What changed in this filing

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Item 1. Financial Statements

2022-11-01 compared with 2022-08-02 · 114 added, 98 removed, 485 unchanged (30% of the section changed)

3 unchanged sentences

(Unaudited, in thousands, except par value)

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

CURRENT ASSETS:

28 unchanged sentences

STOCKHOLDERS’ EQUITY:

Preferred stock, $ 0.0001 par value— 100,000 shares authorized and no shares issued and outstanding as of June 30, 2022 and December 31, 2021

Common stock, $ 0.0001 par value— 1,000,000 shares authorized as of June 30, 2022 and December 31, 2021;

304,455 and 307,681 shares issued and outstanding as of June 30, 2022 and December 31, 2021

Preferred stock, $ 0.0001 par value— 100,000 shares authorized and no shares issued and outstanding as of September 30, 2022 and December 31, 2021

Common stock, $ 0.0001 par value— 1,000,000 shares authorized as of September 30, 2022 and December 31, 2021;

305,515 and 307,681 shares issued and outstanding as of September 30, 2022 and December 31, 2021

Additional paid-in capital 1,717,605 1,530,046

7 unchanged sentences

(Unaudited, in thousands, except per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

2022 2021 2022 2021

28 unchanged sentences

(Unaudited, in thousands)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

9 unchanged sentences

(Unaudited, in thousands)

Three Months Ended June 30, 2022 Six Months Ended June 30, 2022

Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022

Common Stock Additional

1 unchanged sentence

Earnings Accumulated

Other Comprehensive Loss Total

Comprehensive

Income (Loss) Total

Stockholders’ Equity Common Stock Additional

2 unchanged sentences

Comprehensive

Income (Loss) Total

Stockholders’

9 unchanged sentences

Balance at end of period 305,515 $ 31 $ 1,717,605 $ 2,714,711 $ ( 47,129 ) $ 4,385,218 305,515 $ 31 $ 1,717,605 $ 2,714,711 $ ( 47,129 ) $ 4,385,218

Three Months Ended June 30, 2021 Six Months Ended June 30, 2021

Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021

Common Stock Additional

Paid-In Capital (1) Retained

Earnings Accumulated Other Comprehensive Loss Total

Earnings Accumulated

Comprehensive

Income (Loss) Total

Stockholders’

3 unchanged sentences

Comprehensive

Income (Loss) Total

Stockholders’

13 unchanged sentences

(Unaudited, in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

23 unchanged sentences

Business acquisitions, net of cash acquired ( 145,087 ) —

Investments in privately-held companies and intangibles ( 11,691 ) ( 6,084 )

Escrow receipts from past business acquisitions — 1,299

Investments and notes receivable in privately-held companies ( 12,691 ) ( 10,684 )

Proceeds from sale of marketable securities 186,782 19,607

2 unchanged sentences

Proceeds from issuance of common stock under equity plans 43,073 56,154

Tax withholding paid on behalf of employees for net share settlement ( 18,802 ) ( 6,353 )

Repurchase of common stock ( 619,888 ) ( 101,355 )

Tax withholdings paid on behalf of employees for net share settlement ( 25,542 ) ( 10,622 )

Repurchases of common stock ( 667,470 ) ( 235,512 )

Net cash used in financing activities ( 649,939 ) ( 189,980 )

24 unchanged sentences

In management’s opinion, the unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of our financial information.

The results for the three and six months ended June 30, 2022, are not necessarily indicative of the results expected for the full fiscal year.

The results for the three and nine months ended September 30, 2022, are not necessarily indicative of the results expected for the full fiscal year.

The condensed consolidated balance sheet as of December 31, 2021 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by GAAP for complete financial statements.

7 unchanged sentences

Risks and Uncertainties

Global economic and business activities continue to face widespread macroeconomic uncertainties, including supply chain and labor shortages, inflation and monetary policy shifts, recession risks, the ongoing global coronavirus ("COVID-19") pandemic and potential disruptions from the Russia-Ukraine conflict.

Our contract manufacturers and suppliers have experienced workforce disruptions, delays in component sourcing, production and export of their products as well as component shortages and increased component costs, which have disrupted our supply chain and have impacted and will likely continue to impact our ability to supply products to our customers on a timely basis.

