| Equity | Equity Common Stock —The Company had reserved shares of common stock for future issuance as follows (in thousands): October 31, 2024 January 31, 2024 2012 Equity Incentive Plan: Options outstanding 21,468 26,767 Restricted stock units outstanding 1 789 2020 Equity Incentive Plan: Options outstanding 1,586 602 Restricted stock units outstanding 26,702 20,168 Shares available for future grants 64,432 59,371 2020 Employee Stock Purchase Plan: Shares available for future grants 16,446 13,764 Total shares of common stock reserved for future issuance 130,635 121,461 Stock Repurchase Program and Treasury Stock —In February 2023, the Company’s board of directors authorized a stock repurchase program of up to $2.0 billion of the Company’s outstanding Class A common stock. Repurchases may be effected, from time to time, either on the open market (including via pre-set trading plans), in privately negotiated transactions, or through other transactions in accordance with applicable securities laws. The timing and amount of any repurchases will be determined by management based on an evaluation of market conditions and other factors. The program does not obligate the Company to acquire any particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion. In August 2024, the Company’s board of directors authorized the repurchase of an additional $2.5 billion of its outstanding common stock and extended the expiration date of the stock repurchase program from March 2025 to March 2027. The following table summarizes the stock repurchase activity under the Company’s stock repurchase program (in thousands, except per share data): Three Months Ended October 31, Nine Months Ended October 31, 2024 2023 2024 2023 Number of shares repurchased 8,826 2,607 14,765 4,012 Weighted-average price per share (1) $ 115.11 $ 153.48 $ 130.87 $ 147.49 Aggregate purchase price (1) $ 1,015,925 $ 400,000 $ 1,932,164 $ 591,673 ________________ (1) Excludes transaction costs and excise tax associated with the repurchases. All repurchases were made in open market transactions, except for the 3.6 million shares of the Company’s outstanding Class A common stock that were repurchased for $399.6 million from purchasers of the Notes in the offering in privately negotiated transactions entered into in connection with the Notes offering at a purchase price of $112.50 per share. See Note 10, “Convertible Senior Notes,” for further details. As of October 31, 2024, $2.0 billion remained available for future stock repurchases under the stock repurchase program (exclusive of any transaction costs associated with repurchases). The first 0.5 million shares repurchased during the nine months ended October 31, 2023 were recorded in treasury stock as a reduction to the stockholders’ equity on the condensed consolidated balance sheets. All shares of Class A common stock subsequently repurchased were retired. Upon retirement, the par value of the common stock repurchased was deducted from common stock and any excess of repurchase price (including associated transaction costs) over par value was recorded entirely to retained earnings (accumulated deficit) on the condensed consolidated balance sheets. In addition, the Company previously issued approximately 0.2 million shares of its Class A common stock, in connection with a business combination completed during the three months ended January 31, 2024, to one of its wholly-owned subsidiaries, in exchange for a noncontrolling equity interest in the acquired company that was held by the subsidiary prior to this business combination. These shares were treated as treasury stock for accounting purposes as of January 31, 2024, April 30, 2024, and July 31, 2024, and were subsequently transferred to the Company and retired during the three months ended October 31, 2024. Equity Incentive Plans —The Company’s 2020 Equity Incentive Plan (2020 Plan), which became effective in connection with its Initial Public Offering (IPO), provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards (RSUs), performance awards and other forms of equity compensation (collectively, equity awards). All shares that remain available for future grants are under the 2020 Plan. The Company’s 2012 Equity Incentive Plan (2012 Plan) provided for the grant of equity awards to employees, non-employee directors, and other service providers of the Company. The 2012 Plan was terminated in September 2020 in connection with the IPO but continues to govern the terms of outstanding awards that were granted