Veritone, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Stock Plans

Stock Plans

9 Months Ended

Sep. 30, 2022

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock Plans

NOTE 11. STOCK PLANS

Stock-Based Compensation

During the nine months ended September 30, 2022, the Company granted options to purchase an aggregate of 291,850 shares of its common stock that are subject to time-based vesting conditions.

The Company valued these stock options using the Black-Scholes Merton option pricing model. The following assumptions were used to compute the grant date fair values of the stock options granted during the nine months ended September 30, 2022:


Expected term (in years)	5.5 - 6.1
Expected volatility	82% - 92%
Risk-free interest rate	1.7% - 3.5%
Expected dividend yield		—

The assumptions used in calculating the fair values of purchase rights granted under the ESPP during the three months ended September 30, 2022 are set forth in the table below:


Expected term (in years)	0.5 - 2.0
Expected volatility	67% - 119%
Risk-free interest rate	0.1% - 3.0%
Expected dividend yield		—

The Company’s stock-based compensation expense by type of award and by operating expense grouping are presented below:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Stock-based compensation expense by type of award:
Restricted stock units	$	3,509	$	4,264	$	9,999	$	14,014
Stock awards		—		—				19
Performance-based stock options		—		—				16,314
Stock options		1,226		791		4,001		2,426
Employee stock purchase plan		367		86		540		337
Common stock issued for services		—		131		39		381
Total	$	5,102	$	5,272	$	14,579	$	33,491

Stock-based compensation expense by operating expense grouping:
Cost of revenue	$	46	$	—	$	90	$	—
Sales and marketing		538		226		1,728		1,358
Research and development		1,532		431		3,783		2,016
General and administrative		2,986		4,615		8,978		30,117
	$	5,102	$	5,272	$	14,579	$	33,491

Equity Award Activity Under Stock Plans

Restricted Stock Units

The Company’s restricted stock unit activity for the nine months ended September 30, 2022 was as follows:


				Weighted
				Average Grant
	Shares			Date Fair Value
Unvested at December 31, 2021		886,461		$	32.56
Granted		766,935		$	13.18
Forfeited		(40,500	)	$	24.88
Vested		(511,719	)	$	37.38
Unvested at September 30, 2022		1,101,177		$	15.60

As of September 30, 2022, total unrecognized compensation cost related to restricted stock units was $12,339, which is expected to be recognized over a weighted average period of 1.88 years.

Performance-Based Stock Options

The activity during the nine months ended September 30, 2022 related to stock options that are subject to performance-based vesting conditions tied to the achievement of stock price goals by the Company was as follows:


				Weighted-Average
							Remaining		Aggregate
					Exercise		Contractual		Intrinsic
	Options				Price		Term		Value
Outstanding at December 31, 2021		3,834,441			$	11.05
Exercised		(40,916	)		$	5.61
Expired		(14,243	)		$	5.30
Outstanding at September 30, 2022		3,779,282			$	11.13		5.8	$	2
Exercisable at September 30, 2022		3,779,282			$	11.13		5.8	$	2

The aggregate intrinsic value of the options exercised during the nine months ended September 30, 2022 and 2021 was $275 and $7,665, respectively. No performance-based stock options were granted during the nine months ended September 30, 2022 and 2021 and no performance-based stock options vested during the nine months ended September 30, 2022. During the nine months ended September 30, 2021, the Company achieved all of the stock price milestones applicable to substantially all of the performance-based stock options and, as a result, such performance-based stock options vested and all associated unrecognized compensation was accelerated and recognized in full as a one-time expense of $16,268.

Stock Options

The activity during the nine months ended September 30, 2022 related to all other stock options was as follows:


				Weighted-Average
							Remaining		Aggregate
					Exercise		Contractual		Intrinsic
	Options				Price		Term		Value
Outstanding at December 31, 2021		5,508,608			$	15.10
Granted		630,467			$	11.50
Exercised		(49,343	)		$	5.91
Forfeited		(190,212	)		$	19.44
Expired		(41,776	)		$	15.45
Outstanding at September 30, 2022		5,857,744			$	14.69		6.0	$	1,464
Exercisable at September 30, 2022		4,504,070			$	14.03		5.1	$	1,049

The weighted average grant date fair value of stock options granted during the nine months ended September 30, 2022 and 2021 was $8.59 and $19.95 per share, respectively. The aggregate intrinsic value of the stock options exercised during the nine months ended September 30, 2022 and 2021 was $274 and $9,521, respectively. The total grant date fair value of stock options vested during the nine months ended September 30, 2022 and 2021 was $4,204 and $1,797, respectively. At September 30, 2022, total unrecognized compensation expense related to stock options was $14,423 and is expected to be recognized over a weighted average period of 2.9 years.

The aggregate intrinsic values in the tables above represent the difference between the fair market value of the Company’s common stock and the average option exercise price of in-the-money options, multiplied by the number of such stock options.

Employee Stock Purchase Plan

During the nine months ended September 30, 2022, a total of 130,538 shares of common stock were purchased under the Company’s ESPP. As of September 30, 2022, accrued employee contributions for future purchases under the ESPP totaled $250.