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, 2023

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 were 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, as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or non-qualified stock options. As of March 31, 2023, 8,762,366 shares of common stock were available for issuance as future awards under the 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, 2022	7,123,300	$	9.33	6.11	$	262,419
Granted	1,484,072	28.62
Exercised	(1,248,497)	2.55
Forfeited / Expired	(408,439)	45.44
Options outstanding as of March 31, 2023	6,950,436	$	12.73	6.12	$	45,689
Vested and expected to vest (net of estimated forfeitures) at March 31, 2023	6,892,464	$	12.59	6.10	$	45,688
Exercisable as of March 31, 2023	5,565,191	$	8.16	5.41	$	45,162

At March 31, 2023, total unrecognized stock-based compensation expense related to unvested stock options, net of estimated forfeitures, was $23,517, with an expected remaining weighted-average recognition period of 2.05 years.

Restricted Stock

Awards of restricted stock units may be either grants of time-based restricted units (“RSUs”) or performance-based restricted units (“PSUs”) 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 PSUs with a performance condition are recognized on a straight-line basis based on the most likely attainment scenario, which is re-evaluated each period.

Restricted stock agreements (“RSAs”) are awards of Class A common stock that are legally issued and outstanding. RSAs are subject to restrictions on transfer and are generally subject to a risk of forfeiture if the award recipient ceases providing services to the Company prior to the lapse of the restrictions. The stock-based compensation expense for these awards was determined using the closing price on the date of grant applied to the total number of shares that were anticipated to fully vest. The RSAs have time conditions and 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 one year, depending on the terms of the RSA.

The following table summarizes RSU, PSU, and RSA activity:


	Number of Shares	Weighted-Average Grant Date Fair Value




Unvested restricted shares outstanding as of March 31, 2022	373,301	$	35.82
Granted	1,646,582	22.91
Vested	(287,206)	15.69
Forfeited	(62,088)	30.09
Unvested restricted shares outstanding as of March 31, 2023	1,670,589	$	24.96

At March 31, 2023, total unrecognized stock-based compensation expense related to RSUs, PSUs and RSAs was $30,632, with an expected remaining weighted-average recognition period of 2.18 years.

Valuation of Awards

For stock options granted, the Company 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 2023, 2022, and 2021 are presented below.

Year ended March 31,

2023

2022

2021

Risk-free interest rate

2.71% to 4.38%

0.63% to 1.77%

0.21% to 0.66%

Expected life of the options (years)

5.27 to 5.33

4.82 to 5.27

4.93 to 5.23

Expected volatility

72% to 80%

72% to 72%

64% to 72%

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,
	2023		2022		2021
Total fair value of options vested	$	15,375	$	11,495	$	4,816
Total intrinsic value of options exercised	$	16,909	$	68,163	$	97,603

Stock-Based Compensation Expense

Stock-based compensation expense for the years ended March 31, 2023, 2022, and 2021, was $30,401, $19,304, and $5,877, respectively, and was recorded within general and administrative expenses on the consolidated statements of operations and comprehensive income (loss).