The Company's amended and restated certificate of incorporation authorizes the issuance of 700,000,000 shares of common stock with a par value of $0.0001 per share. Shares of common stock reserved for issuance, on an as-converted basis, are as follows:


	December 31,	December 31,
	2020	2021
Options issued and outstanding	19,600,223	12,785,176
RSUs outstanding	—	1,508,615
Shares available for future issuance under 2020 plan	2,537,181	9,979,700
Shares available for issuance under ESPP	—	1,869,302
Warrants to purchase common stock	75,000	—
Total	22,212,404	26,142,793

In 2012, the Company adopted the Equity Incentive Plan (“2012 Equity Incentive Plan”) authorizing the granting of incentive stock options (“ISOs”) and non-statutory stock options (“NSOs”) to eligible participants. Under the 2012 Equity Incentive Plan, the exercise price of an ISO and NSO shall not be less than 100% of the estimated fair value of the shares on the date of grant, as determined by the Board of Directors. The exercise price of an ISO granted to a 10% stockholder shall not be less than 110% of the estimated fair value of the shares on the date of grant, as determined by the Board of Directors. Options generally vest over four years and are exercisable for up to 10 years after the date of grant if the employee provides service to the Company for at least three years.

In October 2020, our Board of Directors adopted, and in November 2020 our Board of Directors amended and our stockholders approved, our 2020 Equity Incentive Plan which was effective on December 14, 2020. The Company terminated the 2012 Equity Incentive Plan immediately prior to effectiveness of the 2020 Equity Incentive Plan with respect to the grant of future awards. However, our 2012 Equity Incentive Plan continues to govern the terms and conditions of the outstanding awards granted under our 2012 Equity Incentive Plan.

The 2020 Equity Incentive Plan authorizes granting of ISOs, NSOs, stock appreciation rights, restricted stock, restricted stock units, or RSUs, and performance awards. In addition, the 2020 Equity Incentive Plan also includes any shares subject to awards granted under our 2012 Equity Incentive Plan that, on or after December 15, 2020, expire or otherwise terminate without having been exercised or issued in full, are tendered to or withheld by

us for payment of an exercise price or for satisfying tax withholding obligations, or are forfeited to or repurchased by us due to failure to vest. The maximum number of shares that may be added to the 2020 Equity Incentive Plan pursuant to outstanding awards under the 2012 Equity Incentive Plan is 15,000,000 shares. The number of shares available for issuance under our 2020 Equity Incentive Plan also includes an annual increase on the first day of each fiscal year beginning with 2021 in an amount equal to the lesser of 15,000,000 shares or 5% of the outstanding shares of our common stock on the last day of our immediately preceding fiscal year.

In connection with the Company’s acquisition of Prodigy, the Company assumed the Prodigy Software, Inc. 2015 Stock Incentive Plan (the “Prodigy Plan”), under which certain unvested options under the Prodigy Plan were assumed by the Company. The assumed options are subject to the same terms and conditions that were applicable to them under the Prodigy Plan, except that (i) the assumed options relate to shares of Upstart’s common stock, and (ii) the number of shares of Upstart’s common stock was the result of an adjustment based upon a ratio as described further in the Registration Statement on Form S-8 filed with the SEC on April 16, 2021.


	Number of Options	Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life (years)	Aggregate Intrinsic Value
Balances at December 31, 2020	19,600,223	$	4.27	6.8	$	715,084

Options granted	612,384	105.68
Options assumed upon acquisition	23,494	9.06
Options exercised	(7,047,722)	2.09
Options cancelled and forfeited	(403,203)	7.36
Balances at December 31, 2021	12,785,176	10.23		6.8	1,803,812
Options exercisable – December 31, 2021	7,471,578	3.32		5.7	1,105,683
Options vested and expected to vest – December 31, 2021	12,689,220	$	9.97	6.8	$	1,793,628

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the fair value of the Company’s stock as of December 31, 2021. The aggregate intrinsic value of options exercised for the year ended December 31, 2019, 2020 and 2021, was $2.1 million, $50.0 million, and $1,391.7 million, respectively. The weighted-average grant date fair value of options granted during the year ended December 31, 2019, 2020 and 2021, was $3.99, $11.04, and $62.06 per share, respectively. The weighted-average fair value of options assumed in connection with an acquisition was $74.84 per share for the year ended December 31, 2021. The total fair value of options vested for the year ended December 31, 2019, 2020 and 2021, was $2.7 million, $7.9 million, and $23.5 million, respectively.

