What changed in this filing

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Item 1. Financial Statements

2023-10-31 compared with 2023-08-01 · 90 added, 87 removed, 482 unchanged (27% of the section changed)

3 unchanged sentences

(In thousands, except par value)

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

CURRENT ASSETS:

27 unchanged sentences

STOCKHOLDERS’ EQUITY:

Preferred stock, $ 0.0001 par value— 100,000 shares authorized and no shares issued and outstanding as of June 30, 2023 and December 31, 2022

Common stock, $ 0.0001 par value— 1,000,000 shares authorized as of June 30, 2023 and December 31, 2022;

309,355 and 306,890 shares issued and outstanding as of June 30, 2023 and December 31, 2022

Preferred stock, $ 0.0001 par value— 100,000 shares authorized and no shares issued and outstanding as of September 30, 2023 and December 31, 2022

Common stock, $ 0.0001 par value— 1,000,000 shares authorized as of September 30, 2023 and December 31, 2022;

310,972 and 306,890 shares issued and outstanding as of September 30, 2023 and December 31, 2022

Additional paid-in capital 2,028,301 1,780,714

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,

2023 2022 2023 2022

27 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,

2023 2022 2023 2022

11 unchanged sentences

(Unaudited, in thousands)

Three Months Ended June 30, 2023 Six Months Ended June 30, 2023

Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023

Common Stock Additional

2 unchanged sentences

Comprehensive

Income (Loss) Total

Stockholders’ Equity Common Stock Additional

7 unchanged sentences

Net income — — — 545,327 — 545,327 — — — 1,473,685 — 1,473,685

Other comprehensive income (loss), net of tax — — — — ( 3,703 ) ( 3,703 ) — — — — 8,700 8,700

Other comprehensive income, net of tax — — — — 2,042 2,042 — — — — 10,742 10,742

Stock-based compensation — — 85,390 — — 85,390 — — 215,398 — — 215,398

4 unchanged sentences

Balance at end of period 310,972 $ 31 $ 2,028,301 $ 4,500,389 $ ( 23,166 ) $ 6,505,555 310,972 $ 31 $ 2,028,301 $ 4,500,389 $ ( 23,166 ) $ 6,505,555

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

22 unchanged sentences

(Unaudited, in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

5 unchanged sentences

Deferred income taxes ( 217,489 ) ( 148,355 )

Unrealized gain on equity investments ( 19,172 ) ( 23,413 )

Gain on strategic investments ( 18,699 ) ( 24,121 )

Amortization (accretion) of investment premiums (discounts) ( 22,389 ) 14,167

23 unchanged sentences

Effect of exchange rate changes ( 934 ) ( 6,090 )

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 586,714 ( 127,546 )

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 1,073,698 95,463

CASH, CASH EQUIVALENTS AND RESTRICTED CASH —Beginning of period 675,978 625,050

20 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, 2023, are not necessarily indicative of the results expected for the full fiscal year.

The results for the three and nine months ended September 30, 2023, are not necessarily indicative of the results expected for the full fiscal year.

The condensed consolidated balance sheet as of December 31, 2022 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 inflation, monetary policy shifts, the recent banking crisis, recession risks, and potential supply chain and other disruptions from the Russia-Ukraine conflict and the U.S.

trade war with China.

We have continued to work closely with our contract manufacturers and supply chain partners to ramp production following a period of delayed component sourcing and workforce disruptions.

We have worked closely with our contract manufacturers and supply chain partners to ramp production following a period of delayed component sourcing and workforce disruptions.

We have worked diligently to drive improvements in these areas, including funding additional working capital and incremental purchase commitments, and have begun to see some reduction in customer lead times on certain products.

Over time, the recovery of capacity should allow us to ship products against previously committed deployment plans and accelerate some deployments where needed, while trying to limit building customer inventory.

On this basis, we now expect some shipments against these deployment schedules to extend into 2024.

On this basis, we expect some shipments against these deployment plans to extend into 2024.

As customer lead times reduce more broadly, we have seen and expect to continue to see a commensurate reduction in visibility to customer demand and a gradual return to somewhat shorter demand-planning horizons which has resulted in lower demand levels.

