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Stock-based Compensation and Stockholders' Equity
 6 Months Ended
Dec. 31, 2021
Share-based Payment Arrangement [Abstract]  
Stock-based Compensation and Stockholders' Equity Stock-based Compensation and Stockholders' Equity
Equity Incentive Plan

On June 5, 2020, the stockholders of the Company approved the 2020 Equity and Incentive Compensation Plan (the "2020 Plan"). The maximum number of shares available under the 2020 Plan is 5,000,000 plus 1,045,000 shares of common stock that remained available for future awards under the 2016 Equity Incentive Plan (the “2016 Plan”), at the time of adoption of the 2020 Plan. No other awards can be granted under the 2016 Plan. 7,246,000 shares of common stock remain reserved for outstanding awards issued under the 2016 Plan at the time of adoption of the 2020 Plan.

As of December 31, 2021, the Company had 2,142,683 authorized shares available for future issuance under the 2020 Plan.

Common Stock Repurchase

On January 29, 2021, a duly authorized subcommittee of the Board of Directors approved a share repurchase program to repurchase up to an aggregate of $200.0 million of the Company's common stock at market prices. The program is effective until the earlier of July 31, 2022 or the date when the maximum amount of common stock is repurchased. The Company had $150.0 million of remaining availability under the share repurchase program as of December 31, 2021. There were no shares repurchased under the share repurchase program during the three and six months ended December 31, 2021.

Determining Fair Value

The Company's fair value of RSUs and PRSUs is based on the closing market price of the Company's common stock on the date of grant. The Company estimates the fair value of stock options granted using the Black-Scholes-option-pricing model. This fair value is then amortized ratably over the requisite service periods of the awards, which is generally the vesting period. The key inputs in using the Black-Scholes-option-pricing model were as follows:

Expected Term—The Company’s expected term represents the period that the Company’s stock-based awards are expected to be outstanding and was determined based on the Company's historical experience.

Expected Volatility—Expected volatility is based on the Company's historical volatility.

Expected Dividend—The Black-Scholes valuation model calls for a single expected dividend yield as an input and the Company has no plans to pay dividends.

Risk-Free Interest Rate—The risk-free interest rate used in the Black-Scholes valuation method is based on the United States Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of option.

The fair value of stock option grants for the three and six months ended December 31, 2021 and 2020 was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:
 Three Months Ended
December 31,		Six Months Ended
December 31,
 2021202020212020
Risk-free interest rate0.81%
0.45%
0.81% - 0.45%
0.27% - 0.45%
Expected term6.09 years5.98 years6.09 years5.98 years
Dividend yield—%—%—%—%
Volatility49.69%
50.34%
49.69% - 49.71%
50.34% - 50.43%
Weighted-average fair value$17.94$11.13$17.59$13.14
The following table shows total stock-based compensation expense included in the condensed consolidated statements of operations for the three and six months ended December 31, 2021 and 2020 (in thousands):
 
 Three Months Ended
December 31,		Six Months Ended
December 31,
 2021202020212020
Cost of sales$471 $407 $918 $910 
Research and development4,103 3,339 7,983 7,041 
Sales and marketing496 497 1,013 1,014 
General and administrative4,106 2,210 6,277 4,658 
Stock-based compensation expense before taxes9,176 6,453 16,191 13,623 
Income tax impact(2,310)(1,732)(4,198)(3,687)
Stock-based compensation expense, net$6,866 $4,721 $11,993 $9,936 
    
As of December 31, 2021, $9.4 million of unrecognized compensation expense related to stock options is expected to be recognized over a weighted-average period of 3.71 years, $53.2 million of unrecognized compensation cost related to unvested RSUs is expected to be recognized over a weighted-average period of 2.77 years and unrecognized compensation cost of $0.1 million related to unvested PRSUs was recognized during the quarter ended December 31, 2021. Additionally, as described below, $6.7 million of unrecognized compensation cost related to the 2021 CEO Performance Stock Option is expected to be recognized over a period of 5.0 years.
    
Stock Option Activity

In March 2021, the Company’s Compensation Committee of the Board of Directors (the “Compensation Committee”) approved the grant of a stock option award for 1,000,000 common stock shares to the Company’s CEO (the “2021 CEO Performance Stock Option”). The 2021 CEO Performance Stock Option has five vesting tranches with a vesting schedule based entirely on the attainment of operational milestones (performance conditions) and market conditions, assuming (1) continued employment either as the CEO or in such capacity as agreed upon between the Company’s CEO and the Board of Directors and (2) service through each vesting date. Each of the five vesting tranches of the 2021 CEO Performance Stock Option will vest upon certification by the Compensation Committee that both (i) the market price milestone for such tranche, which begins at $45.00 per share for the first tranche and increases up to $120.00 per share thereafter (based on a 60 calendar day trailing average, counting only trading days), has been achieved, and (ii) any one of the following five operational milestones focused on total revenue, as reported under U.S. GAAP, have been achieved for the previous four consecutive fiscal quarters. Upon vesting and exercise, including the payment of the exercise price of $45.00 per share, prior to March 2, 2024, the Company’s CEO must hold shares that he acquires until March 2, 2024, other than those shares sold pursuant to a cashless exercise where shares are simultaneously sold to pay for the exercise price and any required tax withholding.

