Stock Incentive Plan

2005 Stock Incentive Plan

In 2005, the Company adopted the 2005 Stock Incentive Plan (the “2005 Plan”), which was amended in April 2014. The 2005 Plan was terminated in connection with the IPO with respect to the granting of future awards, and accordingly, no shares are available for future issuance under this plan. All shares that were reserved but not issued under the 2005 Plan as of immediately prior to its termination became available for issuance under the 2015 Equity Incentive Plan (the “2015 Plan”) upon its adoption. Shares reserved for issuance pursuant to awards under the 2005 Plan that expire or terminate without having been exercised subsequent to the IPO or are forfeited to or repurchased by the Company subsequent to the IPO became available for issuance under the 2015 Plan, subject to the limits set forth in the 2015 Plan.

2015 Equity Incentive Plan

In April 2015, the Board adopted and the Company’s stockholders approved the 2015 Equity Incentive Plan (the “2015 Plan”), which became effective upon the effectiveness of the registration statement in connection with our IPO. As of such date, an aggregate of 2,700,000 shares of common stock were reserved for issuance under the 2015 Plan, plus (a) those shares reserved but unissued under our 2005 Plan as of immediately prior to the termination of the 2005 Plan and (b) shares subject to options, restricted stock units, or similar awards granted under the 2005 Plan that, after the effectiveness of the registration statement, expire or otherwise terminate without having been exercised or issued in full and shares issued pursuant to awards granted under the 2005 Plan that, after the effectiveness of the registration statement, are forfeited to or repurchased by the Company (provided that the maximum number of shares that may be added to the 2015 Plan pursuant to (a) and (b) is 4,515,212 shares). Additionally, the 2015 Plan provides that the number of shares reserved and available for issuance will increase annually on the first day of each fiscal year beginning with the 2016 fiscal year equal to the least of (i) 3,100,000 shares of Common Stock, (ii) 4% of the outstanding shares of Common Stock on the last day of immediately preceding fiscal year, or (iii) an amount determined by the board of directors.

The 2015 Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Code, to the Company’s employees and any parent and subsidiary corporations’ employees, and for the grant of nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to the Company’s employees, directors and consultants and its parent and subsidiary corporations’ employees and consultants.

As of July 31, 2016, an aggregate of 4,349,738 common shares were reserved under the 2015 Plan, of which 430,729 shares remained available for issuance.

2015 Employee Stock Purchase Plan

The Company’s Board of Directors adopted and the Company’s stockholders approved the 2015 Employee Stock Purchase Plan (the “ESPP”) with the first offering period under the ESPP beginning on the effectiveness of the registration statement in connection with our IPO. As of such date, an aggregate of 775,000 shares of common stock were reserved and are available for issuance under the ESPP. Additionally, the ESPP provides that the number of shares reserved and available for issuance will increase annually on the first day of each fiscal year beginning with the 2016 fiscal year equal to the least of (i) 775,000 shares of Common Stock, (ii) 1% of the outstanding shares of Common Stock on the last day of immediately preceding fiscal year, or (iii) an amount determined by the ESPP administrator.

The ESPP allows eligible employees to purchase shares of common stock at a discount through payroll deductions of up to 15% of their eligible compensation, at 85% of the fair market value, as defined in the ESPP, on the first day of the offering period or the last day of the purchase period, whichever is lower, and subject to any plan limitations. The ESPP provides for consecutive six-month offering periods, starting on the first trading day on or after June 15 and December 15 of each year. The first offering period began on the first trading day on the effective date of the registration statement and ended on December 15, 2015. During the year ended July 31, 2016, a total of 296,411 shares were purchased by and distributed to employees at an average price of $6.94 per share.

As of July 31, 2016, 772,454 shares were reserved for future issuance under the 2015 ESPP.

Stock-based Compensation Expense

The total stock-based compensation expense recognized for stock-based awards under the Company’s equity plans in the consolidated statements of comprehensive loss was as follows:



	Year Ended July 31,
	2016		2015		2014
	(in thousands)
Cost of subscription and support revenue	$	147	$	44	$	24
Cost of professional services and other revenue	520		223		133
Research and development	3,592		1,195		490
Sales and marketing	1,808		777		1,090
General and administrative	2,321		1,212		989
Total stock-based compensation expense	$	8,388	$	3,451	$	2,726

The total stock-based compensation expense for stock options awarded to non-employees included above was immaterial for all periods presented.