1 unchanged sentence

While inventory and working capital levels may continue to increase and remain elevated in the near term, we expect that purchase commitments will continue to decline as supplier lead times shorten.

Although these elevated inventory positions are largely related to early

life cycle products, we cannot be certain that we will be able to sell all of this inventory, which may in the future result in excess and obsolete inventory charges.

Although these elevated inventory positions and purchase commitments are largely related to

relatively early life cycle products, the larger magnitude of these balances, combined with a reduction in customer demand-planning horizons, has resulted in increased risk that we may not be able to sell all of this inventory, which in turn has resulted, and may in the future result, in the need for us to incur excess and obsolete inventory-related charges.

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

1 unchanged sentence

While we have seen improvements in our supply chain and manufacturing operations, any remaining or new supply chain and manufacturing related constraints could negatively impact our business in future periods.

In addition, although our business has experienced limited disruption as a result of the Russia-Ukraine conflict, continued escalation of the conflict may negatively impact the global economy and our future operating results and financial condition.

In addition, although our business has experienced limited disruption as a result of the recent conflicts between Russia-Ukraine, continued escalation of this conflict as well as the Israeli-Hamas conflict may negatively impact the global economy and our future operating results and financial condition.

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

1 unchanged sentence

however, any continued or renewed disruption in manufacturing and supply resulting from these factors could negatively impact our business.

We also believe that our customers, following a year of elevated purchase, must now consider changing technology roadmaps and priorities, including the need for the rapid deployment of artificial intelligence ("AI") and related technologies, resulting in some uncertainty as to future investment plans and a more constrained approach to some forecasts and orders in the near term.

In addition, any prolonged economic disruptions or further deterioration in the global economy could have a negative impact on demand from our customers in future periods.

We also believe that some of our customers, following a year of elevated purchases, must now consider changing technology roadmaps and priorities, including the need for the rapid deployment of AI and related technologies, resulting in some uncertainty as to future investment plans and a more constrained approach to some forecasts and orders in the near term.

In addition, any prolonged economic disruptions or further deterioration in the global economy could have a negative impact on demand from our customers in future periods, particularly in the enterprise market where we are continuing to expand our penetration.

Accordingly, current results and financial condition discussed herein may not be indicative of future operating results and trends.

5 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):

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

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

20 unchanged sentences

______________________________________

(1) As of June 30, 2023 and December 31, 2022, all of our certificates of deposits were domestic deposits.

(2) The $ 24.8 million represents the fair value of marketable equity securities as of June 30, 2023.

This publicly-traded equity investment generated an unrealized gain of $ 5.8 million for the six months ended June 30, 2023, and an unrealized gain of $ 11.3 million for the three months ended June 30, 2023.

Total initial cost for this investment was $ 3.0 million with no changes since our initial investment.

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

(1) As of September 30, 2023 and December 31, 2022, all of our certificates of deposits were domestic deposits.

(2) During the three months ended September 30, 2023, the Company sold all its shares of marketable equity securities for $ 23.9 million.

This publicly-traded equity investment generated a realized loss of $ 1.0 million and an unrealized gain of $ 5.8 million for the three and nine months ended September 30, 2023, respectively.

The initial cost of this investment was $ 3.0 million with no changes since our initial investment.

The cumulative gain from the initial purchase was $ 20.9 million, the majority of which has been reflected in prior periods as net unrealized gains.

The realized and unrealized gains/losses are included in Othe r 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 June 30, 2023, the Company did not make any transfers between the levels of the fair value hierarchy.

During the three and nine months ended September 30, 2023, 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):

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

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, our debt securities are generally not subject to credit risk;

therefore, we did not recognize any credit losses or non-credit-related impairments related to such securities for the three and six months ended June 30, 2023.

therefore, we did not recognize any credit losses or non-credit-related impairments related to such securities for the three and nine months ended September 30, 2023.

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

Realized losses were immaterial for the three and six months ended June 30, 2023.

Realized gains or losses were immaterial for the three and nine months ended September 30, 2023.

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

June 30, 2023

September 30, 2023

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

4 unchanged sentences

Total $ 2,155,949 $ ( 12,711 ) $ 407,787 $ ( 4,073 ) $ 2,563,736 $ ( 16,784 )

As of June 30, 2023, we had no marketable debt securities with contractual maturities that exceed 24 months.

