enph-20221025
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________
FORM 8-K
________________________________________________

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 25, 2022
________________________________________________
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ENPHASE ENERGY, INC.
(Exact name of registrant as specified in its charter)
________________________________________________
Delaware 001-35480 20-4645388
(State or other jurisdiction of Incorporation) (Commission File No.) (IRS Employer Identification No.)

47281 Bayside Parkway
Fremont, CA 94538
(Address of principal executive offices, including zip code)
(877) 774-7000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.00001 par value per shareENPHNasdaq Global Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 




Item 2.02. Results of Operations and Financial Condition.
On October 25, 2022, Enphase Energy, Inc. (the “Company”) issued a press release announcing the Company’s financial results for the third quarter ended September 30, 2022. A copy of the press release is furnished as Exhibit 99.1 to this report.
The information in Item 2.02 of this Form 8-K and the exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and shall not be incorporated by reference in any registration statement or other document filed under the Securities Act or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filings, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits.
(d)Exhibits. 
Exhibit NumberDescription




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date:October 25, 2022ENPHASE ENERGY, INC.
 By:/s/ Mandy Yang
  Mandy Yang
  Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)



Document

Exhibit 99.1
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Enphase Energy Reports Financial Results for the Third Quarter of 2022
FREMONT, Calif., Oct. 25, 2022 - Enphase Energy, Inc. (NASDAQ: ENPH), a global energy technology company and the world’s leading supplier of microinverter-based solar and battery systems, announced today financial results for the third quarter of 2022, which included the summary below from its President and CEO, Badri Kothandaraman.
We reported record quarterly revenue of $634.7 million in the third quarter of 2022, along with 42.9% for non-GAAP gross margin. We shipped 4,342,805 microinverters, or approximately 1,709 megawatts DC, and 133.6 megawatt hours of Enphase® IQ™ Batteries.
Financial highlights for the third quarter of 2022 are listed below.
Record quarterly revenue of $634.7 million
GAAP gross margin of 42.2%; non-GAAP gross margin of 42.9%
GAAP operating income of $135.4 million; non-GAAP operating income of $194.0 million
GAAP net income of $114.8 million; non-GAAP net income of $175.5 million
GAAP diluted earnings per share of $0.80; non-GAAP diluted earnings per share of $1.25
Free cash flow of $179.1 million; ending cash, cash equivalents, and marketable securities of $1.42 billion
Our revenue and earnings for the third quarter of 2022 are provided below, compared with the prior quarter and the year ago quarter:
(In thousands, except per share and percentage data)
GAAPNon-GAAP
Q3 2022Q2 2022Q3 2021Q3 2022Q2 2022Q3 2021
Revenue$634,713 $530,196 $351,519 $634,713 $530,196 $351,519 
Gross margin42.2 %41.3 %39.9 %42.9 %42.2 %40.8 %
Operating expenses$132,475 $124,969 $103,007 $78,587 $71,169 $57,341 
Operating income$135,441 $94,036 $37,351 $193,962 $152,412 $85,932 
Net income$114,812 $76,976 $21,809 $175,513 $149,852 $84,157 
Basic EPS$0.85 $0.57 $0.16 $1.29 $1.11 $0.62 
Diluted EPS$0.80 $0.54 $0.15 $1.25 $1.07 $0.60 
Our total revenue increased 20%, compared to the second quarter of 2022. Demand was strong in our markets worldwide, particularly in North America and Europe. Our revenue in Europe for the third quarter of 2022 increased approximately 70%, compared to the second quarter of 2022, as countries in the region are accelerating their efforts to address rising energy prices and reliance on fossil fuels. Our IQ Battery shipments increased 1%, compared to the second quarter of 2022. Our non-GAAP gross margin was 42.9% in the third quarter of 2022, compared to 42.2% in the second quarter of 2022, driven by IQ8™ Microinverter product mix.
Our non-GAAP operating expenses were $78.6 million in the third quarter of 2022, compared to $71.2 million in the second quarter of 2022, primarily due to increased investment in R&D, customer service, and sales. Our non-GAAP operating income was $194.0 million in the third quarter of 2022, compared to $152.4 million in the second quarter of 2022.
We exited the third quarter of 2022 with $1.42 billion in cash, cash equivalents, and marketable securities and generated $188.0 million in cash flow from operations in the third quarter of 2022. Our capital expenditures were $8.9 million in the third quarter of 2022, compared to $8.7 million in the second quarter of 2022.


