Stock-based compensation

3 Months Ended

Mar. 31, 2025

Share-Based Payment Arrangement [Abstract]

Service-based vesting stock options

The following is a summary of service-based vesting stock option activity for the three months ended March 31, 2025, and the status of service-based vesting stock options outstanding as of March 31, 2025:


	Three Months Ended March 31, 2025
	Options	Wtd. Avg. Exercise Price
Outstanding as of beginning of period	127,000	$	2.19
Exercised	—	—
Outstanding as of March 31, 2025	127,000	$	2.19

Stock options exercisable as of March 31, 2025	127,000	$	2.19

As of March 31, 2025, there was $2.6 million of aggregate intrinsic value of outstanding and exercisable service-based vesting stock options. Intrinsic value is the total pretax intrinsic value for all “in-the-money” options (i.e., the difference between the Company’s closing stock price on the last trading day of the reporting period and the exercise price, multiplied by the number of shares) that would have been received by the option holders had all option holders exercised their options on March 31, 2025. This amount will change based on the fair market value of the Company’s stock. We did not recognize stock compensation expense related to service-based options during the three months ended March 31, 2025. There were no exercises of service vesting-based awards during the three months ended March 31, 2025. There were no service-based vesting options granted during the three months ended March 31, 2025. The weighted average remaining contractual life of service-based vesting stock options outstanding and exercisable as of March 31, 2025 is 1.2 years. There were no unrecognized compensation costs for service-based vesting stock options as of March 31, 2025.

Restricted stock

Service-based vesting restricted stock

The following is a summary of service-based vesting restricted stock activity for the three months ended March 31, 2025, and the status of unvested service-based vesting restricted stock outstanding as of March 31, 2025:


	Three Months Ended March 31, 2025
	Shares	Wtd. Avg. Grant Date Fair Value
Outstanding as of beginning of period	1,295,640	$	16.00
Granted	290,333	25.33
Vested	(171,379)	19.47
Forfeited	(15,151)	14.17
Non-vested as of March 31, 2025	1,399,443	$	17.53

The aggregate fair value of the service-based vesting awards granted was $7.4 million during the three months ended March 31, 2025. The aggregate fair value of the service-based vesting awards that vested was $4.5 million during the three months ended March 31, 2025.

We recognized stock compensation expense related to service-based vesting awards of $2.7 million during the three months ended March 31, 2025. As of March 31, 2025, there was $22.5 million in unrecognized compensation costs related

to service-based vesting awards. The weighted average remaining recognition period over which these service-based vesting awards will be expensed is approximately 2.8 years.

Performance-based restricted stock

On March 8, 2024, the Company granted a performance-based restricted stock award for 109,512 shares to an executive. The shares granted contain performance conditions based on Company metrics related to future performance. The shares will vest as to between 0% and 200% of the number of restricted shares granted to the recipient based on performance conditions during the period beginning on January 1, 2024 through December 31, 2025. The grant date fair value of this award was $17.36 per share. The fair value of this award is being expensed on a straight-line basis over the requisite service period ending on December 31, 2025.

During the fourth quarter of the year ended December 31, 2024, it was determined the probability of attainment of the performance condition increased to greater than 100% of shares granted. In accordance with ASC 718, we recognized a cumulative catch up in stock compensation expense of $0.4 million to reflect the increased probability the performance-based award would vest in excess of the shares originally granted. The fair value of this award is being expensed on a straight-line basis in accordance with the estimated quantity of shares expected to vest over the requisite service period ending on December 31, 2025.

During the three months ended March 31, 2025, the Company's Board approved a modification to the metrics underlying the performance-based award to give effect to the adjusted operating results of the Company following the divestitures that occurred during the year ended December 31, 2024. The modification increased the probability that the performance-based award would vest in excess of the shares originally granted to its maximum amount of 200%. In accordance with ASC 718, this modification resulted in an incremental compensation cost of $1.6 million, which will be recognized over the remainder of the service period of the award.

We recognized stock compensation expense of $0.4 million related to performance-based restricted stock awards for the three months ended March 31, 2025. As of March 31, 2025, there was $2.7 million in unrecognized non-cash compensation costs related to performance-based restricted stock awards expected to vest. We expect to recognize those costs over 0.8 years. Non-cash compensation costs are expensed over the period for which performance was measured.

