STOCK BASED AWARD PLANS

9 Months Ended

Sep. 30, 2022

Stock-Based Award Plans

Stock Based Award Plans

12.    STOCK-BASED AWARD PLANS

The 2020 Plan provides the ability to grant cash and equity-based incentive awards to eligible employees, directors and service providers in order to attract, retain and motivate those that make important contributions to the Company. The Company issued stock options, RSAs, and RSUs under the 2020 Plan. As of September 30, 2022, 10,680 shares of Class A common were available for issuance under the 2020 Plan.

Options

The following table summarizes activity for options outstanding under the 2020 Plan for the nine months ended September 30, 2022:

				Weighted
			Weighted	Average
			Average	Remaining	Aggregate
			Exercise	Contractual	Intrinsic
2020 Plan Option Activity	Units		Price	Life (Years)	Value
	(unaudited)
Outstanding at January 1, 2022	9,500	$	4.20	5.2	$	110,843
Forfeited	(100)		5.31
Expired	(1)		32.16
Exercised	(668)		2.81
2020 Plan options outstanding at September 30, 2022	8,731		4.29	4.5		81,881
2020 Plan options excercisable at September 30, 2022	6,294		2.80	3.5		68,410

The detail of options outstanding, vested and exercisable under the 2020 Plan as of September 30, 2022 is as follows:

	Options Outstanding		Options Vested and Exercisable
		Weighted		Weighted
		Average		Average
Exercise Prices	Units	Life (Years)	Units	Life (Years)
	(unaudited)
$0.15 to $0.71	1,766	—	1,766	—
$2.15	336	2.4	336	1.4
$2.50	2,161	3.8	2,161	3.8
$2.67	419	4.4	419	4.4
$3.17	1,074	5.5	322	5.6
$3.73	1,533	7.1	756	7.1
$4.70	683	7.4	341	7.4
$18.47	213	9.2	—	—
$18.96	235	8.9	105	8.9
$19.00	66	9.0	17	9
$32.16	245	8.4	71	7.6
	8,731		6,294

The Board of Directors (“the Board”) intends all options granted to be exercisable at a price per share not less than the per share fair market value of the Company’s Class A common stock underlying the options on the date of grant. Compensation expense for option awards are measured based on the grant date fair value of the awards and recognized in the condensed consolidated statements of comprehensive loss over the period during which the participant is required to perform the requisite services. The vesting period is generally one to four years. The grant date fair value of options is estimated using the Black-Scholes model.

There were no options issued under the 2020 Plan during the three or nine months ended September 30, 2022. The Company issued 303 options and 566 options under the 2020 Plan during the three months and nine months ended September 30, 2021, respectively. The assumptions used in the Black-Scholes model to determine the value of the options issued during these periods are as follows:

	Option Valuation Period
	Q3 2021			Q3 2021			Q2 2021			Q1 2021
Fair market value of common stock	$	18.96		$	19.00		$	17.66		$	32.16
Volatility		37.1	%		37.1	%		36.8	%		36.8	%
Expected term (years)		5.0			5.0			6.0			6.0
Expected dividend yield		—	%		—	%		—	%		—	%
Risk-free interest rate		0.8	%		0.9	%		0.4	%		0.4	%

The fair market value of common stock reflects the market closing price on NASDAQ on the respective option grant date. As of the valuation dates, the Company lacked sufficient historical data on the volatility of its stock price. Selected volatility is representative of expected future volatility and was based on the historical and implied volatility of comparable publicly traded companies over a similar expected term. The expected term represents the term the options are expected to be exercised over, which differs from the term of the option grants which is ten years. The Company does not expect to pay dividends. The risk-free interest rate was based on the rate for a U.S. Treasury zero-coupon issue with a term that closely approximates the expected term of the option grants.

At September 30, 2022, $12,134 of unrecognized compensation expense associated with options is expected to be recognized over a weighted average period of approximately 2.15 years.

Restricted Stock Units

The following table summarizes RSU activity for the nine months ended September 30, 2022:

		Weighted
		Average
		Grant Date Fair
	Units	Value Per Share
Outstanding at January 1, 2022	530	$	26.49
Granted	2,128		13.43
Vested	(48)		23.33
Forfeited	(118)		15.93
Outstanding at September 30, 2022	2,492	$	15.90

Stock-based compensation cost for RSUs is measured based on the fair value of the Company’s underlying common stock on the date of grant and is recognized on a straight-line basis in the condensed consolidated statements of comprehensive loss over the period during which the participant is required to perform services in exchange for the award, which is generally one to four years. Vested RSUs are settled by issuing Class A shares or the equivalent value in cash at the Board’s discretion. At September 30, 2022, $31,273 of unrecognized compensation cost for RSUs is expected to be recognized over a weighted average period of approximately 3.1 years.

