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STOCK CAPITAL | 9 Months Ended
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Sep. 30, 2024
Share-based Payment Arrangement [Abstract] |
STOCK CAPITAL | NOTE 17: STOCK CAPITAL
a. | Common stock rights:
Common stock confers upon its holders the right to receive notice of, and to participate in, all general meetings of the Company, where each share of common stock shall have one vote for all purposes, to share equally, on a per share basis, in bonuses, profits, or distributions out of fund legally available therefor, and to participate in the distribution of the surplus assets of the Company in the event of liquidation of the Company.
b. | Equity Incentive Plans:
The Company’s 2007 Global Incentive Plan (the “2007 Plan”) was adopted by the board of directors on August 30, 2007. The 2007 Plan terminated upon the Company’s IPO on March 31, 2015 and no further awards may be granted thereunder. All outstanding awards will continue to be governed by their existing terms and 379,358 available options for future grants were transferred to the Company’s 2015 Global Incentive Plan (the “2015 Plan”) and are reserved for future issuances under the 2015 plan. The 2015 Plan became effective upon the consummation of the IPO. The 2015 Plan provides for the grant of options, restricted stock units ("RSU"), performance stock units ("PSU"), and other share-based awards to directors, employees, officers, and non-employees of the Company and its subsidiaries. As of September 30, 2024, a total of 23,709,926 shares of common stock were reserved for issuance pursuant to stock awards under the 2015 Plan (the “Share Reserve”), an aggregate of 12,392,004 shares are still available for future grants. The Share Reserve will automatically increase on January 1st of each year during the term of the 2015 Plan, commencing on January 1st of the year following the year in which the 2015 Plan becomes effective, in an amount equal to 5% of the total number of shares of capital stock outstanding on December 31st of the preceding calendar year; provided, however, that the Company’s board of directors may determine that there will not be a January 1st increase in the Share Reserve in a given year or that the increase will be less than 5% of the shares of capital stock outstanding on the preceding December 31st. Under its 2015 Plan, the Company granted PSU awards to certain employees and officers which vest upon the achievement of certain performance or market conditions subject to their continued employment with the Company. The market condition for the PSUs is based on the Company’s share price target or total shareholder return ("TSR") compared to the TSR of companies listed in the S&P 500 index over a one to three year performance period. The Company uses a Monte-Carlo simulation to determine the grant date fair value for these awards, which takes into consideration the market price of a share of the Company’s common stock on the date of grant less the present value of dividends expected during the requisite service period, as well as the possible outcomes pertaining to the TSR market condition. The Company recognizes such compensation expenses on an accelerated vesting method. The aggregate maximum number of shares of common stock that may be issued on the exercise of incentive stock options is 10,000,000. As of September 30, 2024, an aggregate of 8,617,974 options are still available for future grants under the 2015 Plan. A summary of the activity in stock options and related information is as follows:
|  | Number of options |  |  | Weighted average exercise price |  |  | Weighted average remaining contractual term in years |  |  | Aggregate intrinsic Value |
Outstanding as of December 31, 2023 |  |  | 317,416 |  |  | $ | 53.38 |  |  |  | 4.05 |  |  | $ | 17,366 |
Exercised |  |  | (14,757 | ) |  |  | 4.60 |  |  |  | - |  |  |  | 537 |
Forfeited or expired |  |  | (666 | ) |  |  | 3.96 |  |  |  | - |  |  |  | - |
Outstanding as of September 30, 2024 |  |  | 301,993 |  |  | $ | 55.87 |  |  |  | 3.48 |  |  | $ | 899 |
Vested and expected to vest as of September 30, 2024 |  |  | 301,930 |  |  | $ | 55.82 |  |  |  | 3.45 |  |  | $ | 25,782 |
Exercisable as of September 30, 2024 |  |  | 299,552 |  |  | $ | 53.79 |  |  |  | 3.42 |  |  | $ | 25,782 |
The intrinsic value is the amount by which the closing price of the Company’s common stock on September 30, 2024 or the price on the day of exercise exceeds the exercise price of the stock options multiplied by the number of in-the-money options. A summary of the activity in the RSUs and related information is as follows:
|  | Number of RSUs |  |  | Weighted average grant date fair value |
Unvested as of December 31, 2023 |  |  | 1,860,286 |  |  | $ | 182.52 |
Granted |  |  | 1,731,577 |  |  |  | 45.89 |
Vested |  |  | (539,819 | ) |  |  | 187.51 |
Forfeited |  |  | (306,658 | ) |  |  | 158.23 |
Unvested as of September 30, 2024 |  |  | 2,745,386 |  |  | $ | 98.11 |
A summary of the activity in the PSUs and related information is as follows:
|  | Number of PSUs |  |  | Weighted average grant date fair value |
