Noncash Share-based Compensation (Note)

9 Months Ended

Sep. 30, 2024

Noncash Share-based Compensation [Abstract]

The Company's 2017 Equity Incentive Plan (as amended and restated, the "2017 Stock Plan") had an aggregate authorized limit of 7,650,000 shares for issuance. In May 2023, the Company's stockholders approved an amendment to the 2017 Stock Plan increasing the aggregate amount of shares available for issuance to 10,550,000. As of September 30, 2024, 3,380,014 shares remain available for issuance under the 2017 Stock Plan.

The following table presents the number of shares or units outstanding for each award type as of September 30, 2024 and December 31, 2023 (in thousands):


Award type	September 30, 2024	December 31, 2023

Restricted stock units (time-based)	2,731	2,767



Market stock units	439	358

During the three months ended September 30, 2024, the Company granted 77,191 RSUs (time-based) with a weighted average grant-date fair value of $19.90 per share.

During the nine months ended September 30, 2024, the Company granted 1,410,809 RSUs (time-based) with a weighted average grant-date fair value of $34.48 per share. The Company also granted 179,681 MSUs with a weighted average grant-date fair value of $39.95 to certain executive employees during the nine months ended September 30, 2024. These MSUs vest on January 31, 2027, and the actual number of MSUs that will be eligible to vest is based on the total stockholder return of the Company relative to the total stockholder return of the Index over the performance period, as defined by each award's plan documents or individual award agreements. The maximum number of shares issuable upon vesting is 200% of the MSUs initially granted.

The Company estimates the fair value of MSUs on the date of grant using a Monte Carlo simulation model. The weighted average assumptions used to value the MSUs granted during the nine months ended September 30, 2024 were as follows:


	Nine Months Ended September 30, 2024
Volatility	51.24	%
Risk-free interest rate	4.14	%
Expected award life in years	2.90
Dividend yield	—	%

Share-based compensation expense is allocated to expense categories in the unaudited condensed consolidated statements of comprehensive income (loss). The following table summarizes share-based compensation expense included in the Company's unaudited condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2024 and 2023 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Share-based compensation:
Cost of revenue	$	1,177	$	1,033	$	3,396	$	2,850
Operating expenses:
Selling and marketing (1)	675		2,992		6,740		9,023
Research and development (1)	898		2,817		6,543		7,840
General and administrative	4,521		4,091		13,540		11,876
Total included in operating expenses	6,094		9,900		26,823		28,739
Total share-based compensation expense	$	7,271	$	10,933	$	30,219	$	31,589

(1) During the three months ended September 30, 2024, both sales and marketing expense, and research and development expense included a $1.3 million reversal of noncash share-based compensation expense, as certain performance criteria as a condition to vest is not expected to be met.

At September 30, 2024, the Company had an estimated $78.2 million of total unrecognized compensation costs related to share-based compensation arrangements. These costs will be recognized over a weighted average period of 2.7 years.

The Company's Employee Stock Purchase Plan (as amended, the "ESPP") permits eligible employees to purchase Company shares on an after-tax basis in an amount between 1% and 10% of their annual pay: (i) on June 30 of each year at a 15% discount of the fair market value of the Company's common stock on January 1 or June 30, whichever is lower, and (ii) on December 31 of each year at a 15% discount of the fair market value of the Company's common stock on July 1 or December 31, whichever is lower. An employee may not purchase more than $5,000 in either of the six-month measurement periods described above or more than $10,000 annually. In May 2021, the Company's stockholders approved an amendment to the ESPP increasing the aggregate amount of shares available for issuance under the ESPP to 1,000,000. During the three and nine months ended September 30, 2024, the Company issued 43,298 and 83,706 shares under the ESPP, respectively. As of September 30, 2024, 199,411 shares remain authorized and available for issuance under the ESPP. As of September 30, 2024, the Company held approximately $0.7 million on behalf of employees for future purchases under the ESPP, and this amount was recorded in accrued payroll and other employee benefits in the Company's unaudited condensed consolidated balance sheet.