Note 13 - Stock-based Compensation

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

13. Stock-Based Compensation

The Company maintains the 2021 Equity Incentive Plan (the “2021 Plan”). As of March 31, 2024, 26,818,838 shares remained for future issuance under the 2021 Plan. To date, the Company has issued only stock options and restricted stock units to employees, directors and consultants. 

The Company records stock-based compensation in cost of revenue, sales and marketing, general and administrative and research and development. Stock-based compensation was included in the following line items:

	Three Months Ended March 31,
	2024		2023
	(in thousands)
Cost of revenue	$	871	$	670
Sales and marketing		2,284		2,201
General and administrative		4,967		4,382
Research and development		1,336		851
Total stock-based compensation	$	9,458	$	8,104

Stock Options

The compensation costs for stock option awards are accounted for in accordance with ASC 718. Stock options vest over a four-year service period and expire on the tenth anniversary of the date of award. 

On  March 5, 2024, the Company granted 469,920 options under the 2021 Plan. The Company estimated the grant date fair value of these stock options using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	March 5,
	2024
Expected life (in years)		6.11
Expected volatility		55.85	%
Risk-free rate		4.10	%
Dividend yield		—

To estimate the expected life of stock options, the Company considered the vesting term, contractual expiration period, and market conditions. Expected volatility is based on historical volatility of a group of peer entities. Dividend yields are based upon historical dividend yields. Risk-free interest rates are based on the implied yields currently available on U.S. Treasury zero coupon issues with a remaining term equal to the expected life. Based on these inputs, the grant-date fair value was determined to be $2.0 million.

As of March 31, 2024, there was $13.5 million in unrecognized compensation costs related to all unvested options.

As of  March 31, 2024, the Company had 26,813,324 options outstanding and 22,139,333 options exercisable with intrinsic values of $106.7 million and $97.7 million, respectively. During the three months ended March 31, 2024, 293,361 options were exercised, with a total intrinsic value of $1.5 million.

Restricted Stock Units

Under the terms of the 2021 Plan, we have issued restricted stock unit awards with a continuous employment condition only (“Time-Based RSUs”), and restricted stock unit awards with a continuous employment condition that are also contingent on the Company meeting certain performance goals (“PSUs”, and together “RSUs”). Both types of RSU awards vest over a four-year period from the grant date.

3,563,974 Time-Based RSUs and 502,676 PSUs were granted under the 2021 Plan during the three months ended March 31, 2024, with a weighted-average grant date fair-value of $7.46 per award. The compensation costs for RSUs are accounted for in accordance with ASC 718.  RSUs are measured at the fair market value of the underlying stock at the grant date. RSUs that vested during the three months ended March 31, 2024 had an aggregate fair value at vesting of $16.0 million. As of March 31, 2024, there was $74.3 million in unrecognized compensation costs specific to the unvested RSUs, to be recognized over a weighted-average period of 2.9 years. As of March 31, 2024, the Company had 11,891,043 unvested Time-Based RSUs and 502,676 unvested PSUs with a weighted-average grant date fair-value of $6.23 per award.

Company Earn-Out RSUs

The compensation costs for Company Earn-Out RSUs are accounted for in accordance with ASC 718. In order to capture the market conditions associated with the Company Earn-Out RSUs, the Company applied an approach that incorporated a Monte Carlo simulation, which involved random iterations that took different future price paths over the Sponsor Earn-Out RSUs’ contractual life based on the appropriate probability distributions. The fair value was determined by taking the average of the fair values under each Monte Carlo simulation trial. Under this approach, the grant-date fair value of the Company Earn-Out RSUs on July 1, 2021, was determined to be $2.5 million. The stock options underlying the Earn-Out RSUs vest over a four-year period and expire on the tenth anniversary of the date of award. If the contingent milestones of the Earn-Out RSUs are not met by July 1, 2028, the holders of the underlying stock options will not receive the Earn-Out RSUs.