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Stock-Based Compensation
 12 Months Ended
Dec. 31, 2024
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation Stock-Based Compensation
2020 Executive Equity Incentive Plan
In August 2020, the Company’s Board of Directors approved the 2020 Executive Equity Incentive Plan (the “Executive Equity Plan”). The Executive Equity Plan permitted the granting of nonstatutory stock options (“NSOs”) and RSUs to the Company’s employees, consultants, and directors. A total of 165,900,000 shares of the Company’s Class B common stock were reserved for issuance under the Executive Equity Plan. During August 2020, options to purchase 162,000,000 shares of Class B common
stock and restricted stock units covering 3,900,000 shares of the Company’s Class B common stock were granted to certain officers.
The Executive Equity Plan was terminated prior to the Company’s Direct Listing, and no additional awards will be granted under the Executive Equity Plan. However, the Executive Equity Plan will continue to govern the terms and conditions of the outstanding awards previously granted under the Executive Equity Plan.
2020 Equity Incentive Plan
In September 2020, prior to the Direct Listing, the Company’s Board of Directors approved the 2020 Equity Incentive Plan (“2020 Plan”). The 2020 Plan provides for the grant of incentive stock options (“ISOs”), NSOs, restricted stock, RSUs, SARs, and performance awards to the Company’s employees, directors, and consultants. A total of 150,000,000 shares of the Company’s Class A common stock were initially reserved for issuance pursuant to the 2020 Plan. In addition, the number of shares of Class A common stock reserved for issuance under the 2020 Plan includes certain shares of common stock subject to awards under the 2010 Equity Incentive Plan (“2010 Plan”) and Executive Equity Plan in the case of certain occurrences, such as expirations, terminations, exercise and tax-related withholding, or failures to vest. Shares of Class B common stock added to the 2020 Plan from the 2010 Plan or Executive Equity Plan are reserved for issuance under the Company’s 2020 Plan as Class A common stock. The number of shares of Class A common stock available for issuance under the 2020 Plan will also include an annual increase on the first day of each fiscal year beginning on January 1, 2022, equal to the least of:
•250,000,000 shares of the Company’s Class A common stock;
•Five percent of the outstanding shares of the Company’s common stock as of the last day of the immediately preceding fiscal year; or
•such other amount as the administrator of the 2020 Plan determines.
Under the 2020 Plan, the exercise price of options granted is generally at least equal to the fair market value of the Company’s Class A common stock on the date of grant. The term of an ISO generally may not exceed ten years. Additionally, the exercise price of any ISO granted to a 10% stockholder shall not be less than 110% of the fair market value of the common stock on the date of grant, and the term of such option grant shall not exceed five years. Options and other equity awards become vested and, if applicable, exercisable based on terms determined by the Board of Directors or another plan administrator on the date of grant, which is typically four years for new employees and varies for subsequent grants.
Stock Options and SARs
The following table summarizes stock option and SAR activity for the year ended December 31, 2024 (in thousands, except per share amounts and years):
Options OutstandingSARs Outstanding
Number of Awards
Weighted-Average Exercise Price Per Share
Weighted-Average
Remaining Contractual Life (years)
Aggregate Intrinsic Value
Number of Awards
Weighted-Average Exercise Price Per Share
Weighted-Average
Remaining Contractual Life (years)
Aggregate Intrinsic Value
Balance as of December 31, 2023278,470 $8.62 7.6$2,381,172 — $— 0.0$— 
Granted— — 51,620 50.73 
Exercised(99,297)7.51 (41,023)50.00 
Canceled and forfeited(1,064)5.78 (4,160)50.19 
Balance as of December 31, 2024178,109 $9.26 6.9$11,821,740 6,437 $55.75 6.7$127,976 
Vested and exercisable as of December 31, 202480,155 $6.66 6.0$5,528,204 — $— 0.0$— 
The aggregate intrinsic value of options and SARs outstanding, as well as those which are vested and exercisable, is calculated as the difference between the exercise price of the underlying options and the fair value of the Company’s common stock as of the respective periods presented, accounting for the maximum appreciation of an award, as applicable. The aggregate intrinsic value of options exercised during the years ended December 31, 2024, 2023, and 2022 was $3.8 billion, $476.8 million, and $112.3 million, respectively, and is calculated based on the difference between the exercise price and the fair value of the Company’s common stock on the exercise date. The aggregate intrinsic value of SARs exercised during the year ended December 31, 2024 was $707.9 million. SARs exercised during the years ended December 31, 2023 and 2022 were not material.
There were no options granted during the years ended December 31, 2024, 2023, and 2022. The total grant-date fair value of options that vested during the years ended December 31, 2024, 2023, and 2022 was $107.7 million, $131.0 million, and $170.8 million, respectively. The weighted-average grant-date fair value of SARs granted during the year ended December 31, 2024 was $4.08 per share. The total grant-date fair value of SARs that vested during the year ended December 31, 2024 was $138.8 million. No SARs were vested in the years ended December 31, 2023 or 2022.
As of December 31, 2024, the total unrecognized stock-based compensation expense related to options and SARs outstanding was $500.4 million and $54.8 million, respectively, which is expected to be recognized over a weighted-average service period of six and seven years, respectively.
