Common Stock and Stockholders' Equity | Common Stock and Stockholders’ Equity Redeemable Convertible Preferred Stock Immediately prior to the completion of the IPO in April 2019, all shares of redeemable convertible preferred stock then outstanding were converted into 41,273,345 shares of common stock on a one-to-one basis and then immediately reclassified into common stock. Equity Incentive Plans The Company has two equity incentive plans: the 2010 Stock Plan (the “2010 Plan”) and the 2019 Equity Incentive Plan (the “2019 Plan”, collectively the “Stock Plans”). Upon completion of the Company’s IPO in April 2019, the Company ceased granting awards under the 2010 Plan, and all shares that remained available for future issuance under the 2010 Plan at that time were transferred to the 2019 Plan. The 2019 Plan superseded and replaced the 2010 Plan. As of July 31, 2020 and January 31, 2020, respectively, the Company was authorized to grant up to 17,679,277 shares and 13,126,301 shares of common stock under the Stock Plans. In March 2019, the Company granted 3,041,000 stock options to existing employees with 50 percent of these options vesting over four years from the grant date and 50 percent vesting over five years from the grant date. The Company currently uses authorized and unissued shares to satisfy stock award exercises. As of July 31, 2020 and January 31, 2020, there were 13,660,976 shares and 11,841,156 shares available for future issuance under the Stock Plans, respectively. Shares of common stock reserved for future issuance are as follows: July 31, 2020 Outstanding stock options and unvested RSUs outstanding 16,300,947 Available for future stock option and RSU grants 13,660,976 Available for ESPP 2,235,888 Total common stock reserved at July 31, 2020 32,197,811 Stock Option Activity Stock option activity is as follows: Number of Weighted Weighted Aggregate (in thousands) Outstanding at January 31, 2020 14,498,045 $ 7.37 7.8 years $ 231,300 Granted 231,028 $ 21.44 Exercised (1,287,830) $ 4.43 Canceled (663,393) $ 10.88 Outstanding at July 31, 2020 12,777,850 $ 7.73 7.3 years $ 290,647 Vested as of July 31, 2020 7,675,279 $ 4.76 6.7 years $ 197,386 The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock options on the date of grant. The Company accounts for forfeitures as they occur. The following assumptions were used to calculate the fair value of employee stock option grants made during the periods: Three Months Ended July 31, Six Months Ended July 31, 2020 2019 2020 2019 Expected dividend yield — — — — Expected volatility 43.9 % 42.0% - 42.1% 43.3% - 43.9% 42.0% - 42.8% Expected term (years) 6.1 6.0 - 6.1 6.1 5.5 - 6.9 Risk-free interest rate 0.41 % 1.80 % 0.41% - 0.47% 1.80% - 2.48% Stock options granted during the three months ended July 31, 2020 and 2019 had a weighted average grant date fair value of $12.59 and $23.08 per share, respectively. The aggregate intrinsic value of stock options exercised during the three months ended July 31, 2020 and 2019 was $11.6 million and $10.5 million, respectively. Stock options granted during the six months ended July 31, 2020 and 2019 had a weighted average grant date fair value of $8.96 and $10.83 per share, respectively. The aggregate intrinsic value of stock options exercised during the six months ended July 31, 2020 and 2019 was $23.0 million and $30.5 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 July 31, 2020 there was approximately $37.0 million of total unrecognized compensation cost related to unvested stock options granted under the Stock Plans, which will be recognized over a weighted average period of 2.9 years. Restricted Stock Units A summary of the Company’s RSU activity and related information is as follow: Number of RSUs Weighted Outstanding at January 31, 2020 1,114,911 $ 28.10 Granted 2,682,462 $ 17.76 Vested, net of shares withheld for employee payroll taxes (93,942) $ 22.33 Canceled (180,334) $ 21.60 Outstanding at July 31, 2020 3,523,097 $ 20.69 The Company uses the fair value of RSUs based on the fair value of the underlying shares on the date of grant. The Company accounts for forfeitures as they occur. As of July 31, 2020, there was $67.1 million of unrecognized stock-based compensation expense related to unvested RSUs, which is expected to be recognized over a weighted average period of 3.5 years based on vesting under the award service conditions. Employee Stock Purchase Plan In April 2019, the Board adopted and approved the 2019 Employee Stock Purchase Plan, which became effective on April 11, 2019. The ESPP initially reserved and authorized the issuance of up to a total of 1,850,000 shares of common stock to participating employees. Pursuant to the terms of the ESPP, the number of shares reserved under the ESPP increased by 777,916 shares on February 1, 2020. The ESPP generally provides for 24-month offering periods, with each offering period consisting of four six-month purchase periods, except for the initial offering period which began on April 11, 2019 and ended on December 13, 2019. 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 July 31, 2020 and 2019, the Company recognized $1.2 million and $1.8 million of stock-based compensation expense related to the ESPP, respectively. During the six months ended July 31, 2020 and 2019, the Company recognized $2.8 million and $2.2 million of stock-based compensation expense related to the ESPP, respectively. During the three months ended July 31, 2020 and 2019, the Company withheld $1.6 million and $2.6 million in contributions from employees, respectively. During the six months ended July 31, 2020 and 2019, the Company withheld $3.5 million and $2.6 million in contributions from employees, respectively. During the three and six months ended July 31, 2020, 181,253 shares of common stock were issued under the ESPP at a purchase price of $19.63. During the three and six months ended July 31, 2019, 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 July 31, Six Months Ended July 31, 2020 2019 2020 2019 (in thousands) Cost of revenue $ 263 $ 327 $ 607 $ 470 Research and development 2,469 1,437 4,652 2,297 Sales and marketing 2,870 2,326 5,155 3,790 General and administrative 4,366 3,143 7,862 5,488 Total $ 9,968 $ 7,233 $ 18,276 $ 12,045 |