Shares reserved for issuance

[Table of Contents](#i77b271276a234b51923cb690f1158463_7)  
Note 7. Commitments and Contingencies   
Off-Balance Sheet Arrangements  
As of September 30, 2022, we had no material off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures or capital resources other than certain items disclosed in Note 11 “Commitments and Contingencies” of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021.  
Indemnification Provisions  
In the normal course of business to facilitate transactions in our services and products, we indemnify certain parties: customers, vendors, lessors, and other parties with respect to certain matters, including, but not limited to, services to be provided by us and intellectual property infringement claims made by third parties. In addition, we have entered into indemnification agreements with our directors and our executive officers that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. Several of these agreements limit the time within which an indemnification claim can be made and the amount of the claim.  
It is not possible to make a reasonable estimate of the maximum potential amount under these indemnification agreements due to the unique facts and circumstances involved in each particular agreement. Additionally, we have a limited history of prior indemnification claims and the payments we have made under such agreements have not had a material adverse effect on our results of operations, cash flows or financial position. However, to the extent that valid indemnification claims arise in the future, future payments by us could be significant and could have a material adverse effect on our results of operations or cash flows in a particular period. As of September 30, 2022, we did not have any material indemnification claims that were probable or reasonably possible.  
Note 8. Stockholders’ Equity  
As of September 30, 2022, the 2005 Incentive Plan, as amended, has a total reserve of 27,783,379 shares of which 3,757,122 shares are available for issuance.  
Summary of Stock-Based Compensation Expense  
The stock-based compensation related to our stock-based awards and employee stock purchase plan for the three and nine months ended September 30, 2022 and 2021 is as follows (in thousands):

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|   |  | Three Months EndedSeptember 30, |  | Nine Months EndedSeptember 30, |
|   |  | 2022 |  | 2021 |  | 2022 |  | 2021 |
| Cost of net revenues |  | $ | 1,651  |  |  | $ | 1,451  |  |  | $ | 4,779  |  |  | $ | 4,175  |  |
| Selling, general and administrative |  | 25,293  |  |  | 22,229  |  |  | 76,509  |  |  | 67,131  |  |
|  |  |  |  |  |  |  |  |  |
| Research and development |  | 5,974  |  |  | 4,722  |  |  | 17,391  |  |  | 13,192  |  |
| Total stock-based compensation |  | $ | 32,918  |  |  | $ | 28,402  |  |  | $ | 98,679  |  |  | $ | 84,498  |  |

  
Restricted Stock Units (“RSUs”)  
The fair value of RSUs is based on our closing stock price on the date of grant. RSUs granted generally vest over a period of four years. A summary for the nine months ended September 30, 2022 is as follows:

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Number of SharesUnderlying RSUs(in thousands) |  | Weighted Average Grant Date Fair Value |  | Weighted Average RemainingContractual Term (in years) |  | Aggregate Intrinsic Value(in thousands) |
| Unvested as of December 31, 2021 | 492  |  |  | $ | 369.17  |  |  |  |  |  |
| Granted | 239  |  |  | 478.94  |  |  |  |  |  |
| Vested and released | (196) |  |  | 334.10  |  |  |  |  |  |
| Forfeited | (35) |  |  | 433.42  |  |  |  |  |  |
| Unvested as of September 30, 2022 | 500  |  |  | $ | 430.73  |  |  | 1.4 |  | $ | 103,619  |  |

  
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