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Stock-based compensation

6 Months Ended

Jun. 30, 2022

13. Stock-based compensation

2010 Stock Option and Grant Plan

The Company’s 2010 Stock Option and Grant Plan (the “2010 Plan”) provided for the Company to grant incentive stock options or nonqualified stock options, restricted stock awards and other stock-based awards to employees, officers, directors and consultants of the Company.

In March 2021, the Board of Directors approved an increase to the 2010 Plan shares by 382,889 shares. Following the effectiveness of the IPO, no additional awards are being granted under the 2010 Plan and shares of existing outstanding options that are forfeited or canceled will be available for grant under the 2021 Incentive Award Plan.

2021 Incentive Award Plan

In July 2021, the Board of Directors adopted, and the Company’s stockholders approved, the 2021 Incentive Award Plan (the “2021 Plan”), which became effective in connection with the IPO of Class A common stock. The 2021 Plan provides for the grant of stock options, including incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based and cash-based awards. The 2021 Plan has a term of ten years. The aggregate number of shares of Class A common stock available for issuance under the 2021 Plan is equal to (i) 4,200,000 shares; (ii) any shares which are subject to the 2010 Plan awards that become available for issuance under the 2021 Plan; and (iii) an annual increase for ten years on the first day of each calendar year beginning on January 1, 2022, equal to the lesser of (A) 5% of the aggregate number of shares of Class A common stock outstanding on the last day of the immediately preceding calendar year and (B) such smaller amount of shares as

determined by the Board of Directors. No more than 33,900,000 shares of Class A common stock may be issued under the 2021 Plan upon the exercise of incentive stock options. As of June 30, 2022, there are 3,593,599 shares available for issuance under the 2021 Plan.

The following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of stock options granted to employees and directors:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Risk-free interest rate	2.85	%	1.1	%	2.00	%	1.0	%
Expected term (in years)	5.9		6.1		6.0		6.0
Expected volatility	43.9	%	43.1	%	43.1	%	44.3	%
Expected dividend yield	0	%	0	%	0	%	0	%

Stock options

The following table summarizes the Company’s stock option activity since December 31, 2021:


				Weighted
		Weighted		average
	Number of	average		remaining	Aggregate
	shares	exercise price		contractual term	intrinsic value
				(in years)		(in thousands)
Outstanding as of December 31, 2021	4,823,100	$	5.06	7.62	$	31,041
Granted	1,542,759		7.53
Exercised	(475,033)		0.99
Expired	(5,546)		10.74
Forfeited	(212,152)		11.85
Outstanding as of June 30, 2022	5,673,128	$	5.79	8.15	$	9,010
Options vested and expected to vest as of June 30, 2022	5,673,128	$	5.79	8.15	$	9,010
Options exercisable as of June 30, 2022	2,426,101	$	2.72	6.78	$	6,687

The aggregate intrinsic value of options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s Class A common stock for those options that had exercise prices lower than such fair value.

The intrinsic value of stock options exercised during the six months ended June 30, 2022 and 2021 was $2.8 million and $0.3 million, respectively.

The weighted average grant-date fair value per share of stock options granted during the three months ended June 30, 2022 and 2021 was $2.40 and $1.03, respectively, and during the six months ended June 30, 2022 and 2021 was $3.30 and $0.80, respectively.

Restricted stock

In February 2021, the Company granted 248,903 shares of restricted stock to an employee under the 2010 Plan with a four-year vesting term. In connection with the grant, the employee paid $0.5 million, which represents the $2.10 per share fair value of the common stock on the date of the restricted stock grant. The restricted common stock includes a repurchase right, whereas upon the occurrence of the employee’s resignation or termination for cause or good reason the Company shall have the right to repurchase unvested restricted common stock shares. At June 30, 2022 and December 31, 2021, the Company had $0.3 million and $0.5 million in unvested restricted common stock liability included in other long-term liabilities, respectively.