While we continue to experience strong overall demand from customers, we believe ongoing supply disruptions combined with other supply chain related constraints could impact our ability to fulfill this increased demand and as a result could negatively impact our business in future periods.

trade war with China.

Our contract manufacturers and suppliers have experienced workforce disruptions, delays in component sourcing, production and export of their products and component shortages and increased component costs, which have disrupted our supply chain and have impacted and will likely continue to impact our ability to supply products to our customers on a timely basis.

While overall demand remains strong across our customers base, we believe ongoing supply disruptions combined with other supply chain related constraints could impact our ability to fulfill this increased demand and as a result could negatively impact our business in future periods.

In addition, inflation pressure in our supply chain and scarcity of some materials needed to build our products have increased our cost of revenue and have impacted, and may continue to negatively impact our gross margin.

The extent of the impact on our operational and financial performance, including our ability to execute our business strategies and initiatives in the expected time frame, and the impact of any initiatives and programs we may undertake to address financial and operational challenges, will depend on future developments, the impact to our customers, partners, employees, contract manufacturers and supply chain, as well as restrictions on travel and transport, all of which continue to evolve and are unpredictable.

Management continues to actively monitor the impact of these macroeconomic factors

on the Company's financial condition, liquidity, operations, suppliers, industry, and workforce.

Our operating cash flows have also been and may continue to be negatively impacted by increased component inventories on hand or at our contract manufacturers, awaiting supply of a limited number of scarce components necessary to build and ship the completed product.

our customers, partners, employees, contract manufacturers and supply chain, all of which continue to evolve and are unpredictable.

Management continues to actively monitor the impact of these macroeconomic factors on the Company's financial condition, liquidity, operations, suppliers, industry, and workforce.

As of the date of issuance of these condensed consolidated financial statements, the extent to which these factors may materially impact the Company's financial condition, liquidity, or results of operations is uncertain.

3 unchanged sentences

ASU 2021-08 requires companies to recognize and measure contract assets and contract liabilities relating to contracts with customers that are acquired in a business combination in accordance with ASC 606.

Under previous GAAP, an acquirer generally recognizes assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers, at fair value on the acquisition date.

Under previous GAAP, an acquirer generally recognized assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers, at fair value on the acquisition date.

2021-08 results in the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree before the acquisition under ASC Topic 606.

1 unchanged sentence

The Company adopted this ASU as of January 1, 2022 on a prospective basis and the adoption impact was immaterial to the condensed consolidated financial statements.

The standard will not impact acquired contract assets or liabilities from business combinations occurring prior to the adoption date.

The standard did not impact acquired contract assets or liabilities from business combinations occurring prior to the adoption date.

Fair Value Measurements

2 unchanged sentences

The following tables summarize the fair value of these financial assets by significant investment category and their levels within the fair value hierarchy (in thousands):

As of June 30, 2022 As of December 31, 2021

September 30, 2022 December 31, 2021

Level I Level II Level III Total Level I Level II Level III Total

2 unchanged sentences

Money market funds $ 353,987 $ — $ — $ 353,987 $ 221,382 $ — $ — $ 221,382

Commercial paper — 3,642 — 3,642 — — — —

Certificate of deposits (1)

— 14,556 — 14,556 — — — —

government notes 23,368 — — 23,368 — — — —

Agency securities — 46,000 — 46,000 — — — —

377,355 60,556 — 437,911 221,382 — — 221,382

Marketable Securities:

12 unchanged sentences

______________________________________

(1) As of June 30, 2022 and December 31, 2021, all of our certificates of deposits were domestic deposits.

(2) The $ 16.7 million represents the fair value of marketable equity securities as of June 30, 2022.

(1) As of September 30, 2022 and December 31, 2021, all of our certificates of deposits were domestic deposits.

(2) The $ 15.8 million represents the fair value of marketable equity securities as of September 30, 2022.

This amount includes $ 8.3 million that was reclassified from Investments on our condensed consolidated balance sheet following the commencement of public market trading of the issuer in January 2022.

This publicly-traded equity investment generated an unrealized gain of $ 8.4 million for the six months ended June 30, 2022, and an unrealized loss of $ 5.1 million for the three months ended June 30, 2022.

The unrealized gains and losses are included in Other income (expense), net on the Condensed Consolidated Statements of Operations.