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IQ8 Microinverters constituted approximately 47% of all our microinverter shipments during the third quarter of 2022. IQ8 Microinverters can form a microgrid and provide Sunlight Backup™ during an outage, even without a battery. With our Sunlight Jump Start™ feature, IQ8 Microinverters can restart a home energy system using sunlight only after prolonged grid outages that may result in a fully depleted battery. This eliminates the need for a manual restart of the system and gives homeowners greater resilience.
Our IQ Battery shipments were 133.6 megawatt hours in the third quarter of 2022, compared to 132.4 megawatt hours in the second quarter of 2022. We shipped batteries to the United States, Germany, and Belgium during the third quarter. We now have approximately 2,100 installers worldwide that are certified to install our IQ Batteries.
We recently acquired GreenCom Networks AG based in Munich, Germany. The company provides Internet of Things (IoT) software solutions for customers to connect and manage a wide range of distributed energy devices within the home, thereby enabling sector convergence. This acquisition allows us to add a local engineering team to service the accelerating clean energy transition in Europe, provide installers with a complete home energy management system integrating Enphase microinverters and batteries with third-party electric vehicle (EV) chargers and heat pumps, and enable homeowners to monitor and control their devices from the Enphase® App.
BUSINESS HIGHLIGHTS
On Aug. 1, 2022, Enphase Energy announced that Salcomp, a global high-precision manufacturer, shipped more than five million Enphase IQ® Microinverters.
On Aug. 11, 2022, Enphase Energy announced that ClipperCreek™, a division of Enphase offering EV charging solutions, is expanding product deployments amidst rising consumer interest in EVs and electrification.
On Aug. 31, 2022, Enphase Energy announced a new agreement with Home Connect, an open digital platform that allows home appliances of various brands to be managed with a single app. Home Connect is available for nine well-known home appliance brands including Bosch, Siemens, Gaggenau, Neff, and Thermador.
In Aug. 2022, Enphase Energy announced that Complete Solar, a leading technology-enabled residential solar company in the United States, is seeing increased deployments of Enphase Energy Systems™ powered by IQ8 Microinverters and IQ Batteries. Enphase Energy also announced that Meraki Solar, headquartered in Florida, is expanding the adoption of Enphase IQ Microinverters as homeowners across the United States are hit with extreme weather and rising energy prices.
On Sept. 6, 2022, Enphase Energy announced that it expanded its global relationship with renewable energy company BayWa r.e., a leading global developer and solar photovoltaic (PV) distributor, to distribute Enphase’s IQ7 family of microinverters and IQ Batteries in Germany and Benelux.
On Sept. 17, 2022 Enphase Energy announced that Gaslicht.com, a Netherlands-based leading energy platform and part of the Bencom Group, is seeing an increase in deployments of residential solar energy systems powered by the Enphase IQ7 family of microinverters.
In Oct. 2022, Enphase Energy announced that Energiekonzepte Deutschland GmbH (EKD), one of the leading residential solar and battery storage service providers in Germany, will now offer Enphase IQ Batteries to its customers. Enphase Energy also announced that CREATON GmbH, one of the leading residential roof manufacturers in Europe, is now exclusively offering Enphase IQ Batteries as CREATON is now able to integrate battery installations into solar roofing projects.
Enphase Energy recently announced that installers in Hawaii, Rhode Island, Massachusetts, and New Jersey have seen growing deployments of Enphase Energy Systems powered by IQ8 Microinverters and IQ Batteries.
FOURTH QUARTER 2022 FINANCIAL OUTLOOK
For the fourth quarter of 2022, Enphase Energy estimates both GAAP and non-GAAP financial results as follows:
Revenue to be within a range of $680 million to $720 million, which includes shipments of 120 to 135 megawatt hours of Enphase IQ Batteries
GAAP gross margin to be within a range of 39.0% to 42.0%; non-GAAP gross margin to be within a range of 40.0% to 43.0%, excluding stock-based compensation expenses and acquisition related amortization
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GAAP operating expenses to be within a range of $152.0 million to $156.0 million
Non-GAAP operating expenses to be within a range of $87.0 million to $91.0 million, excluding $65.0 million estimated for stock-based compensation expenses, restructuring charges for site consolidation, and acquisition related costs and amortization
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Use of Non-GAAP Financial Measures
Enphase Energy has presented certain non-GAAP financial measures in this press release. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either exclude or include amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States (“GAAP”). Reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure can be found in the accompanying tables to this press release. Non-GAAP financial measures presented by Enphase Energy include non-GAAP gross profit, gross margin, operating expenses, income from operations, net income, net income per share and free cash flow.
These non-GAAP financial measures do not reflect a comprehensive system of accounting, differ from GAAP measures with the same captions and may differ from non-GAAP financial measures with the same or similar captions that are used by other companies. In addition, these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Enphase Energy’s results of operations as determined in accordance with GAAP. As such, these non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Enphase Energy uses these non-GAAP financial measures to analyze its operating performance and future prospects, develop internal budgets and financial goals, and to facilitate period-to-period comparisons. Enphase Energy believes that these non-GAAP financial measures reflect an additional way of viewing aspects of its operations that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting its business.
