Weighted-average service period

Table of ContentsThe following table summarizes our performance-based restricted stock unit activity, presented with the maximum number of shares that could potentially vest, for the three months ended June 30, 2022:

|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
|  | Performance-Based RestrictedStock Units(in thousands) |  | Weighted-Average GrantDate Fair Value |
| Outstanding as of March 31, 2022 | 190  |  |  | $ | 142.60  |  |
| Granted | 509  |  |  | 127.98  |  |
| Vested | (73) |  |  | 142.60  |  |
| Forfeited or cancelled | (26) |  |  | 142.60  |  |
| Outstanding as of June 30, 2022 | 600  |  |  | $ | 130.20  |  |

Market-Based Restricted Stock UnitsOur market-based restricted stock units vest contingent upon the achievement of pre-determined market and service conditions. If these market conditions are not met but service conditions are met, the market-based restricted stock units will not vest; however, any compensation expense we have recognized to date will not be reversed. The number of shares of common stock to be issued at vesting will range from zero to 200 percent of the target number of market-based restricted stock units based on our total stockholder return (“TSR”) relative to the performance of companies in the Nasdaq-100 Index for each measurement period, over either a one-year, two-year cumulative, and three-year cumulative period, a two-year and four-year cumulative period or a three-year period.The following table summarizes our market-based restricted stock unit activity, presented with the maximum number of shares that could potentially vest, for the three months ended June 30, 2022:

|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
|  | Market-BasedRestricted  StockUnits(in thousands) |  | Weighted-Average  GrantDate Fair Value |
| Outstanding as of March 31, 2022 | 1,321  |  |  | $ | 134.69  |  |
| Granted | 178  |  |  | 176.70  |  |
| Vested | (95) |  |  | 114.97  |  |
| Forfeited or cancelled | (298) |  |  | 123.14  |  |
| Outstanding as of June 30, 2022 | 1,106  |  |  | $ | 146.25  |  |

Stock-Based Compensation ExpenseThe following table summarizes stock-based compensation expense resulting from stock options, restricted stock units, market-based restricted stock units, performance-based restricted stock units, and the ESPP purchase rights included in our Condensed Consolidated Statements of Operations (in millions):

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|   | Three Months Ended June 30, |  |  |
|   | 2022 |  | 2021 |  |  |  |  |
| Cost of revenue | $ | 2  |  |  | $ | 1  |  |  |  |  |  |
| Research and development | 81  |  |  | 85  |  |  |  |  |  |
| Marketing and sales | 13  |  |  | 12  |  |  |  |  |  |
| General and administrative | 29  |  |  | 27  |  |  |  |  |  |
| Stock-based compensation expense | $ | 125  |  |  | $ | 125  |  |  |  |  |  |

During the three months ended June 30, 2022 and 2021, we recognized $21 million and $24 million, respectively, of deferred income tax benefit related to our stock-based compensation expense.As of June 30, 2022, our total unrecognized compensation cost related to stock options, restricted stock units, market-based restricted stock units, and performance-based restricted stock units was $1,109 million and is expected to be recognized over a weighted-average service period of 2.3 years. Of the $1,109 million of unrecognized compensation cost, $1,020 million relates to restricted stock units, $52 million relates to market-based restricted stock units, $37 million relates to performance-based restricted stock units.22  

