Stock-Based Compensation

12 Months Ended

Dec. 31, 2023

Stock-Based Compensation

Stock-Based Compensation

(8) Stock-Based Compensation

The Company has two equity incentive plans: the 2012 Stock Incentive Plan and the Amended and Restated 2019 Equity Incentive Plan. New awards can only be granted under the Amended and Restated 2019 Equity Incentive Plan (the “Plan”). At December 31, 2023, 1,138,279 shares of common stock were available for future issuances under the Plan. The Plan is subject to an annual increase, subject to prior approval by the Company’s board of directors, equal to the lesser of (i) 432,442 shares, (ii) 4% of the shares outstanding on the last day of the immediately preceding fiscal year and (iii) such smaller number of shares as determined by the board of directors. The Plan provides for the grant of incentive stock options, nonqualified stock options, restricted stock awards, restricted stock units and/or stock appreciation rights to employees, directors, and other persons, as determined by the Company’s board of directors. The Company’s stock options vest based on the terms in each award agreements and generally vest over four years and have a term of 10 years. The Company estimates forfeitures that it expects will occur and adjusts expense for actual forfeitures in the periods they occur.

The Company measures employee and nonemployee stock-based awards at grant-date fair value and records compensation expense ratably over the vesting period of the award. The Company recorded stock-based compensation expense in the following expense categories of its accompanying consolidated statements of operations and comprehensive loss (in thousands):

	Year ended December 31,
	2023		2022		2021
Sales and marketing	$	1,824	$	1,373	$	961
General and administrative		2,478		2,029		1,542
Research and development		730		587		1,158
Total stock‑based compensation	$	5,032	$	3,989	$	3,661

The following table summarizes stock option activity for the Plan:

				Weighted
				average
		Weighted		remaining
	Number of	average exercise		contractual term
	shares	price per share		(years)
Outstanding at January 1, 2021	1,498,208	$	10.87
Granted	468,000		14.80
Exercised	(77,154)		7.08
Canceled/forfeited	(182,645)		13.08
Outstanding at December 31, 2021	1,706,409	$	11.88
Granted	450,410		10.24
Exercised	(3,563)		5.51
Canceled/forfeited	(81,408)		13.13
Outstanding at December 31, 2022	2,071,848	$	11.49
Granted	212,960		10.50
Exercised	(25,428)		5.00
Canceled/forfeited	(96,927)		11.25
Outstanding at December 31, 2023	2,162,453	$	11.48	6.26
Vested and expected to vest at December 31, 2023	2,131,840	$	11.48	6.23
Exercisable at December 31, 2023	1,606,779	$	11.50	5.50

Included in outstanding options at December 31, 2023, were 355,766 stock options granted outside of the Plan. These grants were made pursuant to the Nasdaq inducement grant exception in accordance with Nasdaq listing rule 5635(c)(4). At December 31, 2023, the aggregate intrinsic value of both outstanding options and exercisable options was $0.3 million.

The 2012 Stock Incentive Plan provided the holders of stock options an election to early exercise prior to vesting. The Company had the right, but not the obligation, to repurchase early exercised options without transferring any appreciation to the employee if the employee terminates employment before the end of the original vesting period. The repurchase price is the lesser of the original exercise price or the then fair value of the common stock. At December 31, 2022, all early exercised options had vested.

The following table summarizes activity relating to early exercise of stock options:

	Number of
	shares
Unvested balance at January 1, 2021	182
Vested	(153)
Unvested balance at December 31, 2021	29
Vested	(29)
Unvested balance at December 31, 2022	—

The weighted average grant-date fair value per share of options granted was $7.19, $6.55 and $8.66 for the years ended December 31, 2023, 2022 and 2021, respectively. The aggregate intrinsic value of options exercised was $0.1 million, $16,000 and $0.4 million for the years ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023, the total unrecognized compensation expense related to unvested employee and nonemployee stock option awards was $3.5 million, which is expected to be recognized in expense over a weighted-average period of approximately 2.2 years.

Estimating Fair Value of Stock Options

The fair value of each grant of stock options was determined by the Company using the methods and assumptions discussed below. Certain of these inputs are subjective and generally require judgment to determine.

Expected term – The expected term of stock options represents the weighted average period the stock options are expected to be outstanding. The Company uses the simplified method for estimating the expected term as provided by the Securities and Exchange Commission. The simplified method calculates the expected term as the average time to vesting and the contractual life of the options.

Expected volatility – Due to the Company’s limited operating history and lack of sufficient company-specific historical or implied volatility, the expected volatility assumption was determined by examining the historical volatilities of a group of industry peers, including the Company, whose share prices are publicly available.

Risk-free interest rate – The risk-free rate assumption is based on the U.S. Treasury instruments, the terms of which were consistent with the expected term of the Company’s stock options.

Expected dividend – The Company has not paid and does not intend to pay dividends.

The fair value of each option was estimated on the date of grant using the weighted average assumptions in the table below:

	Year ended December 31,
	2023		2022		2021
Expected dividend yield	—		—		—
Expected volatility	74.3	%	69.6	%	63.9	%
Risk‑free interest rate	3.99	%	2.55	%	0.99	%
Expected term (in years)	6.15		6.20		6.15

Restricted Stock Units

The Company has issued service-based and performance-based restricted stock units (“RSUs”). During the year ended December 31, 2023, the Company granted 479,585 service-based awards at a weighted average grant-date fair value of $9.89 per RSU. Vesting of the service-based RSUs is based on the terms in each award agreement and is generally over four years. During the year ended December 31, 2023, the Company granted 250,149 performance-based RSUs at a weighted average grant-date fair value of $10.95 per RSU. Vesting of these performance-based RSUs is subject to continued service through 2026 and the achievement of certain performance milestones for fiscal year 2026. The amount of RSUs that will vest can range from 0% to 110% of the original number of RSUs granted. Expense for the performance-based RSUs is not recognized until the performance conditions are deemed probable of achievement. The Company did not record any expense related to the performance-based RSUs during the year ended December 31, 2023.

The following table summarizes restricted stock units for the Plan:

	Number of
	shares
Outstanding at January 1, 2021	—
Granted	194,232
Vested	(12,000)
Canceled/forfeited	(19,189)
Outstanding at December 31, 2021	163,043
Granted	197,950
Vested	(40,783)
Canceled/forfeited	(8,219)
Outstanding at December 31, 2022	311,991
Granted	729,734
Vested	(101,559)
Canceled/forfeited	(32,963)
Outstanding at December 31, 2023	907,203

Included in outstanding RSUs at December 31, 2023, were 123,250 RSUs granted outside of the Plan. These grants were made pursuant to the Nasdaq inducement grant exception in accordance with Nasdaq listing rule 5635(c)(4). The weighted average grant-date fair value per RSU granted was $10.25, $11.21 and $16.57 during the years ended December 31, 2023, 2022 and 2021, respectively. The aggregate intrinsic value of RSUs outstanding was $6.0 million and $3.6 million at December 31, 2023 and 2022, respectively. The total unrecognized compensation expense at December 31, 2023 related to RSUs was $4.8 million, which is expected to be recognized in expense over a weighted-average period of approximately 2.9 years.