Company: CSTL
Filing Date: 2025-05-05
Form Type: 10-Q
Source: 0001447362-25-000069
Chunk: 112

Company: CASTLE BIOSCIENCES INC
Filing Date: 2025-05-05
Form: 10-Q
Item: Item 8
Chunk 112
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 used under the ESPP: Three Months EndedMarch 31,20252024Average expected term (years)1.21.3Expected stock price volatility 56.55% - 85.21%72.04% - 130.95%Risk-free interest rate 3.88% - 4.22%4.43% - 5.33%Dividend yield—%—%Fair ValueThere were no stock options granted for the three months ended March 31, 2025 and 2024. The weighted-average grant date fair value of the purchase rights granted under the ESPP was $9.43 and $11.17 per share, respectively. Stock-Based Compensation ExpenseStock-based compensation expense is included in the unaudited condensed consolidated statements of operations as follows (in thousands): Three Months EndedMarch 31, 20252024Cost of sales (exclusive of amortization of acquired intangible assets)$1,456 $1,314 Research and development1,895 2,629 Selling, general and administrative7,828 8,732 Total stock-based compensation expense$11,179 $12,675 Retirement Policy In January 2023, our board of directors approved a retirement policy (the “Retirement Policy”) that provides for acceleration of a portion of unvested awards granted to and held by certain eligible employees upon meeting age, service and notice requirements. Included in total stock-based compensation expense for the three months ended March 31, 2025, and 2024 is $0.3 million and $0.2 million, respectively, from the accelerated recognition of expense for modifications of awards falling in scope of the Retirement Policy.

As of March 31, 2025, the total unrecognized stock-based compensation cost related to outstanding awards was $88.7 million, which is expected to be recognized over a weighted-average period of 2.6 years. The total unrecognized compensation cost will be adjusted for forfeitures in future periods as they occur. 

13. Income Taxes

Our effective income tax rate was immaterial for the three months ended March 31, 2025, and was 11.0% for the three months ended March 31, 2024. 

The effective rate for the three months ended March 31, 2025 and 2024 differed from our federal statutory rate of 21% was primarily due to the tax impact from the valuation allowance for current year activity, state income taxes