XML 30 R18.htm IDEA: XBRL DOCUMENT v3.24.1.1.u2
Equity
 3 Months Ended
Apr. 30, 2024
Share-Based Payment Arrangement [Abstract]  
Equity Equity
Common Stock—The Company had reserved shares of common stock for future issuance as follows (in thousands):

April 30, 2024January 31, 2024
2012 Equity Incentive Plan:
Options outstanding25,296 26,767 
Restricted stock units outstanding388 789 
2020 Equity Incentive Plan:
Options outstanding1,562 602 
Restricted stock units outstanding22,653 20,168 
Shares available for future grants71,037 59,371 
2020 Employee Stock Purchase Plan:
Shares available for future grants16,759 13,764 
Total shares of common stock reserved for future issuance137,695 121,461 

Stock Repurchase Program and Treasury Stock—In February 2023, the Company’s board of directors authorized a stock repurchase program of up to $2.0 billion of its outstanding Class A common stock. Repurchases may be effected, from time to time, either on the open market (including via pre-set trading plans), in privately negotiated transactions, or through other transactions in accordance with applicable securities laws. The program is funded using the Company’s working capital and will expire in March 2025. The timing and amount of any repurchases will be determined by management based on an evaluation of market conditions and other factors. The program does not obligate the Company to acquire any particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion.

The following table summarizes the stock repurchase activity under the Company’s stock repurchase program (in thousands, except per share data):

Three Months Ended April 30,
20242023
Number of shares repurchased2,982 1,405 
Weighted-average price per share(1)
$173.14 $136.39 
Aggregate purchase price(1)
$516,329 $191,694 
________________
(1)Includes transaction costs associated with the repurchases.

As of April 30, 2024, $891.9 million remained available for future stock repurchases under the stock repurchase program. The first 0.5 million shares repurchased during the three months ended April 30, 2023 were recorded in treasury stock as a reduction to the stockholders’ equity on the condensed consolidated balance sheets. All shares of Class A common stock subsequently repurchased were retired. Upon retirement, the par value of the common stock repurchased was deducted from common stock and any excess of repurchase price (including associated transaction costs) over par value was recorded entirely to retained earnings (accumulated deficit) on the condensed consolidated balance sheets.

Equity Incentive Plans—The Company’s 2020 Equity Incentive Plan (2020 Plan), which became effective in connection with its Initial Public Offering (IPO), provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards (RSUs), performance awards and other forms of equity compensation (collectively, equity awards). All shares that remain available for future grants are under the 2020 Plan.
The Company’s 2012 Equity Incentive Plan (2012 Plan) provided for the grant of equity awards to employees, non-employee directors, and other service providers of the Company. The 2012 Plan was terminated in September 2020 in connection with the IPO but continues to govern the terms of outstanding awards that were granted prior to the termination of the 2012 Plan. Upon the expiration, forfeiture, cancellation, or reacquisition of any shares of common stock underlying outstanding equity awards granted under the 2012 Plan, an equal number of shares of Class A common stock will become available for grant under the 2020 Plan. No further equity awards will be granted under the 2012 Plan.

The Company’s 2020 Employee Stock Purchase Plan (2020 ESPP), which became effective in connection with the IPO, authorizes the issuance of shares of common stock pursuant to purchase rights granted to employees. Offering periods are generally six months long and begin on March 15 and September 15 of each year, except for the first two offering periods. The initial offering period began on September 15, 2020 and ended on February 26, 2021. The second offering period began on March 1, 2021 and ended on September 14, 2021.

On February 1, 2024, the shares available for grant under the 2020 Plan and the 2020 ESPP were automatically increased by 16.7 million shares and 3.3 million shares, respectively, pursuant to the annual evergreen increase provisions under the 2020 Plan and the 2020 ESPP.

Stock Options—Stock options granted under the 2012 Plan and the 2020 Plan (collectively, the Plans) generally vest based on continued service over four years and expire ten years from the date of grant. Certain stock options granted under the 2012 Plan are exercisable at any time following the date of grant and expire ten years from the date of grant.