In May 2021, the Company amended an employee stock option agreement which resulted in a modification of the vesting of a certain number of option shares. The Company valued the amended stock options as of the modification date. Based on the Black-Scholes option pricing model fair value, incremental stock-based compensation expense of $4.4 million resulting from the modification was recognized during the year ended December 31, 2021.

As of December 31, 2021, total unrecognized stock-based compensation expense related to unvested stock options was $55.7 million, which is expected to be recognized over a remaining weighted-average period of 1.9 years.

During the year ended December 31, 2021, the Company began granting RSUs to employees and nonemployees. RSUs vest upon satisfaction of a service-based condition, which is generally satisfied over four years. The following table summarized RSU activity for the year ended December 31, 2021:


	Number of Shares	Weighted-Average Grant Date Fair Value Per Share
Unvested at December 31, 2020	—
RSUs granted	1,605,235	$	138.27
RSUs vested	(32,809)	128.30
RSUs cancelled and forfeited	(63,811)	$	100.02
Unvested at December 31, 2021	1,508,615

As of December 31, 2021, total unrecognized stock-based compensation expense related to outstanding unvested RSUs was $180.5 million, which is expected to be recognized over a remaining weighted-average period of 3.0 years.

In connection with the Prodigy acquisition, 82,201 shares of the Company’s restricted stock were issued to certain Prodigy employees. The restricted stock is subject to restrictions which lapse on a quarterly basis over two years. Refer to “Note 5. Acquisitions” for further information.


	Number of Shares	Weighted-Average Grant Date Fair Value Per Share
Unvested at December 31, 2020	—
Restricted	82,201	$	121.65
Vested	20,550	$	121.65
Unvested at December 31, 2021	61,651

As of December 31, 2021, total unrecognized stock-based compensation expense related to restricted stock was $6.4 million, which is expected to be recognized over a remaining weighted-average period of 1.3 years.

In October 2020, our Board of Directors adopted, and in November 2020 our Board of Directors amended and our stockholders approved, our ESPP which was effective on December 14, 2020. Our ESPP provides for consecutive six-month offering periods. The offering periods are scheduled to start on the first trading day on or after February 15 and August 15 of each year, except the first offering period commenced on December 16, 2020 and ended on the first trading day on or before August 15, 2021. The second offering period commenced on the last trading day on or after August 15, 2021. The ESPP permits participants to purchase shares in the amount of 85% of the lower of the fair market value of our shares of common stock on the first trading day of the offering period or on

As of December 31, 2021, total unrecognized stock-based compensation expense related to the ESPP was $0.8 million, which is expected to be recognized over a remaining weighted-average period of 0.1 years.

In determining the fair value of the stock-based awards, the Company uses the Black-Scholes option-pricing model and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment.

Fair Value of Common Stock–Prior to the completion of the IPO, the fair value of the shares of common stock was determined by the Company’s Board of Directors as there was no public market for the Company’s common stock. After the completion of the IPO, the fair value of the Company’s common stock is determined by the closing price, on the date of grant, of its common stock, which is traded on the Nasdaq Global Select Market.

Expected Term–The expected term represents the period that the Company’s stock options are expected to be outstanding. We estimate the expected term based on the simplified method, which is the weighted-average time to vesting and the contractual maturity.

Volatility–Because the Company does not have an active trading market for its common stock for a sufficient period of time, the expected volatility is estimated based on the average volatility for comparable publicly-traded companies, over a period equal to the expected term of the stock option grants.

Risk-free Interest Rate–The risk-free interest rate assumption is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of the option.

Dividends–The Company has never paid dividends on its common stock and does not anticipate paying dividends on common stock. Therefore, the Company uses an expected dividend yield of zero.

Year Ended December 31,

2019

2020

2021

Expected term (in years)

5.5 – 10.0

5.3 – 10.0

5.3 – 6.9

Expected volatility

55.69% – 59.23%

53.23% – 72.02%

45.98% – 65.01%

Risk-free interest rate

1.67% – 2.40%

0.33% – 1.50%

0.62% – 1.34%

Dividend yield

—%

The Company recorded stock-based compensation in the following expense categories in its consolidated statements of operations and comprehensive income (loss) for employees and nonemployees:


	Year Ended December 31,
		2019		2020		2021
Sales and marketing		$	278	$	1,562	$	6,059
Customer operations		433		898		6,251
Engineering and product development		1,803		4,844		39,191
General, administrative, and other		1,292		4,209		21,685
Total		$	3,806	$	11,513	$	73,186


	Year Ended December 31,
	2019		2020		2021
Stock options	$	3,806	$	11,513	$	30,985
RSUs	—		—		31,548
ESPP	—		—		7,117
Restricted Stock	—		—		3,536
Total	$	3,806	$	11,513	$	73,186