As presented in the “Reconciliation of Non-GAAP Financial Measures” tables in the accompanying press release, each of the non-GAAP financial measures excludes one or more of the following items for purposes of calculating non-GAAP financial measures to facilitate an evaluation of the Enphase Energy’s current operating performance and a comparison to its past operating performance:
Stock-based compensation expense. Enphase Energy excludes stock-based compensation expense from its non-GAAP measures primarily because they are non-cash in nature. Moreover, the impact of this expense is significantly affected by the Enphase Energy’s stock price at the time of an award over which management has limited to no control.
Acquisition related expenses and amortization. This item represents expenses incurred related to the Enphase Energy’s business acquisitions, which are non-recurring in nature, and amortization of acquired intangible assets, which is a non-cash expense. Acquisition related expenses and amortization of acquired intangible assets are not reflective of the Enphase Energy ongoing financial performance.
Restructuring charges and asset impairment. Enphase Energy excludes restructuring related charges due to the nature of the expenses being unplanned and arising outside the ordinary course of continuing operations. These costs primarily consist of fees paid for cash-based severance costs and asset write-downs of property and equipment, and other contract termination costs resulting from restructuring initiatives.
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Non-cash interest expense. This item consists primarily of amortization of debt issuance costs and accretion of debt discount because these expenses do not represent a cash outflow for the Enphase Energy except in the period the financing was secured and such amortization expense is not reflective of the Enphase Energy ongoing financial performance.
Loss on partial settlement of convertible notes. This item is reflected in other income (expense), net and represents (i) the difference between the carrying value and the fair value of the settled convertible notes and (ii) the inducement loss for the difference between the value of the shares issued to settle the convertible notes and the value of the shares that would have been issued under the original conversion terms with respect to the repurchased Notes due 2025, which is non-cash in nature and is not reflective of the Enphase Energy ongoing financial performance.
Non-GAAP income tax adjustment. This item represents the amount adjusted to the Enphase Energy’s GAAP tax provision or benefit to present the non-GAAP tax amount based on cash tax expense and reserves.
Free cash flow. This item represents net cash flows from operating activities plus deemed repayment of convertible notes attributable to accreted debt discount reported in operating activities less purchases of property and equipment.
Conference Call Information
Enphase Energy will host a conference call for analysts and investors to discuss its third quarter 2022 results and fourth quarter 2022 business outlook today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). The call is open to the public by dialing (833) 634-5018. A live webcast of the conference call will also be accessible from the “Investor Relations” section of Enphase Energy’s website at investor.enphase.com. Following the webcast, an archived version will be available on the website for approximately one year. In addition, an audio replay of the conference call will be available by calling (877) 344-7529; replay access code 3730150, beginning approximately one hour after the call.
Forward-Looking Statements
This press release contains forward-looking statements, including statements related to Enphase Energy’s expectations as to its fourth quarter of 2022 financial outlook and expense levels; the capabilities, advantages, features and performance of its technology and products; the anticipated benefits of its acquisition of GreenCom Networks; the anticipated demand for and availability of its products and services; and growth in deployments of Enphase Energy Systems. These forward-looking statements are based on Enphase Energy’s current expectations and inherently involve significant risks and uncertainties. Enphase Energy’s actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of certain risks and uncertainties including those risks described in more detail in its most recent Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, its most recent Annual Report on Form 10-K for the year ended December 31, 2021 and other documents on file with the SEC from time to time and available on the SEC’s website at www.sec.gov. Enphase Energy undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in its expectations, except as required by law.
A copy of this press release can be found on the investor relations page of Enphase Energy’s website at investor.enphase.com.
About Enphase Energy, Inc.
Enphase Energy, a global energy technology company based in Fremont, CA, is the world's leading supplier of microinverter-based solar and battery systems that enable people to harness the sun to make, use, save, and sell their own power—and control it all with a smart mobile app. The company revolutionized the solar industry with its microinverter-based technology and builds all-in-one solar, battery, and software solutions. Enphase has shipped more than 52 million microinverters, and over 2.7 million Enphase-based systems have been deployed in more than 145 countries. For more information, visit www.enphase.com.
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© 2022 Enphase Energy, Inc. All rights reserved. Enphase Energy, Enphase, the “e” logo, IQ, IQ7, IQ8, IQ Battery, Enphase Energy Systems, Sunlight Backup, Sunlight Jump Start, ClipperCreek, and certain other names and marks are trademarks of Enphase Energy, Inc. Other names are for informational purposes and may be trademarks of their respective owners.


