Stock-Based Compensation

9 Months Ended

Sep. 30, 2024

Share-Based Payment Arrangement [Abstract]

2015 Equity Incentive Plan

In 2015, we adopted the 2015 Equity Incentive Plan (the “2015 Plan”) that authorized the granting of options for shares of common stock. Our 2015 Plan provided for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit (“RSU”) awards, and other stock awards. The 2015 Plan was terminated in connection with the adoption of the 2021 Equity Incentive Plan (the “2021 Plan”) in November 2021 in connection with the initial public offering (“IPO”), and we will not grant any additional awards under the 2015 Plan. However, the 2015 Plan will continue to govern the terms and conditions of the outstanding awards previously granted thereunder.

2021 Equity Incentive Plan

In September 2021, our board of directors adopted, and our stockholders approved, the 2021 Plan, which became effective in connection with the IPO in November 2021. The 2021 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, RSU awards, performance awards, and other forms of equity compensation. In addition, the number of shares of our Class A common stock reserved for issuance under the 2021 Plan will automatically increase on January 1 of each year for a period of 10 years, beginning on January 1, 2022 and continuing through (and including) January 1, 2031, in an amount equal to 4% of the total number of share of our common stock (both Class A and Class B) outstanding on December 31 of the immediately preceding year, except that, before the date of any such increase, our board of directors may determine that the increase for such year will be a lesser number of shares. Additionally, to the extent that any stock options outstanding under the 2015 Plan expire, terminate prior to exercise, are not issued because the award is settled in cash, are forfeited because of the failure to vest, or are reacquired or withheld (or not issued) to satisfy a tax withholding obligation or the purchase or exercise price, if any, the shares of Class B common stock reserved for issuance pursuant to such equity awards will become available for issuance as shares of Class A common stock under the 2021 Plan. The maximum number of shares of our Class A common stock that may be issued on the exercise of incentive stock options under the 2021 Plan is 100,000,000 shares.

2021 Employee Stock Purchase Plan

In September 2021, our board of directors adopted, and our stockholders approved, the 2021 Employee Stock Purchase Plan (the “2021 ESPP”), which became effective in connection with the IPO in November 2021. The 2021 ESPP authorizes the issuance of shares of Class A common stock pursuant to purchase rights granted to employees. The number of shares of our Class A common stock reserved for issuance will automatically increase on January 1 of each year for a period of 10 years, beginning on January 1, 2022 and continuing through (and including) January 1, 2031, by the lesser of (1) 1% of the total number of shares of our common stock (both Class A and Class B) outstanding on December 31 of the immediately preceding year and (2) 142,500 shares, except that, before the date of any such increase, our board of directors may determine that such increase will be less than the amount set forth in clauses (1) and (2). The price at which Class A common stock is purchased under the 2021 ESPP is equal to 85% of the fair market value of a share of our Class A common stock on the first day of the offering period, or the date of purchase, whichever is lower. Offering periods are six months long and begin on November 3 and May 3 of each year.

Stock Options

A summary of the status of the 2015 Plan and 2021 Plan as of December 31, 2023 and September 30, 2024, and changes during the nine month period ended September 30, 2024, is presented below:


	Options Outstanding
	Number of Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2023	662,499	$	72.00	6.50	$	927
Granted	—	—
Exercised	(1,251)	25.40			2
Forfeited	(7,559)	81.26
Cancelled	(71,096)	79.30
Outstanding at September 30, 2024	582,593	$	71.09	6.02	$	415
Vested and exercisable at September 30, 2024	434,848	$	77.97	5.28	$	415

There were no stock options granted for the three and nine months ended September 30, 2024. The weighted-average fair value of options granted during the three and nine months ended September 30, 2023 was $13.20 and $12.60, respectively. We calculated the fair value of each option using an expected volatility over the expected life of the option, which was estimated using the average volatility of comparable publicly traded companies. The

expected life of options granted is based on the simplified method to estimate the expected life of the stock options, giving consideration to the contractual terms and vesting schedules.

