Stockholders' Equity

3 Months Ended

Apr. 30, 2019

Equity Incentive Plans

We maintain three stock-based compensation plans: the 2018 Equity Incentive Plan (the "2018 Plan"), the Amended and Restated 2011 Equity Incentive Plan (the “2011 Plan”) and the Amended and Restated 2003 Stock Plan (the “2003 Plan”).

Our board of directors adopted, and our stockholders approved the 2018 Plan during the year ended January 31, 2019. The 2018 Plan went into effect in April 2018, upon the effectiveness of our IPO Registration Statement. This plan serves as a

successor to the 2011 Plan and 2003 Plan and provides for the grant of stock-based awards to our employees, directors and consultants. No additional awards under the 2011 Plan or 2003 Plan were made as of the effective date of the 2018 Plan. Outstanding awards under these two plans continue to be subject to the terms and conditions of the respective plans.

Shares available for grant under the 2011 Plan that were reserved but not issued as of the effective date of the 2018 Plan were added to the reserves of the 2018 Plan. Any shares subject to outstanding awards originally granted under the 2011 Plan that: (i) expire or terminate for any reason prior to exercise or settlement; (ii) are forfeited because of the failure to meet a contingency or condition required to vest such shares or otherwise return to the Company; or (iii) are reacquired, withheld (or not issued) to satisfy a tax withholding obligation in connection with an award or to satisfy the purchase price or exercise price of a stock award shall become available for future issuance pursuant to the 2018 Plan. As of April 30, 2019, 26.8 million shares were available for future issuance under the 2018 Plan.

The number of shares reserved under the 2018 Plan will automatically increase on the first day of each fiscal year, starting on February 1, 2019 and continuing through February 1, 2028, in an amount equal to (i) 5% of the total number of shares of our capital stock outstanding on January 31st of the preceding fiscal year or (ii) a lesser number of shares as determined by our board of directors. Pursuant to this automatic increase, the Compensation Committee of our board of directors approved an increase of 8.5 million shares reserved for issuance effective on February 1, 2019.

Stock Options

Option activity for the three months ended April 30, 2019, was as follows:



(in thousands, except per share and years data)	Number of Options Outstanding		Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at January 31, 2019	13,648		$	12.27	5.38	$	507,371
Options exercised	(2,634	)	10.82
Options canceled/expired	(25	)	17.69
Outstanding at April 30, 2019	10,989		$	12.61	5.41	$	484,184
Vested and expected to vest at April 30, 2019	10,852		$	12.55	5.38	$	478,824
Exercisable at April 30, 2019	9,418		$	11.77	5.05	$	422,811

As of April 30, 2019, our total unrecognized compensation cost related to stock option grants was $11.0 million. We expect to recognize this expense over the remaining weighted-average period of approximately 1.6 years.

RSUs

Substantially all the RSUs that we have issued through January 31, 2018 vest upon the satisfaction of both service-based and performance-based vesting conditions. The service-based condition is typically satisfied over a four-year service period. The performance-based condition related to these awards was satisfied upon the effectiveness of our IPO Registration Statement on April 26, 2018. On that date we recorded a cumulative stock-based compensation expense of $262.8 million using the accelerated attribution method for all the RSUs with the service condition fully satisfied.

In the year ended January 31, 2019, we granted 0.7 million RSUs that are subject to either performance-based or market-based vesting conditions and a service-based condition. The performance-based conditions will be satisfied if our financial performance meets certain operating targets. The market-based conditions will be satisfied if certain milestones based on our common stock price are met. All other RSUs granted after January 31, 2018 vest on the satisfaction of a service-based condition only.

RSU activity for the three months ended April 30, 2019, was as follows:



(in thousands, except per share data)	Number of Units		Weighted-Average Grant Date Fair Value
Unvested at January 31, 2019	17,142		$	34.56
Granted	1,174		55.42
Vested	(2,468	)	20.72
Canceled	(821	)	37.23
Unvested at April 30, 2019	15,027		$	38.32

As of April 30, 2019, our total unrecognized compensation cost related to RSUs was $51.2 million. We expect to recognize this expense over the remaining weighted-average period of approximately 2.2 years.

2018 Employee Stock Purchase Plan

Our 2018 Employee Stock Purchase Plan (“2018 ESPP”) allows eligible employees to contribute, normally through payroll deductions, up to 15% of their earnings for the purchase our common stock at a discounted price per share. The price at which common stock is purchased under the 2018 ESPP is equal to 85% of the fair market value of our common stock on the first or last day of the offering period, whichever is lower. The 2018 ESPP provides for separate six-month offering periods that begin on September 15 and March 15 each year. The initial offering period ran from September 15, 2018 through March 14, 2019. In the three months ended April 30, 2019, 0.2 million shares of our common stock were purchased under the 2018 ESPP. Compensation expense related to the ESPP was $1.9 million for the three months ended April 30, 2019.

The number of shares reserved under the 2018 ESPP will automatically increase on the first day of each fiscal year, starting on February 1, 2019 and continuing through February 1, 2028, in an amount equal to the lesser of (i) 1% of the total number of shares of our common stock outstanding on January 31 of the preceding fiscal year, (ii) 3.8 million shares, or (iii) a lesser number of shares determined by our board of directors. As of April 30, 2019, 5.3 million shares were reserved for future issuance under the 2018 ESPP.