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Employee Incentive Plans | 12 Months Ended
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Jan. 31, 2020
Share-based Payment Arrangement [Abstract] |
Employee Incentive Plans | Employee Incentive Plans The Company’s equity incentive plans provide for granting stock options, RSUs and restricted stock awards to employees, consultants, officers and directors. In addition, the Company offers an ESPP to eligible employees. Stock-based compensation expense by award type was as follows (in thousands):
| Year Ended January 31,
| 2020 |  | 2019 |  | 2018
Stock options | $ | 21,888 |  |  | $ | 23,466 |  |  | $ | 24,186 |
RSUs | 94,637 |  |  | 41,637 |  |  | 9,104 |
ESPP | 9,408 |  |  | 7,248 |  |  | 7,111 |
Restricted stock awards | 590 |  |  | 1,608 |  |  | 3,281 |
Restricted common stock | 101 |  |  | 2,361 |  |  | 6,178 |
Total | $ | 126,624 |  |  | $ | 76,320 |  |  | $ | 49,860 |
Stock-based compensation expense was recorded in the following cost and expense categories in the Company’s consolidated statements of operations (in thousands):
| Year Ended January 31,
| 2020 |  | 2019 |  | 2018
Cost of revenue: |  |  |  |  |
Subscription | $ | 12,923 |  |  | $ | 7,837 |  |  | $ | 4,600 |
Professional services and other | 7,164 |  |  | 4,983 |  |  | 3,137 |
Research and development | 37,683 |  |  | 22,642 |  |  | 18,107 |
Sales and marketing | 38,077 |  |  | 22,916 |  |  | 13,242 |
General and administrative | 30,777 |  |  | 17,942 |  |  | 10,774 |
Total | $ | 126,624 |  |  | $ | 76,320 |  |  | $ | 49,860 |
Stock-based compensation expense recorded to research and development in the consolidated statements of operations exclude amounts that were capitalized related to internal-use software for the years ended January 31, 2020, 2019 and 2018. See Note 6 for additional details. Equity Incentive Plans The Company has two equity incentive plans: the 2009 Stock Plan (2009 Plan) and the 2017 Equity Incentive Plan (2017 Plan). All shares that remain available for future grants are under the 2017 Plan. As of January 31, 2020, options to purchase 11,348,049 shares of Class B common stock and 1,011,253 shares of Class A common stock remained outstanding. As of January 31, 2020, the total number of shares reserved for future Class A stock grants under the 2017 Plan was 16,456,003 shares, including shares transferred from the 2009 Plan. Stock Options Options issued to new employees under the Plan generally are exercisable for periods not to exceed ten years and generally vest over four years with 25% vesting after one year and with the remainder vesting monthly thereafter in equal installments. Shares offered under the Plan may be: (i) authorized but unissued shares or (ii) treasury shares. A summary of the Company’s stock option activity and related information was as follows:
| Number of Options |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value (in thousands)
Outstanding as of January 31, 2019 | 17,803,794 |  |  | $ | 9.16 |  |  | 7.1 |  | $ | 1,304,446 |
Granted | 415,547 |  |  | 82.33 |  |  |  |  |
Exercised | (5,422,281 | ) |  | 8.37 |  |  |  |  |
Canceled | (437,758 | ) |  | 13.35 |  |  |  |  |
Outstanding as of January 31, 2020 | 12,359,302 |  |  | $ | 11.82 |  |  | 6.2 |  | $ | 1,436,487 |
As of January 31, 2020: |  |  |  |  |  |  |
Vested and expected to vest | 12,359,302 |  |  | $ | 11.82 |  |  | 6.2 |  | $ | 1,436,487 |
Vested and exercisable | 8,723,638 |  |  | $ | 8.16 |  |  | 5.9 |  | $ | 1,045,852 |
The weighted-average grant-date fair value of options granted was $37.35, $17.21 and $5.40 during the years ended January 31, 2020, 2019 and 2018, respectively. The total grant-date fair value of stock options vested was $23.7 million, $23.8 million and $23.9 million during the years ended January 31, 2020, 2019 and 2018, respectively. The intrinsic value of the options exercised, which represents the difference between the fair market value of the Company’s common stock on the date of exercise and the exercise price of each option, was $558.6 million, $309.3 million and $204.8 million for the years ended January 31, 2020, 2019 and 2018, respectively. As of January 31, 2020 and January 31, 2019, there was a total of $28.2 million and $37.3 million, respectively, of unrecognized stock-based compensation expense, which is being recognized over a weighted-average period of 1.4 and 1.9 years, respectively. The Company used the Black-Scholes option pricing model to estimate the fair value of stock options granted with the following assumptions:
| Year Ended January 31,
| 2020 |  | 2019 |  | 2018