Stock Options

A summary of activity under the Company’s equity plans and related information was as follows:



	Options Outstanding
	Number of Shares Underlying Outstanding Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (In thousands)
Balances at July 31, 2013	3,262,518		$	1.10	7.82	$	9,807
Options granted	1,664,158		4.79
Options exercised	(545,370	)	0.84
Options canceled	(372,581	)	2.86
Balances at July 31, 2014	4,008,725		2.51		7.65	31,716
Options granted	1,213,344		14.39
Options exercised	(465,385	)	2.07
Options canceled	(481,233	)	4.04
Balances at July 31, 2015	4,275,451		5.75		7.29	17,468
Options granted	1,449,350		9.50
Options exercised	(625,496	)	1.86
Options canceled	(460,213	)	7.87
Balances at July 31, 2016	4,639,092		$	7.24	7.15	$	24,146
Exercisable at July 31, 2016	2,372,431		$	4.27	5.55	$	19,375
Vested and expected to vest at July 31, 2016	4,207,727		$	6.93	7.00	$	23,169

Aggregate intrinsic value represents the difference between the fair market value based on the valuation of the common stock as determined by the Company’s Board of Directors prior to the IPO, or the closing market price of the Company’s common stock, following the IPO, and the exercise price of the in-the-money stock options.

No income tax benefit has been recognized relating to stock-based compensation expense and no tax benefits have been realized from exercised stock options. The weighted-average grant-date fair value of options granted during the years ended July 31, 2016, 2015, and 2014 was $4.19, $6.21, and $2.63 per share, respectively. The total intrinsic value of stock options exercised during the years ended July 31, 2016, 2015 and 2014 was $4.7 million, $6.1 million and $3.6 million, respectively. The total fair value of options vested during the years ended July 31, 2016, 2015 and 2014 was $3.2 million, $1.7 million and $0.7 million, respectively. As of July 31, 2016, there was total unrecognized stock-based compensation cost of $7.4 million related to unvested stock options, net of estimated forfeitures, which is expected to be recognized over a weighted-average period of 2.9 years.

The following table summarizes information about stock options outstanding under the Company’s equity plans as of July 31, 2016:



		Options Outstanding				Options Exercisable
Exercise Price		Number of Options Outstanding	Weighted- Average Remaining Contractual Life (Years)	Weighted- Average Exercise Price per Share		Number of Options Exercisable	Weighted- Average Exercise Price Per Share
$	0.46	216,420	4.82	$	0.46	216,420	$	0.46
$	0.61	21,707	2.50	0.61		21,707	0.61
$	0.68	490,335	5.67	0.68		455,795	0.68
$	1.06	436,699	0.45	1.06		436,699	1.06
$	1.52	89,895	6.13	1.52		86,859	1.52
$	1.75	105,131	6.65	1.75		89,002	1.75
$	3.65	84,238	6.90	3.65		61,775	3.65
$	4.10	633,700	7.17	4.10		471,529	4.10
$	4.26	38,948	7.38	4.26		25,050	4.26
$	7.37	98,380	7.60	7.37		59,751	7.37
$	7.41	527,050	9.08	7.41		—	—
$	7.70	54,450	9.63	7.70		—	—
$	8.05	62,000	9.38	8.05		—	—
$	8.20	57,000	9.46	8.20		—	—
$	8.32	37,000	9.13	8.32		—	—
$	8.37	42,100	9.48	8.37		—	—
$	9.12	64,568	7.84	9.12		36,452	9.12
$	9.60	18,000	9.72	9.60		—	—
$	10.41	100,100	8.05	10.41		51,795	10.41
$	10.78	62,250	9.23	10.78		—	—
$	10.86	16,700	8.90	10.86		5,300	10.86
$	11.96	25,000	9.97	11.96		—	—
$	12.69	307,701	8.24	12.69		127,500	12.69
$	12.96	447,100	9.89	12.96		625	12.96
$	13.68	102,338	8.30	13.68		44,394	13.68
$	15.88	153,172	8.40	15.88		66,913	15.88
$	17.56	347,110	8.64	17.56		114,865	17.56
		4,639,092	7.15	$	7.24	2,372,431	$	4.27