As of September 30, 2023, 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):

June 30, 2023

September 30, 2023

Due in 1 year or less $ 1,517,054

1 unchanged sentence

Total debt securities $ 2,699,785

The weighted-average remaining duration of our marketable debt securities is approximately 0.9 years as of June 30, 2023.

The weighted-average remaining duration of our marketable debt securities is approximately 0.9 years as of September 30, 2023.

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 for our non-marketable equity securities during the three and six months ended June 30, 2023 and June 30, 2022, and w e recorded an immaterial amount of realized and unrealized losses for the three and six months ended June 30, 2023 and June 30, 2022.

We did not record any realized gains for our non-marketable equity securities during the three and nine months ended September 30, 2023 and September 30, 2022, and w e recorded an immaterial amount of realized and unrealized losses for the three and nine months ended September 30, 2023 and September 30, 2022 .

Unrealized gains f or our non-marketable equity securities are summarized below (in thousands):

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

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

2023 2022 2023 2022

3 unchanged sentences

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 non-marketable equity securities .

The following table summarizes the activity related to our non-marketable equity securities as of June 30, 2023 and December 31, 2022 (in thousands):

June 30, 2023 December 31, 2022

The following table summarizes the activity related to our non-marketable equity securities as of September 30, 2023 and December 31, 2022 (in thousands):

September 30, 2023 December 31, 2022

Cost of investments (1)

3 unchanged sentences

Carrying amount of investments $ 62,288 $ 39,468

(1) During the three months ended June 30, 2023, we had an $ 8.0 million convertible note previously included in other assets, plus accrued interest of $ 0.6 million, that was converted to an equity investment and included in cost of investments.

(1) During the nine months ended September 30, 2023, we had an $ 8.0 million convertible note previously included in other assets, plus accrued interest of $ 0.6 million, that was converted to an equity investment and included in cost of investments.

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, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Cash and cash equivalents $ 1,748,818 $ 671,707

3 unchanged sentences

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Accounts receivable $ 846,577 $ 928,490

3 unchanged sentences

Inventories consist of the following (in thousands):

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Raw materials $ 944,329 $ 759,519

3 unchanged sentences

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Inventory deposits $ 198,369 $ 162,047

3 unchanged sentences

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Land $ 44,017 $ 41,500

8 unchanged sentences

Property and equipment, net $ 102,592 $ 95,009

Depreciation expense was $ 7.8 million and $ 6.2 million for the three months ended June 30, 2023 and 2022, respectively, and $ 14.9 million and $ 11.8 million for the six months ended June 30, 2023 and 2022, respectively.

Depreciation expense was $ 8.6 million and $ 6.9 million for the three months ended September 30, 2023 and 2022, respectively, and $ 23.5 million and $ 18.7 million for the nine months ended September 30, 2023 and 2022, respectively.

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Accrued compensation-related costs $ 99,382 $ 117,053

8 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,

2023 2022 2023 2022

4 unchanged sentences

Contract liabilities, ending balance $ 120,281 $ 100,776 $ 120,281 $ 100,776

As of June 30, 2023 and December 31, 2022, $ 48.8 million and $ 45.2 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, 2023 and December 31, 2022, $ 52.5 million and $ 45.2 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,

2023 2022 2023 2022

5 unchanged sentences

Other Performance Obligations

Other performance obligations totaling $ 812.8 million as of June 30, 2023 include unbilled multi-year PCS and service contract amounts of $ 95.8 million and $ 717.0 million of binding contractual agreements with certain customers that are primarily related to future product shipments.

Other performance obligations totaling $ 820.3 million as of September 30, 2023 include unbilled multi-year PCS and service contract amounts of $ 313.2 million and $ 507.1 million of binding contractual agreements with certain customers that are primarily related to future product shipments.

Revenue from Total Remaining Performance Obligations

T otal revenue from our contract liabilities, deferred revenue and other performance obligations that will be recognized in future periods amounts to $ 2.1 billion.

Included in this amount is the $ 717.0 million of binding contractual agreements related primarily to future product shipments that will be recognized as revenue over the next two years .

Included in this amount is the $ 507.1 million of binding contractual agreements related primarily to future product shipments that are expected to be recognized as revenue over the next two years .

