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Equity
3 Months Ended
Apr. 30, 2022
Equity [Abstract]  
Equity
10. Equity
In connection with the IPO, on October 18, 2021, the Company filed a restated certificate of incorporation that authorized the issuance of 1,500,000,000 shares of Class A common stock, 250,000,000 shares of Class B common stock, and 50,000,000 shares of preferred stock at $0.0000025 par value for each class of shares. Common stockholders are entitled to dividends when and if declared by the board of directors. No dividends have been declared to date. The holder of each share of Class A common stock is entitled to one vote and the holder of each share of Class B common stock is entitled to ten votes.
Common Stock
The Company had shares of common stock reserved for future issuance as follows (in thousands):
April 30, 2022January 31, 2022
Class A and Class B common stock
Options issued and outstanding15,797 17,146 
Shares available for issuance under Equity Incentive Plans22,996 18,248 
RSUs issued and outstanding6,473 3,280 
Shares reserved for issuance to charitable organizations1,636 1,636 
2021 ESPP 4,740 3,271 
Total51,642 43,581 
Early Exercised Options (subject to a repurchase right)
Certain stock option holders have the right to exercise unvested options, subject to a repurchase right held by the Company at the original exercise price, in the event of voluntary or involuntary termination of employment of the holder. As of April 30, 2022 and January 31, 2022, there were 503,216 and 713,967 shares, respectively, of unvested options that had been early exercised and were subject to repurchase for a total liability of $4.8 million and $6.8 million, respectively. The liability associated with early exercised options is included in other long-term liabilities in the condensed consolidated balance sheets.
For accounting purposes, issuance of shares will be recognized only on vesting. However, shares issued for the early exercise of options are included in issued and outstanding shares as they are legally issued and outstanding.
Equity Incentive Plans
In 2015, the Company adopted the 2015 Equity Incentive Plan (the “2015 Plan”), in which shares of common stock of the Company are reserved for issuance of stock options to team members, directors, or consultants. The options generally vest 25% upon completion of one year and then ratably over 36 months. Options generally expire ten years from the date of grant. All these options qualify as equity settled awards and contain no performance conditions.
In September 2021, in connection with the IPO, the board of directors and stockholders approved the 2021 Equity Incentive Plan (the “2021 Plan”) as a successor to the Company’s 2015 Plan (together the “Plans”). The 2021 Plan authorizes the award of both stock options, which are intended to qualify for tax treatment under Section 422 of the Internal Revenue Code, and nonqualified stock options, as well for the award of restricted stock awards (“RSAs”), stock appreciation rights (“SARs”), RSUs, and performance and stock bonus awards. Pursuant to the 2021 Plan, incentive stock options may be granted only to our team members. The Company may grant all other types of awards to our team members, directors, and consultants. The Company initially reserved 13,032,289 shares of our Class A common stock, plus any reserved shares of Class B common stock not issued or subject to outstanding grants under the 2015 Plan on the effective date of the 2021 Plan, for issuance as Class A common stock pursuant to awards
granted under the 2021 Plan. The number of shares reserved for issuance under our 2021 Plan will increase automatically on February 1 of each of the years from 2022 through 2031. As such, effective as of February 1, 2022, 7,344,382 shares were added to the 2021 Plan.
The awards available for grant under the above Plans for the periods presented were as follows (in thousands):
April 30, 2022January 31, 2022
Available at beginning of period
18,248 4,796 
Awards authorized7,344 22,532 
Options granted — (7,936)
RSUs granted(3,258)(3,290)
RSUs cancelled and forfeited56 10 
Options cancelled and forfeited591 2,044 
Options repurchased15 92 
Available at end of period
22,996 18,248 
In the event that shares previously issued under the above Plans are reacquired by the Company, such shares shall be added to the number of shares then available for issuance under the Plans. In the event that an outstanding stock option for any reason expires or is canceled, the shares allocable to the unexercised portion of such stock option will be added to the number of shares then available for issuance under the Plans.
Both Plans allow the grantees to early exercise stock options.
Stock Options and RSUs
The following table summarizes options activity under our Plans, and related information:
Number of Stock Options Outstanding (in thousands)Weighted Average Exercise PriceWeighted Average Remaining YearsAggregate Intrinsic value (in millions)
Balances at January 31, 2022
17,146 $11.83 8.24$894.8 
Options granted— — 
Options exercised(758)7.26 6.10
Options cancelled(5)8.96 — 
Options forfeited(586)13.30 — 
Balances at April 30, 2022
15,797 $11.99 7.96$567.7 
Exercisable at April 30, 2022
15,797 
Options vested at April 30, 2022
5,894 $7.15 7.01$240.4 
Options expected to vest at April 30, 2022
9,903 $14.87 8.52$327.4 
The aggregate grant-date fair value of options vested during the three months ended April 30, 2022 and 2021 was $9.4 million and $2.3 million, respectively. The weighted-average grant-date fair value per share of options granted was zero and $7.68 for the three months ended April 30, 2022 and 2021, respectively. The aggregate intrinsic value of options exercised during the three months ended April 30, 2022 and 2021 was $30.8 million and $10.1 million, respectively. The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company’s estimated stock price at the time of
exercise and the exercise price, multiplied by the number of related in-the-money options) that would have been received by the option holders had they exercised their options at the end of the period.