The achievement status of the operational and stock price milestones as of December 31, 2021 was as follows:

Annualized Revenue MilestoneAchievement StatusStock Price MilestoneAchievement Status
(in billions)
$4.0
Achieved (1)
$45Not met
$4.8Probable$60Not met
$5.8Probable$75Not met
$6.8Probable$95Not met
$8.0Improbable$120Not met
(1)The Company has presented this revenue goal as having been “Achieved”, as its reported revenues for the four quarters ended December 31, 2021 were $4.17 billion. Under the terms of the agreement governing this award, the Compensation Committee must certify that the goal has been achieved after the Company files this Quarterly Report on Form 10-Q before the goal will be deemed achieved under that agreement. The Company expects the Compensation Committee to so certify shortly after the filing date of this report and the Company does not intend to file a Current Report on Form 8-K following such certification.

On the grant date, a Monte Carlo simulation was used to determine for each tranche (i) a fixed expense amount for such tranche and (ii) the future time when the market price milestone for such tranche was expected to be achieved, or its “expected market price milestone achievement time.” Separately, based on a subjective assessment of the Company’s future financial performance, each quarter, the Company will determine whether achievement is probable for each operational milestone that has not previously been achieved or deemed probable of achievement, and, if so, the future time when the Company expects to achieve that operational milestone, or its “expected operational milestone achievement time.” When the Company first determines that an operational milestone has become probable of being achieved, the Company will allocate the entire expense for the related tranche over the number of quarters between the grant date and the then-applicable “expected vesting time.” The “expected vesting time” at any given time is the later of (i) the expected operational milestone achievement time (if the related operational milestone has not yet been achieved) and (ii) the expected market price milestone achievement time (if the related market price milestone has not yet been achieved). The Company will immediately recognize a catch-up expense for all accumulated expenses from the grant date through the quarter in which the operational milestone was first deemed probable of being achieved. Each quarter thereafter, the Company will recognize the prorated portion of the then-remaining expense for the tranche based on the number of quarters between such quarter and the then-applicable expected vesting time, except that upon vesting of a tranche, all remaining expenses for that tranche will be immediately recognized.

During the three and six months ended December 31, 2021, the Company recognized compensation expense related to the 2021 CEO Performance Stock Option of $2.9 million and $3.8 million, respectively. No compensation expense related to the 2021 CEO Performance Stock Option was recognized during the three and six months ended December 31, 2020. As of December 31, 2021 and June 30, 2021, the Company had $6.7 million and $10.5 million, respectively, in unrecognized compensation cost related to the 2021 CEO Performance Stock Option. The unrecognized compensation cost as of December 31, 2021 is expected to be recognized over a period of five years.
    
The following table summarizes stock option activity during the six months ended December 31, 2021 under all plans:
 
Options
Outstanding		Weighted
Average
Exercise
Price per
Share		Weighted
Average
Remaining
Contractual
Term (in Years)
Balance as of June 30, 20215,175,554 $26.17 
Granted193,620 $36.89 
Exercised(669,403)$17.84 
Forfeited/Cancelled(85,000)$29.84 
Balance as of December 31, 20214,614,771 $27.82 5.49
Options vested and exercisable at December 31, 20212,876,247 $21.10 3.41

RSU and PRSU Activity

In January 2015, the Company began to grant RSUs to employees. The Company grants RSUs to certain employees as part of its regular employee equity compensation review program as well as to selected new hires. RSUs are typically service based share awards that entitle the holder to receive freely tradable shares of the Company's common stock upon vesting.
In March 2020, the Compensation Committee granted a PRSU award to one of the Company's senior executives. The award vests in two tranches and includes service and performance conditions. Each tranche has 15,000 RSUs that vest in May 2021 and November 2021 based on service conditions only. Additional units can be earned based on revenue growth percentage in fiscal year 2020 compared to fiscal year 2019, which units would vest in May 2021, and based on revenue growth percentage in fiscal year 2021 compared to fiscal year 2020, which units have vested in November 2021. No additional units were earned for fiscal year 2020 as revenue decreased from fiscal year 2019. An additional 2,939 units were earned for fiscal year 2021 that vested on November 10, 2021.

The following table summarizes RSU and PRSU activity during the six months ended December 31, 2021 under all plans: 
Time-Based RSUs
Outstanding		Weighted
Average
Grant-Date Fair Value per Share		PRSUs
Outstanding		Weighted
Average
Grant-Date Fair Value per Share
Balance as of June 30, 20211,854,956 $26.79 15,000 $34.27 
Granted641,195 $36.81 2,939 $34.27 
Released(355,657)$22.19 (17,939)$34.27 
Forfeited(185,036)$28.49 — $— 
Balance as of December 31, 20211,955,458 $30.69 — $—