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Stock-Based Compensation Expense and Shareholders' Equity
 12 Months Ended
Jul. 31, 2020
Stockholders' Equity and Stock-based Compensation [Abstract]  
Stock-Based Compensation Expense and Shareholders' Equity Stock-Based Compensation Expense and Shareholders’ Equity
Equity Incentive Plans
On September 14, 2011, the Company’s Board of Directors adopted the 2011 Stock Plan (“2011 Plan”) for the purpose of granting equity-based incentive awards as compensation tools to motivate the Company’s workforce. The Company had initially reserved 7,500,000 shares of its common stock for the issuance of awards under the 2011 Plan. The 2011 Plan provides that the number of shares reserved and available for issuance under the plan may be increased each January 1, beginning on January 1, 2013, by up to 5% of the outstanding number of shares of the Company’s common stock on the immediately preceding December 31. The Company elected not to increase the number of shares of common stock available for grant under this plan for the calendar year ended December 31, 2019. The shares available for issuance is subject to adjustment in the event of a stock split, stock dividend or other defined changes in the Company’s capitalization.
Stock-Based Compensation Expense
Stock-based compensation expense related to options and Stock Awards is included in the Company’s consolidated statements of operations as follows (in thousands):
Fiscal years ended July 31,
202020192018
Stock-based compensation expense$102,191 $91,570 $89,176 
Net impact of deferred stock-based compensation(374)(54)438 
Total stock-based compensation expense$101,817 $91,516 $89,614 
Stock-based compensation expense was included in the following categories:
Cost of subscription and support revenue$7,575 $4,659 $2,842 
Cost of license revenue769 173 46 
Cost of services revenue20,816 22,781 21,856 
Research and development26,324 23,421 25,440 
Sales and marketing21,260 19,245 18,387 
General and administrative25,073 21,237 21,043 
Total stock-based compensation expense101,817 91,516 89,614 
Tax benefit from stock-based compensation28,360 29,159 24,481 
Total stock-based compensation expense, net of tax effect$73,457 $62,357 $65,133 
Total unrecognized stock-based compensation expense as of July 31, 2020 related to stock options and Stock Awards is as follows:
Unrecognized Expense
(in thousands)		Weighted Average Expected Recognition Period
(in years)
Stock options$675 0.7
Stock Awards205,236 2.4
Total unrecognized stock-based compensation expense$205,911 
Stock Awards
A summary of the Company’s Stock Awards activity under the Company’s equity incentive plans is as follows:
Stock Awards Outstanding
Number of Stock AwardsWeighted Average Grant Date Fair Value
 Aggregate Intrinsic Value(1)
(in thousands)
Balance as of July 31, 20172,634,085 $56.62 $190,076 
Granted1,814,084 $79.65 
Released(1,260,758)$56.92 $103,957 
Canceled(255,256)$63.66 
Balance as of July 31, 20182,932,155 $69.43 $252,752 
Granted1,238,700 $100.01 
Released(1,398,676)$69.20 $133,050 
Canceled(387,506)$75.16 
Balance as of July 31, 20192,384,673 $85.20 $243,427 
Granted1,587,664 $106.65 
Released(1,217,337)$82.73 $121,915 
Canceled(309,302)$87.25 
Balance as of July 31, 20202,445,698 $99.34 $287,761 
Expected to vest as of July 31, 20202,445,698 $99.34 $287,761 

(1)    Aggregate intrinsic value at each fiscal year end represents the total market value of Stock Awards at the Company’s closing stock price of $117.66, $102.08, and $86.20 on July 31, 2020, 2019, and 2018, respectively. Aggregate intrinsic value for released Stock Awards represents the total market value of released Stock Awards at date of release.