This publicly-traded equity investment generated an unrealized gain of $ 7.5 million for the nine months ended September 30, 2022, and an unrealized loss of $ 0.9 million for the three months ended September 30, 2022.

The unrealized gains and losses are included in Other income (expense), net on the unaudited Condensed Consolidated Statements of Operations.

Refer to Note 3.

Financial Statements Details.

During the three and six months ended on June 30, 2022, the Company did not make any transfers between the levels of the fair value hierarchy.

During the three and nine months ended on September 30, 2022, the Company did not make any transfers between the levels of the fair value hierarchy.

Marketable debt securities

The following table summarizes the amortized cost, unrealized gains and losses, and fair value of our debt securities measured at fair value on a recurring basis (in thousands):

As of June 30, 2022 As of December 31, 2021

September 30, 2022 December 31, 2021

Amortized Cost Unrealized Gains Unrealized Losses Fair Value Amortized Cost Unrealized Gains Unrealized Losses Fair Value

8 unchanged sentences

Given the short-term and conservative nature of our portfolio, the unrealized losses are not related to credit risk;

therefore, we did not recognize any credit losses or non-credit-related impairments related to our available-for-sale marketable debt securities for the three and six months ended June 30, 2022.

therefore, we did not recognize any credit losses or non-credit-related impairments related to our available-for-sale marketable debt securities for the three and nine months ended September 30, 2022.

All unrealized losses were recognized in other comprehensive income (loss).

Realized losses were immaterial for the three and six months ended June 30, 2022.

Realized losses were immaterial for the three and nine months ended September 30, 2022.

The following table is an analysis of our marketable debt securities in unrealized loss positions (in thousands):

As of June 30, 2022

September 30, 2022

Unrealized Losses within 12 months Unrealized Losses 12 months or greater Total

4 unchanged sentences

Total $ 1,658,315 $ ( 29,147 ) $ 574,938 $ ( 10,502 ) $ 2,233,253 $ ( 39,649 )

As of June 30, 2022, we had no marketable debt securities with contractual maturities that exceed 24 months.

As of September 30, 2022, we had no marketable debt securities with contractual maturities that exceed 24 months.

The fair values of marketable debt securities, by remaining contractual maturities, are as follows (in thousands):

As of June 30, 2022

September 30, 2022

Due in 1 year or less $ 1,773,158

1 unchanged sentence

Total debt securities $ 2,236,643

The weighted-average remaining duration of our marketable debt securities is approximately 0.8 years as of June 30, 2022.

The weighted-average remaining duration of our marketable debt securities is approximately 0.6 years as of September 30, 2022.

As we view these marketable debt securities as available to support current operations, we classify marketable debt securities with maturities beyond 12 months as current assets under the caption "Marketable securities" on the condensed consolidated balance sheets.

6 unchanged sentences

In addition, the valuation requires management judgment due to the absence of market price and lack of liquidity.

We did not record any realized gains or losses for our non-marketable equity securities measured at fair value on a non-recurring basis during the three and six months ended June 30, 2022 and June 30, 2021.

We recorded an unrealized gain of $ 15.0 million on non-marketable equity securities based on observable price changes from orderly transactions of identical or similar securities of the same issuer in the six months ended June 30, 2022, but did not record any unrealized losses or additional unrealized gains in the three months ended June 30, 2022 and the three and six months ended June 30, 2021.

We did not record any realized gains or losses for our non-marketable equity securities measured at fair value on a non-recurring basis during the three and nine months ended September 30, 2022 and September 30, 2021.

We recorded unrealized gains of $ 1.7 million and $ 16.7 million on non-marketable equity securities based on observable price changes from orderly transactions of identical or similar securities in three and the nine months ended September 30, 2022.

We recorded immaterial unrealized losses in the three and nine months ended September 30, 2022.

We evaluate our non-marketable equity securities for impairment at each reporting period via a qualitative assessment with various potential impairment indicators, including, but not limited to, an assessment of a significant adverse change in the economic environment, significant adverse changes in the general market condition of the geographies and industries in which our investees operate, and other publicly-available information that affected the value of the its non-marketable equity securities.

