Stock-Based Compensation

6 Months Ended

Jun. 30, 2021

Share-based Payment Arrangement [Abstract]

Stock-Based CompensationDuring October 2020, the Company amended the 2016 LTIP increasing the total number of shares available for issuance to 9,400,000 from 4,500,000 and extended the term to September 30, 2030. Our 2016 LTIP provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock and dividend equivalent rights to our senior executives, directors, employees, and other service providers. Awards granted under the 2016 LTIP vest over the periods determined by the Board of Directors or the Compensation Committee of the Board of Directors, generally two to three years and stock options granted under the 2016 LTIP expire no more than ten years after the date of grant. Approximately 6.2 million shares of our common stock were reserved for future grants as of June 30, 2021 under the 2016 LTIP.

The following are the stock-based compensation expense incurred for the three and six months ended June 30, 2021 (in thousands). We recorded immaterial share-based compensation expense for the comparative periods ended June 30, 2020.


	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021
Cost of sales - services	$	795	$	1,532
Sales and marketing	2,233		3,780
Research and development	648		1,109
General and administrative	17,660		28,585
Total	$	21,336	$	35,006

Restricted Stock Awards and Restricted Stock Unit (collectively “RSU”) Activity

During the first quarter of 2021, a number of RSUs were granted to our senior executives, directors and employees.

Service-Based RSU Awards

A summary of the awards of Service-Based RSUs that vest upon the completion of a service requirement are presented below:


	Number of Shares	Weighted- Average Grant Date Fair Value (per share)		Weighted- Average Contractual Life (years)	Aggregate Intrinsic Value (in thousands)
Unvested Balance - December 31, 2020	59,521	$	0.18	2.4	$	2,000
Granted	2,731,963	36.52		—	—
Vested	(119,800)	36.17		—	—
Forfeited	(74,776)	36.63		—	—
Unvested Balance - June 30, 2021	2,596,908	$	35.97	1.7	$	88,300

We recognized an expense of $14.3 million and $22.0 million related to share-based compensation expense for Service-Based RSUs capable of being earned for completing a service requirement during the three and six months ended June 30, 2021, respectively. As of June 30, 2021, there was approximately $75.0 million of unrecognized stock-based compensation expense related to Service-Based RSUs, and this unrecognized expense is expected to be recognized over a weighted-average period of 1.7 years on a straight-line basis.

Performance-Based RSU Awards

A summary of the awards of Performance-Based RSUs that vest upon the attainment of certain price targets of the Company’s common stock are presented below:


	Number of Shares	Weighted- Average Grant Date Fair Value (per share)		Weighted- Average Contractual Life (years)	Aggregate Intrinsic Value (in thousands)
Unvested Balance - December 31, 2020	—	$	—	—	$	—
Granted	438,403	30.84		—	—
Vested	—	—		—	—
Forfeited	(16,176)	30.84		—	—
Unvested Balance - June 30, 2021	422,227	$	30.84	2.6	$	14,400

On January 28, 2021 the Company granted certain senior executives awards of Performance-Based RSUs that could settle in 438,403 shares of our common stock. The awards will vest only if, during the three-year period from the date of grant, (a) the Company’s common stock, as listed on the Nasdaq Global Market, trades at or above $42.40 per share (the “Target Price”) for 20 of 30 consecutive trading days or (b) the weighted average of the per share price of the Company’s common stock over any 30 consecutive trading days is at least equal to the Target Price.

For these Performance-Based RSUs containing market conditions, the conditions are required to be considered when calculating the grant date fair value. In order to reflect the substantive characteristics of these awards, a Monte Carlo simulation valuation model was used to calculate the grant date fair value of such awards. Monte Carlo approaches are a class of computational algorithms that rely on repeated random sampling to compute their results. This approach allows the calculation of the value of such Performance-Based RSUs based on a large number of possible stock price path scenarios. Our key assumptions include a performance period of 2.92 years, expected volatility of 57.4%, and a risk-free rate of 0.18%. As the Company recently completed its IPO in November 2020, expected volatility was based on the average historical stock price volatility of comparable publicly-traded companies over the performance period. The risk-free rate is based on the U.S. treasury zero-coupon issues in effect at the time of grant over the performance period. Expense for these awards is recognized over the derived service period as determined through the Monte Carlo simulation model. The fair value at grant date and derived service periods calculated for these market condition Performance-Based RSUs were $30.84 and 0.38 years, respectively.

We recognized an expense of $7.0 million and $13.0 million related to share-based compensation expense for these awards of Performance-Based RSUs during the three and six months ended June 30, 2021, respectively. As of June 30, 2021, all of the stock-based compensation expense related to these Performance-Based RSUs was recognized.