Stockholders' Equity

6 Months Ended

Jun. 30, 2022

Equity [Abstract]

Stockholders' Equity

Note 6. Stockholders’ Equity

Follow-on public offerings

On February 22, 2021, the Company completed a follow-on public offering, in which it issued and sold 1,500,000 shares of its common stock, resulting in net proceeds to the Company of $181.6 million after deducting underwriting discounts and commissions of $8.6 million and deferred offering costs of $0.3 million.

On November 10, 2021 the Company completed a follow-on public offering, in which it issued and sold 1,300,000 shares of its common stock, resulting in net proceeds to the Company of $279.0 million after deducting underwriting discounts and commissions of $13.2 million and deferred offering costs of $0.3 million.

At-The-Market offering

On May 4, 2022, the Company entered into a Sales Agreement ("Sales Agreement"), with Stifel, Nicolaus & Company, Incorporated ("Stifel"), under which the Company may offer and sell from time to time at its sole discretion, up to an aggregate of 800,000 shares of its common stock, par value $0.0001 per share, through Stifel as its sales agent. The Company intends to use the net proceeds from the

shares of common stock offered and sold to primarily replenish funds expended to satisfy anticipated tax withholding and remittance obligations related to the net settlement upon vesting of restricted stock unit awards (“RSU”) granted to employees under the equity incentive plans. The Company has filed a prospectus supplement pursuant to the Sales Agreement for the offer and sale of up to an aggregate of 800,000 shares of its common stock. Subject to the terms and conditions of the Sales Agreement, Stifel will sell the common stock from time to time, based upon instructions from the Company. The Company agreed to pay Stifel a commission of up to 3% of the gross sales proceeds of any common stock sold through Stifel under the Sales Agreement. During the three months ended June 30, 2022, the Company sold 100,000 shares of its common stock to Stifel under the Sales Agreement at a weighted average price of $205.91 per share resulting in net proceeds to the Company of $20.1 million, after deducting underwriting discounts and commissions of $0.4 million and deferred offering costs of $0.1 million.

Equity Incentive Plans

The following table summarizes the RSU, performance based restricted stock unit awards ("PRSU"), and multi-year performance restricted stock units ("MYPSU") activity for the three and six months ended June 30, 2022:

	RSU			Grant Date		PRSU		Grant Date		MYPSU		Grant Date
	Number of			Fair Value		Number of		Fair Value		Number of		Fair Value
	Shares			per share		Shares		per share		Shares		per share
Unvested at December 31, 2021		2,227,197		$	40.6		58,954	$	261.4		—	$	-
Granted	173,291				232.7		11,202		233.1		311,872		88.6
Vested		(217,358	)		45.8		—		—		—		—
Forfeited		(5,352	)		117.3		—		—		—		—
Unvested at March 31, 2022		2,177,778		$	55.1		70,156	$	256.9		311,872	$	88.6
Granted		104,555			217.7		—		—		—		—
Vested		(214,327	)		45.3		—		—		—		—
Forfeited		(21,962	)		89.5		—		—		—		—
Unvested at June 30, 2022		2,046,044		$	62.2		70,156	$	256.9		311,872	$	88.6

On August 4, 2020, the Compensation Committee of the Company adopted and approved the Executive Bonus and Retention Plan (the “Bonus and Retention Plan”). In each of January and July 2021, the Compensation Committee approved target bonus amounts and performance goals for the first half and second half, respectively, of the fiscal year 2021 (the “2021 Goals”). In January 2022, the Compensation Committee approved target bonus amounts and performance goals for the first half of the fiscal year 2022 (the “1H2022 Goals”). The 2021 Goals and 1H2022 Goals are based on the achievement of revenue and Non-GAAP operating profit, as well as individual performance goals. The awards for the actual payouts are granted in the quarter following the end of the performance period. The target bonuses were granted based on a fixed dollar amount to be settled in RSUs on the vesting date and hence the awards have been classified as liability-based awards until settled. Such expense is included in the non-cash adjustment within stock-based compensation expense on the condensed consolidated cash flow statements. The liability of $1.3 million for 1H2022 Goals was recorded as accrued expenses and other current liabilities in the condensed consolidated balance sheet as of June 30, 2022.

In April 2022, the Company approved a bonus plan for certain employees. The target bonuses are granted based on a fixed dollar amount to be settled in RSUs in the quarter following the end of the performance period. Due to the fixed dollar amount targets, the awards have been classified as liability-based awards until settled. Once settled, these awards are reflected as RSU granted in the above table. Such expense is included in the non-cash adjustment within stock-based compensation expense on the condensed consolidated cash flow statements. The liability of $0.6 million was recorded as accrued expenses and other current liabilities in the condensed consolidated balance sheet as of June 30, 2022.

In December 2021, the Compensation Committee of the Company approved PRSUs with performance goals for the year 2022 (the “PRSU 2022 Goals”). The PRSU 2022 Goals are based on the achievement of revenue. These grants are included in the PRSU awards granted in the table above.

In February 2022, the Compensation Committee of the Company approved and granted to certain of the Company’s executive officers MYPSUs with vesting based on achievement of stock price targets, which are measured based on the 60-trading day average per share closing price of the Company’s common stock on the Nasdaq Global Market during the performance periods of up to six years from the date of grant, subject to the continued service of the grantee through the vest date. The grant-date fair value of each MYPSU was determined using Monte Carlo simulation model. The assumptions used in the Monte Carlo simulation included expected volatility of 44.4%, risk free rate of 1.83%, no expected dividend yield, expected term of six years and possible future stock prices over the performance period based on historical stock and market prices. The Company recognizes the expense related to the MYPSUs on a graded-vesting method over the requisite service period.

Stock-Based Compensation

The following table presents the detail of stock-based compensation expense amounts included in the condensed consolidated statement of operations for each of the periods presented:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(in thousands)
Equity based awards
Cost of revenue	$	283	$	428	$	921	$	812
Research and development		4,325		2,531		9,700		4,987
Selling, general and administrative		5,805		3,675		13,541		7,010
	$	10,413	$	6,634	$	24,162	$	12,809
Liability based awards - to be settled in equity
Cost of revenue	$	44	$	33	$	63	$	50
Research and development		668		328		888		532
Selling, general and administrative		685		494		979		758
	$	1,397	$	855	$	1,930	$	1,340
Total stock-based compensation - equity and liability based	$	11,810	$	7,489	$	26,092	$	14,149
Liability-based awards - cash settled
Cost of revenue	$	—	$	—	$	—	$	102
Research and development		—		37		—		143
Selling, general and administrative		—		—		—		108
	$	—	$	37	$	—	$	353
Total stock-based compensation expense	$	11,810	$	7,526	$	26,092	$	14,502
Stock-based compensation expense recorded to additional paid-in capital
Equity based awards	$	10,413	$	6,634	$	24,162	$	12,809
Liability based awards - settled in equity		—		—		1,488		1,191
Total stock-based compensation expense recorded to additional paid-in capital	$	10,413	$	6,634	$	25,650	$	14,000

The following table presents the unrecognized compensation costs and related weighted average period of recognition as of June 30, 2022:

	As of
	June 30, 2022
	Unrecognized Compensation Costs (in millions)		Weighted Average Period of Recognition (in years)
RSUs	$	120.3		2.4
PRSUs	$	-		-
MYPSUs	$	23.9		1.5
Liability-based awards	$	0.5		0.4