The following table summarizes the activity related to our non-marketable equity securities as of June 30, 2022 and December 31, 2021 (in thousands):

June 30, 2022 December 31, 2021

The following table summarizes the activity related to our non-marketable equity securities as of September 30, 2022 and December 31, 2021 (in thousands):

September 30, 2022 December 31, 2021

Cost of investments (1) $ 23,625 $ 14,933

Cumulative impairment — —

Cumulative impairment and downward adjustment ( 629 ) —

Cumulative upward adjustment (1) 16,681 5,314

Carrying amount of investments $ 39,677 $ 20,247

(1) During the six months ended June 30, 2022, $ 3.0 million previously included in the Cost of investments and $ 5.3 million previously included in the Cumulative upward adjustment, or $ 8.3 million in aggregate, were reclassified from Investments to Marketable securities on our condensed consolidated balance sheet following the commencement of public market trading of the issuer.

There was no such activity in the three months ended June 30, 2022.

(1) During the nine months ended September 30, 2022, $ 3.0 million previously included in the Cost of investments and $ 5.3 million previously included in the Cumulative upward adjustment, or $ 8.3 million in aggregate, were reclassified from Investments to Marketable securities on our condensed consolidated balance sheet following the commencement of public market trading of the issuer.

There was no such activity in the three months ended September 30, 2022.

Financial Statements Details

1 unchanged sentence

The reconciliation of cash, cash equivalents and restricted cash reported on the unaudited condensed consolidated balance sheets to the total of the same such amounts in the unaudited condensed consolidated statements of cash flows is as follows (in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Cash and cash equivalents $ 716,253 $ 620,813

3 unchanged sentences

Accounts receivable, net consists of the following (in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Accounts receivable $ 660,108 $ 521,597

3 unchanged sentences

Inventories consist of the following (in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Raw materials $ 629,058 $ 316,737

3 unchanged sentences

Prepaid expenses and other current assets consist of the following (in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Inventory deposits $ 121,916 $ 46,311

5 unchanged sentences

Property and equipment, net consists of the following (in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Land $ 40,601 $ 40,145

8 unchanged sentences

Property and equipment, net $ 96,449 $ 78,634

Depreciation expense was $ 6.2 million and $ 4.8 million for the three months ended June 30, 2022 and 2021, respectively, and $ 11.8 million and $ 9.7 million for the six months ended June 30, 2022 and 2021, respectively.

Depreciation expense was $ 6.9 million and $ 4.9 million for the three months ended September 30, 2022 and 2021, respectively, and $ 18.7 million and $ 14.6 million for the nine months ended September 30, 2022 and 2021, respectively.

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Accrued payroll related costs $ 82,791 $ 99,571

6 unchanged sentences

The following table summarizes the activity related to our accrued liability for estimated future warranty costs (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Warranty accrual, beginning of period $ 10,414 $ 9,314

4 unchanged sentences

The following table summarizes the beginning and ending balances of our contract assets included in "Prepaid and other current assets" on the condensed consolidated balance sheets (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Contract assets, beginning balance $ 24,388

4 unchanged sentences

The following table summarizes the activity related to our contract liabilities (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

4 unchanged sentences

Contract liabilities, ending balance $ 100,776 $ 87,571 $ 100,776 $ 87,571

As of June 30, 2022 and December 31, 2021, $ 41.4 million and $ 38.7 million of our contract liabilities, respectively, were included in "Other current liabilities" with the remaining balances included in "Other long-term liabilities" on the condensed consolidated balance sheets.

As of September 30, 2022 and December 31, 2021, $ 42.2 million and $ 38.7 million of our contract liabilities, respectively, were included in "Other current liabilities" with the remaining balances included in "Other long-term liabilities" on the condensed consolidated balance sheets.

Deferred Revenue

1 unchanged sentence

The following table summarizes the activity related to our deferred revenue (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

6 unchanged sentences

Other performance obligations include unbilled contract revenue for services and products that will be recognized in future periods.

As of June 30, 2022, other performance obligations of $ 178.1 million were comprised mainly of unbilled multi-year PCS contract amounts that will be recognized as revenue in future periods.

In addition, as of June 30, 2022 the company had entered into $ 762.7 million of binding contractual agreements with certain customers that are primarily related to future product shipments.

As of September 30, 2022, other performance obligations of $ 178.6 million were comprised mainly of unbilled multi-year PCS contract amounts that will be recognized as revenue in future periods.

In addition, as of September 30, 2022 the company had entered into $ 844.2 million of binding contractual agreements with certain customers that are primarily related to future product shipments.