prior to the termination of the 2012 Plan. Upon the expiration, forfeiture, cancellation, or reacquisition of any shares of common stock underlying outstanding equity awards granted under the 2012 Plan, an equal number of shares of Class A common stock will become available for grant under the 2020 Plan. No further equity awards will be granted under the 2012 Plan. The Company’s 2020 Employee Stock Purchase Plan (2020 ESPP), which became effective in connection with the IPO, authorizes the issuance of shares of common stock pursuant to purchase rights granted to employees. Offering periods are generally six months long and begin on the first trading day on or after March 15 and September 15 of each year, except for the first two offering periods. The initial offering period began on September 15, 2020 and ended on February 26, 2021. The second offering period began on March 1, 2021 and ended on September 14, 2021. On February 1, 2024, the shares available for grant under the 2020 Plan and the 2020 ESPP were automatically increased by 16.7 million shares and 3.3 million shares, respectively, pursuant to the annual evergreen increase provisions under the 2020 Plan and the 2020 ESPP. Stock Options —Stock options granted under the 2012 Plan and the 2020 Plan (collectively, the Plans) generally vest based on continued service over four years and expire ten years from the date of grant. Certain stock options granted under the 2012 Plan are exercisable at any time following the date of grant and expire ten years from the date of grant. A summary of stock option activity during the nine months ended October 31, 2024 is as follows: Number of Shares Weighted- Weighted-Average Remaining Contractual Life Aggregate Balance—January 31, 2024 27,369 $ 12.35 5.0 $ 5,023,664 Granted 960 $ 163.04 Exercised (1,379) $ 7.69 Canceled (92) $ 3.75 Balance—April 30, 2024 26,858 $ 18.01 4.8 $ 3,723,873 Granted 77 $ 164.78 Exercised (1,816) $ 7.14 Canceled (22) $ 207.56 Balance—July 31, 2024 25,097 $ 19.07 4.6 $ 2,872,192 Exercised (2,012) $ 5.75 Canceled (31) $ 207.56 Balance—October 31, 2024 23,054 $ 19.98 4.5 $ 2,287,372 Vested and exercisable as of October 31, 2024 21,958 $ 12.45 4.4 $ 2,287,350 The weighted-average grant-date fair value of options granted during the nine months ended October 31, 2024 was $79.16 per share. No options were granted during the nine months ended October 31, 2023. The intrinsic value of options exercised in the nine months ended October 31, 2024 and 2023 was $687.0 million and $901.4 million, respectively. The aggregate grant-date fair value of options that vested during the nine months ended October 31, 2024 and 2023 was $23.5 million and $36.4 million, respectively. Equity-Classified RSUs —RSUs granted under the 2012 Plan are equity-classified and had both service-based and performance-based vesting conditions, of which the performance-based vesting condition was satisfied upon the effectiveness of the IPO in September 2020. The service-based vesting condition for these awards is typically satisfied over four years with a cliff vesting period of one year and continued vesting quarterly thereafter. Stock-based compensation associated with RSUs granted under the 2012 Plan was recognized using an accelerated attribution method from the time it was deemed probable that the vesting condition was met through the time the service-based vesting condition had been achieved. Equity-classified RSUs granted under the 2020 Plan include those that only contain a service-based vesting condition that is typically satisfied over four years, and the related stock-based compensation for these RSUs is recognized on a straight-line basis over the requisite service period. In addition, under the 2020 Plan, the Company granted 0.8 million and 0.5 million equity-classified RSUs (Leadership PRSUs) to its executive officers and certain other members of its senior leadership team during the nine months ended October 31, 2024 and 2023, respectively. These Leadership PRSUs were granted at 120% of the target number of these awards, representing the maximum number of Leadership PRSUs that may be eligible to vest over their full term, and have both service-based and performance-based vesting conditions. The service-based vesting condition for these Leadership PRSUs is typically satisfied over four years with a cliff vesting period of one year and continued vesting quarterly thereafter. The performance-based vesting condition is satisfied upon the achievement of certain Company annual