Stockholders' Equity

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

Accelerated Share Repurchase

On December 3, 2021, we entered into an accelerated share repurchase (ASR) agreement with a financial institution (2021 ASR). We accounted for the 2021 ASR as two separate transactions, a repurchase of our common stock and an equity-linked contract indexed to our common stock that met certain accounting criteria for classification in stockholders' equity. Upon execution, we paid a fixed amount of $300.0 million and received an initial delivery of 8,403,361 shares of our common stock, which were retired immediately. The initial delivery of shares of our common stock represented approximately 80 percent of the fixed amount paid of $300.0 million, which was based on the share price of our common stock on the date of execution. The 2021 ASR was recorded as a reduction to additional paid in capital on our consolidated statements of stockholders’ equity. The 2021 ASR settled during the first quarter of 2022 and we received an additional delivery of 2,163,219 shares of our common stock, which were retired immediately. The 2021 ASR resulted in a total repurchase of 10,566,580 shares of our common stock at a volume-weighted-average price, less an agreed upon discount, of $28.3914 per share. We were not required to make any additional cash payments or delivery of common stock to the financial institutions upon settlement.

Securities Repurchase Program

In November 2021, our board of directors approved a $500.0 million increase to our existing securities repurchase program authorizing the repurchase of up to $1.0 billion of our common stock and/or convertible notes, through open market purchases, block trades, and/or privately negotiated transactions or pursuant to Rule 10b5-1 plans, in compliance with applicable securities laws and other legal requirements. The timing, volume, and nature of the repurchases will be determined by management based on the capital needs of the business, market conditions, applicable legal requirements, and other factors. During the year ended December 31, 2021, we entered into the 2021 ASR for $300.0 million and repurchased $100.0 million of aggregate principal amount of the 2025 notes in privately-negotiated transaction for an aggregate consideration of $184.9 million. During the year ended December 31, 2020, we repurchased $57.4 million of aggregate principal amount of the 2023 notes in privately-negotiated transactions for an aggregate consideration of $149.6 million. As of December 31, 2021 $365.5 million remains under the repurchase program, which has no expiration date and will continue until otherwise suspended, terminated or modified at any time for any reason by our board of directors.

Equity Offering

In February 2021, we entered into an underwriting agreement pursuant to which we agreed to issue and sell 10,974,600 shares of our common stock at a public offering price of $102.00 per share generating aggregate net proceeds of $1,091.5 million, after deducting underwriting discounts and commissions of $26.9 million and offering expenses of $1.1 million.

Share-based Compensation Expense

Total share-based compensation expense recorded for employees and non-employees, is as follows (in thousands):


	Years Ended December 31,
		2021		2020		2019
Cost of revenues		$	1,621	$	950	$	426
Research and development		37,131		31,588		22,229
Sales and marketing		13,887		9,606		7,380
General and administrative		56,207		41,911		34,874
Total share-based compensation expense		$	108,846	$	84,055	$	64,909

During the year ended December 31, 2021 we capitalized share-based compensation expense of $2.6 million. As of December 31, 2021, we had a total of approximately $273.0 million of unrecognized share-based compensation expense that is expected to be recognized over the remaining weighted average period of 2.6 years.

2021 PSU Grants with Market-Based Conditions

In March 2021, we granted PSUs under the 2013 Equity Incentive Plan (the 2013 Plan) with market-based conditions to certain of our key employees. The number of shares of our common stock that may be issued to settle these PSUs range from 50% at the threshold level to 150% at the maximum level of the 100% target level of the award depending on achieving a maximum average market value of the per share price of our common stock, for a period of 60 consecutive trading days, over a three-year performance period ending on the third anniversary of the date of grant. No payout will be made for performance below the 50% threshold level. The market value of the per share price of our common stock must reach $123.81, $148.58, or $173.34 at the threshold, target, or maximum levels, respectively, for achievement of the award, which could result in issuance of 244,086, 488,173, or 732,260 shares of our common stock at each respective payout level. These PSUs will vest over a four-year period, with the initial vesting of 50% of the award occurring in March 2024. The number of PSUs granted totaled 732,260 shares, which represents the maximum number of shares, and had a grant date fair value of $68.55 per share, determined under the Monte Carlo simulation approach described further below. As of December 31, 2021, the market-based conditions have not been met.

Fair Value of PSUs with Market-Based Conditions

We estimate the fair value of the PSUs using a Monte Carlo simulation approach, which utilizes the fair value of our common stock based on an active market and requires input on the following subjective assumptions:

Expected Term. The expected term for the awards is the performance period of three years.

Expected Volatility. The expected volatility is based on the historical average volatility of our stock price over the expected term.

Expected Dividends. The dividend assumption is based on our historical experience. To date we have not paid any dividends on our common stock.

Risk-Free Interest Rate. The risk-free interest rate used in the valuation method is the implied yield currently available on the U.S. treasury zero-coupon issues, with a remaining term equal to the expected term.

The following table summarizes the key assumptions used to determine the fair value of the awards:


Expected term (years)	3.00
Expected volatility	49.04	%
Expected dividends	—	%
Risk-free interest rate	0.27	%

2021 PSU Grants with Financial and Strategic Performance Targets

In March 2021, we granted PSUs under the 2013 Plan to certain of our key executives. The PSUs entitle the executives to receive a certain number of shares of our common stock based on our satisfaction of certain financial and strategic performance targets during 2021. Based on the achievement of the performance conditions for the March 2021 grants, the final settlement partially met the target threshold based on a specified objective formula approved by the Compensation Committee. These PSUs will vest over a three-year period, with the initial vesting occurring in March 2022. The number of shares underlying these March 2021 PSUs granted during the year ended December 31, 2021 totaled 278,644 shares and had a grant date fair value of $99.05 per share.

2020 PSU Grants with Financial and Strategic Performance Targets

In March 2020, we granted PSUs under the 2013 Plan to certain of our key executives. The PSUs entitle the executives to receive a certain number of shares of our common stock based on our satisfaction of certain financial and strategic performance targets during 2020. Based on the achievement of the performance conditions for the March 2020 grants, the final settlement met the target threshold based on a specified objective formula approved by the Compensation Committee. These PSUs will vest over a three-year period, with the initial vesting occurring in March 2021. The number of shares underlying the March 2020 PSUs granted during the year ended December 31, 2020 totaled 460,976 shares and had a grant date fair value of $39.21 per share.

2019 PSU Grants with Financial and Strategic Performance Targets

In March 2019, we granted PSUs under the 2013 Plan to certain of our key executives. The PSUs entitle the executives to receive a certain number of shares of our common stock based on our satisfaction of certain financial and strategic performance targets during 2019. Based on the achievement of the performance conditions for the March 2019 grants, the final settlement met the target threshold based on a specified objective formula approved by the Compensation Committee. These PSUs will vest over a three-year period, with the initial vesting occurring in March 2020. The number of shares underlying the March 2019 PSUs granted during the year ended December 31, 2019 totaled 436,042 shares and had a grant date fair value of $40.42 per share.

RSUs and PSUs Activity


	RSUs and PSUs Outstanding
	Number of RSUs and PSUs Outstanding	Weighted Average Grant Date Fair Value
Balance at December 31, 2020	4,816,000	$	37.82
Granted	6,758,593	47.95
Released	(2,762,251)	34.77
Forfeited	(640,880)	48.97
Balance at December 31, 2021	8,171,462	$	46.36

The weighted-average grant-date fair value of RSUs and PSUs granted during the years ended December 31, 2021, 2020, and 2019 was $47.95, $45.37, and $37.56, respectively. The total fair value of RSUs and PSUs vested as of the vesting dates during the years ended December 31, 2021, 2020, and 2019 was $232.0 million, $200.1 million, and $222.3 million, respectively.

Fair Value of 2013 ESPP

Under the 2013 ESPP, rights to purchase shares are generally granted during the second and fourth quarter of each year. We estimate the fair value of each right to purchase shares under our 2013 ESPP using the Black-Scholes-Merton option-pricing model, which utilizes the fair value of our common stock based on active market and requires input on the following subjective assumptions:

Expected Term. The expected term for rights to purchase shares under the 2013 ESPP is six months.

Expected Volatility. The expected volatility is based on the average volatility of our stock price over the expected term.

Expected Dividends. The dividend assumption is based on our historical experience. To date we have not paid any dividends on our common stock.

Risk-Free Interest Rate. The risk-free interest rate used in the valuation method is the implied yield currently available on the United States treasury zero-coupon issues, with a remaining term equal to the expected term.

The following table summarizes the key assumptions used to determine the fair value of rights granted under the 2013 ESPP:


	Years Ended December 31,
		2021			2020			2019
Expected term (years)		0.50			0.50			0.50
Expected volatility		47.02%-99.96%			52.06%-68.09%			40.51%-41.81%
Dividend yield		—		%	—		%	—		%
Risk-free interest rate		0.04%-0.07%			0.12%-0.15%			1.59%-2.43%
Weighted-average grant-date fair value per share		$	14.70		$	20.52		$	9.88

2013 ESPP Activity

There were 167,890, 173,992 and 201,581 shares purchased under the 2013 ESPP during the years ended December 31, 2021, 2020 and 2019, respectively, at an average price per share of $40.35, $38.85 and $25.55, respectively, with cash proceeds from the issuance of shares of $6.8 million, $6.8 million and $5.1 million, respectively.

Stock Option Activity


	Options Outstanding
	Number of Options Outstanding	Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Term in Years	Aggregate Intrinsic Value
Balance at December 31, 2020	627,317	$	7.86	3.48	$	51,733,285

Released	(245,561)	8.78

Balance at December 31, 2021	381,756	$	7.28	2.80	$	8,942,541

We did not grant any stock option awards during the years ended December 31, 2021, 2020, and 2019. The total intrinsic value of options exercised during the years ended December 31, 2021, 2020 and 2019, was approximately $10.7 million, $53.5 million and $90.8 million, respectively.