Velo3D, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Equity Incentive Plans and Stock-Based Compensation

Equity Incentive Plans and Stock-Based Compensation

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Equity Incentive Plans and Stock-Based Compensation

Equity Incentive Plans and Stock-Based CompensationAs of September 30, 2023, the Company had a remaining allocated reserve of 30,298,210 shares of its common stock for issuance under its 2021 Equity Incentive Plan (the “2021 EIP”), which provides for the granting of stock options, restricted stock units (“RSUs”) and stock appreciation rights to employees, directors, and consultants of the Company. As of September 30, 2023, the Company had an allocated reserve of 7,371,214 shares of its common

stock for issuance under its 2021 Employee Stock Purchase Plan (“2021 ESPP”). As of September 30, 2023, the Company had not begun any offering periods for the 2021 ESPP.

Stock options

Activity under the 2021 EIP is set forth below:


	Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term in years
	(In thousands)	(Per share data)		(Years)
Outstanding as of December 31, 2021	21,191	$	0.58	8.2
Granted	—	$	—
Exercised	(2,795)	$	0.42
Forfeited or expired	(665)	$	2.49
Outstanding as of September 30, 2022	17,731	$	0.54	7.5
Options vested and expected to vest as of September 30, 2022	17,731	$	0.54
Vested and exercisable as of September 30, 2022	10,145	$	0.65

Outstanding as of December 31, 2022	16,960	$	0.54	7.3
Granted	—	$	—
Exercised	(1,400)	$	0.30
Forfeited or expired	(424)	$	0.62
Outstanding as of September 30, 2023	15,136	$	0.56	6.7
Options vested and expected to vest as of September 30, 2023	15,136	$	0.56
Vested and exercisable as of September 30, 2023	12,327	$	0.64

The aggregate intrinsic value of options outstanding was $18.4 million and $24.4 million, respectively, as of September 30, 2023 and December 31, 2022. Intrinsic value of options exercised for the nine months ended September 30, 2023 and 2022 was $3.8 million and $10.5 million, respectively. The total grant date fair value of options vested was $0.6 million and $1.5 million for the nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, total unrecognized compensation cost related to options was $0.4 million related to 2.8 million unvested options and is expected to be recognized over a weighted-average period of 1.1 years.

For the nine months ended September 30, 2023, there were no options granted.

Restricted Stock Units

The fair value of RSUs under the Company’s 2021 EIP is estimated using the value of the Company’s common stock on the date of grant.

The following table summarizes outstanding and expected to vest RSUs as of September 30, 2023 and 2022 and their activity during the nine months ended September 30, 2023 and 2022:


	Number of Shares	Weighted-Average Grant Date Fair Value		Aggregate Intrinsic Value
	(In thousands)	(Per share data)		(In thousands)
Balance as of December 31, 2021	4,041	$	7.26	$	31,563
Granted	2,912	3.81		11,500
Released	(385)	5.52		1,991
Cancelled	(370)	6.42		1,503
Balance as of September 30, 2022	6,198	$	5.80	$	24,422
Expected to vest as of September 30, 2022	6,198	$	5.80	$	24,422

Balance as of December 31, 2022	9,623	$	4.47	$	17,225
Granted	6,987	2.08		14,562
Released	(3,138)	3.39		5,862
Cancelled	(1,981)	3.97		4,454
Balance as of September 30, 2023	11,491	$	3.40	$	17,926
Expected to vest as of September 30, 2023	11,491	$	3.40	$	17,926

The aggregate intrinsic value of outstanding RSUs is calculated based on the closing price of the Company’s common stock as of the date outstanding. As of September 30, 2023, there was $33.2 million of unrecognized compensation cost related to 11.5 million unvested RSUs, which is expected to be recognized over a weighted average period of approximately 2.5 years. As of September 30, 2022, there was $30.3 million of unrecognized compensation cost related to 6.2 million unvested RSUs, which is expected to be recognized over a weighted average period of approximately 3.1 years.

Earnout Shares––Employees

The Earnout Shares issuable to holders of employee stock options are accounted as stock-based compensation expense as they are subject to forfeiture based on the satisfaction of certain employment conditions. The estimated fair values of the Earnout Shares associated with vested stock options are recognized as an expense and determined by the Monte Carlo simulation valuation model using a distribution of potential outcomes on a monthly basis over the five-year earnout period. The portion of the Earnout Shares associated with unvested stock options are recognized as an expense and considers the vesting continuing employment requirements.

Stock-based Compensation Expense

The following sets forth the total stock-based compensation expense by type of award included in the statements of operations:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(In thousands)
Restricted stock units	$	4,917	$	2,831	$	13,720	$	7,787
Stock options	88		415		956		1,473
Earnout shares–employees	1,711		1,911		4,810		5,830
	$	6,716	$	5,157	$	19,486	$	15,090

The following sets forth the total stock-based compensation expense for the stock options and RSUs included in the statements of operations:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(In thousands)
Research and development	$	3,115	$	2,407	$	9,104	$	7,485
Selling and marketing	1,637		1,144		4,718		3,399
General and administrative	1,964		1,606		5,664		4,206
	$	6,716	$	5,157	$	19,486	$	15,090