Note 8. Equity Incentive Plans

Equity Incentive Plans

We maintain two equity incentive plans: the 2009 Equity Incentive Plan (our 2009 Plan) and the 2015 Equity Incentive Plan (our 2015 Plan). In August 2015, our board of directors adopted, and in September 2015 our stockholders approved, the 2015 Plan, which became effective in connection with our IPO and serves as the successor to our 2009 Plan. Our 2015 Plan provides for grants of incentive stock options,-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, performance cash awards, and other forms of stock awards to our employees, directors and consultants. We ceased grants of new awards under our 2009 Plan after the effective date of our 2015 Plan, and no new grants will be made from our 2009 Plan. Outstanding awards granted under our 2009 Plan will remain subject to the terms of our 2009 Plan and applicable award agreements, until such outstanding awards that are stock options are exercised, terminated or expired by their terms, and until any restricted stock awards become vested or are forfeited.

We have initially reserved 27,000,000 shares of our Class A common stock for issuance under our 2015 Plan. The number of shares reserved for issuance under our 2015 Plan will increase automatically on the first day of February of each of 2016 through 2025, in an amount equal to 5% of the total number of shares of our capital stock outstanding as of the immediately preceding January 31.

The exercise price of stock options will generally not be less than 100% of the fair market value of our common stock on the date of grant, as determined by our board of directors. Our equity awards generally vest over a two to four year period and expire no later than ten years from the date of grant.

2015 Employee Stock Purchase Plan

In August 2015, our board of directors adopted and our stockholders approved, the 2015 Employee Stock Purchase Plan (2015 ESPP), which became effective in connection with our IPO. A total of 3,500,000 shares of Class A common stock was initially reserved for issuance under the 2015 ESPP. The 2015 ESPP allows eligible employees to purchase shares of our Class A common stock at a discount through payroll deductions (or other payroll contributions) of up to 30% of their eligible compensation, subject to a cap of 3,000 shares on any purchase date or $25,000 in any calendar year (as determined under applicable tax rules). Except for the initial offering period, the 2015 ESPP provides for 24 month offering periods beginning March 16th and September 16th of each year, and each offering period will consist of four six-month purchase periods. The initial offering period began in October 2015, and will end on September 15, 2017. On each purchase date, eligible employees will purchase our Class A common stock at a price per share equal to 85% of the lesser of the fair market value of our Class A common stock (1) on the first trading day of the applicable offering period or (2) the purchase date.

Additionally, in accordance with our 2015 ESPP, if the closing stock price on the offering date of a new offering falls below the closing stock price on the offering date of an ongoing offering, the ongoing offering terminates immediately following the purchase of ESPP shares on the purchase date immediately preceding the new offering and participants in the terminated ongoing offering will automatically be enrolled in the new offering (ESPP reset). As the closing stock price on the new offering date of March 16, 2016 was lower than the closing stock price on the initial offering date of October 7, 2015, the initial offering period ended on March 15, 2016 and an ESPP reset was triggered. This reset resulted in a modification charge of approximately $10.3 million, net of estimated forfeiture, which will be recognized over the new 24-month offering period.

During the three months ended April 30, 2016, we recognized $4.2 million of stock-based compensation expense related to our 2015 ESPP. As of April 30, 2016, there was $28.7 million of unrecognized stock-based compensation expense, net of estimated forfeiture related to our 2015 ESPP that is expected to be recognized over the term of the related offering periods.

Stock Options

A summary of activity under our equity incentive plans and related information is as follows:

	Options Outstanding
	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (In Years)		Aggregate Intrinsic Value (in thousands)
Balance as of January 31, 2016		68,879,087		$	6.43		7.9	$	505,131
Options granted		1,891,000			12.75
Options exercised		(2,181,055	)		1.40
Options cancelled		(691,251	)		11.27
Balance as of April 30, 2016		67,897,781		$	6.72	7.7		$	562,758
Vested and exercisable as of April 30, 2016		25,495,004		$	2.64	6.6		$	304,484
Vested and expected to vest as of April 30, 2016		65,641,943		$	6.64	7.7		$	549,018

The aggregate intrinsic value of options vested and exercisable and vested and expected to vest as of April 30, 2016 is calculated based on the difference between the exercise price and the closing price of $14.55 of our Class A common stock on April 29, 2016.

As of April 30, 2016, total unrecognized employee compensation cost, net of estimated forfeitures, was $179.1 million, which is expected to be recognized over a weighted-average period of approximately 3.5 years. To the extent the actual forfeiture rate is different from what we have estimated, stock-based compensation related to these awards will be different from our expectations.

During the three months ended April 30, 2015 and 2016, we granted options to purchase 83,000 and 780,000 shares of common stock, respectively, net of cancellations that vest upon satisfaction of a performance condition. For those options that management determined that it is probable that the performance condition will be satisfied, stock-based compensation expense of $440,000 and $549,000 was recognized during the three months ended April 30, 2015 and 2016 respectively.

Restricted Stock Units

A summary of the restricted stock unit activity under our 2015 Plan and related information is as follows:

	Number of Restricted Stock Units Outstanding			Weighted- Average Grant Date Fair Value
Unvested balance as of January 31, 2016		53,000		$	16.98
Granted		4,334,600			14.27
Vested		—			—
Forfeited / cancelled		(10,500	)		13.91
Unvested balance as of April 30, 2016		4,377,100		$	14.30
Expected to vest as of April 30, 2016		4,144,238		$	14.30

As of April 30, 2016, total unrecognized employee compensation cost, net of estimated forfeitures, related to outstanding restricted stock units was $57.5 million, which is expected to be recognized over a weighted-average period of approximately 2.9 years. To the extent the actual forfeiture rate is different from what we have estimated, stock-based compensation related to these awards will be different from our expectations.

Stock-Based Compensation Expense

The following table summarizes the components of stock-based compensation expense recognized in the condensed consolidated statements of operations (in thousands):

	Three Months Ended April 30,
	2015		2016
Cost of revenue—product	$	56	$	102
Cost of revenue—support		333		1,051
Research and development		3,625		11,220
Sales and marketing		3,444		7,237
General and administrative		1,401		2,524
Total stock-based compensation expense	$	8,859	$	22,134