Contact:

Karen Sagot
Enphase Energy, Inc.
Investor Relations
ir@enphaseenergy.com
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ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months EndedNine Months Ended
September 30,
2022
June 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Net revenues$634,713 $530,196 $351,519 $1,606,201 $969,330 
Cost of revenues366,797 311,191 211,161 942,307 578,222 
Gross profit267,916 219,005 140,358 663,894 391,108 
Operating expenses:
Research and development44,188 39,256 29,411 119,163 73,937 
Sales and marketing55,257 53,588 39,296 150,189 84,504 
General and administrative32,436 32,125 34,300 102,647 74,530 
Restructuring charges594 — — 594 — 
Total operating expenses132,475 124,969 103,007 372,593 232,971 
Income from operations135,441 94,036 37,351 291,301 158,137 
Other income (expense), net
Interest income3,680 796 110 4,936 281 
Interest expense(2,255)(2,168)(12,628)(7,159)(32,463)
Other income (expense), net(2,611)(456)874 (5,208)814 
Loss on partial settlement of convertible notes (1)— — — — (56,382)
Total other expense, net(1,186)(1,828)(11,644)(7,431)(87,750)
Income before income taxes134,255 92,208 25,707 283,870 70,387 
Income tax benefit (provision)(19,443)(15,232)(3,898)(40,261)22,471 
Net income$114,812 $76,976 $21,809 $243,609 $92,858 
Net income per share:
Basic$0.85 $0.57 $0.16 $1.80 $0.69 
Diluted$0.80 $0.54 $0.15 $1.70 $0.65 
Shares used in per share calculation:
Basic135,633 135,196 134,721 135,056 133,719 
Diluted145,962 143,725 141,220 144,058 143,091 