Revenue from Total Remaining Performance Obligations

Revenue from total remaining performance obligations represents contract liabilities, deferred revenue and unbilled contract revenue that will be recognized in future periods.

As of June 30, 2022, approximately $ 1,313.3 million of revenue is expected to be recognized from remaining performance obligations, of which approximately 83 % is expected to be recognized over the next two years and approximately 17 % is expected to be recognized during the third to the fifth year.

As of September 30, 2022, approximately $ 1,220.5 million of revenue is expected to be recognized from remaining performance obligations, of which approximately 82 % is expected to be

recognized over the next two years and approximately 18 % is expected to be recognized during the third to the fifth year.

These amounts do not include the $ 844.2 million of binding contractual agreements related primarily to future product shipments outlined above.

As of June 30, 2022, it is expected that the majority of the amounts allocated to these specific performance obligations will be recognized as revenue upon product shipment over the next two years ;

As of September 30, 2022, it is expected that the majority of the amounts allocated to these specific performance obligations will be recognized as revenue upon product shipment over the next two years ;

however, given the current uncertain supply chain environment and industry wide supply constraints, we may experience manufacturing and shipment delays or cancellations related to these performance obligations, which could impact revenue recognition.

1 unchanged sentence

Other income (expense), net consists of the following (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Interest income $ 6,929 $ 1,636 $ 13,783 $ 5,553

Unrealized gain (loss) on equity investments ( 5,084 ) — 23,413 —

Unrealized gain on equity investments 708 — 24,121 —

Other income (expense), net ( 820 ) ( 290 ) ( 140 ) ( 913 )

1 unchanged sentence

Acquisition, Goodwill and Acquisition-Related Intangible Assets

During the six months ended June 30, 2022, we completed two acquisitions of private companies for total consideration of $ 158.9 million including $ 4.0 million in common stock and the remainder in cash.

The purchase prices included $ 62.3 million of intangible assets, $ 85.1 million of goodwill and $ 11.5 million of net assets acquired.

During the nine months ended September 30, 2022, we completed two acquisitions of private companies for total consideration of $ 158.9 million including $ 4.0 million in common stock and the remainder in cash.

The purchase prices included $ 62.3 million of intangible assets, $ 82.6 million of goodwill and $ 14.0 million of net tangible assets acquired.

We also incurred certain acquisition-related expenses of $ 4.7 million, which primarily consisted of retention bonuses to continuing employees as well as professional and consulting fees.

6 unchanged sentences

Total intangible assets acquired $ 62,300

The changes in the carrying values of goodwill for the three and six months ended June 30, 2022 are as follows (in thousands):

The changes in the carrying values of goodwill for the three and nine months ended September 30, 2022 are as follows (in thousands):

Balance at December 31, 2021 $ 188,397

2 unchanged sentences

Additions related to the acquisition completed in June 2022 56,530

Measurement-period adjustments to the acquisition completed in January, 2022 49

Measurement-period adjustments 49

Balance at June 30, 2022 $ 273,494

Measurement-period adjustments ( 2,476 )

Balance at September 30, 2022 $ 271,018

Acquisition-Related Intangible Assets

1 unchanged sentence

Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Remaining Useful Life (in years)

December 31, 2021 Additions June 30, 2022 December 31, 2021 Amortization June 30, 2022 December 31, 2021 June 30, 2022

December 31, 2021

Additions September 30, 2022 December 31, 2021

Amortization September 30, 2022 December 31, 2021

September 30, 2022

Developed technology $ 124,730 $ 30,200 $ 154,930 $ ( 53,663 ) $ ( 18,553 ) $ ( 72,216 ) $ 71,067 $ 82,714 4.5

3 unchanged sentences

Total $ 165,360 $ 62,300 $ 227,660 $ ( 71,805 ) $ ( 24,335 ) $ ( 96,140 ) $ 93,555 $ 131,520 4.9

Amortization expense related to acquisition-related intangible assets was $ 7.7 million, and $ 7.4 million for the three months ended June 30, 2022 and 2021, and $ 15.0 million and $ 14.8 million for the six months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022, future estimated amortization expense related to the acquisition-related intangible assets is as follows (in thousands):

Amortization expense related to acquisition-related intangible assets was $ 9.3 million, and $ 7.3 million for the three months ended September 30, 2022 and 2021, and $ 24.3 million and $ 22.1 million for the nine months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022, future estimated amortization expense related to the acquisition-related intangible assets is as follows (in thousands):

Future Amortization Expense

7 unchanged sentences

In addition, we purchase strategic component inventory from certain suppliers under non-cancellable purchase commitments, including integrated circuits, which are consigned to our contract manufacturers.