Valuation Assumptions

The Company estimates the fair value of each stock-based award on the date of grant using the Black-Scholes option pricing model utilizing the assumptions noted below. The expected term of the stock-based awards is based on the average period the stock-based awards are expected to remain outstanding calculated as the midpoint of the stock-based awards’ vesting terms and contractual expiration periods, as the Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. The expected stock price volatility for the Company’s common stock was determined by examining the historical volatilities of a group of its industry peers as it does not have sufficient trading history of the Company’s common stock. The risk-free interest rate was calculated using the average of the published interest rates for United States Treasury zero-coupon issues with maturities that approximate the expected term. The dividend yield assumption is zero as the Company does not have any history of, nor plans to make, dividend payments. Forfeitures were estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differed from those estimates. Forfeitures were estimated based on historical experience. The fair value of the common stock was historically determined by the Company’s board of directors given the absence of a public trading market prior to its IPO. The board of directors determined the fair value of the common stock at the time of the stock-based award grant by considering a number of objective and subjective factors, including valuations of comparable companies, operating and financial performance, lack of liquidity of capital stock and general and industry-specific economic outlooks, amongst other factors. Since the Company’s IPO, the Company has used the market closing price of the common stock as reported on the NASDAQ Global Select Market.

The following assumptions were used to estimate the fair value of options granted:



	Year Ended July 31,
	2016		2015		2014
Expected term (in years)	5.5 – 6.2		5.8 – 6.4		5.5 – 6.9
Risk-free interest rate	1.3 –1.9		1.5 –1.9		1.7 – 2.3
Expected volatility	43 – 45		39 – 44		48 – 50
Dividend yield	—	%	—	%	—	%
Fair value of common stock	$7.41 – $12.96		$10.41 – $17.56		$4.11 – $9.12

The following assumptions were used to estimate the fair value of ESPP shares:



	Year Ended July 31,
	2016		2015
Expected term (in years)	0.5		0.7
Risk-free interest rate	0.4% – 0.5%		0.1		%
Expected volatility	36% – 40%		30		%
Dividend yield	—	%	—		%
Fair value of common stock	$8.27 – $12.81		$	17.00

Employee Stock Purchase Plan

As of July 31, 2016, the remaining unamortized expense related to the Company’s 2015 ESPP Plan was $0.4 million, which will be recognized over a weighted-average remaining period of 0.4 years.

Series G-1 Stock

Stock-based compensation expense for the year ended July 31, 2016 and 2015 included $0.2 million and $0.6 million, respectively, of amortization expense for Series G-1 convertible preferred stock (which have since been converted to common stock) issued to former employees of InsightsOne. The awards are subject to vesting on a monthly basis over certain vesting periods.

As of July 31, 2016, the remaining unamortized expense related to these shares was less than $0.1 million, which will be recognized over a weighted-average remaining period of 0.4 years.

Restricted Stock Units

A summary of RSUs under the Company’s equity plans and related information was as follows:



	RSUs Outstanding					Aggregate Intrinsic Value (In thousands)
	Number of Shares		Weighted- Average Grant- Date Fair Value		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (In thousands)
Balances at July 31, 2013	66,775		$	1.05
Granted	20,343		7.48
Released	(70,655	)	1.43
Forfeited	(657	)	7.38
Balances at July 31, 2014	15,806		7.38
Granted	266,257		13.92
Released	—		—
Forfeited	(2,917	)	7.38
Balances at July 31, 2015	279,146		13.68		3.58	$	2,247
Granted	2,564,275		8.93
Released	(156,708	)	10.70
Forfeited	(261,819	)	8.65
Balances at July 31, 2016	2,424,894		$	9.39	3.27	$	30,166

The Company grants RSUs as part of total stock compensation and such grants may have time-based vesting, performance-based vesting or a combination of the two. The fair value of time-based RSUs is determined using the closing market price on the date of grant. As of July 31, 2016, the remaining unamortized expense related to all RSUs was $7.9 million which will be recognized over a weighted-average remaining period of 3.3 years.

There were RSUs granted in connection with the acquisition of InsightsOne in fiscal 2014. Such RSUs are subject to a time-based vesting condition and a performance-based vesting condition, both of which must be satisfied before these RSUs are vested and settled for shares of common stock. The time-based vesting condition is three years and the performance-based vesting condition was satisfied upon the completion of the Company’s initial public offering in April 2015. The remaining expense is de minimus.