Stockholders' Equity

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Share Repurchases

In November 2023 and February 2023, we entered into accelerated share repurchase (ASR) agreements with financial institutions. Upon execution, we paid a fixed amount of $150.0 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. Each ASR, along with $3.2 million in associated costs, primarily consisting of an estimated 1% excise tax, was recorded as a reduction to additional paid in capital on our consolidated statements of stockholders’ equity. The November 2023 ASR did not settle during 2023. The February 2023 ASR settled, and we were not required to make any additional cash payments or delivery of common stock to the financial institution upon settlement. During the year ended December 31, 2023, we received a total of 23,072,822 shares of our common stock under the ASR transactions, which were retired immediately.

In June 2023, we repurchased 3,433,157 shares of our common stock in open market transactions for $34.5 million.

During the year ended December 31, 2022, we received a total of 12,709,278 shares of our common stock from prior ASR and open market transactions, which were retired immediately.

Securities Repurchase Program

In August 2023, our Board of Directors approved a $200.0 million increase to our existing securities repurchase program authorizing the repurchase of up to $2.2 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. As of December 31, 2023, we had $3.7 million remaining under the securities 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.

Share-based Compensation Expense

The following table presents total share-based compensation expense recorded (in thousands):


	Years Ended December 31,
		2023		2022		2021
Cost of revenues		$	2,256	$	2,484	$	1,621
Research and development		44,103		41,335		37,131
Sales and marketing		9,524		13,857		13,887
General and administrative		77,619		75,780		56,207
Total share-based compensation expense		$	133,502	$	133,456	$	108,846

During the years ended December 31, 2023, 2022 and 2021, we capitalized share-based compensation expense of $3.3 million, $5.3 million, and $2.6 million, respectively. As of December 31, 2023, we had a total of approximately $141.3 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 1.8 years.

PSU Grants with Financial and Strategic Performance Targets

In March 2023, 2022, and 2021, we granted PSUs 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 the years ended December 31, 2023, 2022, and 2021, respectively. Based on the achievement of the performance conditions for the March 2023, 2022 and 2021 PSUs, the final settlement partially met the target threshold, based on a specified objective formula approved by the Compensation Committee of the Board of Directors. The March 2023 PSUs vest over either a one-year or three-year period, with initial vesting occurring one year after the grant date. The March 2022 and March 2021 PSUs vest over a three-year period, with the initial vesting occurring one year after the grant date. During the years ended

December 31, 2023, 2022, and 2021, the number of shares underlying the March 2023, March 2022, and March 2021 PSUs totaled 565,341, 614,177, and 278,644, respectively, and each had a grant date fair value per share of $15.89, $35.82, and $99.05, respectively.

2021 PSU Grants with Market-Based Conditions

In March 2021, we granted PSUs 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 the 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 vest over a four-year period, subject to continued service over the requisite 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, 2023, 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 presents 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, 2022	9,155,680	$	36.03
Granted	6,283,841	14.58
Released	(3,637,801)	35.32
Forfeited	(1,735,937)	31.79
Balance at December 31, 2023	10,065,783	$	23.63

The weighted-average grant-date fair value of RSUs and PSUs granted during the years ended December 31, 2023, 2022, and 2021 was $14.58, $27.68, and $47.95, respectively. The total fair value of RSUs and PSUs vested as of the vesting dates during the years ended December 31, 2023, 2022, and 2021 was $45.3 million, $74.2 million, and $232.0 million, respectively.

Fair Value of ESPP

Under the 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 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 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 presents the key assumptions used to determine the fair value of rights granted under the ESPP:


	Years Ended December 31,
		2023		2022			2021
Expected term (years)		0.50		0.50			0.50
Expected volatility		55.79%-109.39%		70.37%-78.74%			47.02%-99.96%
Dividend yield		0.00%		0.00		%	0.00		%
Risk-free interest rate		5.24%-5.41%		1.54%-4.54%			0.04%-0.07%
Weighted-average grant-date fair value per share		$	3.62	$	8.71		$	14.70

ESPP Activity

There were 454,533, 382,392 and 167,890 shares purchased during the years ended December 31, 2023, 2022 and 2021, respectively, at an average price per share of $8.10, $15.61 and $40.35, respectively, with cash proceeds from the issuance of shares of $3.7 million, $6.0 million and $6.8 million, respectively. Share-based compensation expense related to ESPP was $2.5 million, $3.1 million, and $3.2 million during the years ended December 31, 2023, 2022 and 2021, respectively.

Stock Option Activity


	Stock Options Outstanding
	Number of Stock Options Outstanding	Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Term in Years	Aggregate Intrinsic Value
Balance at December 31, 2022	326,258	$	7.02	2.15	$	5,954,714

Exercised	(72,049)
Forfeited	(21,882)
Balance at December 31, 2023	232,327	$	6.02	1.81	$	1,240,014

We did not grant any stock options during the years ended December 31, 2023, 2022, and 2021. The total intrinsic value of stock options exercised during the years ended December 31, 2023, 2022 and 2021, was approximately $0.2 million, $1.3 million and $10.7 million, respectively.