As of June 30, 2022, we had non-cancellable purchase commitments of $ 4,472.2 million, out of which $ 2,937.6 million have confirmed receipt dates within 12 months, and $ 1,534.6 million have confirmed receipt dates greater than 12 months.

As of September 30, 2022, we had non-cancellable purchase commitments of $ 4.3 billion, of which $ 3.1 billion have confirmed receipt dates within 12 months, and $ 1.2 billion have confirmed receipt dates greater than 12 months.

These open purchase orders are considered enforceable and legally binding, and while we may have some limited ability to reschedule, and adjust our requirements based on our business needs prior to the delivery of goods or performance of services, this can only occur with the agreement of the related supplier.

We also had deposits to our contract manufacturers to secure our purchase commitments in the amount of $ 100.8 million and $ 49.1 million as of June 30, 2022 and December 31, 2021, respectively, which were recorded within prepaid expenses and other current assets, as well as other assets in the condensed consolidated balance sheets.

We also had deposits to our contract manufacturers to secure our purchase commitments in the amount of $ 124.7 million and $ 49.1 million as of September 30, 2022 and December 31, 2021, respectively, which were recorded within prepaid expenses and other current assets, as well as other assets in the condensed consolidated balance sheets.

We have entered into agreements with some of our direct customers and channel partners that contain indemnification provisions relating to potential situations where claims could be alleged that our products infringe the intellectual property rights of a third party.

21 unchanged sentences

We record a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

As of June 30, 2022, provisions recorded for contingent losses related to other claims and matters have not been significant.

As of September 30, 2022, provisions recorded for contingent losses related to other claims and matters have not been significant.

Based on currently-available information, management does not believe that any additional liabilities relating to other unresolved matters are probable or that the amount of any resulting loss is estimable, and believes these other matters are not likely, individually and in the aggregate, to have a material adverse effect on our financial position, results of operations or cash flows;

however, litigation is subject to inherent uncertainties and our view of these matters may change in the future.

Were an unfavorable outcome to occur, there exists the possibility of a material adverse

impact on our financial position, results of operations or cash flows for the period in which the unfavorable outcome occurs, and potentially in future periods.

Were an unfavorable outcome to occur, there exists the possibility of a material adverse impact on our financial position, results of operations or cash flows for the period in which the unfavorable outcome occurs, and potentially in future periods.

Stockholders’ Equity and Stock-Based Compensation

6 unchanged sentences

The New Repurchase Program does not obligate us to acquire any of our common stock, and may be suspended or discontinued by us at any time without prior notice.

As of June 30, 2022, the remaining authorized amount for stock repurchases under this program was approximately $ 307.2 million.

A summary of the stock repurchase activity under the New Repurchase Program for the six months ended June 30, 2022 is as follows (in thousands, except per share amounts):

Six Months Ended

June 30, 2022

As of September 30, 2022, the remaining authorized amount for stock repurchases under this program was approximately $ 259.6 million.

A summary of the stock repurchase activity under the New Repurchase Program for the nine months ended September 30, 2022 is as follows (in thousands, except per share amounts):

Nine Months Ended

September 30, 2022

Aggregate purchase price $ 667,470

1 unchanged sentence

Average price paid per share $ 103.75

The aggregate purchase price of repurchased shares of our common stock is recorded as a reduction to retained earnings in our condensed consolidated statements of stockholders' equity.

The aggregate purchase price of repurchased shares of our common stock is recorded as a reduction to retained earnings in our unaudited condensed consolidated statements of stockholders' equity.

All shares repurchased have been retired.

6 unchanged sentences

Effective January 1, 2022, our board of directors authorized an increase of 9,230,434 shares to the shares available for issuance under the 2014 Plan.

As of June 30, 2022, there remained approximately 94.7 million shares available for issuance under the 2014 Plan.

As of September 30, 2022, there remained approximately 93.4 million shares available for issuance under the 2014 Plan.

