NOTE 13:

CONVERTIBLE AND REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)

Convertible and Redeemable Convertible Preferred Stock:

Upon the closing of the Company’s IPO, Series A, B, C, D, D-1 and E of its convertible and redeemable convertible preferred stock automatically converted into 68,325,487 shares of common stock after giving effect to certain adjustments in connection with the 1-to-4.5 forward stock split (the “Stock Split”, see paragraph {d} “Stock Split” within this Note for further information).

With respect to Series F redeemable convertible preferred stock, the mechanism of its conversion was determined using a price per share equal to 102% of the offering price of $10.00 per share. As a result, the Company issued 7,937,455 shares of common stock, after giving effect to the Stock Split.

As of December 31, 2021, there were no shares of convertible and redeemable convertible preferred stock issued and outstanding.

In connection with the IPO, the Company amended and restated its Certificate of Incorporation to change the authorized preferred stock to 20,000,000 shares of preferred stock, all with a par value of $0.0001 per share.

Composition of convertible and redeemable convertible preferred stock capital of $0.0001 as of December 31, 2020:

	December 31, 2020
	Authorized		Issued and outstanding		Aggregate liquidation preference
	Number of shares

Series A Preferred stock		1,043,778		1,043,778	$	1,921
Series B Preferred stock		3,240,085		3,240,085		12,631
Series C Preferred stock		3,434,556		3,403,141		18,110
Series D Preferred stock		2,870,544		2,814,258		17,287
Series D-1 Preferred stock		714,286		714,286		4,354
Series E Preferred stock		4,042,693		3,940,885		40,000
Series F Preferred stock		1,666,667		1,666,667		93,043

Convertible and redeemable convertible Preferred stock		17,012,609		16,823,100	$	187,346

On February 3, 2021, SVB Financial Group (“SVB”) converted a Warrant to Purchase Stock issued on February 3, 2011 (the “Series C Warrant”) into shares of the Company’s Series C Convertible Preferred Stock pursuant to the cashless conversion mechanism described in the Series C Warrant. The conversion was exercised for all 31,414 shares covered by the Series C Warrant and resulted in the net issuance of 27,011 shares of the Company’s Series C Convertible Preferred Stock. Pursuant to the terms of the Series C Warrant, the number of net shares issued was determined by dividing (a) the aggregate fair market value of the shares otherwise issuable upon exercise of the Series C Warrant minus the aggregate exercise price of such shares by (b) the fair market value of one share of the Company’s Series C Convertible Preferred Stock.

Common Stock:

The shares of common stock confer upon their holders the right to receive notice to participate and vote in general stockholders meetings of the Company, and the right to receive dividends, if declared, and to participate in the distribution of the surplus assets of the Company upon liquidation of the Company, as more fully described in the Company's Certificate of Incorporation.

In connection with the IPO, the Company amended and restated its Certificate of Incorporation to change the authorized common stock to 1,000,000,000 shares of common stock, all with a par value of $0.0001 per share.

Receivables on Account of Stock:

In May 2015, the Company entered into loan agreements with certain of its executive employees for the purpose of exercising vested options (the “Employee Loan Agreements”). In accordance with the Employee Loan Agreements, the amounts granted to the borrowers shall automatically be forgiven and deemed to have been repaid in full upon the consummation of an Exempted IPO, as such term is defined in the Employee Loan Agreements. In February 2021, the Employee Loan Agreements were amended such that the loans would be automatically forgiven and deemed to have been repaid in full immediately prior to the public filing by the Company of a registration statement under the Securities Act of 1933, as amended.

In March 2021, the loans were fully forgiven. Following the forgiveness of the loans, the Company recorded an expense for the year ended December 31, 2021, in the amount of $1,724 included in other operating expenses in the consolidated statement of operations. The amount included the tax gross-up expense that was paid by the Company following the forgiveness.

