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Common Stock and Stockholders' Equity | 3 Months Ended
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Apr. 30, 2024
Equity [Abstract] |
Common Stock and Stockholders' Equity | Common Stock and Stockholders’ Equity Common Stock Repurchase In October 2023, the Company repurchased a total of 2,331,002 shares of the Company’s common stock through open market purchases at an average per share price of $21.45 for a total repurchase price of $50.0 million. The cost of repurchased shares is recorded as Treasury Stock in the condensed consolidated balance sheets. Equity Incentive Plan The Company has adopted the 2019 Equity Incentive Plan (the “2019 Plan”). As of April 30, 2024 and January 31, 2024, the Company was authorized to grant up to 36,092,962 shares and 31,519,553 shares of common stock, respectively, under the 2019 Plan. The Company currently uses authorized and unissued shares to satisfy stock award exercises and settlement of Restricted Stock Units (“RSUs”) and Performance Stock Units (“PSUs”). As of April 30, 2024 and January 31, 2024, there were 19,846,670 shares and 17,178,454 shares available for future issuance under the 2019 Plan, respectively. Shares of common stock reserved for future issuance are as follows:
| April 30, 2024
Outstanding stock options and unvested RSUs and PSUs | 15,595,062 |
Available for future stock option, RSU, and PSU grants | 19,846,670 |
Available for Employee Stock Purchase Plan (“ESPP”) | 4,297,539 |
Total common stock reserved at April 30, 2024 | 39,739,271 |
Stock Option Activity Stock option activity is as follows:
| Number of Shares |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Term |  | Aggregate Intrinsic Value
|  |  |  |  |  |  | (in thousands)
Outstanding at January 31, 2024 | 4,875,025 |  |  | $ | 10.29 |  |  | 4.4 years |  | $ | 68,151 |
Granted | — |  |  | $ | — |  |  |  |  |
Exercised | (41,875) |  |  | $ | 6.94 |  |  |  |  |
Canceled | (12,289) |  |  | $ | 13.30 |  |  |  |  |
Outstanding at April 30, 2024 | 4,820,861 |  |  | $ | 10.31 |  |  | 4.1 years |  | $ | 50,306 |
Vested as of April 30, 2024 | 4,718,085 |  |  | $ | 9.88 |  |  | 4.0 years |  | $ | 50,064 |
No stock options were granted during the three months ended April 30, 2024 and 2023. The aggregate intrinsic value of stock options exercised during the three months ended April 30, 2024 and 2023 was $0.5 million and $12.1 million, respectively. The intrinsic value for options exercised is the difference between the market value of the stock and the exercise price of the stock option at the date of exercise. As of April 30, 2024, there was approximately $1.3 million of total unrecognized compensation cost related to unvested stock options granted under the 2019 Plan, which will be recognized over a weighted average period of 1.6 years. Restricted Stock Units A summary of the Company’s RSU activity and related information is as follows:
| Number of RSUs |  | Weighted Average Grant Date Fair Value Per Share
Outstanding at January 31, 2024 | 7,412,056 |  |  | $ | 31.08 |
Granted | 2,924,763 |  |  | $ | 21.63 |
Vested | (783,267) |  |  | $ | 30.73 |
Forfeited or canceled | (342,977) |  |  | $ | 29.79 |
Outstanding at April 30, 2024 | 9,210,575 |  |  | $ | 28.17 |
The fair value of RSUs is based on the fair value of the underlying shares on the date of grant. The Company accounts for forfeitures as they occur. As of April 30, 2024, there was $239.1 million of unrecognized stock-based compensation expense related to unvested RSUs, which is expected to be recognized over a weighted average period of 2.4 years based on vesting under the award service conditions. Performance Stock Units The Company grants PSUs to certain employees of the Company for which the ultimate number of units that will vest are determined based on the achievement of market and/or performance conditions at the end of the stated performance period. The Company grants PSUs to certain employees of the Company, which are to vest based on the level of achievement of a Company target related to PagerDuty’s operating plan and the relative growth of the per share price of the Company’s common stock as compared to the S&P Software & Services Select Index over the one-year performance period. The PSUs vest over a three-year period, subject to continuous service with the Company. The number of shares of the Company’s common stock that will vest based on the performance and market conditions can range from 0% to 200% of the target amount. Compensation expense for PSUs with performance conditions is measured using the fair value at the date of grant, and may be adjusted over the vesting period based on interim estimates of performance against the performance condition. Compensation expense for PSUs with market conditions is measured using a Monte Carlo simulation approach. Expense is recorded over the vesting period under the graded-vesting attribution method. In the three months ended April 30, 2024, the Compensation Committee of the Board certified the results of PagerDuty’s operating plan and relative growth of the per share price of the Company’s common stock as compared to the S&P Software & Services Select Index for the fiscal year ended January 31, 2024. Based on the results, the PSUs granted in April 2023 (“2023 PSU Awards”) were cancelled as the target was not met. A summary of the Company’s PSU activity and related information is as follows:
|  | Number of PSUs |  | Weighted Average Grant Date Fair Value Per Share
Outstanding at January 31, 2024 |  | 541,992 |  |  | $ | 35.08 |
Granted(1) |  | 781,813 |  |  | $ | 21.62 |
Vested |  | (9,050) |  |  | $ | 41.17 |
Forfeited or canceled |  | (3,280) |  |  | $ | 41.88 |
Performance adjustment for 2023 PSU Awards |  | (529,662) |  |  | $ | 34.98 |
Outstanding at April 30, 2024 |  | 781,813 |  |  | $ | 28.14 |
(1)This amount represents awards granted at 100% attainment.
During the three months ended April 30, 2024, the Company recorded stock-based compensation expense for the number of PSUs considered probable of vesting based on the attainment of the performance targets. As of April 30, 2024, total unrecognized stock-based compensation cost related to PSUs was $19.4 million. This unrecognized stock-based compensation cost is expected to be recognized using the accelerated attribution method over a weighted-average period of approximately 1.6 years. Employee Stock Purchase Plan The Company’s ESPP generally provides for 24-month offering periods beginning June 15 and December 15 of each year, with each offering period consisting of four six-month purchase periods. On each purchase date, eligible employees will purchase the shares at a price per share equal to 85% of the lesser of (1) the fair market value of the Company’s stock as of the beginning of the offering period or (2) the fair market value of the Company’s stock on the purchase date, as defined in the ESPP. During the three months ended April 30, 2024 and 2023, the Company recognized $1.7 million and $1.8 million, respectively, of stock-based compensation expense related to the ESPP. During the three months ended April 30, 2024 and 2023, the Company withheld $3.1 million and $3.7 million, respectively, in contributions from employees. During the three months ended April 30, 2024 and 2023, there were no purchases related to the ESPP. Stock-Based Compensation Stock-based compensation expense included in the Company’s condensed consolidated statements of operations is as follows:
| Three Months Ended April 30,
| 2024 |  | 2023
| (in thousands)
Cost of revenue | $ | 1,756 |  |  | $ | 1,876 |
Research and development | 11,222 |  |  | 10,101 |
Sales and marketing | 7,947 |  |  | 5,951 |
General and administrative | 12,015 |  |  | 9,617 |
Total | $ | 32,940 |  |  | $ | 27,545 |

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- Definition The entire disclosure for shareholders' equity and share-based payment arrangement. Includes, but is not limited to, disclosure of policy and terms of share-based payment arrangement, deferred compensation arrangement, and employee stock purchase plan (ESPP). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 505 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//505/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 718 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//718/tableOfContent + Details
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