In addition, approximately 76 % of the remaining $ 1.6 billion of this future revenue is expected to be recognized over the next two years and approximately 24 % is expected to be recognized during the third to the fifth year.

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,

2023 2022 2023 2022

Interest income $ 43,676 $ 6,929 $ 98,391 $ 13,783

Unrealized gain (loss) on equity investments 24,743 ( 5,084 ) 19,172 23,413

Gain (loss) on strategic investments ( 473 ) 708 18,699 24,121

Other income (expense), net ( 1,388 ) ( 820 ) ( 6,790 ) ( 140 )

1 unchanged sentence

Acquisition, Goodwill and Acquisition-Related Intangible Assets

We had no material business acquisitions during the six months ended June 30, 2023.

We had no material business acquisitions during the nine months ended September 30, 2023.

During the year ended December 31, 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.

2 unchanged sentences

The purchase price allocation for the two acquisitions have been finalized.

No changes were made to the purchase price allocation for the three and six months ended June 30, 2023.

No material changes were made to the carrying values of goodwill for the three and six months ended June 30, 2023.

No changes were made to the purchase price allocation for the three and nine months ended September 30, 2023.

No material changes were made to the carrying values of goodwill for the three and nine months ended September 30, 2023.

Acquisition-Related Intangible Assets

2 unchanged sentences

December 31, 2022

Additions June 30, 2023 December 31, 2022

Amortization June 30, 2023 December 31, 2022

June 30, 2023

Additions September 30, 2023 December 31, 2022

Amortization September 30, 2023 December 31, 2022

September 30, 2023

Developed technology $ 154,930 $ — $ 154,930 $ ( 79,036 ) $ ( 19,262 ) $ ( 98,298 ) $ 75,894 $ 56,632 4.2

2 unchanged sentences

Total $ 221,940 $ — $ 221,940 $ ( 99,735 ) $ ( 26,747 ) $ ( 126,482 ) $ 122,205 $ 95,458 4.4

Amortization expense related to acquisition-related intangible assets was $ 9.3 million, and $ 7.7 million for the three months ended June 30, 2023 and 2022, respectively, and $ 18.6 million and $ 15.0 million for the six months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023, 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 $ 8.1 million and $ 9.3 million for the three months ended September 30, 2023 and 2022, respectively, and $ 26.7 million and $ 24.3 million for the nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, 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, 2023, we had non-cancellable purchase commitments of $ 2.2 billion, of which $ 1.9 billion have confirmed receipt dates within 12 months, and $ 0.3 billion have confirmed receipt dates greater than 12 months.

As of September 30, 2023, we had non-cancellable purchase commitments of $ 2.0 billion, of which $ 1.7 billion have expected receipt dates within 12 months, and $ 0.3 billion have expected 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 $ 301.6 million and $ 192.5 million as of June 30, 2023 and December 31, 2022, 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 $ 201.1 million and $ 192.5 million as of September 30, 2023 and December 31, 2022, 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.

23 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, 2023, provisions recorded for contingent losses related to other claims and matters have not been significant.

As of September 30, 2023, 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;

4 unchanged sentences

Stock Repurchase Program

Our board of directors has authorized a $ 1.0 billion stock repurchase program (the “Repurchase Program”).

In October 2021, our board of directors authorized a $ 1.0 billion stock repurchase program (the “Repurchase Program”).

This authorization allows us to repurchase shares of our common stock that will be funded from working capital and expires in the fourth quarter of 2024.

1 unchanged sentence

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

As of June 30, 2023, the remaining authorized amount for stock repurchases under the Repurchase Program was approximately $ 144.5 million.

A summary of the stock repurchase activity under the Repurchase Program for the three and six months ended June 30, 2023 is as follows (in thousands, except per share amounts):

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2023

As of September 30, 2023, the remaining authorized amount for stock repurchases under the Repurchase Program was approximately $ 144.5 million.

We did not repurchase any shares during the three months ended September 30, 2023.

A summary of the stock repurchase activity under the Repurchase Program for the nine months ended September 30, 2023 is as follows (in thousands, except per share amounts):

Nine Months Ended

September 30, 2023

Aggregate purchase price $ 112,279

8 unchanged sentences

Awards granted under the 2014 Plan could be in the form of Incentive Stock Options (“ISOs”), Nonstatutory Stock Options (“NSOs”), Restricted Stock Units (“RSUs”), Restricted Stock Awards (“RSAs”) or Stock Appreciation Rights (“SARs”).

