Common Stock and Stockholders’ Equity

Common stock reserved for issuance—The Company had reserved shares of common stock for future issuance pursuant to equity plans as follows (in thousands):



	As of March 31,
	2019	2018
Common stock options outstanding	2,751	3,215
RSUs outstanding	2,419	2,079
Available for future stock option and RSU grants	10,796	9,576
Available for future employee stock purchase plan awards	2,274	1,929
	18,240	16,799

Employee Stock Purchase Plan—The Company’s board of directors adopted, and the Company’s stockholders approved, the Company’s 2014 Employee Stock Purchase Plan (“ESPP”), which became effective in December 2014. The ESPP initially reserved and authorized the issuance of up to 1,000,000 shares of common stock. The ESPP provides that the number of shares reserved and available for issuance under the ESPP automatically increases each April, beginning on April 1, 2015, by the lesser of 500,000 shares, 1% of the number of the Company’s common stock shares issued and outstanding on the immediately preceding March 31, or such lesser number of shares as determined by the Company’s board of directors. For the fiscal years ended March 31, 2019, 2018, and 2017, 0.2 million shares, 0.2 million shares, and 0.2 million shares of common stock were purchased under the ESPP, respectively, and a total of $3.6 million, $2.2 million, and $1.8 million of stock-based compensation expense was recorded, respectively. As of March 31, 2019, 2,273,989 shares of common stock were available for issuance under the ESPP.

2008 Equity Incentive Plan—The Company’s board of directors adopted, and the Company’s stockholders approved, the 2008 Equity Incentive Plan, or the 2008 Plan, in February 2008. The 2008 Plan was terminated in connection with the Company’s initial public offering (“IPO”), and accordingly, no shares are available for future issuance under this plan. The 2008 Plan continues to govern outstanding awards granted thereunder.

2014 Equity Incentive Plan—The Company’s board of directors adopted, and the Company’s stockholders approved, the Company’s 2014 Equity Incentive Plan (the “2014 Plan”), which became effective in December 2014. The 2014 Plan serves as the successor to the Company’s 2008 Plan. The 2014 Plan initially reserved and authorized the issuance of 5,000,000 shares of the Company’s common stock. Additionally, shares not issued or subject to outstanding grants under the 2008 Plan upon its termination became available under the 2014 Plan, resulting in a total of 5,184,878 available shares under the 2014 Plan as of the effective date of the 2014 Plan. Pursuant to the terms of the 2014 Plan, any shares subject to outstanding stock options or other stock awards under the 2008 Plan that (i) expire or terminate for any reason prior to exercise or settlement, (ii) are forfeited because of the failure to meet a contingency or condition required to vest such shares or otherwise return to the Company or (iii) are reacquired, withheld (or not issued) to satisfy a tax withholding obligation in connection with an award or to satisfy the purchase price or exercise price of a stock award will become available for issuance pursuant to awards granted under the 2014 Plan. The 2014 Plan provides that the number of shares reserved and available for issuance under the plan automatically increases each April 1, beginning on April 1, 2015, by 5% of the outstanding number of shares of the Company’s common stock shares issued and outstanding on the immediately preceding March 31, or such lesser number of shares as determined by the Company’s board of directors. As of March 31, 2019, there were 10,795,889 shares available for issuance under the 2014 Plan.

The following table summarizes the Company’s stock option and RSU award activities for the fiscal year ended March 31, 2019 (in thousands, except exercise price, contractual term and fair value information):



	Options Outstanding							RSUs Outstanding
	Number of Shares		Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value		Number of Shares		Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding—April 1, 2018	3,215		$	22.79	6.7	$	165,041	2,079		$	42.31	2.7	$	154,071
Stock options granted	473		98.93
RSUs granted								1,532		98.74
Stock options exercised	(822	)	21.15			62,459
RSUs vested								(879	)	43.28
Stock options canceled/forfeited	(115	)	53.43
RSUs canceled/forfeited								(313	)	52.76
Outstanding - March 31, 2019	2,751		$	35.10	6.3	$	176,002	2,419		$	76.34	3.0	$	238,734
Options vested and expected to vest - March 31, 2019	2,728		$	34.59	6.3	$	175,803
Options vested and exercisable - March 31, 2019	1,921		$	20.02	5.3	$	151,259
RSUs expected to vest - March 31, 2019								2,232		$	74.52		$	220,294