(1)    Loss on partial settlement of convertible notes of $56.4 million for the nine months ended September 30, 2021, primarily related to the $9.5 million non-cash loss on partial settlement of $87.1 million aggregate principal amount of the Notes due 2024, $9.5 million non-cash loss on partial settlement of $217.8 million aggregate principal amount of the Notes due 2025 and $37.5 million non-cash inducement loss incurred on repurchase of Notes due 2025.
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ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
September 30,
2022
December 31,
2021
ASSETS
Current assets:
Cash and cash equivalents$337,583 $119,316 
Marketable securities1,079,713 897,335 
Accounts receivable, net367,647 333,626 
Inventory146,451 74,400 
Prepaid expenses and other assets51,270 37,784 
Total current assets1,982,664 1,462,461 
Property and equipment, net91,801 82,167 
Operating lease, right of use asset, net18,128 14,420 
Intangible assets, net90,924 97,758 
Goodwill195,508 181,254 
Other assets140,439 118,726 
Deferred tax assets, net178,371 122,470 
Total assets$2,697,835 $2,079,256 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$92,823 $113,767 
Accrued liabilities255,800 157,912 
Deferred revenues, current79,609 62,670 
Warranty obligations, current32,350 19,395 
Debt, current89,654 86,052 
Total current liabilities550,236 439,796 
Long-term liabilities:
Deferred revenues, noncurrent239,971 187,186 
Warranty obligations, noncurrent73,530 53,982 
Other liabilities25,418 16,530 
Debt, noncurrent1,198,627 951,594 
Total liabilities2,087,782 1,649,088 
Total stockholders’ equity610,053 430,168 
Total liabilities and stockholders’ equity$2,697,835 $2,079,256 