The following table summarizes the Company’s restricted stock units activity (in thousands):
Number of Shares (1)
Weighted-
Average
grant date
fair value
Balances at January 31, 2022
272 $82.10 
Granted3,258 55.61 
Vested(1)82.10 
Cancelled(56)67.56 
Forfeited— — 
Balances at April 30, 2022
3,473 $57.51 
(1) The table above does not include 3 million RSUs issued to our founder and the CEO described below.
These RSUs are grants of shares of our common stock, the vesting of which is based on the requisite service requirement. Generally, our RSUs are subject to forfeiture and are expected to vest over two to four years ratably on a combination of bi-annual and quarterly basis.
As of April 30, 2022 and January 31, 2022, approximately $252.2 million and $101.8 million of total unrecognized compensation cost was related to stock options and restricted stock units granted, that is expected to be recognized over a weighted-average period of 1.4 years and 2.3 years, respectively. The expected stock compensation expense remaining to be recognized reflects only outstanding stock awards as of the periods presented, and assumes no forfeitures.
CEO Performance Award
In May 2021, the Company granted 3 million RSUs tied to its Class B common stock to Mr. Sijbrandij, the Company’s co-founder and CEO, with an estimated aggregate grant date fair value of $8.8 million, estimated utilizing a Monte Carlo valuation model. The RSUs contain a service condition and a performance condition based on the achievement of eight separate stock price hurdles/tranches ranging from $95 to $500 per share on a recognized stock exchange or a per share price received in a corporate transaction defined in the grant. The price hurdles will adjust for stock splits, recapitalizations, and the like. Provided that Mr. Sijbrandij continues to be the CEO of the Company, stock-based compensation expense is recognized over the derived service period, regardless of whether the stock price hurdles are achieved. We will recognize total stock-based compensation expense of $8.8 million over the requisite service period of each tranche, which ranged from 2.83 to 7.50 years, using the accelerated attribution method. If the stock price hurdles are met sooner than the derived service period, the Company will adjust the stock-based compensation expense to reflect the cumulative expense associated with the vested portion of these RSUs.
The Company recorded $0.4 million of stock-based compensation expense related to the CEO RSUs during the three months ended April 30, 2022. As of April 30, 2022, unrecognized stock-based compensation expense related to these RSUs was $7.2 million which will be recognized over the remaining derived service period of the respective tranches which ranges from 2 to 7 years.
2021 Employee Stock Purchase Plan (“ESPP”)
In September 2021, the Company’s board of directors and our stockholders approved the 2021 Employee Stock Purchase Plan (“ESPP”) to enable eligible team members to purchase shares of the Company’s Class A common stock with accumulated payroll deductions and provides a 15% purchase price discount of the fair market value of the Company’s Class A common stock on the IPO date or purchase date, whichever is lower. The 2021 ESPP also provides up to a 27-month look-back period with four purchase dates in May and November of each year, and first purchase in May 2022. The Company initially reserved 3,271,090 shares of our Class A common stock for issuance and sale under our 2021 ESPP with automatic increase on February 1 for the first ten calendar years. As such, effective as of February 1, 2022, 1,468,876 shares of our Class A common stock were added to our 2021 ESPP.
The following table summarizes assumptions used in estimating the fair value of the ESPP for the initial offering period using the Black-Scholes option-pricing model:
Three Months Ended April 30,
2022
Risk-free interest rate
0.07% - 0.47%
Volatility
38.47% - 46.61%
Expected term (in years)
0.57 - 2.07
Dividend yield—%
The Company recorded $4.4 million of stock-based compensation expense related to the ESPP during the three months ended April 30, 2022. As of April 30, 2022, approximately $27.4 million of total unrecognized compensation cost was related to the ESPP that is expected to be recognized over 1.6 years.
Stock-Based Compensation Expense
The Company recognized stock-based compensation expense as follows (in thousands):
Three Months Ended April 30,
20222021
Cost of revenue$790 $152 
Research and development5,036 965 
Sales and marketing7,051 1,439 
General and administrative4,594 875 
Total stock-based compensation expense$17,471 $3,431 
The corporate income tax benefit recognized in the condensed consolidated statements of operations for stock-based compensation expense was $0.9 million for the three months ended April 30, 2022 and not material for the three months ended April 30, 2021.