XML 32 R18.htm IDEA: XBRL DOCUMENT v3.23.1
Stockholders' equity
 3 Months Ended
Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]  
Stockholders' equity
11. Stockholders' equity
Preferred stock— In connection with the IPO, the Company’s amended and restated certificate of incorporation became effective, which authorized the issuance of 50,000,000 shares of undesignated preferred stock with a par value of $0.00001 per share with rights and preferences, including voting rights, designated from time to time by the board of directors.
Common stock— Common stockholders are entitled to one vote per share. As of March 31, 2023 and December 31, 2022, the following shares of common stock were available for future issuance:
March 31,December 31,
20232022
2010 Equity Incentive Plan:
Stock options outstanding9,925,732 10,333,771 
2021 Equity Incentive Plan:
RSUs outstanding and PSUs(1)
17,713,184 16,178,101 
Shares available for future issuance under:
2021 Equity Incentive Plan7,324,533 2,814,126 
2021 Employee Stock Purchase Plan3,379,715 1,929,578 
Total shares of common stock reserved38,343,164 31,255,576 
(1) The number of PSUs reserved for issuance is based on the maximum achievement of the corporate performance metric.
Equity incentive plans— In 2010, the Company adopted the 2010 Equity Incentive Plan (the “2010 Plan”). The 2010 Plan provided for incentive stock options (“ISOs”), non-statutory stock options (“NSOs”, collectively with ISOs, “stock options”), SARs, restricted stock, and restricted stock units (“RSUs”) to be granted to eligible employees, directors, and consultants. The 2010 Plan was terminated in October 2021 in connection with the IPO but continues to govern the terms and conditions of the outstanding awards granted pursuant to the 2010 Plan. No further equity awards will be granted under the 2010 Plan.
The Company adopted the 2021 Equity Incentive Plan (the "2021 Plan") in September 2021, which became effective on October 28, 2021 (collectively with the 2010 Plan, the “Equity Incentive Plans”) and was approved by the Company’s stockholders. The 2021 Plan provides for the granting of ISOs, NSOs, SARs, restricted stock, RSUs, and performance awards to eligible employees, directors, and consultants.

The Company initially reserved 13,800,000 shares for issuance under the 2021 Plan. The amount available for issuance is subject to an annual increase on the first day of each calendar year, beginning on January 1, 2023, in an amount equal to 5% of the outstanding shares of the Company’s common stock on the last day of the immediately preceding calendar year or a lesser amount determined by the Company’s Board of Directors or compensation committee. The amount available for issuance shall also include Returning Shares, which are any shares subject to awards granted under the 2010 Plan that, on or after October 29, 2021, expire or otherwise terminate without having been exercised in full, are tendered to or withheld by the Company for payment of an exercise price or for tax withholding obligations, or are forfeited to or repurchased by the Company due to failure to vest. On January 1, 2023, the shares available for future grants under the 2021 Plan automatically increased by 7,250,689 pursuant to the above evergreen provision of the 2021 Plan.

Stock options— The Company may grant stock options at exercise prices not less than the fair market value at the date of grant. These options generally expire 10 years from the date of grant. The Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period for each award, which is generally even over four years.
The following is a summary of activity for stock options having only service-based vesting conditions under the Equity Incentive Plans:

Options OutstandingWeighted Average Exercise PriceWeighted Average Remaining Contractual TermAggregate Intrinsic Value
(In Thousands)
Balance - December 31, 2022
10,283,771 $4.18 6.38$66,234 
Granted — — 
Exercised (355,516)4.10 
Canceled (52,523)11.28 
Balance - March 31, 2023
9,875,732 $4.15 3.06$47,212 
Vested & expected to vest as of March 31, 2023
9,875,732 $4.15 3.06$47,212 
Exercisable as of March 31, 2023
8,973,521 $3.92 2.89$44,616 
There were no stock options granted during the three months ended March 31, 2023 or 2022. The decrease in weighted average remaining contractual term during the period is due to stock options held by the Company’s former CEO, Mr. Coccari, which will expire if not exercised by the end of the 90-day post-termination exercise window that begins upon completion of his transition agreement in February 2024. Refer to further discussion below under other equity transactions.

As of March 31, 2023, total unrecognized stock-based compensation expense related to unvested stock options was $2.2 million, which will be recognized over a weighted average period of 0.8 years.

Stock appreciation rights— The Company may grant SARs at exercise prices not less than the fair market value at the date of grant. The SARs are liability-classified awards that generally expire 10 years from the date of grant. The Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period for each award, which is generally even over four years.

The following is a summary of activity for SARs under the Equity Incentive Plans:
SARs OutstandingWeighted Average Exercise PriceWeighted Average Remaining Contractual TermAggregate Intrinsic Value
(In Thousands)
Balance - December 31, 2022
81,770 $5.44 6.90$418 
Granted — — 
Exercised — — 
Canceled(9,289)6.58 
Balance - March 31, 2023
72,481 $5.29 0.57$257 
Vested & expected to vest as of March 31, 2023
72,481 $5.29 0.57$257 
Exercisable as of March 31, 2023
71,706 $5.28 0.50$254 

There were no SARs granted during the three months ended March 31, 2023 or 2022. The decrease in weighted average remaining contractual term during the period is due to SARs held by employees impacted by the workforce reduction, as described in Note 14. Such SARs will expire if not exercised by the end of their respective 90-day post-termination exercise windows.

