Equity Incentive Plans

We maintain two equity incentive plans: the 2009 Equity Incentive Plan (the 2009 Plan) and the 2015 Equity Incentive Plan (the 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 initial public offering (IPO) and serves as the successor to the 2009 Plan. The 2015 Plan provides for grants of incentive stock options, non-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 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 increases automatically on the first day of February of each year 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 number of shares reserved for issuance under our 2015 ESPP increases automatically on the first day of February of each year through 2025, in an amount equal to the lesser of (i) 1% of the total number of shares of our capital stock outstanding as of the immediately preceding January 31, and (ii) 3,500,000 shares of Class A common stock.

The 2015 ESPP allows eligible employees to purchase shares of our Class A common stock at a discount through payroll deductions 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). The 2015 ESPP provides for 24 month offering periods beginning March 16th and September 16th of each year, and each offering period consists of four six-month purchase periods, subject to a reset provision. 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 would terminate immediately following the purchase of ESPP shares on the purchase date immediately preceding the new offering and participants in the terminated ongoing offering would automatically be enrolled in the new offering (ESPP reset), resulting in a modification. 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 on (1) the first trading day of the applicable offering period or (2) the purchase date. There was an ESPP reset in the three months ended April 30, 2017 that resulted in a total modification charge of $9.0 million, which is recognized over the new offering period ending March 15, 2019.

We recognized stock-based compensation expense related to our 2015 ESPP of $4.1 million and $6.7 million during the three months ended April 30, 2017 and 2018. As of April 30, 2018, there was $32.6 million of unrecognized stock-based compensation expense related to our 2015 ESPP which is expected to be recognized over a weighted-average period of approximately 1.1 years.

Stock Options

A summary of stock option 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, 2018	46,359,949		$	7.75	6.3	$	574,224
Options exercised	(2,193,658	)	4.40
Options forfeited/canceled	(1,019,718	)	8.25
Balance as of April 30, 2018	43,146,573		$	7.91	6.1	$	531,452
Vested and exercisable as of April 30, 2018	28,635,271		$	5.66	5.6	$	417,279

The aggregate intrinsic value of options vested and exercisable as of April 30, 2018 is calculated based on the difference between the exercise price and the closing price of $20.23 of our Class A common stock on April 30, 2018.

As of April 30, 2018, total unrecognized employee compensation cost related to outstanding options was $60.4 million, which is expected to be recognized over a weighted-average period of approximately 2.2 years.

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		Aggregate Intrinsic Value (in thousands)
Unvested balance as of January 31, 2018	17,682,646		$	12.60	$	356,117
Granted	6,364,772		20.06
Vested	(2,013,408	)	11.70
Forfeited	(437,921	)	13.68
Converted	(1,142,838	)	11.86
Unvested balance as of April 30, 2018	20,453,251		$	15.01	$	413,588

As of April 30, 2018, total unrecognized employee compensation cost related to unvested restricted stock units was $275.7 million, which is expected to be recognized over a weighted-average period of approximately 3.1 years.

In March 2017, we granted 750,000 performance stock units (net of 77,000 canceled units), at a target percentage of 100%, with both performance and service vesting conditions payable in common shares, from 0% to 150% of the target number granted, contingent upon the degree to which the performance condition is met. In the three months ended April 30, 2018, a total of 780,000 shares was earned based on the performance condition achieved and these shares will be subject to service conditions through the vesting periods. Stock-based compensation expense for these performance stock units was $0.5 million and $0.7 million for the three months ended April 30, 2017 and 2018, recognized on an accelerated attribution method.

In August 2017, we granted 464,744 performance stock units, at a target percentage of 100%, with both performance and service vesting conditions payable in common shares, from 0% to 150% of the target number granted, contingent upon the degree to which the performance condition is met. The performance condition for these performance stock units was set in March 2018 and accordingly, established the grant date for these awards from an accounting perspective and for determining the grant date fair value.

Restricted Stock

During the three months ended April 30, 2018, we converted certain restricted stock units and performance stock units that were previously granted into 1,375,210 shares of restricted stock for corporate tax benefit purposes. Of the 1,375,210 shares of restricted stock, 697,116 shares are performance restricted stock and 678,094 shares are subject to service vesting conditions only. The conversion did not change the fair value or vesting conditions and therefore no modification accounting is required.

During the three months ended April 30, 2018, we issued 1,933,861 shares of performance restricted stock, at the maximum performance percentage of 180%, with performance vesting conditions payable in common shares, contingent upon the degree to which the performance condition is met. The shares may be earned from 0% to 180%. Actual shares earned may be lower than the aggregate maximum number dependent on the degree to which the performance condition is met, and cannot be higher than the aggregate maximum number. Any portion of shares that are not earned will be canceled.

All unvested restricted shares are subject to repurchase. Stock-based compensation expense for performance restricted stock is recognized on an accelerated attribution method. In the three months ended April 30, 2018, we recognized $3.5 million in stock-based compensation expense relating to restricted stock. As of April 30, 2018, total unrecognized employee compensation cost related to unvested restricted stock was $36.9 million, which is expected to be recognized over a weighted-average period of approximately 2.9 years.

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,
	2017		2018
Cost of revenue—product	$	397	$	608
Cost of revenue—support subscription	1,774		2,684
Research and development	15,588		21,090
Sales and marketing	10,626		13,940
General and administrative	3,834		5,633
Total stock-based compensation expense	$	32,219	$	43,955

The tax benefit related to stock-based compensation expense for all periods presented was not material.