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Stock-Based Compensation | 6 Months Ended
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Jul. 31, 2017
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
Stock-Based Compensation | Note 8. Stock-Based Compensation 2015 Equity Incentive Plan In January 2015, our board of directors adopted the 2015 Equity Incentive Plan (2015 Plan), which became effective prior to the completion of our initial public offering (IPO). A total of 12,200,000 shares of Class A common stock was initially reserved for issuance pursuant to future awards under the 2015 Plan. On the first day of each fiscal year, shares available for issuance are increased based on the provisions of the 2015 Plan. Any shares subject to outstanding awards under our 2006 Equity Incentive Plan (2006 Plan) or 2011 Equity Incentive Plan (2011 Plan) that are cancelled or repurchased subsequent to the 2015 Plan’s effective date are returned to the pool of shares reserved for issuance under the 2015 Plan. Awards granted under the 2015 Plan may be (i) incentive stock options, (ii) nonstatutory stock options, (iii) restricted stock units, (iv) restricted stock awards or (v) stock appreciation rights, as determined by our board of directors at the time of grant. Options and restricted stock units generally vest 25% one year from the vesting commencement date and (a) in the case of options, 1/48th per month thereafter, and (b) in the case of restricted stock units, 1/16th per quarter thereafter. As of July 31, 2017, 17,308,516 shares were reserved for future issuance under the 2015 Plan. 2015 Employee Stock Purchase Plan In January 2015, our board of directors adopted the 2015 Employee Stock Purchase Plan (2015 ESPP), which became effective prior to the completion of our IPO. A total of 2,500,000 shares of Class A common stock was initially reserved for issuance under the 2015 ESPP. On the first day of each fiscal year, shares available for issuance are increased based on the provisions of the 2015 ESPP. The 2015 ESPP allows eligible employees to purchase shares of our Class A common stock at a discount of up to 15% through payroll deductions of their eligible compensation, subject to any plan limitations. Except for the initial offering period, the 2015 ESPP provides for 24-month offering periods beginning March 16 and September 16 of each year, and each offering period consists of four six-month purchase periods. On each purchase date, eligible employees will purchase our stock at a price per share equal to 85% of the lesser of (1) the fair market value of our stock on the offering date or (2) the fair market value of our stock on the purchase date. In the event the price is lower on the last day of any purchase price period, in addition to using that price as the basis for that purchase period, the offering period resets and the new lower price becomes the new offering price for a new 24 month offering period. As of July 31, 2017, 2,969,790 shares were reserved for future issuance under the 2015 ESPP. Stock Options The following table summarizes the stock option activity under the equity incentive plans and related information:
|  | Shares Subject to Options Outstanding |  |  | Weighted-Average |  |  |  |  |
|  |  |  |  |  | Weighted- |  |  | Remaining |  |  |  |  |
|  |  |  |  |  | Average Exercise |  |  | Contractual Life |  |  | Aggregate |
|  | Shares |  |  | Price |  |  | (Years) |  |  | Intrinsic Value |
|  |  |  |  |  |  |  |  |  |  |  |  |  | (in thousands) |
Balance as of January 31, 2017 |  |  | 12,318,800 |  |  | $ | 7.44 |  |  |  | 6.42 |  |  | $ | 119,606 |
Options granted |  |  | 1,133,056 |  |  |  | 16.91 |  |  |  |  |  |  |  |  |
Option exercised |  |  | (930,595 | ) |  |  | 5.82 |  |  |  |  |  |  |  |  |
Options forfeited/cancelled |  |  | (784,749 | ) |  |  | 15.26 |  |  |  |  |  |  |  |  |
Balance as of July 31, 2017 |  |  | 11,736,512 |  |  | $ | 7.96 |  |  |  | 6.12 |  |  | $ | 127,825 |
Vested and expected to vest as of July 31, 2017 |  |  | 11,628,379 |  |  | $ | 7.90 |  |  |  | 6.10 |  |  | $ | 127,359 |
Exercisable as of July 31, 2017 |  |  | 9,164,951 |  |  | $ | 6.11 |  |  |  | 5.49 |  |  | $ | 116,739 |
The aggregate intrinsic value of options vested and expected to vest and exercisable as of July 31, 2017 is calculated based on the difference between the exercise price and the current fair value of our common stock. The aggregate intrinsic value of exercised options for the six months ended July 31, 2017 and 2016 was $11.2 million and $15.4 million, respectively. The aggregate estimated fair value of stock options granted to employees that vested for the six months ended July 31, 2017 and 2016 was $4.8 million and $9.6 million, respectively. The weighted-average grant date fair value of options granted to employees during the six months ended July 31, 2017 and 2016 was $6.82 and $5.10 per share, respectively. As of July 31, 2017, there was $14.3 million of unrecognized stock-based compensation expense related to outstanding stock options granted to employees that is expected to be recognized over a weighted-average period of 2.32 years. In April 2017, the compensation committee of our board of directors approved and granted 475,000 performance-based stock options under the 2015 Plan to certain executive officers where vesting is subject to both the continued employment of the participant and the achievement of market based performance goals established by the Compensation Committee. Subject to the achievement of the performance goals, the performance-based options vest 25% one year from the vesting commencement date and 1/48th per month thereafter. The grant date fair value of these awards was determined using a Monte Carlo valuation model. During the three months ended July 31, 2017, 250,000 performance-based stock options were forfeited in connection with a participant’s resignation of employment. Restricted Stock Units The following table summarizes the restricted stock unit activity under the equity incentive plans and related information:
