The Company had the following reserved shares of common stock for future issuance as of the dates noted (in thousands):


	March 31, 2023		June 30, 2022
2013 Equity Incentive Plan shares available for grant		10,701		11,430
Employee stock options and awards outstanding		9,995		7,616
2014 Employee Stock Purchase Plan		8,467		9,961
Total shares reserved for issuance		29,163		29,007

Share-based compensation expense recognized in the condensed consolidated financial statements by line-item caption is as follows (in thousands):


	Three Months Ended				Nine Months Ended
	March 31, 2023		March 31, 2022		March 31, 2023		March 31, 2022
Cost of product revenues	$	492	$	291	$	1,365	$	904
Cost of service and subscription revenues		930		343		2,568		1,056
Research and development		3,883		2,446		10,935		7,568
Sales and marketing		5,777		3,832		16,326		11,267
General and administrative		4,294		3,941		15,367		11,835
Total share-based compensation expense	$	15,376	$	10,853	$	46,561	$	32,630

The following table summarizes stock option activity for the nine months ended March 31, 2023 (in thousands, except per share and contractual term):


	Number of Shares		Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Options outstanding at June 30, 2022		1,187	$	6.56		3.70	$	2,801
Granted		—		—
Exercised		—		—
Canceled		—		—
Options outstanding at March 31, 2023		1,187	$	6.56		2.95	$	14,909
Vested and expected to vest at March 31, 2023		1,187	$	6.56		2.95	$	14,909
Exercisable at March 31, 2023		1,108	$	6.55		2.91	$	13,921

The fair value of each stock option grant under the 2013 Plan is estimated on the date of grant using the Black-Scholes-Merton option valuation model. The expected term of options granted is derived from historical data on employee exercise and post-vesting employment termination behavior. The risk-free interest rate is based upon the estimated life of the option and the U.S. Treasury yield curve in effect at the time of grant. Expected volatility is based on the historical volatility on the Company’s stock. There were no stock

options granted during the three and nine months ended March 31, 2023 and 2022. There were no stock options exercised during the three and nine months ended March 31, 2023.

Stock awards may be granted under the 2013 Plan on terms approved by the Compensation Committee of the Board. Stock awards generally provide for the issuance of restricted stock units (“RSUs”) including performance-condition or market-condition RSUs which vest over a fixed period of time or based upon the satisfaction of certain performance criteria or market conditions. The Company recognizes compensation expense on the awards over the vesting period based on the awards’ fair value as of the date of grant. The Company does not estimate forfeitures, but accounts for them as incurred.

The following table summarizes stock award activity for the nine months ended March 31, 2023 (in thousands, except grant date fair value):


	Number of Shares			Weighted- Average Grant Date Fair Value		Aggregate Fair Value
Non-vested stock awards outstanding at June 30, 2022		6,429		$	9.57
Granted		6,400			14.65
Released		(3,285	)		8.42
Canceled		(736	)		12.70
Non-vested stock awards outstanding at March 31, 2023		8,808		$	13.43	$	168,413
Stock awards expected to vest at March 31, 2023		8,808		$	13.43	$	168,413

The RSUs granted under the 2013 Plan vest over a period of time, generally one to three years, and are subject to participant's continued service to the Company. The stock awards granted during the nine months ended March 31, 2023 included 1.4 million RSUs including the market condition awards discussed below to named executive officers and directors.

During the nine months ended March 31, 2023 and 2022, the Compensation Committee of the Board granted 1.0 million and 0.7 million RSUs, respectively, with vesting based on market conditions (“MSU”) to certain of the Company’s executive officers. These MSUs vest based on the Company’s total shareholder return (“TSR”) relative to the TSR of the Russell 2000 Index (“Index”). The MSU award represents the right to receive a target number of shares of common stock of up to 150% of the original grant, as indicated in the table below. The MSUs vest based on the Company’s TSR relative to the TSR of the Index over performance periods of three years from the grant date, subject to the grantees’ continued service through the certification of performance.

Total shareholder return is calculated based on the average closing price for the 30-trading days prior to the beginning and end of the performance periods. Performance is measured based on three periods, with the ability for up to one-third of target shares to vest after years one and two and the ability for up to the maximum of the full award to vest based on the full three-year TSR less any shares vested based on one- and two-year periods. Linear interpolation is used to determine the number of shares vested for achievement between target levels.

The grant date fair value of each MSU was determined using the Monte Carlo simulation model. The weighted-average grant-date fair value of the MSUs granted during the nine months ended March 31, 2023 was $16.57 per share. The assumptions used in the Monte Carlo simulation included the expected volatility of 67%, risk-free interest rate of 3.12%, no expected dividend yield, expected term of three years and possible future stock prices over the performance period based on the historical stock and market prices. The Company recognizes the expense related to these MSUs on a graded-vesting method over the estimated term.

The weighted-average grant-date fair value of the MSUs granted during the nine months ended March 31, 2022 was $12.69 per share. The assumptions used in the Monte Carlo simulation included the expected volatility of 66%, risk-free rate of 0.44%, no expected dividend yield, expected term of three years and possible future stock prices over the performance period based on the historical stock and market prices.

The fair value of each share purchase option under the ESPP is estimated on the date of grant using the Black-Scholes-Merton option valuation model with the weighted average assumptions noted in the following table. The expected term of the ESPP represents the term of the offering period of each option. The risk-free interest rate is based upon the estimated life and on the U.S. Treasury yield curve in effect at the time of grant. Expected volatility is based on the historical volatility on the Company’s common stock.

There were 0.8 million and 1.0 million shares issued under the ESPP during the three months ended March 31, 2023 and 2022, respectively. There were 1.5 million and 2.0 million shares issued under the ESPP during the nine months ended March 31, 2023 and 2022, respectively. The following assumptions were used to determine the grant-date fair values of the ESPP shares during the following periods:


	Employee Stock Purchase Plan						Employee Stock Purchase Plan
	Three Months Ended						Nine Months Ended
	March 31, 2023			March 31, 2022			March 31, 2023			March 31, 2022
Expected term	0.5 years			0.5 years			0.5 years			0.5 years
Risk-free interest rate		4.98	%		0.67	%		3.84	%		0.33	%
Volatility		49	%		45	%		55	%		49	%
Dividend yield		—	%		—	%		—	%		—	%

The weighted-average grant-date fair value of shares under the ESPP during the three months ended March 31, 2023 and 2022 was $5.63 and $3.49 per share, respectively. The weighted-average grant-date fair value of shares under the ESPP during the nine months ended March 31, 2023 and 2022 was $4.87 and $3.32 per share, respectively.