The following weighted average assumptions were used for issuances during the three and nine months ended September 30, 2023, for employees and non-employees:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023			2023
Risk-free interest rate	4.29	%		3.77	%
Dividend yield	—			—
Volatility	43.12	%		42.43	%
Expected lives (in years)	6.13			6.04

2021 ESPP

The following table summarizes the weighted-average assumptions used in estimating the fair value of the 2021 ESPP grants for the following offering periods presented, using the Black Scholes option-pricing model:


	Offering Period - May 3, 2024 to November 2, 2024		Offering Period - November 3, 2023 to May 2, 2024		Offering Period - May 3, 2023 to November 2, 2023
Risk-free interest rate	5.41	%	5.45	%	5.08	%
Dividend yield	—		—		—
Volatility	37.13	%	43.12	%	45.59	%
Expected lives (years)	0.5		0.5		0.5

RSUs

After completion of the IPO in November 2021, we began granting RSUs to certain employees. The RSUs granted have service-based vesting conditions. The service-based vesting condition for awards to new employees is typically satisfied over four years, with a cliff vesting period of one year and continued vesting quarterly thereafter. The service-based vesting condition for refresh grants of RSUs to existing employees is typically satisfied over three years with vesting occurring quarterly, subject to the employees’ continued service to us. RSUs and the related stock-based compensation are recognized on a straight-line basis over the requisite service period.

RSU activity during the nine months ended September 30, 2024 was as follows:


	Number of Shares	Weighted-Average Grant Date Fair Value per Share
Unvested at December 31, 2023	513,205	$	38.60
Granted	212,508	13.47
Vested	(160,217)	41.94
Forfeited	(75,523)	41.63
Unvested at September 30, 2024	489,973	$	26.70

Performance Stock Units

In March 2024, in connection with the appointment of Joe Vernachio as CEO, we granted him approximately 30 thousand RSUs with market-based and service-based vesting conditions (“PSUs”). The awards vest based on the

achievement of certain stock price targets as well as his continued employment with us. The total grant date fair value of the awards was determined to be $0.1 million.

In May 2022, we granted a target amount of approximately 40 thousand PSUs to certain executives. The total grant date fair value of the awards was determined to be $4.0 million, with each tranche of the awards representing $1.3 million, $1.4 million, and $1.4 million of the total expense, respectively. Stock-based compensation expense is recognized on a straight-line basis over their requisite service periods, regardless of whether the market condition is ultimately satisfied. Stock-based compensation expense is not reversed if the achievement of the market condition does not occur. We recognized stock-based compensation expense of $0.2 million and $0.6 million for the three and nine months ended September 30, 2024, respectively, and $0.4 million and $1.3 million for the three and nine months ended September 30, 2023, respectively.

PSU activity during the nine months ended September 30, 2024 was as follows:


	Target Number of Shares	Weighted-Average Grant Date Fair Value per Share
Unvested at December 31, 2023	26,255	$	105.80
Granted	32,743	2.61
Vested	—	—
Forfeited	(13,128)	102.20
Unvested at September 30, 2024	45,870	$	33.17

Stock-Based Compensation Expense

Stock-based compensation expense, recognized as selling, general, and administrative expense in the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2024 and 2023, was comprised of the following:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023
Stock-based compensation, net of amounts capitalized	$	2,620	$	4,690	$	8,893	$	15,662
Capitalized stock-based compensation	54		248		228		677
Total stock-based compensation	$	2,674	$	4,938	$	9,121	$	16,339

As of September 30, 2024, there was approximately $4.0 million of total unrecognized compensation cost related to unvested stock options granted under both equity incentive plans, which is expected to be recognized over the weighted-average remaining vesting period of approximately 2.27 years. There was approximately $11.8 million of total unrecognized compensation cost related to outstanding unvested RSUs under the 2021 Plan, which is expected to be recognized over the weighted-average remaining vesting period of approximately 2.51 years. There was approximately $0.4 million of total unrecognized compensation cost related to outstanding unvested PSUs under the 2021 Plan, which is expected to be recognized over the weighted-average remaining vesting period of approximately 1.94 years.