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ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months EndedNine Months Ended
September 30,
2022
June 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Cash flows from operating activities:
Net income$114,812 $76,976 $21,809 $243,609 $92,858 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization14,664 13,999 8,255 42,766 21,409 
Amortization of marketable securities premiums, net of accretion of purchase discounts(612)1,248 58 2,091 58 
Provision for doubtful accounts(79)(16)179 52 450 
Asset impairment— 1,200 — 1,200 — 
Loss on partial settlement of convertibles notes— — — — 56,382 
Deemed repayment of convertible notes attributable to accreted debt discount— — — — (15,585)
Non-cash interest expense2,065 2,046 12,430 6,090 31,893 
Change in fair value of debt securities(519)(987)(784)(390)(3,153)
Stock-based compensation52,296 53,064 46,954 153,157 77,110 
Deferred income taxes115 12,452 1,337 15,732 (28,790)
Changes in operating assets and liabilities:
Accounts receivable(46,226)51,770 5,462 (18,680)(93,069)
Inventory(16,185)(33,830)(27,648)(72,051)(23,640)
Prepaid expenses and other assets526 (18,310)(3,568)(20,826)(18,762)
Accounts payable, accrued and other liabilities32,060 12,033 24,897 42,288 71,787 
Warranty obligations9,329 12,972 7,574 32,207 21,599 
Deferred revenues25,764 16,033 16,399 63,858 64,308 
Net cash provided by operating activities188,010 200,650 113,354 491,103 254,855 
Cash flows from investing activities:
Purchases of property and equipment(8,948)(8,691)(12,682)(30,014)(39,050)
Purchases of marketable securities(512,176)(60,061)(545,490)(572,237)(545,490)
Maturities of marketable securities184,123 116,298 35,000 377,156 35,000 
Investments in private companies(1,000)— (13,000)(1,000)(58,000)
Business acquisitions, net of cash acquired— (3,055)— (27,680)(55,239)
Purchase of intangible asset— — (250)— (250)
Net cash provided by (used in) investing activities(338,001)44,491 (536,422)(253,775)(663,029)
Cash flows from financing activities:
Issuance of convertible notes, net of issuance costs— — — — 1,188,439 
Purchase of convertible note hedges— — — — (286,235)
Sale of warrants— — — — 220,800 
Principal payments and financing fees on debt— — — — (1,422)
Partial repurchase of convertible notes— — — — (289,312)
Repurchase of common stock— — — — (200,000)
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Three Months EndedNine Months Ended
September 30,
2022
June 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Proceeds from exercise of equity awards and employee stock purchase plan693 4,183 42 5,280 3,684 
Payment of withholding taxes related to net share settlement of equity awards(4,589)(5,463)(3,313)(19,396)(20,311)
Net cash provided by (used in) financing activities(3,896)(1,280)(3,271)(14,116)615,643 
Effect of exchange rate changes on cash and cash equivalents(4,003)(238)(376)(4,945)(1,302)
Net increase (decrease) in cash and cash equivalents(157,890)243,623 (426,715)218,267 206,167 
Cash and cash equivalents—Beginning of period495,473 251,850 1,312,261 119,316 679,379 
Cash and cash equivalents —End of period$337,583 $495,473 $885,546 $337,583 $885,546 
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ENPHASE ENERGY, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data and percentages)
(Unaudited)
Three Months EndedNine Months Ended
September 30,
2022
June 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Gross profit (GAAP)$267,916 $219,005 $140,358 $663,894 $391,108 
Stock-based compensation3,188 3,131 2,915 8,826 4,957 
Acquisition related amortization1,445 1,445 — 4,189 — 
Gross profit (Non-GAAP)$272,549 $223,581 $143,273 $676,909 $396,065 

Gross margin (GAAP)42.2 %41.3 %39.9 %41.3 %40.3 %
Stock-based compensation0.5 %0.6 %0.9 %0.5 %0.6 %
Acquisition related amortization0.2 %0.3 %— %0.3 %— %
Gross margin (Non-GAAP)42.9 %42.2 %40.8 %42.1 %40.9 %

Operating expenses (GAAP)$132,475 $124,969 $103,007 $372,593 $232,971 
Stock-based compensation (1)(49,108)(49,933)(44,039)(144,331)(72,153)
Acquisition related expenses and amortization(4,186)(3,867)(1,627)(11,662)(8,082)
Restructuring and asset impairment charges(594)— — (594)— 
Operating expenses (Non-GAAP)$78,587 $71,169 $57,341 $216,006 $152,736 

(1) Includes stock-based compensation as follows:
Research and development
$17,400 $16,266 $10,999 $47,395 $22,215 
Sales and marketing
20,069 22,176 15,472 55,302 24,344 
General and administrative
11,639 11,491 17,568 41,634 25,594 
Total
$49,108 $49,933 $44,039 $144,331 $72,153 

Income from operations (GAAP)$135,441 $94,036 $37,351 $291,301 $158,137 
Stock-based compensation52,296 53,064 46,954 153,157 77,110 
Acquisition related expenses and amortization5,631 5,312 1,627 15,851 8,082 
Restructuring and asset impairment charges594 — — 594 — 
Income from operations (Non-GAAP)$193,962 $152,412 $85,932 $460,903 $243,329 

Net income (GAAP)$114,812 $76,976 $21,809 $243,609 $92,858 
Stock-based compensation52,296 53,064 46,954 153,157 77,110 
Acquisition related expenses and amortization5,631 5,312 1,627 15,851 8,082 
Restructuring and asset impairment charges594 — — 594 — 
Non-cash interest expense2,065 2,048 12,430 6,092 31,893 
Loss on partial settlement of convertible notes— — — — 56,382 
Non-GAAP income tax adjustment115 12,452 1,337 15,732 (28,790)
Net income (Non-GAAP)$175,513 $149,852 $84,157 $435,035 $237,535 

