We recognize stock-based compensation expense associated with stock options and restricted stock units ("RSUs"), and stock purchase rights. Stock options and RSUs are granted under the 2014 Stock Option Plan of Hotshine Holdings, Inc. (the “2014 Plan”) and 2021 Incentive Award Plan (the “2021 Plan”) while stock purchase rights are granted under the 2021 Employee Stock Purchase Plan (“2021 ESPP”).

Refer to our 2024 Form 10-K for additional details on employee stock incentive plans.

Share-Based Payment Valuation

The grant date fair value of Time Vesting Options granted is determined using the Black-Scholes option-pricing model. The grant date fair value of stock purchase rights granted under the 2021 ESPP is determined using the Black-Scholes option-pricing model.

The following table presents, on a weighted-average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant date fair value of stock purchase rights granted under the 2021 ESPP during the periods presented:


	Six Months Ended June 30,
	2025	2024
Expected volatility	39.42 % - 42.14%	49.59% - 50.14%
Risk-free interest rate	4.30% - 4.44%	5.38% - 5.41%
Expected term (in years)	0.49 - 0.50	0.49 - 0.50
Expected dividend yield	None	None

Time Vesting Options

The following table presents, on a weighted-average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant date fair value of Time Vesting Options granted under the 2021 Plan during the periods presented:


	Six Months Ended June 30,
	2025	2024
Expected volatility	46.74%	45.98%
Risk-free interest rate	4.07%	4.52%
Expected term (in years)	6.0	6.0
Expected dividend yield	None	None

Stock Options

A summary of our stock option activity during the period presented is as follows:


	Time Vesting Options			Performance Vesting Options			Total Number of Stock Options			Weighted-Average Exercise Price
Outstanding as of December 31, 2024		9,137,994			1,897,467			11,035,461		$	5.70
Granted		1,583,512			—			1,583,512		$	7.08
Exercised		(986,093	)		(553,300	)		(1,539,393	)	$	1.38
Forfeited		(193,073	)		—			(193,073	)	$	9.39
Outstanding as of June 30, 2025		9,542,340			1,344,167			10,886,507		$	6.44
Options vested or expected to vest as of June 30, 2025		9,010,111			1,344,167			10,354,278		$	9.16
Options exercisable as of June 30, 2025		5,950,001			1,344,167			7,294,168		$	5.69

The number and weighted-average grant date fair value of stock options during the period presented are as follows:


	Number of Stock Options					Weighted-Average Grant Date Fair Value
	Time Vesting Options			Performance Vesting Options		Time Vesting Options		Performance Vesting Options
Unvested as of December 31, 2024		3,544,956			—	$	4.05		—
Granted		1,583,512			—	$	3.56		—
Vested		(1,450,382	)		—	$	4.12		—
Forfeited		(85,746	)		—	$	4.24		—
Unvested as of June 30, 2025		3,592,340			—	$	3.79		—

We granted 1,583,512 Time Vesting Options with a grant date fair value of $5,637 during the six months ended June 30, 2025. There were no Performance Vesting Options granted during the six months ended June 30, 2025.

The fair value of shares attributable to stock options that vested during the six months ended June 30, 2025 was $10,426.

As of June 30, 2025, the weighted-average remaining contractual life of outstanding stock options was approximately 6.01 years.

Restricted Stock Units

A summary of our RSU activity during the period presented is as follows:


	Restricted Stock Units			Weighted-Average Grant Date Fair Value
Unvested as of December 31, 2024		4,812,481		$	8.10
Granted		3,037,300			7.08
Vested		(1,835,398	)		8.56
Forfeited		(320,535	)		7.55
Unvested as of June 30, 2025		5,693,848		$	7.44

We granted 3,037,300 RSUs with a grant date fair value of $21,503 during the six months ended June 30, 2025.

The fair value of shares attributable to RSUs that vested during the six months ended June 30, 2025 was $13,067.

As of June 30, 2025, the weighted-average remaining contractual life of outstanding RSUs was approximately 9.26 years.

Stock-Based Compensation Expense

We estimated a forfeiture rate of 10.26% for awards with service-based vesting conditions based on historical experience and future expectations of the vesting of these share-based payments. We used this rate as an assumption in calculating stock-based compensation expense for Time Vesting Options, RSUs, and stock purchase rights granted under the 2021 ESPP.

Total stock-based compensation expense, by caption, recorded in the consolidated statements of operations and comprehensive income for the periods presented is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Cost of labor and chemicals	$	2,794	$	2,465	$	5,576	$	4,938
General and administrative		3,683		3,441		7,744		7,214
Total stock-based compensation expense	$	6,477	$	5,906	$	13,320	$	12,152

Total stock-based compensation expense, by award type, recorded in the consolidated statements of operations and comprehensive income for the periods presented is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Time Vesting Options	$	1,511	$	1,382	$	3,374	$	2,959
RSUs		4,774		4,348		9,562		8,755
2021 ESPP		192		176		384		438
Total stock-based compensation expense	$	6,477	$	5,906	$	13,320	$	12,152

As of June 30, 2025, total unrecognized compensation expense related to unvested Time Vesting Options was $9,258, which is expected to be recognized over a weighted-average period of 3.95 years.

As of June 30, 2025, there was no unrecognized compensation expense related to unvested Performance Vesting Options as the completion of the IPO satisfied the performance condition and as a result, all outstanding Performance Vesting Options vested.

As of June 30, 2025, total unrecognized compensation expense related to unvested RSUs was $25,919, which is expected to be recognized over a weighted-average period of 2.34 years.

As of June 30, 2025, total unrecognized compensation expense related to unvested stock purchase rights under the 2021 ESPP was $289, which is expected to be recognized over a weighted-average period of 0.38 years.