Stock-Based Compensation

9 Months Ended

Sep. 30, 2025

Share-Based Payment Arrangement [Abstract]

Note 10 – Stock-Based Compensation

The Company recorded stock-based compensation expense of $2.4 million and $4.6 million for the three and nine months ended September 30, 2025, respectively, and expense of $2.4 million and $4.3 million for the three and nine months ended September 30, 2024, respectively, in Selling, general and administrative expenses in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). A portion of the Company’s stock-based awards are liability-classified. Accordingly, changes in the market value of DSG common stock may result in stock-based compensation expense or benefit in certain periods. A stock-based compensation liability of $0.9 million as of September 30, 2025 and $2.0 million as of December 31, 2024 was included in Accrued expenses and other current liabilities in the Unaudited Condensed Consolidated Balance Sheets.

Restricted Stock Awards

During the nine months ended September 30, 2025, the Company issued approximately 104,650 restricted stock awards (“RSAs”) that vest over one year to five years from the grant date with a grant date fair value of $3.2 million. Upon vesting, the vested RSAs are exchanged for an equal number of shares of DSG common stock. The participants have no voting or dividend rights under the RSAs. The RSAs are valued at the closing price of the DSG common stock on the date of grant and the expense is recorded ratably over the vesting period.

Stock Options

During the nine months ended September 30, 2025, the Company granted approximately 422,500 stock options with a grant date fair value of $5.4 million. Stock options vest through the fifth anniversary from the grant date. Each stock option can be exchanged for one share of DSG common stock at the stated exercise price. Upon vesting, stock options are recognized as a component of equity.

The grant date fair value of the stock options issued during the nine months ended September 30, 2025 was estimated using a Black-Scholes valuation model. The weighted average fair value assumptions used in the model were as follows:


Expected volatility			45.6%
Risk-free rate of return			4.1%
Expected term (in years)			6.5
Expected annual dividend			$0

The expected volatility was based on the historic volatility of the Company’s stock price commensurate with the expected life of the stock options. The risk-free rate of return reflects the interest rate offered for zero coupon treasury bonds over the expected life of the stock options. The expected life represents the period of time that options granted are expected to be outstanding and was calculated using the simplified method allowed by the SEC, which approximates our historical experience. The estimated annual dividend was based on the recent dividend payout trend.