Stockholders’ Equity (Deficit)

12 Months Ended

Dec. 31, 2023


12.						Stockholders’ Equity (Deficit)

Stock Repurchase Program

In November 2023, the Company announced that its board of directors approved a share repurchase program with authorization to purchase up to $500 million of the Company’s common stock at management’s discretion and in February 2024, the Company announced that its board of directors approved the repurchase of an additional $500 million of its common stock. Repurchases may be made from time to time through open market purchases or through privately negotiated transactions subject to market conditions, applicable legal requirements, and other relevant factors. Open market repurchases may be structured to occur in accordance with the requirements of Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The Company may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of its common stock under this authorization. The timing and actual number of shares repurchased may depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities. During the year ended December 31, 2023, the Company repurchased 1,448,551 shares of its common stock at a weighted-average price of $24.97 per share for a total amount of $36 million and the shares were retired immediately upon repurchase. As of

December 31, 2023, the Company had $464 million available to repurchase shares pursuant to the share repurchase program.

Common Stock Reserved for Future Issuance

The following table summarizes the Company’s shares of common stock reserved for future issuance on an as-converted basis:


	As of December 31,
	2022	2023

	(in thousands)
Redeemable convertible preferred stock	167,692	—
Series A redeemable convertible preferred stock	—	5,833
Non-voting common stock warrants	7,431	—
Restricted stock units	57,015	33,459
Exchangeable shares outstanding	689	—
Stock options outstanding	30,033	19,553

Remaining shares available for future issuance	3,628	39,523
Shares available for issuance under the 2023 Employee Stock Purchase Plan	—	7,000
Total	266,488	105,368

The holders of common stock are entitled to receive dividends out of funds that are legally available, when and if declared by the board of directors and subject to the rights of the holders of redeemable convertible preferred stock and approval from the holders of the Series A redeemable convertible preferred stock, as applicable. For the years ended December 31, 2022 and 2023, no dividends were declared or paid.

Equity Incentive Plans

The 2013 Equity Incentive Plan, which was terminated in August 2018, allowed the Company to issue awards for its voting common stock only. The 2018 Equity Incentive Plan (the “2018 Plan”) allowed the Company to issue awards for its non-voting common stock only. In connection with the IPO, the 2018 Plan was terminated effective immediately prior to the effectiveness of the 2023 Equity Incentive Plan (the “2023 Plan”) and all reserved shares under the 2018 Plan were transferred to the 2023 Plan.

In August 2023, the Company’s board of directors adopted the 2023 Plan, which became effective in connection with the IPO. The 2023 Plan provides for grants of incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended to the Company’s employees of any parent or subsidiary, and for the grant of non-statutory stock options, stock appreciation rights, restricted stock awards, RSUs, awards, performance awards, and other forms of awards to the Company’s employees, directors, and consultants, including employees and consultants of the Company’s affiliates. Initially, the maximum number of shares of the Company’s common stock that may be issued under its 2023 Plan will not exceed 114,875,120 shares of the Company’s common stock. In addition, the number of shares of common stock reserved for issuance under the Company’s 2023 Plan will automatically increase on January 1 of each calendar year, starting on January 1, 2024 through January 1, 2033, in an amount equal to (1) 5% of the total number of shares of common stock outstanding on December 31 of the year before the date of each automatic increase or (2) a lesser number of shares determined by the Company’s board of directors prior to the applicable January 1. The maximum number of shares of the Company’s common stock that may be issued on the exercise of incentive stock options under the Company’s 2023 Plan will be 344,625,360 shares.

Stock Options

The following table summarizes the activity related to the Company’s equity incentive plans:


	Shares Available for Future Grant	Number of Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life	Aggregate Intrinsic Value

	(in thousands)				(in years)	(in millions)
As of January 1, 2023	3,628	30,033	$	7.65	4.16	$	685
Additional shares reserved	24,800	—
Options exercised	—	(10,476)	$	5.87
Options cancelled and forfeited	4	(4)	$	3.79
Shares withheld related to net share settlement	20,692	—
Restricted stock units granted	(13,766)	—
Restricted stock units forfeited	3,988	—
Restricted stock cancelled	177	—
As of December 31, 2023	39,523	19,553	$	8.60	3.36	$	302
Options vested and expected to vest as of December 31, 2023		19,553	$	8.60	3.36	$	302
Options exercisable as of December 31, 2023		19,432	$	8.36	3.34	$	302

The total intrinsic value of the stock options exercised during the years ended December 31, 2021, 2022, and 2023 was $93 million, $8 million, and $252 million, respectively. The total fair value of stock options vested was $16 million, $17 million, and $6 million for the years ended December 31, 2021, 2022, and 2023, respectively. The weighted-average grant-date fair value of options granted was $49.80 per share for the year ended December 31, 2021. No options were granted during the years ended December 31, 2022 or 2023.

The fair value of the stock options granted during the year ended December 31, 2021 was determined using the following assumptions:


	Year Ended December 31, 2021

Expected term (years)	6.92
Expected volatility	50.71	%
Risk-free interest rate	0.71	%
Expected dividend yield	—

During the year ended December 31, 2021, the board of directors modified the terms of 1,060,459 stock options granted to certain executives related to the acceleration of the service-based vesting conditions upon involuntary termination of employment in conjunction with a change in control event. No incremental stock-based compensation expense was recorded as a result of the modification related to the stock options.

Restricted Stock

The following table summarizes the activity related to the Company’s restricted stock for the year ended December 31, 2023:


	Number of Shares	Weighted-Average Grant-Date Fair Value per Share

	(in thousands)
Unvested and outstanding as of January 1, 2023	828	$	97.99
Granted	—	$	—
Vested (1)	(502)	$	107.83
Forfeited	—	$	—
Unvested and outstanding as of December 31, 2023	326	$	82.83

___________

(1) Includes 176,831 shares of common stock underlying restricted stock that were repurchased and cancelled to cover taxes on the settlement of vested restricted stock during the year ended December 31, 2023 and became available for future grants pursuant to the 2023 Plan.

In January 2021, the Company granted restricted stock covering 450,000 shares of the Company’s non-voting common stock to an executive. The restricted stock vests upon satisfaction of both service-based and performance-based vesting conditions. The unvested restricted stock is subject to the Company’s right of repurchase. The service-based vesting condition is satisfied over a period of four years. The performance-based vesting condition will be satisfied upon a qualifying liquidity event defined as the earlier of (i) a combination or disposition transaction provided that such transaction (or series of transactions) qualifies as a change of control, and (ii) the effective date of the registration statement on Form S-1 filed under the Securities Act in connection with the Company’s IPO. In July 2021, the board of directors modified the terms of the restricted stock related to the acceleration of the service-based vesting conditions upon involuntary termination of employment in conjunction with a change in control event. The modification resulted in the remeasurement of these awards as of the modification date that will result in an incremental stock-based compensation expense of $18 million upon satisfaction of both service-based and performance-based vesting conditions. The grant-date fair value and modification-date fair value of these awards were $79.02 and $119.37 per share, respectively.

During the year ended December 31, 2022, the Company issued restricted stock in connection with business acquisitions. Refer to Note 7 — Business Combinations for further discussion.

The weighted-average grant-date fair value of restricted stock granted in the respective year was $120.33 and $38.37 for the years ended December 31, 2021 and 2022, respectively. The total fair value of restricted stock vested for the years ended December 31, 2021 and 2022 was $3 million and $11 million, respectively.

RSUs

The following table summarizes the activity related to the Company’s RSUs for the year ended December 31, 2023:


	Number of Shares	Weighted-Average Grant-Date Fair Value per Share

	(in thousands)
Unvested and outstanding as of January 1, 2023	56,969	$	54.85
Granted	13,766	$	32.80
Vested (1)	(33,288)	$	49.73
Vested and not settled	(4,340)	$	51.75
Forfeited	(3,988)	$	64.41
Unvested and outstanding as of December 31, 2023	29,119	$	49.45

___________

(1) Includes 15,630,667 shares of common stock underlying RSUs that were withheld to cover taxes on the settlement of vested RSUs during the year ended December 31, 2023 and became available for future grants pursuant to the 2023 Plan.

During the year ended December 31, 2021, the Company granted 752,000 RSUs to the Company’s chief executive officer that vest upon satisfaction of both service-based and performance-based vesting conditions. The service-based vesting condition is satisfied over a period of four years. The performance-based vesting condition will be satisfied upon a qualifying liquidity event defined as the earlier of (i) a change of control and (ii) the effective date of the registration statement on Form S-1 filed under the Securities Act in connection with the IPO of the Company’s common stock. In addition, to incentivize the chief executive officer to maximize stockholder value, the Company granted the executive 800,000 RSUs that vest upon satisfaction of both the performance-based vesting condition noted above and the achievement of certain market capitalization goals during a specified performance period following the effective date of the registration statement on Form S-1 filed under the Securities Act in connection with the IPO of the Company’s common stock, subject in each case to the executive’s continued employment. The executive is also eligible to be granted annual RSU awards through 2025, with the first annual RSU award granted in 2022. In light of the uncertainty that may arise in the event that the Company were to pursue a strategic transaction during the first year of the executive’s employment while the executive is transitioning into the role of chief executive officer, in which case the RSUs noted above may not vest and the executive may not have the opportunity to be granted annual RSU awards, the Company also granted the executive 1,661,538 RSUs that vest upon satisfaction of both service-based vesting conditions and the performance-based vesting condition first noted above. The first service-based vesting condition is satisfied upon the executive’s continued employment over a period of two years following the signing of a qualifying change in control (“CIC”) agreement and is applicable to 50% of the award. The second service-based vesting condition is satisfied upon the executive’s continued employment through the closing of a CIC relating to the qualifying CIC agreement and is applicable to the remaining 50% of the award. If the Company does not enter into a CIC transaction agreement during the first year of the executive’s employment while the executive is transitioning into the role of chief executive officer, all 1,661,538 RSUs will be cancelled. Each of the RSU awards granted to the executive is subject to potential vesting acceleration under certain circumstances.

In May 2022, the chief executive officer elected to voluntarily forfeit 1,661,538 RSUs which would have been eligible to vest following the signing of a qualifying CIC agreement within a specified period as discussed above, pursuant to which the awards were cancelled. No payment or other consideration was provided to the executive for the cancelled RSUs. Given the RSUs were subject to performance-based vesting conditions that were not deemed probable, no stock-based compensation expense was recognized as a result of the cancellation.

During the year ended December 31, 2021, the board of directors modified the terms of an aggregate of 1,952,028 RSUs granted to certain executives and employees related to the acceleration of the service-based vesting conditions in the event of involuntary termination of employment and an aggregate of 10,169,878 RSUs granted to certain employees and other service providers to remove the requirement to continue service with the Company through the date of a liquidity event in order to vest in the RSUs. Additionally, the Company accelerated the service-based vesting of 215,000 RSUs in connection with the termination of employment of executives. The Company has not recorded stock-based compensation expense related to the RSU modifications since the awards are still subject to the performance-based vesting condition that

is not deemed probable. However, the RSU modifications resulted in the remeasurement of these awards as of the modification date that will result in an incremental stock-based compensation expense of $165 million upon satisfaction of both the service-based and performance-based vesting conditions. The weighted-average grant-date fair value and weighted-average modification-date fair value of these awards was $106.06 and $119.42 per share, respectively.

In December 2022, the Company granted an aggregate of 2,520,000 RSUs to certain executives that vest upon satisfaction of a performance-based vesting condition and the achievement of certain market capitalization goals during a specified performance period following the date of grant, subject to the respective executive’s continued employment. The performance-based vesting condition will be satisfied upon a qualifying liquidity event defined as the earlier of (i) a change of control and (ii) the effective date of the registration statement on Form S-1 filed under the Securities Act in connection with the IPO of the Company’s common stock. Once vested, the shares will be subject to a one-year holding period prior to any sale, transfer, or disposal, subject to certain exceptions. Each of the RSU awards granted to the executives is subject to potential vesting acceleration under certain circumstances.

During the year ended December 31, 2023, the board of directors modified the terms of an aggregate of 702,066 RSUs granted to certain executives related to the acceleration of the service-based vesting conditions upon involuntary termination of employment in conjunction with a change in control event. The modification did not result in any incremental stock-based compensation expense given the fair value of the modified awards immediately after the modification was lower than the grant-date fair value of the original awards.

The weighted-average grant-date fair value of RSUs granted in the respective year was $120.02 and $46.08 per share for the years ended December 31, 2021 and 2022, respectively. The total fair value of RSUs vested for the year ended December 31, 2022 was $5 million. No RSUs vested during the year ended December 31, 2021.

Exchangeable Shares

In connection with the acquisition of Unata in 2018, the Company’s subsidiary, Aspen, issued exchangeable shares that were exchangeable by the holders for the shares of the Company’s non-voting common stock on a one-for-one basis (subject to customary adjustments for stock splits or other reorganizations). The exchangeable shares were legally issued and outstanding. The exchangeable shares were held in escrow until such shares were released to the recipient upon the first, second, and third anniversaries of the issuance date, subject to the continued employment of the recipient.

Holders of the exchangeable shares were entitled to receive dividends economically equivalent to noncumulative dividends declared by the Company with respect to its common stock. The released shares could be exchanged for shares of the Company’s common stock, on a one-to-one basis as adjusted for any dividends or withholding tax obligation, at any time at the Company’s option, or upon certain change of control events including a merger, sale of assets, certain changes in law, or the effective date of the registration statement on Form S-1 filed under the Securities Act in connection with the IPO of the Company’s common stock, or automatically on the 10th anniversary of the issuance date. Immediately prior to the IPO, the exchangeable shares were exchanged for shares of the Company’s non-voting common stock, which were converted to shares of voting common stock, and subsequently reclassified into common stock.

The following table summarizes the activity related to the Company’s exchangeable shares for the year ended December 31, 2023:


	Number of Shares	Weighted-Average Grant-Date Fair Value per Share

	(in thousands)










Outstanding and vested as of January 1, 2023	689	$	18.52
Issued	—	$	—
Forfeited	(1)	$	18.52
Shares exchanged	(688)	$	18.52
Outstanding and vested as of December 31, 2023	—	$	—

2023 Employee Stock Purchase Plan

The Company’s board of directors adopted, and the Company's stockholders approved, the 2023 Employee Stock Purchase Plan (“the ESPP”), which became effective immediately prior to the effectiveness of the registration statement on Form S-1 filed under the Securities Act in connection with the Company’s IPO. A total of 7,000,000 shares of common stock were initially reserved for sale under the ESPP. The number of shares of the Company’s common stock reserved for issuance will automatically increase on January 1 of each calendar year, beginning on January 1, 2024 through January 1, 2033, by the lesser of (1) 1% of the total number of shares of common stock outstanding on the last day of the year before the date of the automatic increase and (2) 7,000,000 shares; provided that before the date of any such increase, the Company’s board of directors may determine that such increase will be less than the amount set forth in clauses (1) and (2). Subject to any limitations contained therein, the ESPP allows eligible employees to contribute (in the form of payroll deductions or otherwise to the extent permitted by the administrator) an amount established by the administrator from time to time in its discretion to purchase common stock at a discounted price per share.

As of December 31, 2023, there had been no offering period or purchase period under the ESPP, and no such period will begin unless and until determined by the Company’s board of directors, or its compensation committee under its delegation, as the administrator of the ESPP.

Stock-Based Compensation Expense Summary

The following table summarizes stock-based compensation expense by line item in the consolidated statements of operations related to stock options, restricted stock, and RSUs, as applicable:


	Year Ended December 31,
		2021		2022		2023

		(in millions)
Cost of revenue		$	—	$	—	$	18
Operations and support		1		—		90
Research and development		9		18		1,800
Sales and marketing		3		4		316
General and administrative		9		11		532
Total stock-based compensation expense (1)		$	22	$	33	$	2,756

___________

(1) The Company recognized $2,581 million of stock-based compensation expense, net of $39 million capitalized related to the development of internal-use software, associated with vested RSUs and certain shares of vested restricted stock as a result of the satisfaction of the liquidity event-based vesting condition upon the effective date of the registration statement on Form S-1 filed under the Securities Act in connection with the Company’s IPO. To meet the related tax withholding requirements for the net settlement, net exercise, and cancellation and repurchase, as applicable, of the vested RSUs, for certain vested stock options, and shares of vested restricted stock, the Company withheld or cancelled, as applicable, 20,810,882 of the 43,052,572 shares underlying such equity awards, resulting in the net issuance of 22,241,690 shares of common stock. Based on an IPO price of $30.00 per share, the Company’s tax withholding obligation was $570 million and was paid during the year ended December 31, 2023.

As of December 31, 2023, there was $596 million of unrecognized stock-based compensation expense related to all unvested awards, which is expected to be recognized over a weighted-average period of 2.17 years.

The amount of stock-based compensation capitalized related to the development of internal-use software was not material during the years ended December 31, 2021 and 2022, and $56 million during the year ended December 31, 2023.

The income tax benefit recognized in the consolidated statements of operations related to stock-based awards was not material, $5 million, and $520 million for the years ended December 31, 2021, 2022, and 2023, respectively.