Certain executives and employees of the Company received PSUs and TSR PSUs in addition to RSUs. The PSUs included performance-based conditions and generally vest over a four-year period. The TSR PSUs are subject to total shareholder return rankings of the Company’s common stock relative to the software companies in the S&P Index for a specified period or periods, and vest at the end of three years. In select cases, certain TSR PSUs are also subject to performance-based conditions.
The Company recognized stock-based compensation of $13.1 million, $19.1 million, and $9.4 million related to these performance-based and market-based stock awards in fiscal years 2020, 2019, and 2018, respectively.
Stock Options
Stock option activity under the Company’s equity incentive plans is as follows:
 Number of Stock Options Outstanding Weighted Average Exercise PriceWeighted Average Remaining Contractual Life
(in years)
 Aggregate Intrinsic Value(1)
(in thousands)
Balance as of July 31, 2017555,636 $22.17 4.0$27,777 
Granted(2)
137,057 $10.23 
Exercised(150,924)$13.32 $10,710 
Canceled(4,705)$40.05 
Balance as of July 31, 2018537,064 $21.45 4.3$34,774 
Granted— $— 
Exercised(301,901)$13.11 $24,731 
Canceled(18,436)$9.43 
Balance as of July 31, 2019216,727 $34.10 5.2$14,733 
Granted— $— 
Exercised(132,573)$37.37 $8,917 
Canceled(3,822)$10.99 
Balance as of July 31, 202080,332 $29.80 5.2$7,058 
Vested and expected to vest as of July 31, 202080,332 $29.80 5.2$7,058 
Exercisable as of July 31, 202069,849 $32.60 5.0$5,941 
(1)Aggregate intrinsic value at each fiscal year end represents the difference between the Company’s closing stock price of $117.66, $102.08, and $86.20 on July 31, 2020, 2019, and 2018, respectively, and the exercise price of the option. Aggregate intrinsic value for exercised options represents the difference between the Company’s stock price at date of exercise and the exercise price.
(2)Represents options assumed through the Cyence acquisition on November 1, 2017.
Valuation of Awards
    
    TSR PSUs
The fair values of the TSR PSUs were estimated at the grant date using a Monte Carlo simulation model which included the following assumptions:
Fiscal years ended July 31,
202020192018
Expected term (in years)2.902.882.88
Risk-free interest rate1.46%2.79%1.44%
Expected volatility of the Company28.4%27.2%28.0%
Average expected volatility of the peer companies in the S&P Index37.0%33.0%34.7%
Expected dividend yield—%—%—%

The number of TSR PSUs that may ultimately vest will vary based on the relative performance of the Company’s total shareholder return rankings relative to the software companies in the S&P Index for a specified performance period or periods. The Monte Carlo methodology incorporates into the valuation all possible outcomes, including that the Company’s relative performance may result in no shares vesting. As a result, stock-based compensation expense is recognized regardless of the ultimate achievement of the plan’s performance metrics. The expense will be reversed only in the event that a grantee is terminated prior to satisfying the requisite service period.

    Stock Options
The per share fair value of each stock option was determined using the Black-Scholes option-pricing model with the following assumptions:
Fiscal years ended July 31,
202020192018
Expected life (in years)**1.27
Risk-free interest rate**1.48%
Expected volatility**24.12%
Expected dividend yield**—%
Weighted average fair value of options granted
**$67.90
* There were no options granted during the fiscal years ended July 31, 2020 and 2019.
Common Stock Reserved for Issuance
As of July 31, 2020 and 2019, the Company was authorized to issue 500,000,000 shares of common stock with a par value of $0.0001 per share and, of these, 83,461,925 and 82,140,883 shares of common stock were issued and outstanding, respectively. As of July 31, 2020 and 2019, the Company had reserved shares of common stock for future issuance as follows:
July 31, 2020July 31, 2019
Exercise of stock options to purchase common stock80,332 216,727 
Vesting of restricted stock awards2,445,698 2,384,673 
Shares available for grant under stock plans23,460,234 24,776,361 
Total common stock reserved for issuance25,986,264 27,377,761