Stockholders' Equity and Employee Benefit Plans | STOCKHOLDERS' EQUITY AND EMPLOYEE BENEFIT PLANS Stock-based Compensation The following table summarizes stock-based compensation expense for stock option grants, ESPP purchase rights, restricted stock units, or RSUs, and MSUs recorded in our condensed consolidated statements of operations: Three Months Ended April 30, Nine Months ended April 30, 2016 2015 2016 2015 (In thousands) Cost of revenue $ 1,014 $ 1,001 $ 3,363 $ 3,405 Research and development 2,523 2,549 8,648 7,790 Sales and marketing 5,726 5,941 18,287 18,136 General and administrative 2,532 2,268 7,290 6,767 $ 11,795 $ 11,759 $ 37,588 $ 36,098 The following table summarizes stock-based compensation expense by award type: Three Months Ended April 30, Nine Months ended April 30, 2016 2015 2016 2015 (In thousands) RSUs $ 9,137 $ 8,169 $ 28,452 $ 23,453 Stock options 1,215 1,990 4,381 7,144 ESPP 970 1,600 3,386 5,501 MSUs 473 — 1,369 — $ 11,795 $ 11,759 $ 37,588 $ 36,098 The following table summarizes the unrecognized stock-based compensation balance, net of estimated forfeitures, by type of awards as of April 30, 2016 : As of April 30, 2016 Weighted-Average Amortization Period (In thousands) (In years) RSUs $ 67,999 2.62 Stock options 6,366 2.20 ESPP 2,682 1.00 MSUs 2,744 1.25 Total unrecognized stock-based compensation balance $ 79,791 2.48 Determination of Fair Value The fair value of stock option grants and ESPP purchase rights was estimated at the date of grant and start of the offering period using the following assumptions: Three Months Ended April 30, Nine Months ended April 30, 2016 2015 2016 2015 Stock Options: Expected term (in years) — 6.08 6.08 6.08 Risk-free interest rate — 1.66 % 1.70 % 1.79 % Expected volatility — 54 % 52 % 56 % Dividend rate — — % — % — % Weighted average fair value per share — $ 11.89 $ 9.48 $ 8.88 Employee Stock Purchase Plan: Expected term (in years) — — 0.50 - 2.00 0.50 - 2.00 Risk-free interest rate — — 0.51% - 0.96% 0.16% - 0.71% Expected volatility — — 64 % 71 % Dividend rate — — — % — % Weighted average fair value per share — — $6.19 - $9.44 $7.02-$10.72 We did not grant any stock options during the three months ended April 30, 2016. Stock Option Activity A summary of the stock option activity under our stock plans during the nine months ended April 30, 2016 is presented below: Number of Shares Underlying Outstanding Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value (In thousands) (In years) (In thousands) Outstanding as of July 31, 2015 3,357 $ 15.45 6.67 $ 32,040 Granted 74 18.76 Exercised (648 ) 8.12 Canceled due to forfeitures and expirations (350 ) 19.94 Outstanding as of April 30, 2016 2,433 16.85 6.31 8,685 Vested and expected to vest as of April 30, 2016 2,370 16.74 6.21 8,656 Vested and exercisable as of April 30, 2016 1,743 $ 15.34 5.47 $ 8,266 Restricted Stock Unit Activity A summary of the RSU activity during the nine months ended April 30, 2016 is presented below: Number of Units Weighted-Average Grant Date Fair Value Per Share (In thousands) Outstanding as of July 31, 2015 4,406 $ 21.03 Granted 2,694 17.64 Vested (1,559 ) 20.41 Cancellations due to forfeitures (788 ) 19.99 Outstanding as of April 30, 2016 4,753 $ 19.49 Market Stock Units In September 2015, the Compensation Committee of our board of directors approved awarding MSUs to certain of our officers. In general, the target shares are eligible to be earned in three annual installments, based on the number of shares eligible to be earned for the applicable performance period multiplied by the Performance Multiplier (as defined below) in effect for the applicable performance period. The performance periods consist of a one-, two- and three-year period within the three-year period covering fiscal 2016, fiscal 2017 and fiscal 2018, with each performance period commencing on the first day of fiscal 2016. In each of the first two performance periods, up to one-third of the target shares are eligible to be earned. In the third performance period, up to the maximum shares ( 175% of target shares) less any shares that were earned in a prior performance period are eligible to be earned. The performance goal under the MSUs is our total stockholder return relative to the Russell 2000 Index over the applicable performance period. The Performance Multiplier is based on the positive difference or negative difference, measured in percentage points, between our total stockholder return and the total return for the Russell 2000 Index over the applicable performance period, and ranges from 0% to 175% . Subject to certain exceptions, the MSUs shall vest, if at all, only following the end of each applicable performance period, and the officer must be employed by us at the end of such performance period in order to vest in the award. We use a Monte-Carlo simulation to calculate the fair value of the award on the grant date. Monte-Carlo simulation requires various assumptions including stock price volatility and risk free interest rate as of the valuation date corresponding to the length of time remaining in the performance period and expected dividend yield. In September 2015, we granted a total of 245,000 MSUs with a weighted-average grant date fair value per unit of $20.66 . We recognized $0.5 million and $1.4 million stock-based compensation expense, net of estimated forfeitures, related to MSUs during the three and nine months ended April 30, 2016 . As of April 30, 2016 , there was approximately $2.7 million of unrecognized compensation cost, net of estimated forfeitures, related to MSUs. No MSUs vested during the three and nine months ended April 30, 2016 because the first performance period would not be completed until the end of fiscal 2016. A total of 20,000 MSUs were canceled during the three and nine months ended April 30, 2016 . Share Repurchase Program In November 2015, our board of directors authorized a $100 million share repurchase program, with $50 million of that program to be executed as an accelerated share repurchase, or ASR, and the remaining $50 million of that program to be executed from time to time in compliance with applicable securities laws in the open market or in privately-negotiated transactions. The timing and amounts of any repurchases will be based on market conditions and other factors including price, regulatory requirements and capital availability. The authorization for open market purchases does not require the purchase of any minimum number of shares, has no expiration date and may be suspended, modified or discontinued at any time without prior notice. Under this program, shares repurchased are recorded as a reduction to capital in excess of par value and an increase in accumulated deficit in our condensed consolidated balance sheet. As of April 30, 2016, there was approximately $25 million available for repurchases under this program. In May 2016, our board of directors authorized a $150 million increase to the stock repurchase program. Accelerated Share Repurchase Program In December 2015, we executed an ASR with Goldman, Sachs & Co., or GS&Co, pursuant to which, on December 8, 2015, we paid GS&Co $50 million and received an initial delivery of 2,192,982 shares, representing 80% of the total ASR amount. Upon final settlement of the ASR, GS&Co could have been required to deliver additional shares of common stock to us or we could have been required to deliver shares of our common stock, or elected to make a cash payment, to GS&Co, based on the terms and conditions of the ASR. In February 2016, the ASR was completed and GS&Co delivered 748,464 additional shares to us, resulting in total repurchases of 2,941,446 shares at an average per share price of $17.00 . We accounted for the ASR program as a share repurchase transaction resulting in a reduction of stockholders’ equity and the delivery of 2,941,446 shares resulted in an immediate reduction, on trade date, of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted earnings per share. Open Market Stock Repurchases During the three months ended April 30, 2016, we repurchased on the open market 1,592,480 shares at an average per share price of $15.72 . The repurchases resulted in a reduction of stockholders' equity and an immediate reduction, on trade date, of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted earnings per share. |