Equity Incentive Plans

9 Months Ended

Oct. 31, 2021

Share-based Payment Arrangement [Abstract]

We maintain two equity incentive plans: the 2009 Equity Incentive Plan (the 2009 Plan) and the 2015 Equity Incentive Plan (the 2015 Plan). The 2015 Plan serves as the successor to our 2009 Plan and provides for grants of incentive stock options to our employees and non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units (RSUs), performance stock awards, performance cash awards, and other forms of stock awards to our employees, directors and consultants. Our equity awards generally vest over a two to four year period and expire no later than ten years from the date of grant.

We net-share settle equity awards held by certain employees by withholding shares upon vesting to satisfy tax withholding obligations. The shares withheld to satisfy employee tax withholding obligations are returned to our 2015 Plan and will be available for future issuance. Payments for employees’ tax obligations to the tax authorities are recognized as a reduction to additional paid-in capital and reflected as a financing activity in our condensed consolidated statements of cash flows.

2015 Amended and Restated Employee Stock Purchase Plan

Under our Amended and Restated 2015 Employee Stock Purchase Plan (2015 ESPP), our board of directors (or a committee thereof) has the authority to establish the length and terms of the offering periods and purchase periods and the purchase price of the shares of common stock which may be purchased under the plan. The current offering terms allow eligible employees to purchase shares of our 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, a dollar cap of $7,500 per purchase period, or $25,000 in any calendar year (as determined under applicable tax rules). The current terms also allow for a 24-month offering period beginning March 16th and September 16th of each year, with each offering period consisting of four 6-month purchase periods, subject to a reset provision. Further, currently, on each purchase date, eligible employees may purchase our common stock at a price per share equal to 85% of the lesser of the fair market value of our common stock (1) on the first trading day of the applicable offering period or (2) the purchase date.

Under the reset provision currently authorized, 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 charge to be recognized over the new offering period. During the first quarter of fiscal 2021, there was an ESPP reset that resulted in a modification charge of $23.8 million, which is being recognized over an offering period ending March 15, 2022. There was no ESPP reset during the first three quarters of fiscal 2022.

Stock-based compensation expense related to our 2015 ESPP was $6.8 million and $8.9 million during the third quarter of fiscal 2021 and 2022, and $18.8 million and $25.3 million during the first three quarters of fiscal 2021 and 2022. At the end of the third quarter of fiscal 2022, total unrecognized stock-based compensation cost related to our 2015 ESPP was $21.0 million, which is expected to be recognized over a weighted-average period of 0.8 years.

Stock Options

A summary of the 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 at the end of fiscal 2021	18,558,974	$	9.60	4.3	$	251,503

Options exercised	(3,983,273)	8.42
Options forfeited	(286,550)	11.24
Balance at the end of the third quarter of fiscal 2022	14,289,151	$	9.90	3.6	$	242,811
Vested and exercisable at the end of the third quarter of fiscal 2022	13,250,654	$	10.32	3.4	$	219,225

The aggregate intrinsic value of options vested and exercisable at the end of the third quarter of fiscal 2022 is calculated based on the difference between the exercise price and the closing price of $26.86 of our common stock on the last day of the third quarter of fiscal 2022.

Stock-based compensation expense recognized related to stock options was $1.6 million and $1.7 million during the third quarter of fiscal 2021 and 2022, and $5.7 million and $6.0 million during the first three quarters of fiscal 2021 and 2022.

At the end of the third quarter of fiscal 2022, total unrecognized employee stock-based compensation cost related to outstanding options was $9.3 million, which is expected to be recognized over a weighted-average period of 1.8 years.

RSUs

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


	Number of RSUs Outstanding	Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)
Unvested balance at the end of fiscal 2021	30,830,082	$	15.77	$	712,657
Granted	14,808,923	22.11

Vested	(9,875,551)	16.77
Forfeited	(4,845,679)	16.25

Unvested balance at the end of the third quarter of fiscal 2022	30,917,775	$	18.36	$	830,451

RSUs granted during the third quarter and first three quarters of fiscal 2022 include 263,995 and 1,500,000 shares of performance RSUs, at a target percentage of 100%, with both performance and service vesting conditions payable in common stock, from 0% to 150% of the target number granted, contingent upon the degree to which the performance condition is met. Any portion of shares that are not earned will be canceled.

Stock-based compensation expense recognized related to RSUs was $50.4 million and $65.0 million during the third quarter of fiscal 2021 and 2022, and $147.4 million and $174.9 million during the first three quarters of fiscal 2021 and 2022. At the end of the third quarter of fiscal 2022, total unrecognized employee stock-based compensation cost related to unvested RSUs was $521.9 million, which is expected to be recognized over a weighted-average period of 2.7 years.

Restricted Stock

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


	Number of Restricted Stock Outstanding	Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)
Unvested balance at the end of fiscal 2021	557,836	$	19.06	$	12,903

Vested	(385,711)	18.60
Forfeited	(62,172)	20.22

Unvested balance at the end of the third quarter of fiscal 2022	109,953	$	20.04	$	2,953

All unvested shares of restricted stock are subject to cancellation to the extent vesting conditions are not met. Stock-based compensation expense recognized related to restricted stock was $0.8 million and $0.4 million during the third quarter of fiscal 2021 and 2022, and $7.9 million and $1.6 million during the first three quarters of fiscal 2021 and 2022. At the end of the third quarter of fiscal 2022, total unrecognized employee compensation cost related to unvested restricted stock was $0.2 million, which is expected to be recognized over a weighted-average period of 0.4 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):


	Third Quarter of Fiscal				First Three Quarters of Fiscal
	2021		2022		2021		2022
Cost of revenue—product	$	1,027	$	1,634	$	3,013	$	4,547
Cost of revenue—subscription services	3,883		5,555		10,961		15,098
Research and development	29,220		36,797		87,770		102,343
Sales and marketing	14,898		19,151		48,018		54,317
General and administrative	10,581		12,863		29,993		31,458
Total stock-based compensation expense	$	59,609	$	76,000	$	179,755	$	207,763

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