There were no performance-based restricted stock awards granted or vested during the three months ended March 31, 2025.

Market-based restricted stock

The following is a summary of market-based restricted stock activity under our stock option plan for the three months ended March 31, 2025 and the status of market-based restricted stock outstanding as of March 31, 2025:


	Three Months Ended March 31, 2025
	Shares	Wtd. Avg. Grant
Outstanding as of beginning of period	495,686	$	25.69
Granted	451,801	32.91
Vested	(470,287)	25.19
Non-vested as of March 31, 2025	477,200	$	33.02

The following is a summary of key inputs to our market-based restricted stock awards as of March 31, 2025:


							Fair Value Assumptions
	Grant Date	Target Shares	Vesting Range	Market Condition Period	FV of Award (in millions)		Volatility		Risk Free Rate		Dividend Rate		Attainment %		Vested Shares
2023 TSR(1)	1/3/2023	268,738	0% - 200%	1/1/2023 - 12/31/2024	$	6.8	78	%	4.4	%	—	%	175	%	470,287
2024 TSR(2)	3/8/2024	239,464	0% - 200%	1/1/2024 - 12/31/2025	$	6.3	80	%	4.6	%	—	%	N/A		N/A
2025 TSR	3/18/2025	250,252	0% - 200%	1/1/2025 - 12/31/2026	$	9.8	60	%	4.1	%	—	%	N/A		N/A

(1) Of the $6.8 million fair value of the 2023 Total Shareholder Return ("TSR") award being expensed on a straight-line basis over the grant date to the vesting date, $1.6 million of expense was recognized in 2023 to reflect accelerations in the vesting period of certain awards.

(2) Of the $6.3 million fair value of the 2024 TSR award being expensed on a straight-line basis over the grant date to the vesting date, $0.3 million of expense was recognized in 2024 to reflect accelerations in the vesting period of certain awards.

Each of the market-based restricted stock awards outlined above were granted to its executives. The restricted stock awards granted contain a market condition based on TSR. The TSR market condition measures the Company’s performance against a peer group. The market-based restricted stock awards vest at a range determined by the Compensation Committee of the Board of Directors in comparison to the TSR of a group of the Company's peers. The fair value of these awards are determined using a Monte Carlo simulation with various assumptions. These assumptions include historical volatility, dividend yield, and a risk-free interest rate. The historical volatility is based on the most recent 2-year period for the Company and correlated with the components of the peer group. The stock price projection for the Company and the components of the peer group assumes a 0% dividend yield. This is mathematically equivalent to reinvesting dividends in the issuing entity over the performance period. The risk-free interest rate is based on the yield on the U.S. Treasury Strips as of the measurement date with a maturity consistent with the 2-year term associated with the market condition of these awards. The fair value of these awards are expensed on a straight-line basis over the grant date to the vesting date.

When the TSR period for each award has elapsed, the Company determines the TSR attainment percentage to award each recipient based on the targeted amount of shares granted.

We recognized stock compensation expense of $1.0 million and $1.1 million related to market-based restricted stock awards for the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, there were $12.0 million in unrecognized non-cash compensation costs related to market-based restricted stock awards expected to vest. The weighted average remaining recognition period over which these market-based awards will be expensed is approximately 1.5 years.

The aggregate fair value of the market-based awards granted was $6.3 million for both the three months ended March 31, 2025 and 2024. The aggregate fair value of the market-based awards that vested was $11.5 million and $5.1 million for the three months ended March 31, 2025 and 2024, respectively.

Total stock compensation expense

Compensation expense associated with equity-based awards is recognized on a straight-line basis over the requisite service period, with awards generally vesting over a 4-year period, and forfeitures recognized as incurred. We recorded total stock compensation expense for the three months ended March 31, 2025 and 2024, as follows:


	Three Months Ended March 31,
(In thousands)		2025		2024
Cost of revenue		$	292	$	308
General and administrative costs		2,967		2,833
Sales and marketing costs		388		424
Research and development costs		506		563
Total		$	4,153	$	4,128