Stock-based Compensation

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

Stock-based Compensation

6. Stock-based Compensation

In 2022, the Company adopted the 2022 Inducement Plan (“2022 Plan”). The 2022 Plan provides for the grant of “employment inducement awards” within the meaning of NASDAQ Listing Rule 5635(c)(4). In connection with the commencement of employment of the Company's CEO, the Company granted 800,000 restricted stock units to the CEO under the 2022 Plan, of which 300,000 are subject solely to service-based vesting conditions (the “RSUs”) and 500,000 are subject to both market-based and service-based vesting conditions (the “PSUs”). The RSUs vest in equal annual installments over three years following March 28, 2022.

For restricted stock units with market-based performance conditions, the cost of the awards is recognized as the requisite service is rendered by the employee, regardless of when, if ever, the market-based performance conditions are satisfied. The Monte-Carlo simulation model is used to estimate fair value of market-based performance restricted stock units. The Monte-Carlo simulation model calculates multiple potential outcomes for an award and establishes a fair value based on the most likely outcome. Key assumptions for the Monte-Carlo simulation model include the risk-free rate, expected volatility, expected dividends and the correlation coefficient.

On March 20, 2023, the Company granted 1,563,688 premium-priced options to some of its employees under its 2021 Stock Incentive Plan. The options have a strike price of $7.00 and vest in equal installments over three years following March 10, 2023. The binomial lattice model is used to estimate the fair value of the premium-priced options. The binomial lattice model calculates multiple potential outcomes for option exercises and establishes a fair value based on the most likely outcome. Key assumptions for the binomial lattice model include share price, volatility, the early exercise multiple, risk-free rate, expected dividends, and number of time steps.

The weighted-average assumptions utilized to determine the weighted-average fair value of options are presented in the following table:

	Three Months Ended March 31,
	2024			2023
Weighted-average fair value of options granted during the period	$	—		$	1.75
Risk-free interest rate		—		3.4 - 4.8%
Expected volatility		0.0	%	47.9 - 55.5%
Expected dividend yield		—			—

As of March 31, 2024, there was $20.6 million of unrecognized stock-based compensation expense related to stock-based awards that is expected to be recognized over a weighted-average period of 2.18 years. The following table summarizes stock-based compensation expense as included in the consolidated statement of operations for the three months ended March 31, 2024 and 2023:

	Three Months Ended March 31,
	2024		2023
	(in thousands)
Stock-based compensation:
Cost of subscription and support revenue	$	106	$	138
Cost of professional services and other revenue		40		100
Research and development		315		688
Sales and marketing		354		1,169
General and administrative		1,398		1,448
	$	2,213	$	3,543

The following is a summary of the stock option activity during the three months ended March 31, 2024.

	Number of Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (In Years)		Aggregate Intrinsic Value (1)
Outstanding at December 31, 2023		2,247,951		$	7.73	7.11		$	—
Granted		—			—
Exercised		—			—				—
Canceled		(13,877	)		14.56
Outstanding at March 31, 2024		2,234,074		$	7.69		6.80		—
Exercisable at March 31, 2024		1,276,925		$	8.09		5.21	$	—

(1)The aggregate intrinsic value was calculated based on the positive difference between the fair value of the Company’s common stock on March 31, 2024 of $1.94 per share, or the date of exercise, as appropriate, and the exercise price of the underlying options.

The following table summarizes the restricted stock unit activity for our service-based awards (“S-RSU”) and our performance-based awards (“P-RSU”) during the three months ended March 31, 2024:

	S-RSU Shares			Weighted Average Grant Date Fair Value		P-RSU Shares			Weighted Average Grant Date Fair Value		Total RSU Shares			Weighted Average Grant Date Fair Value
Unvested at December 31, 2023		5,102,268		$	6.04		517,170		$	4.54		5,619,438		$	5.90
Granted		391,021			2.02		—			—		391,021			2.02
Vested and issued		(865,072	)		6.14		—			—		(865,072	)		6.14
Canceled		(595,286	)		6.06		(17,186	)		18.33		(612,472	)		6.40
Unvested at March 31, 2024		4,032,931		$	5.62		499,984		$	4.06		4,532,915		$	5.45