2014 Employee Stock Purchase Plan

1 unchanged sentence

The ESPP became effective on the first day that our common stock was publicly traded.

The number of shares reserved for issuance under the ESPP increases automatically on January 1 of each year by the number of shares equal to 1 % of our shares outstanding immediately preceding December 31, but not to exceed 10,000,000 shares, unless our board of directors, in its discretion, determines to make a smaller increase.

Effective January 1, 2022, our board of directors authorized an increase of 3,076,811 shares to the shares available for issuance under our 2014 Employee Stock Purchase Plan (the “ESPP”).

During the six months ended June 30, 2022, we issued 240,394 shares at a weighted-average purchase price of $ 48.75 per share under the ESPP.

As of June 30, 2022, there remained approximately 20.8 million shares available for issuance under the ESPP.

The number of shares reserved for issuance under the ESPP increases automatically on January 1 of each year by the number of shares equal to 1 % of our shares outstanding on the immediately preceding December 31, but not to exceed 10,000,000 shares, unless our board of directors, in its discretion, determines to make a smaller increase.

Effective January 1, 2022, our board of directors authorized an increase of 3,076,811 shares to the shares available for issuance under the ESPP.

During the nine months ended September 30, 2022, we issued 485,303 shares at a weighted-average purchase price of $ 50.37 per share under the ESPP.

As of September 30, 2022, there remained approximately 20.6 million shares available for issuance under the ESPP.

Stock Option Activities

7 unchanged sentences

Options canceled ( 177 ) 15.68

Balance—June 30, 2022 7,291 $ 12.91 2.4 $ 589,386

Vested and exercisable—June 30, 2022 6,145 $ 10.58 2.0 $ 511,007

Balance—September 30, 2022 6,570 $ 13.19 2.1 $ 654,987

Vested and exercisable—September 30, 2022 5,759 $ 10.91 1.8 $ 587,246

Restricted Stock Unit (RSU) Activities

8 unchanged sentences

RSUs forfeited/canceled ( 389 ) 76.53

Unvested balance—June 30, 2022 9,048 $ 81.16 1.9 $ 848,123

Unvested balance—September 30, 2022 8,895 $ 83.91 1.8 $ 1,004,214

Stock-Based Compensation Expense

The following table summarizes the stock-based compensation expense related to our equity awards (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

5 unchanged sentences

Total stock-based compensation $ 65,477 $ 53,135 $ 165,980 $ 135,632

As of June 30, 2022, there were $ 643.6 million of unamortized compensation costs related to all unvested awards.

As of September 30, 2022, there were $ 667.1 million of unamortized compensation costs related to all unvested awards.

The unamortized compensation costs are expected to be recognized over a weighted-average period of approximately 3.4 years.

1 unchanged sentence

The following table sets forth the computation of our basic and diluted net income per share (in thousands, except per share amounts):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 (1) 2022 2021 (1)

2 unchanged sentences

Add weighted-average effect of dilutive securities:

Stock options and RSUs 9,695 12,764 10,509 12,940

Employee stock purchase plan 132 232 132 232

Employee equity awards 9,470 12,180 10,169 12,800

Weighted-average shares used in computing net income per share, diluted 314,401 319,636 316,745 318,976

4 unchanged sentences

The following weighted-average outstanding shares of common stock equivalents were excluded from the computation of diluted net income per share for the periods presented because their effect would have been anti-dilutive for the periods presented (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 (1) 2022 2021 (1)

4 unchanged sentences

Income Taxes (in thousands, except percentages)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

2 unchanged sentences

Effective tax rate 16.5 % 4.4 % 15.6 % 9.3 %

The increase in the effective tax rates in the three and six months ended June 30, 2022, as compared to the same periods in 2021, was primarily due to a decrease in the proportion of tax benefits attributable to stock-based compensation versus total pre-tax income.

The increase in the effective tax rates in the three and nine months ended September 30, 2022, as compared to the same periods in 2021, was primarily due to a decrease in the proportion of tax benefits attributable to stock-based compensation versus total pre-tax income.

Geographical Information

1 unchanged sentence

The following table represents revenue based on customers’ shipping addresses (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

4 unchanged sentences

Long-lived assets, net, excluding intercompany receivables, investments in subsidiaries, privately-held equity investments and deferred tax assets, by location are summarized as follows (in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

United States $ 76,578 $ 62,163

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements