Stockholders' Equity

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Securities Repurchase Program

In June 2022, our board of directors approved a $1.0 billion increase to our existing securities repurchase program authorizing the repurchase of up to $2.0 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 years ended December 31, 2022, 2021, and 2020, we entered into accelerated share repurchase (ASR) agreements with financial institutions to repurchase 19,965,836 for $600.0 million, repurchased 1,146,803 shares of our common stock in open market transactions for $23.1 million, and repurchased $500.0 million principal amount of the 2026 notes, $100.0 million principal amount of the 2025 notes and $57.4 million principal amount of the 2023 notes in privately-negotiated transactions for aggregate consideration of $734.4 million. As of December 31, 2022, we had $642.6 million remaining 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.

Accelerated Share Repurchases

On February 22, 2022 and December 3, 2021, we entered into accelerated share repurchase (ASR) agreements with financial institutions. Upon execution, we paid a fixed amount of $300.0 million for each ASR and received an initial delivery of shares of our common stock that represented 80 percent of the fixed amount for each ASR. We accounted for each 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. During the years ended December 31, 2022 and 2021, we received a total of 11,562,475 and 8,403,361 shares of our common stock, respectively, which were retired immediately. Each ASR was recorded as a reduction to additional paid in capital on our consolidated statements of stockholders’ equity. We were not required to make any additional cash payments or delivery of common stock to the financial institutions upon settlement.

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,
		2022		2021		2020
Cost of revenues		$	2,484	$	1,621	$	950
Research and development		41,335		37,131		31,588
Sales and marketing		13,857		13,887		9,606
General and administrative		75,780		56,207		41,911
Total share-based compensation expense		$	133,456	$	108,846	$	84,055

During the years ended December 31, 2022 and 2021, we capitalized share-based compensation expense of $5.3 million and $2.6 million, respectively. As of December 31, 2022, we had a total of approximately $220.1 million of unrecognized share-based compensation expense, related to unvested RSUs and PSUs, that is expected to be recognized over the remaining weighted average period of 2.4 years.

PSU Grants with Financial and Strategic Performance Targets

In March 2022, 2021, and 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 years ended December 31, 2022, 2021, and 2020, respectively. Based on the achievement of the performance conditions for the March 2022 and 2021 grants, the final settlement partially met the target threshold, and for the March 2020 grant, the final settlement met the target threshold, based on a specified objective formula approved by the Compensation Committee of the Board of Directors. These PSUs vest over a three-year period, with the initial vesting occurring one year after the grant date. During the years ended December 31, 2022, 2021, and 2020, the number of shares underlying the March 2022, March 2021, and March 2020 PSU grants totaled 614,177, 278,644, and 460,976, respectively, and had a grant date fair value per share of $35.82, $99.05, and $39.21, respectively.

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, 2022, 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 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	%

RSUs and PSUs Activity


	RSUs and PSUs Outstanding
	Number of RSUs and PSUs Outstanding	Weighted Average Grant Date Fair Value
Balance at December 31, 2021	8,171,462	$	46.36
Granted	5,551,727	27.68
Released	(2,784,268)	48.10
Forfeited	(1,783,241)	38.63
Balance at December 31, 2022	9,155,680	$	36.03

The weighted-average grant-date fair value of RSUs and PSUs granted during the years ended December 31, 2022, 2021, and 2020 was $27.68, $47.95, and $45.37, respectively. The total fair value of RSUs and PSUs vested as of the vesting dates during the years ended December 31, 2022, 2021, and 2020 was $74.2 million, $232.0 million, and $200.1 million, respectively.

Fair Value of 2013 ESPP

Under the 2013 ESPP, rights to purchase shares are 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 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,
		2022			2021			2020
Expected term (years)		0.50			0.50			0.50
Expected volatility		70.37%-78.74%			47.02%-99.96%			52.06%-68.09%
Dividend yield		—		%	—		%	—		%
Risk-free interest rate		1.54%-4.54%			0.04%-0.07%			0.12%-0.15%
Weighted-average grant-date fair value per share		$	8.71		$	14.70		$	20.52

2013 ESPP Activity

There were 382,392, 167,890 and 173,992 shares purchased under the 2013 ESPP during the years ended December 31, 2022, 2021 and 2020, respectively, at an average price per share of $15.61, $40.35 and $38.85, respectively, with cash proceeds from the issuance of shares of $6.0 million, $6.8 million and $6.8 million, respectively. Share-based compensation expense related to the 2013 ESPP was $3.1 million, $3.2 million, and $2.6 million during the years ended December 31, 2022, 2021 and 2020, 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, 2021	381,756	$	7.28	2.80	$	8,942,541

Exercised	(55,498)	8.78

Balance at December 31, 2022	326,258	$	7.02	2.15	$	5,954,714

We did not grant any stock option awards during the years ended December 31, 2022, 2021, and 2020. The total intrinsic value of options exercised during the years ended December 31, 2022, 2021 and 2020, was approximately $1.3 million, $10.7 million and $53.5 million, respectively.