Note 16 - Stock-based Compensation

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

16. Stock-Based Compensation

The Company maintains the 2021 Equity Incentive Plan (the “2021 Plan”). As of December 31, 2024, 27,186,959 shares remained for future issuance under the 2021 Plan. To date, the Company has issued only stock options, restricted stock and restricted stock units to employees, directors and consultants.

Stock-based compensation was included in the following line items in the consolidated statements of operations:

	Year Ended December 31,
	2024		2023		2022
	(in thousands)
Cost of revenue	$	1,315	$	3,161	$	2,640
Sales and marketing		8,965		9,518		11,393
General and administrative		20,483		19,338		19,398
Research and development		8,296		4,031		3,787
Total stock-based compensation	$	39,059	$	36,048	$	37,218

Total tax benefit related to vested or exercised awards during the years ended  December 31, 2024, 2023 and 2022 was $9.5 million, $2.5 million and $2.2 million, respectively.

Stock Options

The compensation costs for stock option awards are recognized using the straight-line attribution method over the requite service period and are accounted for forfeitures as they occur. Stock options vest over a four-year service period and expire on the tenth anniversary of the date of award.

Certain of the Company’s stock option awards (the “Officer Awards”) included a provision that required the Company to redeem the vested portion of options at fair value in cash upon a separation of service initiated by the Company or upon death or disability of the holder. The Company determined that the redemption feature required the Officer Awards to be classified in mezzanine equity prior to the Apex Business Combination. For share-based payment arrangements with employees, the amount presented in mezzanine equity at each balance sheet date was based on the redemption provisions of the instrument and adjusted for the proportion of consideration received in the form of employee services. The shares underlying the Officer Awards were puttable to the Company upon certain conditions, such as death or disability of the Officer Awards recipients, which the Company determined was not probable; therefore, the Company reclassified the grant-date intrinsic value to mezzanine equity as the awards vested. The Officer Awards were cancelled in 2021, concurrent with the Apex Business Combination. In exchange for the cancellation of the Officer Awards, the Company agreed to deliver to the holders of the Officer Awards a fixed amount of shares equal to the amount of shares the holders would have received if the Officer Awards were exercised on the date of the Apex Business Combination in a net share settlement scenario. The cancelled Officer Awards were treated as modification of the original awards; however, no incremental value exists as a result of the modification. As a result of the cancellation of the original Officer Awards, the $1.7 million mezzanine balance was reclassified to permanent equity on July 1, 2021, and the Company recognized $3.5 million in previously unrecognized compensation costs. As a result, the Company issued 3,592,504 shares in July 2022.

The weighted-average grant date fair value of options granted in the years ended  December 31, 2024, 2023 and 2022 was $4.26, $2.49 and $2.71, respectively. 

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:

	2024			2023			2022
Expected term (in years)	6.11				6.11			6.11
Expected volatility	55.85		%		59.19	%		45.18	%
Risk-free rate	4.10		%		3.63	%		2.16	%
Dividend yield		—			—			—

A summary of the Company’s stock option activity during the year ended  December 31, 2024 is as follows:

	Stock Options			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life
Balance, January 1, 2024		27,192,185		$	4.25		5.91
Granted		469,920			7.26		—
Exercised		(3,415,893	)		3.23		—
Forfeited or expired		(966,195	)		7.64		—
Balance, December 31, 2024		23,280,017		$	4.32		5.08

As of December 31, 2024, the following table summarizes information about outstanding and exercisable stock options:

	Outstanding						Exercisable
Exercise Price	Stock Options		Weighted-Average Contractual Life		Weighted-Average Exercise Price		Stock Options		Weighted-Average Contractual Life		Weighted-Average Exercise Price
$ 0.16 - $ 1.59		7,600,165		2.67	$	1.41		7,600,165		2.67	$	1.41
$ 1.60 - $ 4.00		9,120,504		5.61		3.90		9,120,504		5.61		3.90
$ 4.01 - $ 9.64		6,559,348		7.14		8.27		4,414,391		6.88		8.71
		23,280,017		5.08	$	4.32		21,135,060		4.82	$	4.01

As of  December 31, 2024, there was $6.8 million in unrecognized compensation costs related to all non-vested options. This unrecognized stock-based compensation cost is expected to be recognized over a weighted-average period of approximately 1.6 years.

As of  December 31, 2024, the Company had 23,280,017 options outstanding and 21,135,060 options exercisable with intrinsic values of $283.8 million and $264.2 million, respectively. During the year ended December 31, 2024, 3,415,893 options were exercised, with a total intrinsic value of $34.8 million. During the year ended December 31, 2023, 2,840,716 options were exercised, with a total intrinsic value of $11.8 million. During the year ended December 31, 2022, 1,799,665 options were exercised, with a total intrinsic value of $6.6 million. Total cash received from exercise of options during the years ended December 31, 2024, 2023 and 2022 was $11.0 million, $5.6 million and $2.8 million, respectively. 

Restricted Stock Units

Under the terms of the 2021 Plan, we have issued 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.

The compensation costs for RSUs are recognized using the straight-line attribution method over the requite service period and are accounted for forfeitures as they occur. RSUs are measured at the fair market value of the underlying stock at the grant date. 

A summary of the Company’s RSU activity during the year ended  December 31, 2024 is as follows:

	Unvested PSUs		Unvested Time-Based RSUs
	Number of Shares		Number of Shares			Weighted-Average Grant-Date Fair Value
Unvested as of December 31, 2023		—		10,702,589		$	5.54
Granted		502,676		3,807,121			7.66
Vested		—		(4,805,497	)		5.73
Forfeited		—		(547,110	)		5.92
Unvested as of December 31, 2024		502,676		9,157,103		$	6.36

The per share weighted-average grant date fair value of RSUs granted during the years ended  December 31, 2024, 2023 and 2022 was $7.66, $4.38 and $5.55, respectively.

The total fair value of shares vested during the years ended  December 31, 2024, 2023 and 2022 was $51.3 million, $18.9 million and $8.2 million, respectively.

As of  December 31, 2024, there was $53.2 million in unrecognized compensation costs specific to the non-vested RSUs under the 2021 Plan. This unrecognized stock-based compensation cost is expected to be recognized over a weighted-average period of approximately 2.4 years.

Company Earn-Out RSUs

The compensation costs for Company Earn-Out RSUs are recognized using the straight-line attribution method over the requite service period and are accounted for forfeitures as they occur. 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 the seventh anniversary of the Apex Business Combination, the holders of the underlying stock options will not receive the Earn-Out RSUs. As of December 31, 2024, all Company Earn-Out RSUs are fully vested. For the years ended  December 31, 2024, 2023 and 2022, the Company recorded stock-based compensation expense of $0.3 million, $0.9 million and $0.9 million, respectively, related to these Earn-Out RSUs.