Stock-Based Compensation

6 Months Ended

Apr. 30, 2022

Share-based Payment Arrangement [Abstract]

The compensation cost recognized in the unaudited condensed consolidated statements of income for our stock compensation arrangements was as follows:


	Three Months Ended April 30,				Six Months Ended April 30,
	2022		2021		2022		2021
	(in thousands)
Cost of products	$	13,078	$	9,304	$	24,285	$	18,656
Cost of maintenance and service	5,893		3,411		10,476		6,746
Research and development expense	58,109		40,507		107,649		81,801
Sales and marketing expense	19,291		14,551		37,092		29,710
General and administrative expense	13,690		11,813		26,330		26,455
Stock-based compensation expense before taxes(1)	110,061		79,586		205,832		163,368
Income tax benefit	(17,852)		(12,407)		(33,386)		(25,469)
Stock-based compensation expense after taxes	$	92,209	$	67,179	$	172,446	$	137,899

(1) During the three and six months ended April 30, 2022, we recognized stock-based compensation expense relating to restricted stock units (RSUs), granted to senior executives in February 2022 with certain market, performance and service conditions (market-based RSUs). Under the award agreements, the vesting of the market-based RSUs is contingent on achieving total stockholder return (TSR) relative to a peer index as well as revenue growth metrics. The performance period during which the achievement goals will be measured is fiscal 2022 and fiscal 2023. The maximum potential awards that may be earned are 187.5% of the target number of the initial awards. The awards will vest in equal increments in December 2023 and December 2024 if the TSR target, revenue growth metrics, and service conditions are achieved. The grant date fair value for the market-based RSUs of $280.82 was determined using a Monte Carlo simulation model with the following assumptions: expected volatility of 33.01%, risk-free interest rate of 1.33% and an expected term of 1.69 years.

As of April 30, 2022, we had $937.6 million of total unrecognized stock-based compensation expense relating to options, RSUs and restricted stock awards, which is expected to be recognized over a weighted-average period of 2.3 years. As of April 30, 2022, we had $76.3 million of unrecognized stock-based compensation expense relating to our Employee Stock Purchase Plan (ESPP), which is expected to be recognized over a period of approximately 2.0 years.

The intrinsic values of equity awards exercised during the periods were as follows:


	Three Months Ended April 30,				Six Months Ended April 30,
	2022		2021		2022		2021
	(in thousands)
Intrinsic value of awards exercised	$	46,464	$	71,680	$	159,389	$	112,204