Equity Incentive Plans:

2007 and 2017 Equity Incentive Plans

Under the Company's 2007 U.S. and Israeli Stock Option Plans ("the 2007 Plans"), options were granted to officers, directors, employees, advisors and consultants of the Company or its subsidiaries.

In 2017, the Company adopted a new equity incentive plan, the "2017 Equity Incentive Plan" (the "2017 Plan" and together with the 2007 Plans, the "Old Plans"), and extended the term of the 2007 Israeli Stock Option Plan and the term of the options already granted thereunder for an additional ten-year period.

Each option granted under the Old Plans is exercisable until the earlier of ten years (or 20 years if granted under the 2007 Israeli Stock Option Plan) from the date of the grant of the option. The options vest primarily over a four year period. Any options that are forfeited or not exercised before expiration become available for future grants.

In December 2020, the Company granted to three of its officers, market-based options at an exercise price of $13.34 per share. The options vest based on the achievement of specific share price targets such that 25% of the award will vest upon the fair market value of a share of common stock increasing fifty percent (50%) above the exercise price; an additional 25% of such award will vest upon the fair market value of a share increasing one-hundred percent (100%) above the exercise price; an additional 25% will vest upon the fair market value of a share increasing one-hundred and fifty percent (150%) above the exercise price; and the remaining 25% of the award will vest upon the fair market value increasing two-hundred percent (200%) above the exercise price.

Following the Company’s IPO, no additional awards will be granted under the Old Plans. However, the Old Plans will continue to govern the terms and conditions of the outstanding awards previously granted under the Old Plans.

2021 Incentive Award Plan

Effective upon the effectiveness of the registration statement for the IPO, the Company adopted the 2021 Incentive Award Plan (the “2021 Plan”, and together with the Old Plans, the "Plans"). The 2021 Plan provides for the grant of stock options, stock appreciation rights, restricted stock, RSUs, and other stock or cash-based awards to the Company’s officers, directors, employees, advisors, and consultants. A total of 8,500,000 shares of the Company’s common stock were initially reserved for issuance pursuant to the 2021 Plan. In addition, the number of shares of common stock reserved for issuance under the 2021 Plan includes certain shares of common stock subject to awards under the Old Plans, in the case of certain occurrences such as expirations, terminations, exercise and tax-related withholding, or failures to vest.

The number of shares of common stock available for issuance under the 2021 Plan will also include an annual increase on the first day of each fiscal year beginning on January 1, 2022, equal to the lesser of:

	•	5% of the aggregate number of shares of common stock outstanding on the final day of the immediately preceding calendar year; and
	•	Such smaller number of shares of common stock as is determined by the Board of Directors.

Under the 2021 Plan, the exercise price of options granted is generally at least equal to the fair market value of the Company’s common stock on the date of grant. The term of the options generally may not exceed ten years. Additionally, the exercise price of any options granted to a 10% stockholder shall not be less than 110% of the fair market value of the common stock on the date of grant, and the term of such option grant shall not exceed five years.

Stock Options

A summary of the Company's stock option activity with respect to options granted under the Plans is as follows:

	Number of Options			Weighted Average exercise price		Weighted remaining contractual term (years)		Aggregate Intrinsic Value

Outstanding as of January 1, 2021		31,981,404		$	3.86		7.72	$	100,495

Granted		2,552,985		$	4.38
Exercised		(863,041	)	$	1.59			$	5,437
Forfeited		(968,385	)	$	3.25

Outstanding as of December 31, 2021		32,702,963		$	3.98		8.34	$	38,894

Exercisable options at end of the year		17,906,181		$	1.53		7.80	$	32,778

The fair value of each service-based award is estimated on the date of grant using the Black-Scholes model that uses the assumptions noted in the following table:

	2021			2020			2019

Expected volatility		62	%		50	%		50	%
Risk-free interest rate		1.31% - 1.34	%		0.8% - 0.4	%		1.7%-2.6	%
Dividend yield		-	%		-	%		-	%
Expected life (years)		5.81			5.83			5.93

These assumptions and estimates were determined as follows:

	(1)	Fair value of common stock – Prior to the IPO, the fair value was determined by the Company's Board of Directors, with input from management and assisted by valuation reports prepared by a third-party valuation specialist. After the IPO, the fair value of the common stock underlying the options was the Company’s closing stock price on the Nasdaq Global Select Market on the grant date.

