Stockholders' equity

12 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

Stockholders' equity

Stockholders’ equity

Undesignated preferred stock

We are authorized to issue 50,000,000 shares of undesignated preferred stock, par value $0.001 per share. The undesignated preferred stock may be issued from time to time at the discretion of our board of directors. As of June 30, 2020 and 2019, no shares of undesignated preferred stock were issued or outstanding.

Common stock

We are authorized to issue 600,000,000 shares of $0.001 par value stock. The holders of each share of common stock have the right to one vote.

Stock repurchase program

In February 2019, our board of directors authorized a program for the repurchase of up to $20.0 million of our shares of common stock through open market purchases. The program expired on August 4, 2020. The timing and amount of repurchase transactions under this program depended on market conditions, cash flow and other considerations. Under this program, we utilized $9.4 million of cash to repurchase 1,692,207 shares of our common stock at an average purchase price of $5.53 per share during fiscal 2020. We utilized $1.3 million of cash to repurchase 221,333 shares of our common stock at an average purchase price of $5.89 per share during fiscal 2019. As of June 30, 2020, the remaining authorized amount of stock repurchases that may be made under this repurchase program was $9.3 million.

Repurchased shares are retired and designated as authorized but unissued shares. We use the par value method of accounting for our stock repurchases. Under the par value method, common stock is first charged with the par value of the shares involved. The excess of the cost of shares acquired over the par value is allocated to additional paid-in capital, or APIC, based on an estimated average sales price per issued share with the excess amounts charged to retained earnings. As a result of our stock repurchases during fiscal 2020, we reduced common stock and APIC by an aggregate of $5.8 million and charged $3.6 million to retained earnings.

Stock plans

Our equity incentive plans provide for granting stock options and restricted stock units, or RSUs, to eligible employees, directors and consultants. Stock options generally vest over a four-year period beginning from the date of grant and generally expire 10 years from the date of grant. RSUs granted to new employees generally vest annually over a four-year period beginning from the date of grant. However, RSUs granted during employment for retention purposes may also vest quarterly over a three-year period beginning from the date of grant. In addition, we offer an employee stock purchase plan, or ESPP, to eligible employees.

Shares available for grant

On July 1, 2019, pursuant to the annual increase provisions of our 2009 Equity Incentive Plan, or the 2009 Plan, the number of shares available for grant under this plan increased by 1,666,666 shares. This was the last annual increase in the shares reserved for issuance under our 2009 Plan, and the plan expired in October 2019 as to new awards. In September 2019, our board of directors also terminated the 2011 Stock Option and Grant Plan, or the 2011 Plan. In November 2019, our stockholders approved the 2019 Equity Incentive Plan, or the 2019 Plan, pursuant to which 5,700,000 shares were initially reserved for future grants and up to an additional 5,800,000 shares are reserved to the extent shares subject to grants under the 2009 Plan were outstanding as of November 20, 2019 but later expire or otherwise terminate without having been exercised in full (in which case the shares subject to such grants will be returned to the 2019 Plan and available for future issuance). The 2019 Plan became effective on November 20, 2019 and will automatically terminate 10 years from its date of adoption by our board of directors. In connection with the adoption of the 2019 Plan, a total of approximately 5,342,000 shares expired which had been previously available but unissued under the 2009 Plan and 2011 Plan.

A summary of our shares available for grant activity is as follows (in thousands):

	Number of Shares
Shares available for grant as of June 30, 2019	4,472
Annual share increase authorized under 2009 Plan	1,667
Granted	(1,681	)
RSUs withheld for taxes in net share settlements	251
Canceled	633
Expired under 2009 and 2011 Plans	(5,342	)
Shares available under 2009 and 2011 Plans upon termination on November 20, 2019	—
Initial shares authorized under 2019 Plan on November 20, 2019	5,700
Shares added from 5,800,000 reserved share pool available(1)	613
Granted	(1,068	)
RSUs withheld for taxes in net share settlements	35
Shares available for grant as of June 30, 2020	5,280
(1) Additional shares are available up to a maximum of 5,800,000 shares only to the extent shares subject to grants under the 2009 Plan were outstanding as of November 20, 2019 but later expire or otherwise terminate without having been exercised in full.

