Common Stock and Stockholders' Equity

6 Months Ended

Sep. 30, 2020

Common Stock and Stockholders’ Equity

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 (the “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 six months ended September 30, 2020, 136,978 shares of common stock were purchased under the ESPP. For the six months ended September 30, 2019, 117,115 shares of common stock were purchased under the ESPP. Stock-based compensation expense recognized related to the ESPP was $1.4 million and $1.5 million for the three months ended September 30, 2020 and 2019, respectively, and $2.4 million and $2.7 million for the six months ended September 30, 2020 and 2019, respectively. As of September 30, 2020, 2,866,596 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 September 30, 2020, there were 12,066,410 shares available for issuance under the 2014 Plan.

The following table summarizes the Company’s stock option, restricted stock unit (“RSU”), and performance unit (“PSU”) award activities for the six months ended September 30, 2020 (in thousands, except exercise price, contractual term and fair value information):


	Options Outstanding						RSUs and PSUs 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, 2020	2,850	$	44.52	6.4	$	43,576	3,100	$	74.20	2.7	$	143,346
Stock options granted	640	62.50
RSUs and PSUs granted (1)							2,323	63.95
Stock options exercised	(287)	9.22			13,729
RSUs and PSUs vested							(705)	72.31
Stock options canceled/forfeited	(138)	75.29
RSUs and PSUs canceled/forfeited							(440)	73.57
Outstanding - September 30, 2020	3,065	$	50.20	6.8	$	47,007	4,278	$	69.02	2.9	$	241,106

(1) The above table includes 111,965 performance unit awards.

In May 2020, the Company began issuing PSUs to certain executives. PSUs granted under the 2014 Plan are contingent upon the achievement of pre-determined market and service conditions. The number of shares of common stock to be issued at vesting will range from 0% to 200% of the target number based on the Company’s total shareholder return (“TSR”) relative to the performance of peer companies for each measurement period, over a one-year, two-year cumulative, and three-year cumulative period. If these market conditions are not met but service conditions are met, the PSUs will not vest; however, any stock-based compensation expense recognized to date will not be reversed. The Company uses a Monte Carlo simulation model to determine the fair value of its PSUs and recognizes expense using the accelerated attribution method over the requisite service period.

Stock-Based Compensation Expense—Stock-based compensation expense for employees and nonemployees was $35.4 million and $23.4 million for the three months ended September 30, 2020 and 2019, respectively, and $66.6 million and $44.5 million for the six months ended September 30, 2020 and 2019, respectively. Cost of revenue, research and development, sales and marketing, and general and administrative expenses were as follows (in thousands):


	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
Cost of revenue	$	1,622	$	1,300	$	3,124	$	2,522
Research and development	10,450		7,434		19,254		14,462
Sales and marketing	14,537		10,533		27,845		19,592
General and administrative	8,758		4,091		16,352		7,970
Total stock-based compensation expense	$	35,367	$	23,358	$	66,575	$	44,546

As of September 30, 2020, unrecognized stock-based compensation cost related to outstanding unvested stock options was $36.3 million, which is expected to be recognized over a weighted-average period of approximately 3.0 years. As of September 30, 2020, unrecognized stock-based compensation cost related to outstanding unvested stock units was $262.5 million, which is expected to be recognized over a weighted-average period of approximately 2.9 years. As of September 30, 2020, unrecognized stock-based compensation cost related to PSUs was $8.5 million, which is expected to be recognized over a weighted-average period of approximately 2.5 years.