In connection with the Taxamo acquisition, certain continuing employees of Taxamo received RSUs with service and performance conditions (“PSUs”). At September 30, 2022, there are 895 shares of our Class A common stock with an aggregate grant date fair value of $15,803 that will be accounted for as post-acquisition compensation expense over the vesting period if targets are achieved. The performance-based condition will be satisfied upon meeting certain performance targets for the year ended 2023. As of September 30, 2022, it is not probable that these targets will be met, thus no compensation expense has been recorded to date related to these PSUs.

Restricted Stock Awards

The following table summarizes RSA activity for the nine months ended September 30, 2022:

		Weighted
		Average
		Grant Date Fair
	Units	Value Per Share
Outstanding at January 1, 2022	326	$	18.76
Granted	106		9.92
Vested	(188)		18.58
Forfeited	(9)		19.00
Outstanding at September 30, 2022	235	$	14.91

Stock-based compensation cost for RSAs is measured based on the fair value of the Company’s underlying common stock on the date of grant and is recognized on a straight-line basis in the condensed consolidated statements of comprehensive loss over the period during which the participants are required to perform services in exchange for the award, which is generally one to four years. At September 30, 2022, $2,858 of unrecognized compensation cost for RSAs is expected to be recognized over a weighted average period of approximately 1.2 years.

Employee Stock Purchase Plan

The ESPP provides eligible employees with rights during each six-month ESPP offering period to purchase shares of the Company’s Class A common through payroll deductions of up to a specified percentage of their eligible compensation. The purchase price of the shares, in the absence of a contrary designation, is 85% of the lower of the fair value of the Class A common stock on the first or last day of the ESPP offering period. Amounts withheld from participants are reflected in accrued salaries and benefits in the condensed consolidated balance sheets until such shares are purchased. Amounts withheld from participants for the offering period ending November 30, 2022 aggregated $837 as of September 30, 2022. As of September 30, 2022, 3,666 shares of Class A common stock were available for issuance under the ESPP.

As of September 30, 2022 there was approximately $99 of unrecognized ESPP stock-based compensation cost expected to be recognized on a straight-line basis over the remaining term of the six-month offering period ending November 30, 2022.

At September 30, 2022 and 2021, there were two ESPP offering periods open that end November 30, 2022 and 2021, respectively. The fair value of ESPP purchase rights for the offering periods is comprised of the value of the 15% ESPP discount and the value associated with the call or put over the respective ESPP offering period. The value of the call or put was estimated using the Black-Scholes model with the following assumptions:

	Offering Period Ending
	11/30/2022			11/30/2021
Fair market value of common stock	$	11.16		$	19.89
Volatility		35.4	%		35.1	%
Expected term (years)		0.5			0.5
Expected dividend yield		-	%		-	%
Risk-free interest rate		1.6	%		0.1	%

Selected volatility is representative of expected future volatility and was based on the historical and implied volatility of comparable publicly traded companies over a similar expected term. The expected term represents the term of the six-month ESPP offering period. The Company does not expect to pay dividends. The risk-free interest rate was based on the rate for a U.S. Treasury zero-coupon issue with a term that closely approximates the expected term of the award at the date nearest the offering term.

Stock-Based Compensation

The Company recognized total stock-based compensation cost related to incentive awards, net of forfeitures, as follows:

	For the three months ended September 30,				For the nine months ended September 30,
	2022		2021		2022		2021
	(unaudited)				(unaudited)
Stock-based compensation expense:
Stock options	$	1,836	$	5,579	$	5,250	$	13,260
RSUs		2,544		908		6,665		2,137
RSAs		725		799		2,034		4,454
ESPP		151		136		434		399
Total stock-based compensation expense	$	5,256	$	7,422	$	14,383	$	20,250

The Company recognized stock-based compensation cost in the condensed consolidated statements of comprehensive loss as follows:

	For the three months ended September 30,				For the nine months ended September 30,
	2022		2021		2022		2021
	(unaudited)				(unaudited)
Stock-based compensation expense:
Cost of revenues, software subscriptions	$	577	$	656	$	1,502	$	1,788
Cost of revenues, services		374		760		1,055		1,976
Research and development		581		876		1,193		2,008
Selling and marketing		1,621		2,157		4,594		4,877
General and administrative		2,103		2,973		6,039		9,601
Total stock-based compensation expense	$	5,256	$	7,422	$	14,383	$	20,250