A summary of our stock option activity is as follows (in thousands except per share and contractual life amounts):

	Number of shares		Weighted average exercise price per share		Weighted average remaining contractual  life (years)	Aggregate intrinsic value
Options outstanding as of June 30, 2019	3,409		$	6.49
Granted	55		4.92
Exercised	(1,351	)	6.27
Canceled or expired	(475	)	6.78
Options outstanding as of June 30, 2020	1,638		$	6.55	5.17	$	209
As of June 30, 2020:
Options vested and expected to vest	1,620		$	6.56	5.14	$	201
Options exercisable	1,432		$	6.74	4.79	$	128

During fiscal 2020, 2019 and 2018, the total cash received from the exercise of stock options was $8.4 million, $8.9 million and $681,000, respectively, and the total intrinsic value of stock options exercised was $5.3 million, $1.1 million and $227,000, respectively.

A summary of our RSU activity is as follows (in thousands except contractual life amounts):

	Number of Shares		Weighted average remaining contractual  life (years)	Aggregate intrinsic value
RSUs outstanding as of June 30, 2019	2,637
Granted	1,633
Vested	(1,057	)
Canceled	(737	)
RSUs outstanding as of June 30, 2020	2,476		1.39	$	13,595
As of June 30, 2020:
RSUs expected to vest	2,175		1.29	$	11,938

Performance-based RSUs

In February 2020, the Compensation Committee of our board of directors (the “Compensation Committee”) approved the grant under our 2019 Equity Incentive Plan of performance-based RSUs covering a target of 500,000 shares of common stock under individual grants to certain of our executive officers, which we refer to as the 2020 PSU Awards. The 2020 PSU Awards are subject to four performance milestones, each requiring achievement of a specified trailing average closing stock price of our common stock for a 30-trading day period on or before the three-year anniversary of the 2020 PSU Awards’ grant date. In the event our board of directors approves entering a transaction which, if consummated, would constitute a change in control of the Company, the performance milestones are increased with respect to shares not already eligible to vest under the 2020 PSU Award, and the performance period is extended to the four-year anniversary of the 2020 PSU Awards’ grant date. Achieving each individual stock price performance milestone will result in one quarter of the shares subject to the 2020 PSU Award becoming eligible to vest. If a stock price performance milestone is achieved, then the shares that became eligible to vest will vest in four (4) equal quarterly installments as of the ensuing March 10, June 10, September 10 and December 10 following the date of certification of the date the performance milestone was achieved, in each case subject to the respective executive’s continued service with the Company through the applicable vesting date. Vesting under the 2020 PSU Award may be accelerated under certain conditions involving a change in control of our Company, including as provided under respective change in control agreements entered between us and the executive. The maximum number of shares subject to the 2020 PSU Award that may vest is 500,000. No shares had vested as of June 30, 2020 under the 2020 PSU Awards.

In September 2019, the Compensation Committee approved the grant under our 2009 Equity Incentive Plan of performance-based RSUs covering a target of 560,000 shares of common stock under individual grants to several of our executive officers, which we refer to as the 2019 PSU Awards. The 2019 PSU Awards are subject to four performance milestones, each requiring achievement of a specified trailing average closing stock price of our common stock for a 30 trading day period on or before the three-year anniversary of the 2019 PSU Awards’ grant date. Achieving each individual stock price performance milestone will result in one quarter of the shares subject to the 2019 PSU Award becoming eligible to vest. If a stock price performance milestone is achieved, then one half of the shares that became eligible to vest under the 2019 PSU Award upon achievement of that stock price performance milestone will vest on the later of November 1, 2020, or the date that the Compensation Committee certifies achievement of the milestone, and the remaining one half of the shares that became eligible to vest will vest on the one-year anniversary of the date the performance milestone was achieved, in each case subject to the respective executive’s continued service with the Company through the applicable vesting date. The 2019 PSU Award milestones are subject to change upon a change in control, as defined in the agreement. The maximum number of shares subject to the 2019 PSU Award that may vest is 560,000. No shares had vested as of June 30, 2020 under the 2019 PSU Awards.

In October 2018, the Compensation Committee approved the grant under our 2009 Equity Incentive Plan of performance-based RSUs covering a target of 240,000 shares of common stock to Dr. HP Jin, our CEO, which we refer to as the CEO PSU Award. The CEO PSU Award is subject to four performance milestones, each requiring achievement of a specified trailing average closing stock price of our common stock for a 30 trading day period on or before the three-year anniversary of the CEO PSU Award’s grant date. Achieving each individual stock price performance milestone will result in one quarter of the shares subject to the CEO PSU Award becoming eligible to vest. If a stock price performance milestone is achieved, then one half of the shares that became eligible to vest under the CEO PSU Award upon achievement of that stock price performance milestone will vest on the later of November 1, 2019, or the date that the Compensation Committee certifies achievement of the milestone, and the remaining one half of the shares that became eligible to vest will vest on the one-year anniversary of the date the performance milestone was achieved, in each case subject to Dr. Jin’s continued service with the Company through the applicable vesting date. The CEO PSU Award milestones are subject to change upon a change in control, as defined in the agreement. The maximum number of shares subject to the CEO PSU Award that may vest is 240,000. No shares had vested as of June 30, 2020 under the CEO PSU Award.

