PINS, question on stock based compensation ?

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Wondering what experience others have with regards to stock based compensation. Here is what PINS had for this quarter:


Share-based compensation by function: 	2020	2021
Total share-based compensation         	79,459	81,024

It looks overly generous to me. Their stock based compensation is 16%+ of their quarterly revenue. I know SBC for tech companies is usually generous so thats not what I am asking. I am specifically looking for some sort of comparison to help me understand/rationalize it.

Thanks for your help!

Ruhaan

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2

That’s roughly on par with other companies in hypergrowth. This is a key reason why many of these companies show accounting losses yet are operating cash flow or even free cash flow positive.

Here’s a collection of high growth/hypergrowth companies I track and their stock-based compensation as a percentage of revenue for calendar year 2020:


ETSY:  3.8%
UPST:  4.9%
SHOP:  8.4%
CRM:  10.3%
ZM:   10.4%
DDOG: 12.3%
CRWD: 17.2%
PINS: 19.0%
DOCU: 19.8%
TWLO: 20.5%
OKTA: 23.5%
ZI:   25.5% (2020 was IPO year, boosting SBC)
ZS:   28.2%
SNOW: 50.9% (2020 was IPO year, boosting SBC)

In my valuations, I assume stock comp as a percentage of revenue drifts down to 5-6% over ten years, which would be on par with companies like Google, Facebook, and Adobe.

Mike

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