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Stockholders' Equity | 9 Months Ended
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Sep. 30, 2023
Stockholders' Equity Note [Abstract] |
Stockholders' Equity | Stockholders’ Equity As of September 30, 2023, the 2005 Incentive Plan, as amended, has a total reserve of 32,168,895 shares of which 4,754,771 shares are available for issuance. Summary of Stock-Based Compensation Expense The stock-based compensation related to our stock-based awards and employee stock purchase plan for the three and nine months ended September 30, 2023 and 2022 is as follows (in thousands):
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2023 |  | 2022 |  | 2023 |  | 2022
Cost of net revenues |  | $ | 1,974 |  |  | $ | 1,651 |  |  | $ | 5,682 |  |  | $ | 4,779 |
Selling, general and administrative |  | 29,739 |  |  | 25,293 |  |  | 87,432 |  |  | 76,509 |
Research and development |  | 7,889 |  |  | 5,974 |  |  | 22,083 |  |  | 17,391 |
Total stock-based compensation |  | $ | 39,602 |  |  | $ | 32,918 |  |  | $ | 115,197 |  |  | $ | 98,679 |
Restricted Stock Units (“RSUs”) The fair value of RSUs is based on our closing stock price on the date of grant. RSUs granted generally vest over a period of four years. A summary for the nine months ended September 30, 2023 is as follows:
| Number of Shares Underlying RSUs (in thousands) |  | Weighted Average Grant Date Fair Value |  | Weighted Average Remaining Contractual Term (in years) |  | Aggregate Intrinsic Value (in thousands)
Unvested as of December 31, 2022 | 489 |  |  | $ | 427.24 |  |  |  |  |
Granted | 508 |  |  | 316.52 |  |  |  |  |
Vested and released | (196) |  |  | 378.93 |  |  |  |  |
Forfeited | (37) |  |  | 388.56 |  |  |  |  |
Unvested as of September 30, 2023 | 764 |  |  | $ | 367.93 |  |  | 1.6 |  | $ | 233,165 |
As of September 30, 2023, we expect to recognize $202.1 million of total unamortized compensation costs, net of estimated forfeitures, related to RSUs over a weighted average period of 2.8 years. Market-Performance Based Restricted Stock Units (“MSUs”) We grant MSUs to members of senior management. Each MSU represents the right to one share of our common stock. The actual number of MSUs which will be eligible to vest will be based on the performance of Align’s stock price relative to the performance of a stock market index over the vesting period. MSUs vest over a period of three years and the maximum number eligible to vest in the future is 250% of the MSUs initially granted. The following table summarizes the MSU performance activity for the nine months ended September 30, 2023:
| Number of Shares Underlying MSUs (in thousands) |  | Weighted Average Grant Date Fair Value |  | Weighted Average Remaining Contractual Term (in years) |  | Aggregate Intrinsic Value (in thousands)
Unvested as of December 31, 2022 | 144 |  |  | $ | 725.73 |  |  |  |  |
Granted | 82 |  |  | 629.53 |  |  |  |  |
Vested and released 1 | (25) |  |  | 392.67 |  |  |  |  |
Forfeited | (43) |  |  | 423.87 |  |  |  |  |
Unvested as of September 30, 2023 | 158 |  |  | $ | 811.06 |  |  | 1.7 |  | $ | 48,135 |
1 Includes MSUs vested during the period below 100% of the original grant as actual shares released is based on Align’s stock performance over the vesting period. As of September 30, 2023, we expect to recognize $56.8 million of total unamortized compensation costs, net of estimated forfeitures, related to MSUs over a weighted average period of 1.7 years. Restricted Stock Units with Performance Conditions (“PSUs”) During the nine months ended September 30, 2023, we did not grant any PSUs to any employees. As of September 30, 2023, we expect to recognize $0.5 million of total unamortized compensation costs, net of estimated forfeitures, related to PSUs over a weighted average term of 1.3 years. Total PSUs granted were 4,728 and the weighted average grant date fair value for the PSUs was $201.63. Employee Stock Purchase Plan As of September 30, 2023, we have 1,995,520 shares available for future issuance under our Amended and Restated 2010 Employee Stock Purchase Plan (the “2010 Purchase Plan”). The fair value of the option component of the 2010 Purchase Plan shares was estimated at the grant date using the Black-Scholes option pricing model with the following weighted average assumptions:
|  |  |  | Nine Months Ended September 30,
|  |  |  |  |  | 2023 |  | 2022
Expected term (in years) |  |  |  |  |  | 1.2 |  | 1.5
Expected volatility |  |  |  |  |  | 56.2 | % |  | 50.2 | %
Risk-free interest rate |  |  |  |  |  | 4.9 | % |  | 1.8 | %
Expected dividends |  |  |  |  |  | — |  |  | — |
Weighted average fair value at grant date |  |  |  |  |  | $ | 133.53 |  |  | $ | 159.44 |
As of September 30, 2023, we expect to recognize $11.6 million of total unamortized compensation costs related to future employee stock purchases over a weighted average period of 0.7 years.

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