|  | Number of |  |  | Weighted- |
|  | Restricted |  |  | Average |
|  | Stock Units |  |  | Grant Date |
|  | Outstanding |  |  | Fair Value |
Unvested balance - January 31, 2017 |  |  | 11,822,316 |  |  | $ | 14.67 |
Granted |  |  | 5,260,434 |  |  |  | 17.57 |
Vested, net of shares withheld for employee payroll taxes |  |  | (1,297,031 | ) |  |  | 13.68 |
Forfeited/cancelled, including shares withheld for employee payroll taxes |  |  | (1,603,930 | ) |  |  | 14.38 |
Unvested balance - July 31, 2017 |  |  | 14,181,789 |  |  | $ | 15.87 |
As of July 31, 2017, there was $197.4 million of unrecognized stock-based compensation expense related to outstanding restricted stock units granted to employees that is expected to be recognized over a weighted-average period of 2.93 years. 2015 ESPP As of July 31, 2017, there was $7.1 million of unrecognized stock-based compensation expense related to the 2015 ESPP that is expected to be recognized over the remaining term of the respective offering periods. Stock-Based Compensation The following table summarizes the components of stock-based compensation expense recognized in the consolidated statements of operations (in thousands):
|  | Three Months Ended |  |  | Six Months Ended |
|  | July 31, |  |  | July 31, |
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
Cost of revenue |  | $ | 2,663 |  |  | $ | 1,830 |  |  | $ | 5,131 |  |  | $ | 3,342 |
Research and development |  |  | 9,554 |  |  |  | 7,348 |  |  |  | 18,714 |  |  |  | 13,872 |
Sales and marketing |  |  | 7,934 |  |  |  | 6,416 |  |  |  | 15,674 |  |  |  | 11,646 |
General and administrative |  |  | 3,916 |  |  |  | 3,470 |  |  |  | 7,494 |  |  |  | 6,293 |
Total stock-based compensation |  | $ | 24,067 |  |  | $ | 19,064 |  |  | $ | 47,013 |  |  | $ | 35,153 |
Determination of Fair Value We estimated the fair value of employee stock options and 2015 ESPP purchase rights using generally a Black-Scholes option pricing model with the following assumptions:
|  | Three Months Ended |  |  | Six Months Ended |
|  | July 31, |  |  | July 31, |
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
Employee Stock Options |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Expected term (in years) |  |  | 5.5 |  | - |  | 6.0 |  |  |  | 5.5 |  | - |  | 6.0 |  |  |  | 5.5 |  | - |  | 6.0 |  |  |  | 5.5 |  | - |  | 6.0 |
Risk-free interest rate |  |  | 1.8 | % | - |  | 2.0% |  |  |  | 1.3 | % | - |  | 1.5% |  |  |  | 1.8 | % | - |  | 2.4% |  |  |  | 1.3 | % | - |  | 1.5% |
Volatility |  |  | 38 | % | - |  | 39% |  |  |  |  |  |  |  | 43% |  |  |  | 38 | % | - |  | 40% |  |  |  |  |  |  |  | 43% |
Dividend yield |  |  |  |  |  |  | 0% |  |  |  |  |  |  |  | 0% |  |  |  |  |  |  |  | 0% |  |  |  |  |  |  |  | 0% |
Employee Stock Purchase Plan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Expected term (in years) |  |  | 0.5 |  | - |  | 2.0 |  |  | 0.5 |  | - |  | 2.0 |  |  |  | 0.5 |  | - |  | 2.0 |  |  | 0.5 |  | - |  | 2.0 |
Risk-free interest rate |  |  | 0.9 | % | - |  | 1.4% |  |  |  | 0.5 | % | - |  | 0.9% |  |  |  | 0.9 | % | - |  | 1.4% |  |  |  | 0.5 | % | - |  | 0.9% |
Volatility |  |  | 28 | % | - |  | 43% |  |  |  | 46 | % | - |  | 60% |  |  |  | 28 | % | - |  | 43% |  |  |  | 46 | % | - |  | 60% |
Dividend yield |  |  |  |  |  |  | 0% |  |  |  |  |  |  |  | 0% |  |  |  |  |  |  |  | 0% |  |  |  |  |  |  |  | 0% |
The assumptions used in the Black-Scholes option pricing model were determined as follows: Fair Value of Common Stock. Prior to our IPO in January 2015, our board of directors considered numerous objective and subjective factors to determine the fair value of our common stock at each grant date. These factors included, but were not limited to, (i) contemporaneous valuations of our common stock performed by unrelated third-party specialists; (ii) the prices for our redeemable convertible preferred stock sold to outside investors; (iii) the rights, preferences and privileges of our redeemable convertible preferred stock relative to our common stock; (iv) the lack of marketability of our common stock; (v) developments in the business; and (vi) the likelihood of achieving a liquidity event, such as an IPO or a merger or acquisition, given prevailing market conditions. Subsequent to the completion of our IPO, we use the market closing price for our Class A common stock as reported on the New York Stock Exchange to determine the fair value of our common stock at each grant date. Expected Term. The expected term represents the period that our share-based awards are expected to be outstanding. The expected term assumptions were determined based on the vesting terms, exercise terms and contractual lives of the options and 2015 ESPP purchase rights. Expected Volatility. Since we do not have sufficient trading history of our common stock, the expected volatility was derived from the historical stock volatilities of several unrelated public companies within the same industry that we consider to be comparable to our business over a period equivalent to the expected term of the stock option grants and 2015 ESPP purchase rights. Risk-free Interest Rate. The risk-free rate that we use is based on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options. Dividend Yield. We have never declared or paid any cash dividends and do not plan to pay cash dividends in the foreseeable future, and, therefore, use an expected dividend yield of zero.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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