Unvested as of December 31, 2023 |  |  | 74,415 |  |  | $ | 302.58 |
Granted |  |  | 96,249 |  |  |  | 86.06 |
Vested |  |  | (12,277 | ) |  |  | 298.92 |
Forfeited |  |  | (14,196 | ) |  |  | 247.53 |
Unvested as of September 30, 2024 |  |  | 144,191 |  |  | $ | 163.78 |
c. | Employee Stock Purchase Plan ("ESPP"):
The Company adopted an ESPP effective upon the consummation of the IPO. As of September 30, 2024, a total of 4,638,023 shares were reserved for issuance under this plan. The number of shares of common stock reserved for issuance under the ESPP will increase automatically on January 1st of each year, for ten years, by the lesser of 1% of the total number of shares of the Company’s common stock outstanding on December 31st of the preceding calendar year or 487,643 shares. However, the Company’s board of directors may reduce the amount of the increase in any particular year at their discretion, including a reduction to zero. The ESPP is implemented through an offering every six months. According to the ESPP, eligible employees may use the lesser of either up to 15% of their salaries or $15,000 per participant, to purchase common stock for every six month plan. The price of an ordinary share purchased under the ESPP is equal to 85% of the lower of the fair market value of the ordinary share on the subscription date of each offering period or on the purchase date. As of September 30, 2024, 1,183,310 shares of common stock have been purchased under the ESPP. As of September 30, 2024, 3,454,713 shares of common stock were available for future issuance under the ESPP. In accordance with ASC No. 718, the ESPP is compensatory and, as such, results in recognition of compensation cost.
d. | Stock-based compensation expenses:
The Company recognized stock-based compensation expenses related to all stock-based awards in the consolidated statement of income (loss) for the three and nine months ended September 30, 2024, and 2023, as follows:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Stock-based compensation expenses: |  |  |  |  |  |  |  |  |  |  |  |
Cost of revenues |  | $ | 6,038 |  |  | $ | 5,882 |  |  | $ | 18,224 |  |  | $ | 17,732 |
Research and development |  |  | 17,115 |  |  |  | 16,481 |  |  |  | 51,893 |  |  |  | 50,962 |
Sales and marketing |  |  | 6,816 |  |  |  | 7,739 |  |  |  | 22,876 |  |  |  | 23,640 |
General and administrative |  |  | 6,672 |  |  |  | 6,713 |  |  |  | 19,825 |  |  |  | 22,681 |
Total stock-based compensation expenses |  | $ | 36,641 |  |  | $ | 36,815 |  |  | $ | 112,818 |  |  | $ | 115,015 |
Stock-based compensation capitalized: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Inventory |  | $ | 722 |  |  | $ | 655 |  |  | $ | 2,387 |  |  | $ | 1,666 |
Other long-term assets |  |  | 508 |  |  |  | 422 |  |  |  | 1,451 |  |  |  | 1,259 |
Total stock-based compensation capitalized |  | $ | 1,230 |  |  | $ | 1,077 |  |  | $ | 3,838 |  |  | $ | 2,925 |
The Company did not recognize any tax benefits realized with stock-based compensation for the three and nine months ended September 30, 2024. The total tax benefit associated with stock-based compensation for the three months ended September 30, 2023 was $3,124. The tax benefit realized from stock-based compensation for the three months ended September 30, 2023 was $1,589. The total tax benefit associated with stock-based compensation for the nine months ended September 30, 2023 was $11,422. The tax benefit realized from stock-based compensation for the nine months ended September 30, 2023 was and $7,050. As of September 30, 2024, there were total unrecognized compensation expenses in the amount of $264,268 related to non-vested equity-based compensation arrangements granted. These expenses are expected to be recognized during the period from October 1, 2024, through August 31, 2028.
e. | Repurchase of Common Stock:
On November 1, 2023, the Company announced the approval by the Board of Directors of a share repurchase program which authorizes the repurchase of up to $300,000 of the Company’s common stock. Under the share repurchase program, repurchases can be made using a variety of methods, which may include open market purchases, block trades, privately negotiated transactions, accelerated share repurchase programs and/or a non-discretionary trading plan or other means, including through 10b5-1 trading plans, all in compliance with the rules of the SEC and other applicable legal requirements. The timing, manner, price and amount of any common share repurchases under the share repurchase program are determined by the Company in its discretion and depend on a variety of factors, including legal requirements, price and economic and market conditions. The program does not obligate the Company to acquire any amount of common stock, it may be suspended, extended, modified, discontinued or terminated at any time at the Company’s discretion without prior notice, and will expire on December 31, 2024. During the nine months ended September 30, 2024, the Company repurchased 753,364 shares of common stock from the open market at an average cost of $66.79 per share for a total of $50,315.

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