A summary of stock option activity during the three months ended April 30, 2024 is as follows:

Number of Shares
(in thousands)		Weighted-
Average
Exercise Price		Weighted-Average Remaining Contractual Life
(in years)		Aggregate
Intrinsic Value
(in thousands)
Balance—January 31, 2024
27,369 $12.35 5.0$5,023,664 
Granted960 $163.04 
Exercised(1,379)$7.69 
Canceled(92)$3.75 
Balance—April 30, 2024
26,858 $18.01 4.8$3,723,873 
Vested and exercisable as of April 30, 2024
25,584 $10.61 4.7$3,715,804 

During the three months ended April 30, 2024, the Company granted a stock option with a grant-date fair value of $77.89 per share. No options were granted during the three months ended April 30, 2023. The intrinsic value of options exercised in the three months ended April 30, 2024 and 2023 was $241.8 million and $321.7 million, respectively. The aggregate grant-date fair value of options that vested during the three months ended April 30, 2024 and 2023 was $7.3 million and $16.5 million, respectively.

Equity-Classified RSUs—RSUs granted under the 2012 Plan are equity-classified and had both service-based and performance-based vesting conditions, of which the performance-based vesting condition was satisfied upon the effectiveness of the IPO in September 2020. The service-based vesting condition for these awards is typically satisfied over four years with a cliff vesting period of one year and continued vesting quarterly thereafter. Stock-based compensation associated with RSUs granted under the 2012 Plan was recognized using an accelerated attribution method from the time it was deemed probable that the vesting condition was met through the time the service-based vesting condition had been achieved.
Equity-classified RSUs granted under the 2020 Plan include those that only contain a service-based vesting condition that is typically satisfied over four years, and the related stock-based compensation for these RSUs is recognized on a straight-line basis over the requisite service period. In addition, during each of the three months ended April 30, 2024 and 2023, the Company granted, under the 2020 Plan, equity-classified RSUs that have both service-based and performance-based vesting conditions (Leadership PRSUs) to its executive officers and certain other members of its senior leadership team. The service-based vesting condition for these Leadership PRSUs is typically satisfied over four years with a cliff vesting period of one year and continued vesting quarterly thereafter. The performance-based vesting condition is satisfied upon the achievement of certain Company annual performance targets set by the compensation committee of the board of directors of the Company. The ultimate number of the Leadership PRSUs eligible to vest ranges between 0% to 120% of the target number of the Leadership PRSUs based on the weighted-average achievement of such Company annual performance metrics for the respective fiscal year. Stock-based compensation associated with these Leadership PRSUs is recognized using an accelerated attribution method over the requisite service period, based on the Company’s periodic assessment of the probability that the performance condition will be achieved. The Company recognized stock-based compensation of $12.5 million and $3.9 million associated with Leadership PRSUs during the three months ended April 30, 2024 and 2023, respectively.

A summary of equity-classified RSUs activity during the three months ended April 30, 2024 is as follows:

Number of Shares
(in thousands)		Weighted-Average Grant Date
Fair Value
per Share
Unvested Balance—January 31, 2024
19,575 $169.82 
Granted(1)
5,869 $167.74 
Vested(3,202)$162.47 
Forfeited(533)$168.85 
Performance adjustment(2)
(50)$139.58 
Unvested Balance—April 30, 2024
21,659 $170.44 
________________
(1)Includes 0.8 million Leadership PRSUs granted at 120% of the target number of these awards, which represents the maximum number of Leadership PRSUs that may be eligible to vest with respect to these awards over their full term.
(2)Represents an adjustment in the number of shares outstanding, with regards to Leadership PRSUs granted during the three months ended April 30, 2023, based on the actual achievement of the associated Company annual performance targets for fiscal 2024.

Liability-Classified RSUs—During the fourth quarter of fiscal 2024, in connection with a business combination, the Company agreed to grant, under the 2020 Plan, RSUs that contain both post-combination service-based and performance-based vesting conditions (Acquisition PRSUs) to eligible existing or future employees, subject to a maximum total number of approximately 1.7 million shares. The post-combination service-based vesting condition for these Acquisition PRSUs is satisfied over four years with a cliff vesting period of one year and continued vesting quarterly thereafter. The performance-based vesting condition is contingent on the achievement of certain performance metric over the twelve-month period ending January 31, 2027. Acquisition PRSUs will vest when both service-based and performance-based conditions are satisfied. The ultimate number of Acquisition PRSUs eligible to vest is determined based on the actual achievement of the performance metric, which takes into account certain factors including the Company’s stock price and market capitalization.

