744) 6.85 7,465 Forfeitures — — — Outstanding, September 30, 2022 3,302,920 $ 6.74 6.0 $ 50,938 Options exercisable at September 30, 2022 3,302,920 $ 6.74 6.0 $ 50,938 Vested or expected to vest at September 30, 2022 3,302,920 $ 6.74 6.0 $ 50,938 The aggregate intrinsic value in the table above represents the total intrinsic value that would have been received by the optionholders had all optionholders exercised their options on the last day of the period. The return target options outstanding on June 27, 2022 were modified such that these options were deemed fully vested as of June 30, 2022. This modification resulted in the recognition of $33.0 million of stock-based compensation expense during the three months ended June 30, 2022. There is no remaining unrecognized compensation expense related to these return target options as of September 30, 2022. The total fair value of return target options vested during the nine months ended September 30, 2022 was $33.0 million. Service-Based Options The table below summarizes the service-based option activity for the nine months ended September 30, 2022: Options Weighted‑ Weighted‑ Aggregate Outstanding, December 31, 2021 1,643,266 $ 5.68 6.1 $ 53,129 Granted — — — Exercised (362,666) 5.65 10,258 Forfeitures — — — Outstanding, September 30, 2022 1,280,600 $ 5.69 5.3 $ 21,093 Options exercisable at September 30, 2022 1,202,964 $ 5.55 5.2 $ 19,984 Vested or expected to vest at September 30, 2022 1,280,600 $ 5.69 5.3 $ 21,093 The aggregate intrinsic value in the table above represents the total intrinsic value that would have been received by the optionholders had all optionholders exercised their options on the last date of the period. Service-based options vest over four years with 25% vesting one year after grant and the remainder vesting ratably on a quarterly basis thereafter. The total fair value of service-based options vested during the nine months ended September 30, 2022 was $0.5 million. There was $0.5 million of unrecognized compensation expense related to service-based options that is expected to be recognized over a weighted-average period of 1.1 years as of September 30, 2022. The Company issues new shares when service-based options are exercised. All service-based options outstanding under the Company’s option plans have exercise prices equal to the fair value of the Company’s stock on the grant date. All awards expire after 10 years. Restricted Stock Units RSU activity for the nine months ended September 30, 2022 was as follows: Units Weighted-Average Grant Date Fair Value (per share) Outstanding, December 31, 2021 6,890,938 $ 31.59 Granted 3,491,707 28.45 Vested (1,036,161) 32.66 Forfeited (524,632) 30.95 Outstanding, September 30, 2022 8,821,852 $ 30.26 RSUs under the 2020 Plan generally vest ratably on an annual basis over four years. There was $226.0 million of unrecognized compensation expense related to unvested RSUs that is expected to be recognized over a weighted-average period of 3.1 years as of September 30, 2022. The total fair value of RSUs vested during the nine months ended September 30, 2022 was $33.9 million. Long-Term Incentive Plan In the third quarter of 2021, the Company offered employees with LTIP grants the opportunity to convert those awards into RSUs under the 2020 Plan. Upon conversion, 50% of the RSUs vested immediately and the remaining 50% vested on the one year anniversary of the grant date, provided the employee remained continuously employed by the Company through the vesting date. All employees elected to convert their outstanding LTIP grants into RSUs, resulting in grants totaling 413,234 shares. The conversion of the previously outstanding LTIP grants into RSUs resulted in the recognition of $1.3 million and $4.5 million of stock-based compensation expense during the three and nine months ended September 30, 2022, respectively, and $8.0 million of stock-based compensation expense during both the three and nine months ended September 30, 2021. The expense on the unvested RSUs was recognized on a straight-line basis over the vesting period. Employee Stock Purchase Plan As of September 30, 2022, the Company has withheld, at the employees’ request, $3.0 million of eligible employee compensation, which is included in accrued liabilities in the condensed consolidated balance sheet, for purchases of common stock under the 2021 ESPP. As of September 30, 2022, 4,063,810 shares of common stock are reserved for future issuance under the 2021 ESPP. During the nine months ended September 30, 2022, the Company’s employees purchased 130,450 shares of common stock under the 2021 ESPP at a purchase price of $26.18 per share. Total proceeds to the Company were $3.4 million during the nine months ended September 30, 2022. The average grant date fair value for the offering period under the 2021 ESPP that commenced on May 2, 2022 was $9.22 per share. The Company used the following assumptions in the Black-Scholes option pricing model to estimate the fair value: Three and Nine Months Ended September 30, 2022 Expected term 0.5 years Expected volatility 60.05% Risk-free interest rate 1.49% Expected dividend yield —% There was $0.2 million of unrecognized compensation expense related to the 2021 ESPP that is expected to be recognized over a period of one month as of September 30, 2022. |