The weighted-average grant-date fair value of options granted during the fiscal years ended March 31, 2019, 2018, and 2017 was $42.37, $21.40, and $12.75, respectively. Intrinsic value of options exercised during the fiscal years ended March 31, 2019, 2018, and 2017 was $62.5 million, $53.2 million, and $65.3 million, respectively. The total fair value of RSUs vested during the fiscal years ended March 31, 2019, 2018, and 2017 was $38.2 million, $25.6 million, and $17.1 million, respectively.

Aggregate intrinsic value for options and RSUs outstanding represents the difference between the closing stock price of the Company’s common stock and the exercise price of outstanding, in-the-money awards. The Company’s closing stock price as reported on the New York Stock Exchange as of March 29, 2019, the last trading day of fiscal 2019, was $98.70.

Employee Stock Options and ESPP Valuation—The Company estimates the fair value of stock options and ESPP shares on the date of grant using the Black-Scholes option-pricing model. Each of the Black-Scholes inputs is subjective and generally requires significant judgments to determine. The assumptions used to estimate the fair value of stock options granted and ESPP shares to be issued during the fiscal years ended March 31, 2019, 2018, and 2017 were as follows:



Stock Options:
	Year Ended March 31,
	2019	2018	2017
Expected term (years)	6	6	5 - 6
Expected volatility	41-42%	42 - 44%	46 - 47%
Risk-free interest rate	2.27-3.06%	1.86 - 2.74%	0.21 - 2.17%
Dividend yield	—	—	—

ESPP:
	Year Ended March 31,
	2019	2018	2017
Expected term (years)	0.5	0.5	0.5
Expected volatility	37-53%	29 - 30%	37 - 44%
Risk-free interest rate	2.23-2.50%	1.16 - 1.82%	0.46 - 0.67%
Dividend yield	—	—	—

Risk-Free Interest Rate

The Company bases the risk-free interest rate used in the Black-Scholes option-pricing model on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent expected term of the options for each option group.

Expected Term

The Company determines the expected term based on the average period the stock options are expected to remain outstanding generally calculated as the midpoint of the stock options vesting term and contractual expiration period, as the Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. The Company estimates the expected term for ESPP shares using the purchase period of 6 months.

Expected Volatility

The Company determines the price volatility factor based on the historical volatilities of its peer group as the Company did not have significant trading history for its common stock. Beginning in February 2017, the Company started to use its historical volatility data when valuing ESPP shares.

Dividend Yield

The expected dividend assumption is based on the Company’s current expectations about its anticipated dividend policy.

Stock-Based Compensation Expense—Aggregate stock-based compensation expense for employees and nonemployees was $56.2 million, $40.6 million, and $31.9 million for the fiscal years ended March 31, 2019, 2018, and 2017, respectively. Cost of revenue, research and development, sales and marketing, and general and administrative expenses were as follows (in thousands):



	Year Ended March 31,
	2019		2018		2017
Cost of revenue	$	3,487	$	2,440	$	1,847
Research and development	17,634		12,176		9,975
Sales and marketing	23,253		16,925		13,042
General and administrative	11,824		9,057		7,082
Total stock-based compensation expense	$	56,198	$	40,598	$	31,946

As of March 31, 2019, unrecognized stock-based compensation cost related to outstanding unvested stock options was $22.7 million, which is expected to be recognized over a weighted-average period of approximately 2.4 years. As of March 31, 2019, unrecognized stock-based compensation cost related to outstanding unvested stock awards was $186.9 million, which is expected to be recognized over a weighted-average period of approximately 3 years.