NOTE 18: STOCK CAPITAL

a. Common stock rights:

Common stock confers upon its holders the right to receive notice of, and to participate in, all general meetings of the Company, where each share of common stock shall have one vote for all purposes, to share equally, on a per share basis, in bonuses, profits, or distributions out of fund legally available therefor, and to participate in the distribution of the surplus assets of the Company in the event of liquidation of the Company.

b. Secondary public offering:

On March 17, 2022, the Company offered and sold 2,300,000 shares of the Company’s common stock, at a public offering price of $295.00 per share. The shares of Common Stock were issued and sold in a registered offering pursuant to the underwriting agreement dated March 17, 2022, among the Company, Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, and Morgan Stanley & Co. LLC (the “Underwriting Agreement”). All of the offered shares were issued at closing, including 300,000 shares of Common Stock that were issued and sold pursuant to the underwriters’ option to purchase additional shares under the Underwriting Agreement, which was exercised in full on March 18, 2022.

The net proceeds to the Company were $650,526 after deducting underwriters' discounts of $27,140 and commissions of $834.

c. Equity Incentive Plans:

The Company’s 2007 Global Incentive Plan (the “2007 Plan”) was adopted by the board of directors on August 30, 2007. The 2007 Plan terminated upon the Company’s IPO on March 31, 2015 and no further awards may be granted thereunder. All outstanding awards will continue to be governed by their existing terms and 379,358 available options for future grants were transferred to the Company’s 2015 Global Incentive Plan (the “2015 Plan”) and are reserved for future issuances under the 2015 plan. The 2015 Plan became effective upon the consummation of the IPO. The 2015 Plan provides for the grant of options, restricted stock units ("RSU"), performance stock units ("PSU"), and other share-based awards to directors, employees, officers, and non-employees of the Company and its subsidiaries. As of December 31, 2022, a total of 18,047,085 shares of common stock were reserved for issuance pursuant to stock awards under the 2015 Plan (the “Share Reserve”), an aggregate of 9,410,816 shares are still available for future grants.

The Share Reserve will automatically increase on January 1^st of each year during the term of the 2015 Plan, commencing on January 1^st of the year following the year in which the 2015 Plan becomes effective, in an amount equal to 5% of the total number of shares of capital stock outstanding on December 31^st of the preceding calendar year; provided, however, that the Company’s board of directors may determine that there will not be a January 1^st increase in the Share Reserve in a given year or that the increase will be less than 5% of the shares of capital stock outstanding on the preceding December 31^st.

The Company granted under its 2015 Plan, PSU awards to certain employees and officers which vest upon the achievement of certain performance or market conditions subject to their continued employment with the Company.

In 2021, the Company has also committed to issuing additional shares, which are subject to resale registration rights and which carry certain performance conditions (including business performance targets and a continued service relationship with the Company) and are treated as PSUs for accounting purposes.

The market condition for the PSUs is based on the Company’s total shareholder return ("TSR") compared to the TSR of companies listed in the S&P 500 index over a one to three year performance period. The Company uses a Monte-Carlo simulation to determine the grant date fair value for these awards, which takes into consideration the market price of a share of the Company’s common stock on the date of grant less the present value of dividends expected during the requisite service period, as well as the possible outcomes pertaining to the TSR market condition. The Company recognizes such compensation expenses on an accelerated vesting method.

The aggregate maximum number of shares of common stock that may be issued on the exercise of incentive stock options is 10,000,000. As of December 31, 2022, an aggregate of 8,617,974 options are still available for future grants under the 2015 Plan.

A summary of the activity in stock options and related information is as follows:

	Number of options			Weighted average exercise price		Weighted average remaining contractual term in years		Aggregate intrinsic Value
Outstanding as of December 31, 2021		474,280		$	44.68		5.22	$	112,479
Exercised		(135,008	)		29.77		-		-
Forfeited or expired		(243	)		5.01		-		-
Outstanding as of December 31, 2022		339,029		$	50.64		4.86	$	79,414
Vested and expected to vest as of December 31, 2022		338,345		$	50.45		4.85	$	79,315
Exercisable as of December 31, 2022		300,865		$	38.52		4.58	$	73,875

The aggregate intrinsic value in the tables above represents the total intrinsic value (the difference between the fair value of the Company’s common stock as of the last day of each period and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on the last day of each period.

The total intrinsic value of options exercised during the years ended December 31, 2022, 2021 and 2020 was $37,948, $65,668, and $251,564, respectively.

There were no options granted in 2022.

The weighted average grant date fair value of options granted to employees and directors during the years ended December 31, 2021 and 2020, was $168.71 and $62.11, respectively.

A summary of the activity in the RSUs and related information is as follows:

	Number of RSUs			Weighted average grant date fair value
Unvested as of January 1, 2022		1,759,972		$	189.25
Granted		683,548			266.06
Vested		(805,872	)		131.79
Forfeited		(149,133	)		214.65
Unvested as of December 31, 2022		1,488,515		$	232.05

A summary of the activity in the PSUs and related information is as follows:

	Number of PSUs		Weighted average grant date fair value
Unvested as of January 1, 2022		108,595	$	296.40
Granted		40,637		294.48
Unvested as of December 31, 2022		149,232	$	295.88

d. Employee Stock Purchase Plan:

The Company adopted an ESPP effective upon the consummation of the IPO. As of December 31, 2022, total of 3,662,737 shares were reserved for issuance under this plan. The number of shares of common stock reserved for issuance under the ESPP will increase automatically on January 1st of each year, for ten years, by the lesser of 1% of the total number of shares of the Company’s common stock outstanding on December 31st of the preceding calendar year or 487,643 shares. However, the Company’s board of directors may reduce the amount of the increase in any particular year at their discretion, including a reduction to zero.

The ESPP is implemented through an offering every six months. According to the ESPP, eligible employees may use up to 15% of their salaries to purchase common stock up to an aggregate limit of $15 per participant for every six months plan. The price of an ordinary share purchased under the ESPP is equal to 85% of the lower of the fair market value of the ordinary share on the subscription date of each offering period or on the purchase date.

As of December 31, 2022, 738,876 shares of common stock had been purchased under the ESPP.

As of December 31, 2022, 2,923,861 shares of common stock were available for future issuance under the ESPP.

In accordance with ASC No. 718, the ESPP is compensatory and, as such, results in recognition of compensation cost.

e. Stock-based compensation expenses:

The Company recognized stock-based compensation expenses related to all stock-based awards in the consolidated statement of income for the years ended December 31, 2022, 2021 and 2020, as follows:

	Year ended December 31,
	2022		2021		2020
Cost of revenues	$	21,818	$	18,743	$	11,082
Research and development		63,211		45,424		27,048
Selling and marketing		31,017		22,834		19,413
General and administrative		29,493		15,592		9,766
Total stock-based compensation expenses	$	145,539	$	102,593	$	67,309

For the year ended December 31, 2022, the Company capitalized $380 stock-based compensation related to the ERP implementation within other long-term assets in the consolidated balance sheets for the year ended December 31, 2022. In 2021 and 2020 the Company did not capitalize any stock-based compensation expenses.

The total tax benefit associated with share-based compensation for the year ended December 31, 2022, 2021 and 2020 was $7,747, $19,113 and $7,847, respectively. The tax benefit realized from share-based compensation for the year ended December 31, 2022, 2021 and 2020 was $10,171, $13,379 and $11,263, respectively.

As of December 31, 2022, there were total unrecognized compensation expenses in the amount of $343,473 related to non-vested equity-based compensation arrangements granted. These expenses are expected to be recognized during the period from October 1, 2022 through November 30, 2026.