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Three Months EndedNine Months Ended
September 30,
2022
June 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Net income per share, basic (GAAP)$0.85 $0.57 $0.16 $1.80 $0.69 
Stock-based compensation0.39 0.39 0.35 1.13 0.58 
Acquisition related expenses and amortization0.04 0.04 0.01 0.12 0.06 
Restructuring and asset impairment charges— — — — — 
Non-cash interest expense0.01 0.02 0.09 0.05 0.24 
Loss on partial settlement of convertible notes— — — — 0.42 
Non-GAAP income tax adjustment— 0.09 0.01 0.12 (0.21)
Net income per share, basic (Non-GAAP)$1.29 $1.11 $0.62 $3.22 $1.78 
Shares used in basic per share calculation GAAP and Non-GAAP135,633 135,196 134,721 135,056 133,719 
Net income per share, diluted (GAAP)$0.80 $0.54 $0.15 $1.70 $0.65 
Stock-based compensation0.37 0.38 0.34 1.11 0.55 
Acquisition related expenses and amortization0.05 0.04 0.01 0.12 0.06 
Restructuring and asset impairment charges0.01 — — 0.01 — 
Non-cash interest expense0.02 0.02 0.09 0.05 0.23 
Loss on partial settlement of convertible notes— — — — 0.40 
Non-GAAP income tax adjustment— 0.09 0.01 0.12 (0.21)
Net income per share, diluted (Non-GAAP) (2)$1.25 $1.07 $0.60 $3.11 $1.68 
Shares used in diluted per share calculation GAAP145,962 143,725 141,220 144,058 143,091 
Shares used in diluted per share calculation Non-GAAP (3)140,634 139,650 140,516 139,983 141,101 
Net cash provided by operating activities (GAAP)$188,010 $200,650 $113,354 $491,103 $254,855 
Purchases of property and equipment(8,948)(8,691)(12,682)(30,014)(39,050)
Deemed repayment of convertible notes due 2024 and notes due 2025 attributable to accreted debt discount— — — — 15,585 
Free cash flow (Non-GAAP)$179,062 $191,959 $100,672 $461,089 $231,390 

(2)    Calculation of non-GAAP diluted net income per share for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021, excludes convertible notes due 2023 interest expense, net of tax of less than $0.1 million in each period from non-GAAP net income. Calculation of non-GAAP diluted net income per share for the nine months ended September 30, 2022 and 2021 excludes convertible notes due 2023 interest expense, net of tax of approximately $0.1 million in each period from non-GAAP net income.
(3)    Effect of dilutive in-the-money portion of convertible senior notes and warrants are included in the GAAP weighted-average diluted shares in periods where we have GAAP net income. We excluded the in-the-money portion of convertible notes due 2024 totaling 46 thousand shares and 1,014 thousand shares in the three months and nine months ended September 30, 2021 from non-GAAP weighted-average diluted shares as we entered into convertible note hedge transactions that reduce potential dilution to our common stock upon any conversion of the notes due 2024. We excluded the in-the-money portion of convertible notes due 2025 totaling 1,253 thousand shares and 658 thousand shares in the three months ended September 30, 2022 and 2021, respectively, and 976 thousand shares in the nine months ended September 30, 2021 from non-GAAP weighted-average diluted shares. We excluded in-the-money portion of convertible notes due 2026 and notes due 2028 totaling 2,057 thousand shares and 2,018 thousand shares, respectively, each in the three months and nine months ended September 30, 2022 from non-GAAP weighted-average diluted shares as we entered into convertible note hedge transactions that reduce potential dilution to our common stock upon any conversion of the notes due 2026 and notes due 2028.
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