Expected volatility | 43 | % |  | 40 | % |  | 40% - 41% |
Expected term (in years) | 6.3 |  |  | 6.3 |  |  | 6.3 - 6.4 |
Risk-free interest rate | 1.55% - 2.27% |  |  | 2.70 | % |  | 1.87% - 2.21% |
Expected dividend yield | — |  |  | — |  |  | — |
Restricted Stock Units A summary of the Company’s RSU activities and related information is as follows:
| Number of RSUs |  | Weighted- Average Grant Date Fair Value Per Share
Outstanding as of January 31, 2019 | 4,835,536 |  |  | $ | 44.49 |
Granted | 2,458,095 |  |  | 114.07 |
Vested | (1,752,333 | ) |  | 44.69 |
Forfeited | (648,057 | ) |  | 54.94 |
Outstanding as of January 31, 2020 | 4,893,241 |  |  | $ | 77.99 |
The Company granted 2,458,095 RSUs with an aggregate fair value of $280.4 million for the year ended January 31, 2020. As of January 31, 2020, there was $335.9 million of unrecognized stock-based compensation expense related to unvested RSUs, which is being recognized over a weighted-average period of 2.7 years based on vesting under the award service conditions. Equity Awards Issued in Connection with Business Combinations In connection with the Stormpath transaction in February 2017, the Company issued 800,000 shares of restricted common stock to Stormpath with an aggregate fair value of $8.6 million, of which 400,000 shares vested during each year ended January 31, 2020 and January 31, 2019. The stock-based compensation expense related to the restricted common stock was recognized using an accelerated attribution method over two years. The Company separately entered into retention arrangements with certain employees of Stormpath and issued 598,500 restricted stock awards with performance conditions under the 2009 Plan, with an aggregate fair value of $6.6 million. The restricted stock awards vest ratably over two or three years from the transaction date, and 210,850 of these shares vested during each of the years ended January 31, 2020 and 2019. Additionally, the Company granted 518,900 service-based stock options under the 2009 Plan to certain Stormpath employees with an aggregate fair value of $2.5 million to vest ratably over the requisite four-year service period. Of the $9.1 million total aggregate fair value of the awards, $1.5 million is related to pre-combination service and was recognized as goodwill. The post-combination expenses for the restricted stock awards and stock options are $5.5 million and $2.1 million, respectively. The expense related to the restricted stock awards is being recognized over two or three years based on an accelerated attribution method. The expense for the stock options is being recognized ratably over the requisite service period. As of January 31, 2020, the remaining unrecognized compensation cost was immaterial. Employee Stock Purchase Plan In February 2017, the Company’s board of directors adopted, and in March 2017, the Company’s stockholders approved the ESPP, which became effective prior to the completion of the IPO. The ESPP initially reserves and authorizes the issuance of up to a total of 3,000,000 shares of Class A common stock to participating employees. Except for the initial offering period which began April 7, 2017 and ended on June 20, 2018, or stock price changes that would reset the offering period after the initial six-month purchase period, the ESPP provides for 12-month offering periods beginning June 21 and December 21 of each year, and each offering period consists of up to two six-month purchase periods. The Company estimated the fair value of ESPP purchase rights using a Black-Scholes option pricing model with the following assumptions:
|  | Year Ended January 31,
|  | 2020 |  | 2019 |  | 2018
Expected volatility |  | 43% - 59% |  | 39% - 70% |  | 32% - 38%
Expected term (in years) |  | 0.5 - 1.0 |  | 0.5 - 1.0 |  | 0.5 - 1.2
Risk-free interest rate |  | 1.53% - 2.05% |  | 2.12% - 2.62% |  | 0.95% - 1.73%
Expected dividend yield |  | — |  | — |  | —
During the year ended January 31, 2020, the Company's employees purchased 322,795 shares of its Class A common stock under the ESPP. The shares were purchased at a weighted-average purchase price of $58.14, with proceeds of $18.8 million. During the year ended January 31, 2019, the Company's employees purchased 615,210 shares of its Class A common stock under the ESPP. The shares were purchased at a weighted-average purchase price of $22.31 with proceeds of $13.7 million. As of January 31, 2020, there was $8.8 million of unrecognized stock-based compensation expense related to the ESPP that is expected to be recognized over an average vesting period of 0.6 years.

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