Once granted, Acquisition PRSUs are initially liability-classified and recorded in other liabilities on the Company’s condensed consolidated balance sheets, as the monetary value of the obligation under each potential outcome of the performance condition is predominantly based on a fixed monetary amount known at inception and will be settled in a variable number of shares. Subsequently, these awards are remeasured to the fair value at each reporting date until the number of Acquisition PRSUs eligible to vest is fixed, at which time these awards will be reclassified to equity. Stock-based compensation associated with these awards is recognized based on the probable outcome of the performance condition, using an accelerated attribution method over the requisite service period, with a cumulative catch-up adjustment recognized for changes in the fair value estimated at each reporting date. As of April 30, 2024 and January 31, 2024, 1.4 million shares of these Acquisition PRSUs had been granted and remained unvested, and the associated liabilities were $3.2 million and $0.5 million, respectively. Stock-based compensation recognized for these Acquisition PRSUs was not material for the three months ended April 30, 2024.
Restricted Common Stock—From time to time, the Company has granted restricted common stock outside of the Plans. Restricted common stock is not deemed to be outstanding for accounting purposes until it vests.

A summary of restricted common stock activity during the three months ended April 30, 2024 is as follows:

Outside of the Plans
Number of Shares
(in thousands)		Weighted-Average Grant Date
Fair Value
per Share
Unvested Balance—January 31, 2024
671 $209.15 
Vested(146)$223.42 
Unvested Balance—April 30, 2024
525 $205.15 


Stock-Based Compensation—The following table summarizes the assumptions used in estimating the fair value of a stock option granted to an employee during the three months ended April 30, 2024:

Three Months Ended April 30, 2024
Expected term (in years)4.8
Expected volatility56.7 %
Risk-free interest rate4.2 %
Expected dividend yield— %

In addition, for the stock option granted during the three months ended April 30, 2024, the shares to be issued upon exercise are subject to a one-year holding period. As such, the Company applied a 7.6% discount for lack of marketability to the fair value estimated using the Black-Scholes option-pricing model, based on the assumptions included in the table above.

No stock options were granted during the three months ended April 30, 2023.

The following table summarizes the assumptions used in estimating the fair value of employee stock purchase rights granted under the 2020 ESPP during the three months ended April 30, 2024 and 2023:

Three Months Ended April 30,
20242023
Expected term (in years)0.50.5
Expected volatility49.6 %71.3 %
Risk-free interest rate5.4 %4.7 %
Expected dividend yield— %— %

Expected term—For stock options considered to be “plain vanilla” options, the Company estimates the expected term based on the simplified method, which is essentially the weighted average of the vesting period and contractual term, as the Company’s historical option exercise experience does not provide a reasonable basis upon which to estimate the expected term. The expected term for employee stock purchase rights granted under the 2020 ESPP (ESPP Rights) approximates the offering period.

Expected volatility—In fiscal 2023 and 2024, the Company used the average volatility of its Class A common stock and the stocks of a peer group of representative public companies to develop an expected volatility assumption. During the three months ended April 30, 2024, the Company began using the average of (i) the historical volatility of its Class A common stock, and (ii) the implied volatility from publicly traded options on its Class A common stock to develop an expected volatility assumption.

Risk-free interest rate—Risk-free rate is estimated based upon quoted market yields for the United States Treasury debt securities for a term consistent with the expected life of the awards in effect at the time of grant.
Expected dividend yield—Because the Company has never paid and has no intention to pay cash dividends on common stock, the expected dividend yield is zero.

Fair value of underlying common stock—Since the completion of the IPO, the fair value of the Company’s common stock is determined by the closing price, on the date of grant, of its common stock, which is traded on the New York Stock Exchange.

The following table summarizes the assumptions used in estimating the fair value of liability-classified Acquisition PRSUs as of April 30, 2024 and January 31, 2024:

April 30, 2024January 31, 2024
Expected volatility57.0 %60.0 %
Risk-free interest rate4.9 %4.0 %

Expected volatility—In fiscal 2024, expected volatility was estimated based on the historical volatility of the Company’s Class A common stock. During the three months ended April 30, 2024, the Company began using the average of (i) the historical volatility of its Class A common stock, and (ii) the implied volatility from publicly traded options on its Class A common stock to develop an expected volatility assumption.

Risk-free interest rate—Risk-free rate is estimated based upon quoted market yields for the United States Treasury debt securities for a term that approximates the period from the reporting date to January 31, 2027.

Stock-based compensation included in the condensed consolidated statements of operations was as follows (in thousands):
Three Months Ended April 30,
20242023
Cost of revenue$32,408 $30,462 
Sales and marketing73,407 72,295 
Research and development194,672 136,417 
General and administrative31,449 25,335 
Stock-based compensation, net of amounts capitalized331,936 264,509 
Capitalized stock-based compensation9,295 11,719 
Total stock-based compensation$341,231 $276,228 

As of April 30, 2024, total compensation cost related to unvested awards not yet recognized was $3.6 billion, which will be recognized over a weighted-average period of 3.0 years.