Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.21.2
Stock-Based Compensation
 9 Months Ended
Sep. 30, 2021
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation Stock-Based Compensation
The following tables present the Company's stock-based compensation expense by award type and financial statement line for the three and nine months ended September 30, 2021 and 2020 (dollars in thousands):

Three Months Ended
September 30,		 Nine Months Ended September 30,
2021 2020 2021 2020
Equity-classified awards:
MIUs $ 139  $ 157  $ 417  $ 470 
RSUs - employee 924  —  924  — 
RSUs - nonemployee 3  —  3  — 
PSUs - employee 114  —  114  — 
Total equity-classified awards 1,180  157  1,458  470 
Total stock-based compensation $ 1,180  $ 157  $ 1,458  $ 470 
Three Months Ended
September 30,		 Nine Months Ended September 30,
2021 2020 2021 2020
Cost of revenue $ 154  $ 16  $ 182  $ 48 
Research and development 417  32  474  95 
Sales and marketing 255  32  312  95 
General and administrative 354  77  490  232 
Total stock-based compensation $ 1,180  $ 157  $ 1,458  $ 470 
As of September 30, 2021, unrecognized stock-based compensation expense related to nonvested awards by award type and their expected weighted-average recognition periods are summarized in the following table (dollars in thousands):

Unrecognized Stock-based Compensation Expense Weighted-average Recognition Period (1)
Equity-classified awards:
MIUs $ 1,807  2.10 years
RSUs - employee 29,142  3.76 years
RSUs - nonemployee 95  3.72 years
PSUs - employee 10,314  10.67 years
Total equity-classified awards 41,358 
Total unrecognized stock-based compensation $ 41,358 
(1) The weighted-average recognition period is calculated as the sum of the weighted remaining period to recognize expense for nonvested awards divided by the sum of the shares that are expected to vest for all awards that have not vested or expired by the end of the reporting period. For awards that the straight-line method is used for expense recognition, the remaining recognition period is the amount of time between the end of the reporting period and the end of the entire award. For awards that the accelerated attribution method is used for expense recognition, the remaining recognition period is the amount of time between the end of the reporting period and the end of each separately vesting portion of the award.
2021 Equity Incentive Plan
The Compensation Committee of the Company approved 4,654,320 RSU and 1,601,875 PSU awards in the third quarter of 2021. As of September 30, 2021, 20,900 unvested RSUs were forfeited upon the grantee’s termination of service, and 4,633,420 RSUs and 1,601,875 PSUs were outstanding.
Restricted Stock Units
As of September 30, 2021, all RSUs granted to employees and nonemployees are classified as equity.
RSUs activities for the nine months ended September 30, 2021 are summarized as follows (in thousands, except for per share data):
Equity-classified RSUs - employee
Number of Shares Weighted-average Grant Date Fair Value (per share) Weighted-average Remaining Contractual Term (1)
Outstanding at December 31, 2020 —  — 
Granted 4,639  $ 6.51 
Vested —  — 
Forfeited (21) 6.51 
Outstanding at September 30, 2021 4,618  $ 6.51  2.09 years

Equity-classified RSUs - nonemployee
Number of Shares Weighted-average Grant Date Fair Value (per share) Weighted-average Remaining Contractual Term (1)
Outstanding at December 31, 2020 —  — 
Granted 15  $ 6.51 
Vested —  — 
Forfeited —  — 
Outstanding at September 30, 2021 15  $ 6.51  1.94 years
(1) The weighted-average remaining contractual term is calculated as the sum of the weighted amount of time between the reporting period end and the vest date divided by the sum of the shares that are outstanding, expected to vest or currently exercisable by the end of the reporting period.
Performance-Based Restricted Stock Units
As of September 30, 2021, all PSUs granted to employees are classified as equity.
As discussed in Note 2(v), the Company estimates the fair value of the PSUs at each measurement date by using a Monte Carlo simulation. The key inputs used in the Monte Carlo simulation are disclosed in the table below. The stock price is based on the closing price of the Company’s Class A common stock on the Nasdaq as of the valuation date. The volatility input is estimated using the volatility of Company’s peer companies as well as the Company’s own implied volatility. The expected life of the PSUs 30 years and all PSUs are assumed to be fully vested at the end of year 30. The risk-free interest rate is based on the Thirty-year Constant Maturity Treasury Rate. The vesting hurdles are set forth in the PSU agreement.
The weighted average assumptions used to value PSUs during the period presented are as follows:

September 30, 2021
Stock price $ 6.52 
Measurement period 30.00 years
Expected volatility 47.50  %
Risk-free rate 1.91  %
Vesting hurdle 1 $ 12.50 
Vesting hurdle 2 $ 15.00 
Vesting hurdle 3 $ 17.50 
PSUs activities for the nine months ended September 30, 2021 are summarized as follows (in thousands, except for per share data):

Equity-classified PSUs - employee
Number of Shares Weighted-average Grant Date Fair Value (per share) Weighted-average Remaining Contractual Term (1)
Outstanding at December 31, 2020 —  — 
Granted 1,602  $ 6.51 
Vested —  — 
Forfeited —  — 
Outstanding at September 30, 2021 1,602  $ 6.51  10.67 years
(1) The weighted-average remaining contractual term is calculated as the sum of the weighted amount of time between the reporting period end and the vest date divided by the sum of the shares that are outstanding, expected to vest or currently exercisable by the end of the reporting period.

Management Incentive Units
As discussed in Note 2(v), stock-based compensation for MIUs is measured based on the grant date fair value of the award estimated by using a Monte Carlo simulation. Assumptions used in the Monte Carlo simulation are disclosed in the table below. The holding period is the expected period until a major liquidity event is expected to occur. The expected volatility assumption is based on the historical volatility of a peer group of publicly traded companies. The discount for lack of marketability is driven by (i) the assumed participation threshold as outlined in MIU Agreements and (ii) the assumed holding period of two years. The risk-free rate for the expected term of the awards is based on U.S. Treasury zero-coupon issues at the time of grant.
The weighted average assumptions used to value MIUs during the periods presented are as follows:

September 30, 2021 December 31, 2020
Holding period 2.00 years 2.00 years
Volatility 45.0 % 45.0  %
Discount for lack of marketability 28.0 % 28.0  %
Risk-free rate 1.6 % 1.6  %
MIUs activities for the nine months ended September 30, 2021 are summarized as follows (in thousands, except for per share data):

Number of Shares Weighted-average Grant Date Fair Value (per share) Weighted-average Remaining Contractual Term (1)
Outstanding at December 31, 2020 3,518 $ 0.79 
Granted — — 
Vested (704) 0.79 
Forfeited — — 
Outstanding at September 30, 2021 2,814 $ 0.79  1.75 years
(1) The weighted-average remaining contractual term is calculated as the sum of the weighted amount of time between the reporting period end and the vest date divided by the sum of the shares that are outstanding, expected to vest or currently exercisable by the end of the reporting period.