7. Stock-based Compensation

The following table presents the classification of stock-based compensation for the periods indicated:


	Three Months Ended October 31,				Nine Months Ended October 31,
	2013		2012		2013		2012
	(in thousands)
Stock-based compensation:
Cost of revenue	$	47	$	30	$	115	$	59
Research and development		1,385		905		3,259		1,979
Selling, general and administrative		1,029		550		2,286		1,403


Total stock-based compensation	$	2,461	$	1,485	$	5,660	$	3,441

As of October 31, 2013, total unrecognized compensation cost related to unvested stock options and unvested restricted stock units was $5.9 million and $18.2 million, respectively, and is expected to be recognized over a weighted-average period of 1.96 years and 3.21 years, respectively. As of January 31, 2013, total unrecognized compensation cost related to unvested stock options and unvested restricted stock units was $7.3 million and $2.4 million, respectively, and is expected to be recognized over a weighted-average period of 2.26 years and 1.77 years, respectively.

The following table sets forth the weighted-average assumptions used to estimate the fair value of stock options and employee stock purchase plan awards for the periods indicated:


	Three Months Ended October 31,						Nine Months Ended October 31,
	2013			2012			2013			2012
Stock Options:
Volatility		65	%		66	%		65	%		66	%
Risk-free interest rate		2.03	%		0.89	%		1.44	%		0.93	%
Expected term (years)		6.05			6.05			6.05			6.05
Dividend yield		0	%		0	%		0	%		0	%

Employee stock purchase plan awards:
Volatility		52	%		51	%		52	%		51	%
Risk-free interest rate		0.04	%		0.18	%		0.04	%		0.18	%
Expected term (years)		0.5			0.94			0.5			0.94
Dividend yield		0	%		0	%		0	%		0	%

The following table summarizes stock option activities for the nine months ended October 31, 2013:


	Option Outstanding
	Shares			Weighted- Average Exercise Price		Weighted- Average Grant-date Fair Value		Total Intrinsic Value of options Exercised (in thousands)		Weighted- Average Remaining Contactual Term (in years)		Aggregate Intrinsic Value (in thousands)

Outstanding at January 31, 2013		4,344,535			6.07
Granted		192,220			15.90	$	9.50
Exercised		(713,498	)		5.33			$	8,239
Forfeited		(59,901	)		9.88


Outstanding at October 31, 2013		3,763,356			6.65						6.44	$	52,314

Exercisable at October 31, 2013		2,839,311			5.62						5.88	$	42,405

Vested and expected to vest at October 31, 2013		3,715,813			6.60						6.41	$	51,819

Exercisable shares include options with early exercise rights. The vested and expected-to-vest options are calculated based on the vesting schedule of each grant as of the reporting date.

The intrinsic value of options outstanding, exercisable and vested and expected-to-vest are calculated based on the difference between the fair market value of the Company’s ordinary shares on the reporting date and the exercise price. The closing price of the Company’s ordinary shares was $20.55 on October 31, 2013, as reported by the NASDAQ Global Market. The intrinsic value of exercised options is calculated based on the difference between the fair market value of the Company’s ordinary shares on the exercise date and the exercise price.

On August 27, 2013, upon recommendation by the Company’s compensation committee, the Company’s board of directors granted awards of restricted stock units (“RSU”) covering a total of 1,058,860 ordinary shares that vest based on service conditions and a total of 154,500 ordinary shares that vest based on a combination of service and performance conditions. The fair value on the grant date was $14.56 per ordinary share. Pursuant to the terms of the service condition awards, 1/16th of the RSUs shall vest every 3 months following the vesting commencement date, so as to be 100% vested on the fourth anniversary of the vesting commencement date. Pursuant to the terms of the performance condition awards, 1/8th of the RSUs shall vest every 3 months following the vesting commencement date, so as to be 100% vested on the second anniversary of the vesting commencement date; provided, however, that notwithstanding the foregoing, the RSUs shall not vest at all until the performance conditions are achieved and are subject to the RSU holder continuing to provide services to the Company through such vesting dates. The vesting commencement date for the performance condition RSUs will begin upon achievement of financial targets for the fiscal year 2014. The performance condition RSUs shall automatically be forfeited in their entirety, without any cost to or action by the Company, if there has been no achievement of the fiscal year 2014 financial targets.

The following table summarizes restricted stock unit activities for the nine months ended October 31, 2013:


	Shares			Weighted- Average Grant-Date Fair Value
Unvested at January 31, 2013		339,217		$	9.99
Granted		1,240,472			14.58
Released		(85,806	)		10.19
Forfeited		(10,052	)		10.63


Unvested at October 31, 2013		1,483,831		$	13.81

As of October 31, 2013, the aggregate intrinsic value of unvested restricted stock units was $30.5 million.

Non-employee Stock-based Compensation

The fair value of awards granted to non-employees is determined on the date of grant and remeasured at the end of each reporting period until such awards vest. The non-employee stock-based compensation was not material for the nine months ended October 31, 2013 and 2012, respectively.