Quarterly report pursuant to Section 13 or 15(d)

Equity Based Awards

v3.24.2.u1
Equity Based Awards
6 Months Ended
Jun. 30, 2024
Share-Based Payment Arrangement [Abstract]  
Equity Based Awards

Note 10. Equity Based Awards

On July 13, 2021, the Company’s stockholders approved the Markforged Holding Corporation 2021 Stock Option and Incentive Plan (“2021 Plan”) and the Markforged Holding Corporation 2021 Employee Stock Purchase Plan (“2021 ESPP”). As of June 30, 2024, 36,078,548 and 10,491,352 shares of common stock were available for issuance under the 2021 Plan and 2021 ESPP, respectively.

Under the 2021 Plan, the Company can grant stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), unrestricted stock awards, cash-based awards, and dividend equivalent rights. The 2021 Plan provides that an additional number of shares of common stock will automatically be added to the shares of common stock authorized for issuance under the 2021 Plan on January 1 of each year. The number of shares of common stock added each year will be equal to (i) 5% of the number of shares of common stock issued and outstanding on the immediately preceding December 31 or (ii) such lesser amount as determined by the Company’s Board of Directors.

The 2021 ESPP allows eligible employees to authorize payroll deductions between 1% and 15% of the base salary or wages, up to $25,000 annually, to be applied toward the purchase of shares of the Company’s common stock occurring at offering periods determined by the Company. At each offering period, the eligible employee will have the option to acquire common stock at a discount of up to 15% of the lesser of the Company’s common stock on (i) the first trading day of the offering period or (ii) the last day of the offering period. The offering periods under the 2021 ESPP are not to exceed 27 months between periods. On January 1 of each subsequent year under the plan, the number of shares available for issuance under the plan will be increased by the lesser of (i) 4,700,000 shares of common stock, (ii) one percent of the number of shares of common stock issued and outstanding as of December 31 of the immediately preceding year, or (iii) number of shares of common stock determined by the Company. During the six months ended June 30, 2024 and 2023 the Company did not recognize stock compensation expense related to the 2021 ESPP as there were no grants under the 2021 ESPP.

Legacy Markforged's 2013 Stock Plan (the “2013 Plan”) was terminated at the Closing and no further awards will be granted thereunder. The 2013 Plan was terminated at Closing and all outstanding awards became outstanding under the 2021 Plan. Option activity under the plan for the year to date period ending June 30, 2024 is as follows:

 

 

 

Number of
Shares

 

 

Weighted-
Average
Exercise
Price
(Per
Share)

 

 

Weighted-
Average
Remaining
Contractual
Life
(in years)

 

Outstanding at December 31, 2023

 

 

10,888,451

 

 

$

2.07

 

 

 

6.13

 

Granted

 

 

 

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

 

 

 

Forfeited

 

 

(208,491

)

 

 

1.94

 

 

 

 

Outstanding at June 30, 2024

 

 

10,679,960

 

 

$

2.07

 

 

5.63

 

Options exercisable at June 30, 2024

 

 

10,308,889

 

 

$

2.07

 

 

 

5.61

 

 

The aggregate intrinsic value of stock options outstanding at June 30, 2024 was $6.0 thousand. As of June 30, 2024, the Company had 10,509,311 options vested and expected to vest.

Additional information regarding the exercise of stock options is as follows:

 

 

 

Six months ended June 30,

 

(in thousands, except weighted average)

 

2024

 

 

2023

 

Intrinsic value of options exercised

 

$

 

 

$

493

 

 

In the six months ended June 30, 2024 and 2023, the Company did not grant any options to purchase shares of Common Stock.

 

Restricted Stock Units

During the six months ended June 30, 2024, the Company awarded RSUs to newly hired employees and continuing employees. The fair value per share of these awards was determined based on the fair market value of our stock on the date of the grant and is being recognized as stock-based compensation expense over the requisite service period. The following table summarizes the RSU activity for the six months ended June 30, 2024:

 

 

 

Number of
Shares

 

 

Weighted-
Average
Grant Date Fair Value
(Per
Share)

 

Outstanding at December 31, 2023

 

 

15,310,998

 

 

$

2.12

 

Granted

 

 

2,496,011

 

 

 

0.46

 

Vested

 

 

(3,250,310

)

 

 

2.22

 

Forfeited

 

 

(1,040,967

)

 

 

2.33

 

Unvested at June 30, 2024

 

 

13,515,732

 

 

$

1.78

 

 

Stock-Based Compensation Expense

Total unrecognized stock-based compensation expense for the RSUs outstanding was $19.9 million at June 30, 2024, which is expected to be recognized over a weighted-average period of 2.3 years. Total unrecognized stock-based compensation expense for the options outstanding was $0.4 million at June 30, 2024, which is expected to be recognized over a weighted-average period of 0.3 years.

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(in thousands)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Stock options

 

$

296

 

 

$

716

 

 

$

595

 

 

$

1,454

 

Restricted stock units

 

 

2,951

 

 

 

1,222

 

 

 

6,150

 

 

 

4,629

 

Stock-based compensation expense for restricted stock units and options

 

$

3,247

 

 

$

1,938

 

 

$

6,745

 

 

$

6,083

 

 

During the three and six months ended June 30, 2024, the Company recognized de minimis stock-based compensation expense related to the Markforged Earnout. The unrecognized compensation expense related to the Markforged Earnout was $0.4 million and would be recognized over a remaining period of no more than 1.0 year, dependent on when vesting conditions are met.

The stock-based compensation expense for stock-based awards and earnout shares were recognized in the following captions within the condensed consolidated statements of operations for the three and six months ended June 30, 2024 and 2023:

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(in thousands)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Cost of revenue

 

$

35

 

 

$

89

 

 

$

84

 

 

$

162

 

Sales and marketing

 

 

387

 

 

 

499

 

 

 

792

 

 

 

975

 

Research and development

 

 

1,009

 

 

 

1,160

 

 

 

2,110

 

 

 

2,329

 

General and administrative

 

 

1,814

 

 

 

(58

)

 

 

3,720

 

 

 

2,580

 

Total stock-based compensation expense

 

$

3,245

 

 

$

1,690

 

 

$

6,706

 

 

$

6,046