The Company maintains the 2016 Stock Incentive Plan and the 2021 Incentive Award Plan (the “Stock Plans”) under which incentive stock options, non-qualified stock options and restricted stock units (“RSU”) may be granted to employees. Under the Stock Plans, the Company has 10,334,897 shares available for issuance as of September 30, 2023.

Under the terms of the Stock Plans, incentive stock options must have an exercise price at or above the fair market value of the stock on the date of the grant, while non-qualified stock options are permitted to be granted below fair market value of the stock on the date of grant. The majority of stock options granted have service-based vesting conditions only. The service-based vesting conditions vary, typically stock options vest over four years with 25% of stock options vesting on the first anniversary of the grant and the remaining 75% vesting monthly over the remaining 36 months. Option holders have a ten-year period to exercise the options before they expire.

A summary of the Company’s stock option activity, for nine months ended September 30, 2023, was as follows:


	Number of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2022		13,434,083		$	0.67		6.77	$	11,593
Granted		—			—		—		—
Exercised		(458,565	)		0.33		—		—
Forfeited		(418,700	)		2.99		—		—
Expired		(59,564	)		0.26		—		—
Outstanding as of September 30, 2023		12,497,254		$	0.60		5.82	$	4,151
Vested and exercisable as of September 30, 2023		11,528,748		$	0.52		5.69	$	4,034
Vested and expected to vest as of September 30, 2023		12,497,254		$	0.60		5.82	$	4,151

There were no options granted during the nine months ended September 30, 2023. As of September 30, 2023, the Company had $1.2 million of unrecognized stock-based compensation expense related to the stock options. This cost is expected to be recognized over a weighted-average period of 1.1 years.

Restricted Stock Units and Performance-based Restricted Stock Units (“PBRSU”)

The following table summarizes our RSU activity for the nine months ended September 30, 2023:


	Shares			Weighted Average Grant Date Fair Value per Share
Outstanding as of December 31, 2022		11,945,375		$	5.22
Granted		23,022,625			1.28
Released		(4,028,417	)		4.36
Forfeited		(4,795,217	)		3.80
Outstanding as of September 30, 2023		26,144,366		$	2.15

As of September 30, 2023, the Company had $47.7 million of unrecognized stock-based compensation expense related to the RSUs. This cost is expected to be recognized over a weighted-average period of 3.1 years. The above table excludes 9,558,823 PBRSUs granted to certain executive officers during nine months ended September 30, 2023.

In May 2023, the Company granted a total of 5,882,353 PBRSUs to certain executives that vest on achieving certain operational milestones as defined in the individual grant agreements subject to continued employment through 2025. Stock-based compensation expense is recognized over the expected performance achievement period of individual performance milestones when the achievement of each individual performance milestone becomes probable. If satisfaction of the performance condition is not probable, stock-based compensation cost recognition is deferred until it becomes probable. The Company reassesses the probability as to whether satisfaction of the performance condition is probable on a quarterly basis, and stock-based compensation cost is adjusted based on the portion of the requisite service provided. These PBRSUs neither carry rights to dividends nor voting rights until the shares are issued or transferred to the recipient. Awards are forfeited if an employee leaves the Company before the PBRSUs vest or the performance period lapses. The weighted-average grant date PBRSU fair value of $1.02 per share is determined based upon the market closing price of the Company’s common stock on the date of grant. As of September 30, 2023, the total unrecognized compensation expense related to the performance-based PBRSUs was $3.4 million, which is expected to be amortized over a weighted-average period of 2.2 years.

In May 2023, the Company also granted a total of 3,676,470 market-based PBRSUs to certain executives that vest over a multi-year period, upon continue service and when the volume-weighted average price per share (“WVAP Average”) of the Company’s common stock for the preceding 30 consecutive trading days equals or exceeds the target stock price for the indicated year. The Company recognizes stock-based compensation based upon the grant date fair value on an accelerated attribution basis over the requisite service period of the award. Provided that the requisite service is rendered, the total fair value of the market-based PBRSUs at the date of grant is recognized as compensation expense even if the market condition is not achieved. However, the number of shares that ultimately vest can vary significantly with the achievement of the specified market criteria. These PBRSUs neither carry rights to dividends nor voting rights until the shares are issued or transferred to the recipient. Awards are forfeited if an employee leaves the Company before the PBRSUs vest. The weighted-average grant date fair value of the market-based PBRSUs was $0.28 per share. The Company estimated the fair value of the market-based PBRSUs award on the grant date using the Monte Carlo simulation model with the following assumptions:

As of September 30, 2023, the total unrecognized compensation expense related to the market-based PBRSUs was $0.9 million, which is expected to be amortized over a weighted-average period of 3.5 years.

In November 2022, the Board and the Company’s stockholders adopted the 2022 Employee Stock Purchase Plan (“ESPP”) under which 12,769,233 shares were authorized for issuance. The ESPP permits eligible employees to purchase the Company’s common stock through payroll deduction with up to 15% of their pre-tax earnings subject to certain Internal Revenue Code limitations. The purchase price of shares is 85% of the lower of the fair market value of the Company’s common stock on the first day of a six-month offering period, or the relevant purchase date. In addition, participants are subject to $25,000 annual purchase restriction. No ESPP shares were purchased during the three and nine months ended September 30, 2023.

Total stock-based compensation expense by function was as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cost of revenue	$	161	$	396	$	858	$	738
Research and development expenses		3,094		4,177		12,717		13,152
General and administrative expenses		1,654		1,263		3,989		3,767
Sales and marketing expenses		240		304		589		701
Total	$	5,149	$	6,140	$	18,153	$	18,358