Stock-Based Awards and Stock-Based Compensation | Note 8. Stock-based Awards and Stock-based Compensation 2005 Stock Option Plan In 2005, the Company adopted a stock plan (2005 Plan), which was amended in September 2011 and again in March 2015. The 2005 Plan was terminated in connection with the IPO, and accordingly, no shares are available for future issuance under this plan. All shares that were available for the Company to grant under the 2005 Plan immediately prior to its termination were canceled. Awards under the 2005 Plan that expire or terminate without having been exercised subsequent to the IPO or are forfeited to or repurchased by the Company subsequent to the IPO will become available for issuance under the 2015 Equity Incentive Plan (2015 Plan), subject to the limits set forth in the 2015 Plan. 2015 Equity Incentive Plan In June 2015, the Board adopted and the Company’s stockholders approved the 2015 Plan, which became effective upon the effectiveness of the IPO Prospectus. The 2015 Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, to the Company’s employees and any subsidiary corporations’ employees, and for the grant of nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to the Company’s employees, directors and consultants and the Company’s subsidiary corporations’ employees and consultants. During the nine months ended October 31, 2016, the Company, automatically by the terms of the 2015 Plan, increased the shares reserved and available for issuance under the 2015 Plan by 1,477,127. As of October 31, 2016, an aggregate of 2,094,979 common shares were reserved and available for issuance under the 2015 Plan. 2015 Employee Stock Purchase Plan In June 2015, the Company’s Board of Directors adopted and the Company’s stockholders approved the 2015 Employee Stock Purchase Plan (ESPP) with the first offering period under the ESPP beginning on the effectiveness of the IPO Prospectus. As of such date, an aggregate of 600,000 shares of common stock were reserved and are available for issuance under the ESPP. During the nine months ended October 31, 2016, the Company, automatically by the terms of the ESPP, increased the shares reserved and available for issuance under the ESPP by 590,851. The Company issued 333,501 shares under the ESPP during the nine months ended October 31, 2016. As of October 31, 2016, the Company had $777,000 in unrecognized stock-based compensation expense, net of estimated forfeitures, related to purchase rights that will be recognized over the weighted average period of approximately 1.0 year. 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) Balance at January 31, 2016 4,844,592 $ 4.49 6.6 years $ 14,268 Granted 190,100 10.68 Exercised (1,015,542 ) 2.24 Forfeited (107,064 ) 8.02 Expired (8,341 ) 7.75 Balance at October 31, 2016 3,903,745 $ 5.27 6.7 years $ 29,773 Vested and expected to vest as of October 31, 2016 3,815,270 $ 5.19 6.7 years $ 29,398 Exercisable as of October 31, 2016 2,321,614 $ 3.26 5.5 years $ 22,378 The intrinsic value for options exercised represents the difference between the fair market value based on the valuation of the common stock as determined by the Company’s Board of Directors prior to the IPO, or the closing market price of the Company’s common stock, following the IPO, on the date of exercise and the exercise price of the in-the-money stock options. As of October 31, 2016, there was $5,603,000 of unamortized stock-based compensation expense related to unvested stock options which will be recognized over a weighted average period of approximately 2.5 years. Restricted stock units A summary of RSU activity during the nine months ended October 31, 2016 was as follows: Number of shares Weighted average grant-date fair value Balance at January 31, 2016 860,472 $ 8.48 Granted 971,458 12.43 Released (260,473 ) 8.11 Forfeited (76,551 ) 8.81 Balance at October 31, 2016 1,494,906 $ 11.09 As of October 31, 2016, there was a total of $15,408,000 in unrecognized stock-based compensation expense related to RSUs, which is expected to be recognized over a weighted-average period of approximately 3.4 years. Valuation and expense of stock-based compensation The fair value of stock options and ESPP awards is estimated at the grant date for options and issuance date for ESPP using the Black-Scholes option valuation model. The determination of fair value of stock options on the date of grant and ESPP awards on the date of issuance using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards based on average historical volatility of comparable entities with publicly traded shares and actual employee stock option exercise behavior. We recognize the stock-based compensation expense of RSUs, net of estimated forfeitures, over the vesting term. The stock-based compensation cost for RSUs is based on the fair value of our common stock on the date of grant. Stock-based compensation from stock options, RSUs and the ESPP included in the Company’s condensed consolidated statements of operations is as follows (in thousands): Three months ended October 31, Nine months ended October 31, 2016 2015 2016 2015 Cost of subscription services $ 146 $ 133 $ 411 $ 299 Cost of professional services 276 154 691 263 Research and development 570 308 1,414 548 Sales and marketing 567 266 1,446 551 General and administrative 692 304 1,853 786 Total $ 2,251 $ 1,165 $ 5,815 $ 2,447 |