Market-Vesting SARs
During the year ended December 31, 2024, the Company granted Market-Vesting SARs that vest upon the satisfaction of a market-based vesting condition and are subject to continued service. During the three months ended December 31, 2024, the market-based vesting condition was satisfied and all Market-Vesting SARs were vested when the price per share of the Company’s Class A common stock exceeded $50 within an open trading window (measured based on the closing price on the immediately prior trading day) (an “Above Price Day”). The Company immediately accelerated $115.8 million of stock-based compensation expense as the SARs vested prior to their grant date derived service period. Following the satisfaction of such condition, Market-Vesting SARs could only be exercised on an Above Price Day, up to the maximum appreciation of $20 per Market-Vesting SAR. During the three months ended December 31, 2024, all outstanding Market-Vesting SARs were exercised. The related employee withholding taxes were funded by net share settlement, where shares withheld by the Company are reflected as a reduction to additional paid in capital. When the related employee withholding taxes are remitted, they are presented as cash outflows for financing activities.
The Company determined the grant-date fair value of Market-Vesting SARs using a Monte Carlo simulation model which incorporates various assumptions including the contractual term, expected stock price volatility, risk-free interest rate, suboptimal exercise factor, annual post-vest termination rate, and cost of capital as of the grant date.
For the Market-Vesting SARs granted during the year ended December 31, 2024, the assumptions used in the Monte Carlo simulation model included the following:
Year Ended
December 31, 2024
Expected volatility rate
55.2% - 58.9%
Risk-free interest rate
4.1% - 4.7%
The expected volatility rate is based on a combination of the Company’s implied volatility and the historical volatility of comparable publicly-traded companies. The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of the SAR. The Company has never paid and has no plans to pay dividends on its common stock, therefore the expected dividend yield is zero.
Time-Vesting SARs
During the year ended December 31, 2024, the Company granted Time-Vesting SARs which vest over explicit service periods of up to nine years. Additionally, such Time-Vesting SARs become exercisable at expiration, during a limited window (“Exercise Window”), if the Company’s stock price reaches a certain threshold. Time-Vesting SARs have exercise prices of between $39–$70 and maximum appreciation values of between $60–$180.
The Company determined the grant-date fair value of Time-Vesting SARs using a Black-Scholes option-pricing model, calculated as the difference in fair value between a SAR with a strike price at the exercise price and a SAR with the strike price at its maximum appreciation, using the following assumptions:
Year Ended
December 31, 2024
Expected volatility rate
54.9% - 59.2%
Expected term (in years)
3.7 - 9.2
Risk-free interest rate
3.4% - 3.9%
Expected dividend yield—%
The expected volatility rate is based on a combination of the Company’s implied and historical volatility, and the historical volatility of comparable publicly-traded companies. The expected term represents the period of time the SARs are expected to be outstanding. The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of the SAR. The Company has never paid and has no plans to pay dividends on its common stock, therefore the expected dividend yield is zero.
RSUs and P-RSUs
The following table summarizes the RSU and P-RSU activity for the year ended December 31, 2024 (in thousands, except per share amounts):
RSUs OutstandingWeighted Average Grant Date Fair Value per ShareP-RSUs OutstandingWeighted Average Grant Date Fair Value per Share
Unvested and outstanding as of December 31, 202382,262 $10.71 1,976 $15.39 
Granted19,098 30.90 4,336 24.02 
Vested(31,989)13.65 (3,654)20.52 
Canceled and forfeited(4,135)15.31 (512)11.29 
Adjustment for performance results achieved(1)
— $— (1,569)$18.90 
Unvested and outstanding as of December 31, 202465,236 $14.89 577 $41.93 
—————
(1) This amount represents the difference between the maximum number of shares that could have been issued under the grant and the actual number of shares earned based on final performance.
During the fiscal year ended December 31, 2024, the Company granted RSUs that have only a service-based vesting condition, as well as P-RSUs that have both service-based and performance-based vesting conditions. The service-based vesting condition for each is generally satisfied upon continued service through a specified date. Vesting periods for the RSUs and P-RSUs are generally up to four years and three months, respectively. The performance-based vesting condition is satisfied upon the achievement of certain Company performance goals set by the Compensation Committee of the Board of Directors. The ultimate number of P-RSUs earned and eligible to vest ranges between 0% to 100% of the target number of P-RSUs granted depending on the level of achievement of such Company performance goals.
The total grant-date fair value of RSUs vested during the years ended December 31, 2024, 2023, and 2022 was $436.6 million, $526.1 million, and $453.2 million, respectively. The total grant-date fair value of P-RSUs vested during the year ended December 31, 2024 was $75.0 million. No P-RSUs were vested in the years ended December 31, 2023 or 2022. As of December 31, 2024, the total unrecognized stock-based compensation expense related to the RSUs outstanding was $711.4 million, which is expected to be recognized over a weighted-average service period of three years. As of December 31, 2024, there was no unrecognized stock-based compensation expense related to the P-RSUs outstanding.
Stock-based Compensation Expense
Total stock-based compensation expense was as follows (in thousands):
Years Ended December 31,
202420232022
Cost of revenue$69,065 $35,995 $44,061 
Sales and marketing239,121 160,645 196,301 
Research and development165,065 98,064 93,871 
General and administrative218,387 181,199 230,565 
Total stock-based compensation expense$691,638 $475,903 $564,798 
The Company did not recognize any tax benefits related to stock-based compensation expense during the years ended December 31, 2024, 2023, or 2022.