Since achievement of the awards is dependent on a market condition, stock-based compensation expense associated with these awards is recognized regardless of whether the market condition is satisfied, provided that the requisite service period has been met. We utilized the Monte Carlo valuation method to determine the fair value and derived service periods of each of the stock price performance milestones. Total stock-based compensation expense associated with all PSU Awards, included in the stock-based compensation expense table below, was $2.0 million for fiscal 2020, and was not material for all prior periods presented.

As of June 30, 2020, no performance-based RSU awards had been earned or canceled, and 1,300,000 shares subject to performance-based RSU awards remained outstanding.

Employee Stock Purchase Plan

In November 2019, the Company’s stockholders approved the 2019 Employee Stock Purchase Plan, or ESPP, which became effective on November 20, 2019. A total of 2,500,000 shares were authorized for issuance to participating employees upon adoption of the ESPP. The ESPP provides for 12-month offering periods beginning March 1 and September 1 of each year, and each offering period will consist of two six-month purchase periods. The initial offering period commenced on March 1, 2020 and will end on March 1, 2021. On each purchase date, eligible employees will purchase the shares at a price per share equal to 85% of the lesser of (i) the fair market value of our stock on the enrollment date of the offering period or (ii) the fair market value of our stock on the exercise date.

Stock-based compensation expense

The following table summarizes total stock-based compensation expense included in our consolidated statements of operations (in thousands):

	Fiscal Year Ended June 30,
	2020		2019		2018
Cost of revenue	$	60	$	77	$	108
Research and development	4,766		4,633		5,263
Sales and marketing	971		681		872
General and administrative	2,237		2,013		2,525
Total stock-based compensation expense	$	8,034	$	7,404	$	8,768

The following table summarizes total stock-based compensation expense recorded for stock options and RSUs issued to employees and nonemployees (in thousands):

	Fiscal Year Ended June 30,
	2020		2019		2018
Stock option awards	$	805	$	1,578	$	2,053
RSU awards	6,710		5,826		6,717
ESPP	519		—		—
Total stock-based compensation expense	$	8,034	$	7,404	$	8,768

We generally use the Black-Scholes option-pricing model to determine the fair value of stock option awards. The determination of the fair value of stock option awards on the date of grant is affected by the stock price as well as assumptions regarding a number of complex and subjective variables. These variables include expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rates and expected dividends. The weighted average assumptions used to value stock options granted and the resulting weighted average grant date fair value per share were as follows:

	Fiscal Year Ended June 30,
	2020			2019			2018
Expected volatility	48		%	39		%	42		%
Expected term (in years)	5.65			6.87			4.75
Risk-free interest rate	1.58		%	2.99		%	2.00		%
Dividend yield	—			—			—
Weighted average grant date fair value per share	$	2.27		$	2.32		$	2.14

We recognize the estimated stock-based compensation expense of RSUs, net of estimated forfeitures, over the vesting term. The estimated stock-based compensation cost is based on the fair value of our common stock on the date of grant.

The weighted average assumptions used to value ESPP purchase rights during the initial offering period beginning March 1, 2020 were as follows:

Expected volatility	93	%
Expected term (in years)	0.75
Risk-free interest rate	0.92	%
Dividend yield	—

At June 30, 2020, the total unrecognized stock-based compensation expense related to employee options was $375,000, net of estimated forfeitures, and will be amortized over a weighted average period of 1.87 years. The total fair value of stock options that vested during fiscal 2020, 2019 and 2018 was $1.1 million, $3.7 million and $2.4 million, respectively. At June 30, 2020, the total unrecognized stock-based compensation expense related to RSUs was $8.7 million, net of estimated forfeitures, and will be amortized over a weighted average period of 2.48 years. The total fair value of RSUs that vested during fiscal 2020, 2019 and 2018 was $6.3 million, $6.0 million and $7.0 million, respectively.

At June 30, 2020, the total unrecognized stock-based compensation expense related to our ESPP was $1.1 million and will be amortized over a weighted average period of 0.42 years.

Shares reserved for future issuance

Common stock reserved for future issuance as of June 30, 2020 was as follows (in thousands):

Stock options outstanding	1,638
RSUs outstanding	2,476
Available for future grants	5,280
Total common shares reserved for future issuance	9,394