Digital Turbine, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Stock-Based Compensation

Stock-Based Compensation

12 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

Stock-Based Award Plans

On September 15, 2020, the Company’s stockholders approved the 2020 Equity Incentive Plan of Digital Turbine, Inc. (the “2020 Plan”), pursuant to which the Company may grant equity incentive awards to directors, employees and other eligible participants. A total of 12,000,000 shares of common stock are reserved for grant under the 2020 Plan. The types of awards that may be granted under the 2020 Plan include incentive and non-qualified stock options, stock appreciation rights, restricted stock, and restricted stock units. The 2020 Plan became effective on September 15, 2020, and has a term of ten years. Stock options may be either “incentive stock options” (“ISOs”), as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or non-qualified stock options (“NQSOs”). As of March 31, 2022, 11,422,493 shares of common stock were available for issuance as future awards under the Company's 2020 Plan.

The following table summarizes stock option activity:


	Number of Shares	Weighted-Average Exercise Price (per share)		Weighted-Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (in thousands)




Options outstanding as of March 31, 2021	8,146,445	$	4.01	6.86	$	622,249
Granted	691,957	70.67
Exercised	(1,312,460)	3.28
Forfeited / Expired	(402,642)	26.55
Options outstanding as of March 31, 2022	7,123,300	$	9.33	6.11	$	262,419

Exercisable as of March 31, 2022	5,714,938	$	4.93	5.56	$	227,050

At March 31, 2022, total unrecognized stock-based compensation expense related to unvested stock options, net of estimated forfeitures, was $19,423, with an expected remaining weighted-average recognition period of 2.07 years.

Restricted Stock

Awards of restricted stock units ("RSUs") may be either grants of time-based restricted units or performance-based restricted units that are issued at no cost to the recipient. The cost of these awards is determined using the fair market value of the Company’s common stock on the date of the grant. No capital transaction occurs until the units vest, at which time they are converted to restricted or unrestricted stock. Compensation expense for RSUs with a time condition is recognized on a straight-line basis over the requisite service period. Compensation expense for RSUs with a performance condition are recognized on a straight-line basis based on the most likely attainment scenario, which is re-evaluated each period.

From time-to-time, the Company enters into restricted stock agreements (“RSAs”) with certain employees and consultants. The RSAs have performance conditions, market conditions, time conditions, or a combination thereof. In some cases, once the stock vests, the individual is restricted from selling the shares of stock for a certain defined period, from three months to two years, depending on the terms of the RSA. As reported in our Current Reports on Forms 8-K filed with the SEC on February 12, 2014, and June 25, 2014, the Company adopted a Board Member Equity Ownership Policy that supersedes any post-vesting lock-up in RSAs that are applicable to people covered by the policy, which includes the Company’s Board of Directors and Chief Executive Officer.

The following table summarizes restricted stock unit ("RSU") and restricted stock award ("RSA") activity:


	Number of Shares	Weighted-Average Grant Date Fair Value




Unvested restricted shares outstanding as of March 31, 2021	333,544	$	4.55
Granted	388,405	39.71
Vested	(319,356)	4.94
Forfeited	(29,292)	49.68
Unvested restricted shares outstanding as of March 31, 2022	373,301	$	35.82

At March 31, 2022, total unrecognized stock-based compensation expense related to RSUs and RSAs was $7,015, with an expected remaining weighted-average recognition period of 1.78 years.

Valuation of Awards

For stock options granted, the Company typically uses the Black-Scholes option pricing model to estimate the fair value of stock options at grant date. The Black-Scholes option pricing model incorporates various assumptions, including volatility, expected term, risk-free interest rates, and dividend yields. The assumptions utilized in this model during fiscal years 2022, 2021, and 2020 are presented below.

Year ended March 31,

2022

2021

2020

Risk-free interest rate

0.63% to 1.77%

0.21% to 0.66%

0.64% to 2.25%

Expected life of the options

4.82 to 5.27 years

4.93 to 5.23 years

5.02 to 9.83 years

Expected volatility

72% to 72%

64% to 72%

64% to 66%

Expected dividend yield

—%

Total fair value of options vested and total intrinsic value of options exercised was as follows for the fiscal years presented:


	Year ended March 31,
	2022		2021		2020
Total fair value of options vested	$	11,495	$	4,816	$	2,577
Total intrinsic value of options exercised (a)	$	68,163	$	97,603	$	10,890

(a) The total intrinsic value of options exercised represents the total pre-tax intrinsic value (the difference between the stock price at exercise and the exercise price multiplied by the number of options exercised) that was received by the option holders who exercised their options during the fiscal year.

Stock-Based Compensation Expense

Stock-based compensation expense for the years ended March 31, 2022, 2021, and 2020, was $19,304, $5,877, and $3,353, respectively, and was recorded within general and administrative expenses on the consolidated statements of operations and comprehensive income / (loss).