The number of shares available for grant and issuance under the 2014 Plan increases automatically on January 1 of each year commencing with 2016 by the number of shares equal to 3 % of the outstanding shares of our common stock on the immediately preceding December 31, but not to exceed 50 million shares (the “2014 Plan Evergreen Increase”), unless our board of directors, in its discretion, determines to make a smaller increase.

The number of shares available for grant and issuance under the 2014 Plan increases automatically on January 1 of each year commencing with 2016 by the number of shares equal to 3 % of the outstanding shares of our common stock on the immediately preceding December 31, but not to exceed 50 million shares, unless our board of directors, in its discretion, determines to make a smaller increase.

Effective January 1, 2023, our board of directors authorized an increase of 9.2 million shares to the shares available for issuance under the 2014 Plan.

As of June 30, 2023, there remained approximately 98.0 million shares available for issuance under the 2014 Plan.

As of September 30, 2023, there remained approximately 96.5 million shares available for issuance under the 2014 Plan.

2014 Employee Stock Purchase Plan

3 unchanged sentences

Effective January 1, 2023, our board of directors authorized an increase of 3.1 million shares to the shares available for issuance under the ESPP.

During the six months ended June 30, 2023, we issued 139,758 shares at a weighted-average purchase price of $ 102.66 per share under the ESPP.

As of June 30, 2023, there remained approximately 23.5 million shares available for issuance under the ESPP.

During the nine months ended September 30, 2023, we issued 279,498 shares at a weighted-average purchase price of $ 105.69 per share under the ESPP.

As of September 30, 2023, there remained approximately 23.4 million shares available for issuance under the ESPP.

Stock Option Activities

7 unchanged sentences

Options canceled ( 2 ) 8.10

Balance—June 30, 2023 3,838 $ 17.00 1.8 $ 556,820

Vested and exercisable—June 30, 2023 3,497 $ 14.89 1.5 $ 514,659

Balance—September 30, 2023 3,073 $ 18.56 1.8 $ 508,139

Vested and exercisable—September 30, 2023 2,799 $ 16.61 1.5 $ 468,286

Restricted Stock Unit (RSU) Activities

8 unchanged sentences

RSUs forfeited/canceled ( 235 ) 98.72

Unvested balance—June 30, 2023 9,262 $ 106.28 1.9 $ 1,500,987

Unvested balance—September 30, 2023 8,534 $ 109.13 1.9 $ 1,569,587

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,

2023 2022 2023 2022

5 unchanged sentences

Total stock-based compensation $ 85,390 $ 65,477 $ 215,398 $ 165,980

As of June 30, 2023, there were $ 868.7 million of unamortized compensation costs related to all unvested awards.

As of September 30, 2023, there were $ 804.3 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 3.6 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,

2023 2022 2023 2022

8 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,

2023 2022 2023 2022

3 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,

2023 2022 2023 2022

2 unchanged sentences

Effective tax rate 15.4 % 16.5 % 14.7 % 15.6 %

The decrease in the effective tax rates in the three and six months ended June 30, 2023, as compared to the same periods in 2022, was primarily due to an increase in tax benefits attributable to stock-based compensation.

The decrease in the effective tax rates in the three and nine months ended September 30, 2023, as compared to the same periods in 2022, was primarily due to an increase in tax benefits attributable to stock-based compensation.

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,

2023 2022 2023 2022

4 unchanged sentences

(1) Includes $ 1,150.5 million and $ 969.2 million revenue generated from the U.S.

for the three months ended June 30, 2023 and June 30, 2022, respectively, and $ 2,216.3 million and $ 1,487.6 million for the six months ended June 30, 2023 and June 30, 2022, respectively.

for the three months ended September 30, 2023 and September 30, 2022, respectively, and $ 3,366.8 million and $ 2,456.8 million for the nine months ended September 30, 2023 and September 30, 2022, respectively.

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, 2023 December 31, 2022

September 30, 2023 December 31, 2022

United States $ 80,449 $ 71,540

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