As of March 31, 2023, total unrecognized stock-based compensation expense related to unvested SARs was immaterial.

Restricted stock units and performance-based restricted stock units— The fair value of RSUs is determined using the fair value of the Company’s common stock on the date of grant. The Company recognizes stock-based compensation expense for RSUs with service-based vesting conditions on a straight-line basis over the requisite service period for each award, which typically vest over a three or four-year period.
During the first quarter of 2023, the Company granted 645,833 PSUs to certain executives at target. Each PSU conveys a right to receive one share of the Company’s common stock on the date it vests, provided that the number of PSUs that will ultimately vest may vary from 0% to 150% of target based upon the achievement of the corporate performance metric at the end of the performance period. One quarter of the eligible PSUs vest upon certification of the corporate performance metric in the first quarter of 2024, and the remaining 75% will vest equally over the following 12 quarters thereafter, subject to continual service by the grantee. Total stock-based compensation expense to be recognized may fluctuate during the performance period due to changes in forecasted achievement. The corporate performance metric associated with these awards has been considered probable of being achieved since the grant date, and the Company assumed 100% achievement as of March 31, 2023.

A summary of RSU and PSU activity under the 2021 Plan is as follows:
RSUs OutstandingWeighted Average Grant Date Fair ValuePSUs OutstandingWeighted Average Grant Date Fair Value
Unvested - December 31, 2022
16,178,101$17.37 — $— 
Granted 2,290,999$9.84 645,833$8.89 
Released(1,257,722)$17.91 — $— 
Canceled(466,926)$15.48 — $— 
Unvested - March 31, 2023
16,744,452$16.35 645,833$8.89 

As of March 31, 2023, total unrecognized stock-based compensation expense related to unvested RSUs was $221.0 million, which will be recognized over a weighted average period of 3.0 years.

As of March 31, 2023, total unrecognized stock-based compensation expense related to unvested PSUs was $5.6 million, which will be recognized over a weighted average period of 2.2 years.

Performance-based stock options— There have been no other changes to the Company’s performance-based stock options compared to those described in Note 14— Stockholders’ equity, included in Part II, Item 8 of the Company’s Annual Report.

As of March 31, 2023, there were 50,000 performance-based stock options outstanding, of which 16,666 were exercisable. As of March 31, 2023, total unrecognized stock-based compensation expense related to unvested performance-based stock options was immaterial.

Employee stock purchase plan— The 2021 Employee Stock Purchase Plan (the “ESPP”) became effective on October 29, 2021. The Company initially reserved 2,800,000 shares of the Company's common stock under the ESPP. Shares reserved for issuance shall increase on the first day of the fiscal year, beginning in fiscal 2023, in an amount equal to the least of 1% of the outstanding shares of common stock on the last day of the immediately preceding fiscal year, three times the initial number of shares reserved under the ESPP, or a lesser amount determined by the Company’s Board of Directors or compensation committee. On January 1, 2023, the shares available for future grants under the ESPP automatically increased by 1,450,137 pursuant to the above evergreen provision of the 2021 ESPP.

As of March 31, 2023, total unrecognized compensation cost for the ESPP was $6.5 million, which will be recognized over a weighted average period of 1.3 years.

Other equity transactions— On February 28, 2023, the Company entered into a transition agreement with Mr. Coccari under which he will provide transition advice through February 28, 2024. During the transition period, he will continue to meet the definition of a service provider under the 2021 Plan, and his equity incentive awards will continue to vest in accordance with their original vesting schedules. Because the scope of services to be provided under the transition period represent a substantive reduction in services being provided by the former CEO, the Company recognized $3.1 million in stock-based compensation expense during the three months ended March 31, 2023, that would have otherwise been recognized from April 2023 to February 2024.
On August 24, 2021, the Company issued 61,300 shares of Udemy restricted common stock to a former executive of CorpU at a grant date fair value per share of $34.14. The total compensation cost recognized during the three months ended March 31, 2023 and 2022 was $0.2 million and $0.2 million, respectively. As of March 31, 2023, total compensation cost related to the restricted stock not yet recognized was $1.0 million, which will be recognized over a weighted average period of 1.4 years.

Total stock-based compensation expense included in the condensed consolidated statements of operations was as follows (in thousands):
Three Months Ended March 31,
20232022
Cost of revenue$1,593 $840 
Sales and marketing7,277 4,137 
Research and development6,294 3,334 
General and administrative9,911 5,031 
Restructuring charges1,208 — 
Total stock-based compensation expense$26,283 $13,342 

The Company capitalized $2.3 million and $1.2 million of stock-based compensation expense as capitalized software during the three months ended March 31, 2023 and 2022, respectively.