	(2)	Risk-free interest rate - The risk-free rate for the expected term of the options is based on the yields of U.S. Treasury securities with maturities appropriate for the expected term of the employee share option awards.

	(3)	Expected life - The expected life represents the period that options are expected to be outstanding. For option grants that are considered to be "plain vanilla," the Company determines the expected term using the simplified method. The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the options.

	(4)	Expected volatility - Since the Company has no trading history of its ordinary shares, the expected volatility is derived from the average historical share volatilities of several unrelated public companies within the Company's industry that the Company considers to be comparable to its own business over a period equivalent to the option's expected term.

	(5)	Expected dividend yield - The Company has never declared or paid any cash dividends and does not presently plan to pay cash dividends in the foreseeable future. As a result, an expected dividend yield of zero percent was used.

The weighted average grant-date fair value of the service-based awards granted in the years ended December 31, 2021, 2020 and 2019 was $2.45, $3.80 and $1.13 per option, respectively. The total grant-date fair value of the service-based awards that vested during the years ended December 31, 2021, 2020 and 2019, was $13,152, $3,615 and $2,377, respectively. The aggregate intrinsic value of options exercised during the years ended December 31, 2020 and 2019, was $8,842 and $837, respectively.

The fair value of each market-based award is estimated on the date of grant using the Monte Carlo model that uses the assumptions noted in the following table:

	2020

Expected volatility		41	%
Risk-free interest rate		0.94	%
Dividend yield		-	%

	(1)	Expected volatility - Because the Company had no trading history of its shares of common stock, the expected volatility was derived from the average historical share volatilities of several unrelated public companies within the Company's industry that the Company considers to be comparable to its own business over a period equivalent to the option's expected term.

	(2)	Risk-free interest rate - The risk-free rate for the expected term of the options is based on the yields of U.S. Treasury securities with maturities appropriate for the expected term of the employee share option awards.

The weighted average fair value of the market-based awards granted in the year ended December 31, 2020, was $2.26 per option. These costs are expected to be recognized over a weighted-average period of approximately five and a half years from December 2020.

RSUs

The following table summarizes the RSU activity for the year ended December 31, 2021:

	RSUs Outstanding			Weighted Average Grant Date Fair Value per Share
Outstanding as of December 31, 2020		-			-
RSUs granted		4,945,721		$	4.38
RSUs vested		(13,500	)	$	4.38
RSUs forfeited		(7,804	)	$	4.38
Unvested and Outstanding as of December 31, 2021		4,924,417		$	4.38

Stock-Based Compensation Expense

The stock-based compensation expense by line item in the accompanying consolidated statement of operations is summarized as follows:

	Year ended December 31,
	2021		2020		2019

Cost of revenue	$	877	$	335	$	218
Research and development		2,798		1,251		617
Sales and marketing		2,173		1,639		329
General and administrative		11,217		1,889		1,158

Total expenses	$	17,065	$	5,114	$	2,322

As of December 31, 2021, there were $62,275 of total unrecognized compensation cost related to non-vested stock-based compensation arrangements granted under the Plans. These costs are expected to be recognized over a weighted-average period of approximately three years.

Stock Split:

In March 2021, the Company’s board of directors and the stockholders of the Company approved a four and a half (4.5)-for-one forward stock split of the Company’s common stock, which became effective on March 19, 2021. The par value of each class of capital stock was not adjusted as a result of this forward stock split. All common stock, redeemable convertible preferred stock, stock options, warrants, and per share information presented within these consolidated financial statements have been adjusted to reflect this forward stock split on a retroactive basis for all periods presented.