The following table summarizes the Company’s restricted stock activity since December 31, 2021:


		Weighted
	Number of	average
	shares	fair value

Unvested as of December 31, 2021	248,903	$	2.10
Granted	-		-
Vested	(82,967)	$	2.10
Forfeited	-		-
Unvested as of June 30, 2022	165,936	$	2.10

Restricted stock units

Restricted stock unit grants to employees have a three-year vesting term. The Company expenses the fair value of the restricted stock units over the vesting period and accounts for forfeitures prospectively as they occur. The following table summarizes restricted stock units granted to Company employees during the six months ended June 30, 2022:


		Weighted
	Number of	average
	shares	fair value

Unvested as of December 31, 2021	-	$	-
Granted	593,480		7.62
Vested	-		-
Forfeited	(9,600)		7.58
Unvested as of June 30, 2022	583,880	$	7.62

The weighted average grant-date fair value per share of restricted stock units granted during the three and six months ended June 30, 2022 was $5.00 and $7.62, respectively. There were no restricted stock units granted during the six months ended June 30, 2021.

2021 Employee Stock Purchase Plan

In July 2021, the Board of Directors adopted, and the Company’s stockholders approved, the 2021 Employee Stock Purchase Plan (the “2021 ESPP”), which became effective in connection with the IPO of Class A common stock. The aggregate number of shares of Class A common stock available for issuance under the 2021 ESPP is equal to (i) 400,000 shares and (ii) an annual increase for ten years on the first day of each calendar year beginning on January 1, 2022, equal to the lesser of (A) 1% of the aggregate number of shares of Class A common stock outstanding on the last day of the immediately preceding calendar year and (B) such smaller amount of shares as determined by the Board of Directors. No more than 6,300,000 shares of Class A common stock may be issued under the 2021 ESPP.

Under the 2021 ESPP, eligible employees may purchase shares of the Company’s common stock through payroll deductions of up to 15% of eligible compensation during an offering period. Generally, each offering period will be for 6 months as determined by the Company's board of directors. In no event may an employee purchase more than 100,000 shares per offering period based on the closing price on the first trading date of an offering period or the last trading date of an offering period, or more than $25,000 worth of stock during any calendar year. The purchase price for shares to be purchased under the 2021 ESPP is 85% of the lesser of the market price of the Company's common stock on the first trading date of an offering period or on any purchase date during an offering period (March 14 or September 14).

During the six months ended June 30, 2022, there were no shares of Class A common stock purchased under the 2021 ESPP. The Company recognized less than $0.1 million of expense related to the 2021 ESPP for each of the three and six months ended June 30, 2022. As of June 30, 2022, 745,640 shares were available under the 2021 ESPP for future issuance.

The Company estimates the fair value of shares issued to employees under the 2021 ESPP using the Black-Scholes option-pricing model. The following weighted average assumptions were used in the calculation of fair value of shares under the 2021 ESPP at the grant date for the three and six months ended June 30, 2022 (there were no offering periods for the three and six months ended June 30, 2021):


	Three Months Ended June 30,			Six Months Ended June 30,
	2022			2022
Risk-free interest rate		0.86	%		0.86	%
Expected term (in years)		0.5			0.5
Expected volatility		43.1	%		43.1	%
Expected dividend yield		0	%		0	%

Stock-based compensation

Stock-based compensation expense was classified in the condensed consolidated statements of operations as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Cost of revenue	$	164	$	85	$	264	$	115
Research and development		100		37		179		49
Sales and marketing		142		60		276		82
General and administrative		852		208		1,522		335
Total stock-based compensation expense	$	1,258	$	390	$	2,241	$	581

As of June 30, 2022, total unrecognized compensation expense related to unvested stock options held by employees and directors was $10.8 million, which is expected to be recognized over a weighted average period of 2.9 years. Additionally, unrecognized compensation expense related to unvested restricted stock units held by employees and directors was $3.9 million, which is expected to be recognized over a weighted average period of 2.7 years.