performance targets set by the compensation committee of the board of directors of the Company. The ultimate number of the Leadership PRSUs eligible to vest ranges between 0% to 120% of the target number of the Leadership PRSUs based on the weighted-average achievement of such Company annual performance metrics for the respective fiscal year. Stock-based compensation associated with these Leadership PRSUs is recognized using an accelerated attribution method over the requisite service period, based on the Company’s periodic assessment of the probability that the performance condition will be achieved. Stock-based compensation recognized for these Leadership PRSUs was $20.2 million and $41.4 million for the three and nine months ended October 31, 2024, respectively, and $10.5 million and $20.6 million for the three and nine months ended October 31, 2023, respectively. A summary of equity-classified RSUs activity during the nine months ended October 31, 2024 is as follows: Number of Shares Weighted-Average Grant Date Unvested Balance—January 31, 2024 19,575 $ 169.82 Granted 5,869 $ 167.74 Vested (3,202) $ 162.47 Forfeited (533) $ 168.85 Performance adjustment (1) (50) $ 139.58 Unvested Balance—April 30, 2024 21,659 $ 170.44 Granted 2,408 $ 141.61 Vested (2,272) $ 172.52 Forfeited (748) $ 167.94 Unvested Balance—July 31, 2024 21,047 $ 167.01 Granted 7,254 $ 120.12 Vested (2,126) $ 174.28 Forfeited (895) $ 166.39 Unvested Balance—October 31, 2024 25,280 $ 152.96 ________________ (1) Represents an adjustment in the number of shares outstanding, with regards to Leadership PRSUs granted during the nine months ended October 31, 2023, based on the actual achievement of the associated Company annual performance targets for fiscal 2024. Liability-Classified RSUs —During the fourth quarter of fiscal 2024, in connection with a business combination, the Company agreed to grant, under the 2020 Plan, RSUs that contain both post-combination service-based and performance-based vesting conditions (Acquisition PRSUs) to eligible existing or future employees, subject to a maximum total number of approximately 1.7 million shares. The post-combination service-based vesting condition for these Acquisition PRSUs is satisfied over four years with a cliff vesting period of one year and continued vesting quarterly thereafter. The performance-based vesting condition is contingent on the achievement of certain performance metric over the twelve-month period ending January 31, 2027. Acquisition PRSUs will vest when both service-based and performance-based conditions are satisfied. The ultimate number of Acquisition PRSUs eligible to vest is determined based on the actual achievement of the performance metric, which takes into account certain factors including the Company’s stock price and market capitalization. Once granted, Acquisition PRSUs are initially liability-classified and recorded in other liabilities on the Company’s condensed consolidated balance sheets, as the monetary value of the obligation under each potential outcome of the performance condition is predominantly based on a fixed monetary amount known at inception and will be settled in a variable number of shares. Subsequently, these awards are remeasured to the fair value at each reporting date until the number of Acquisition PRSUs eligible to vest is fixed, at which time these awards will be reclassified to equity. Stock-based compensation associated with these awards is recognized based on the probable outcome of the performance condition, using an accelerated attribution method over the requisite service period, with a cumulative catch-up adjustment recognized for changes in the fair value estimated at each reporting date. The liabilities associated with these Acquisition PRSUs were not material as of October 31, 2024 and January 31, 2024. Stock-based compensation recognized for these Acquisition PRSUs was not material for each of the three and nine months ended October 31, 2024. A summary of liability-classified RSUs activity during the nine months ended October 31, 2024 is as follows: Number of Shares Unvested Balance—January 31, 2024 and April 30, 2024 1,382 Granted (1) 3 Unvested Balance—July 31, 2024 1,385 Granted (1) 54 Forfeited (16) Unvested Balance—October 31, 2024 1,423 ________________ (1) Represents the maximum number of Acquisition PRSUs that may be eligible to vest with respect to these awards over their full term. Restricted Common Stock —From time to time, the Company has granted restricted common stock outside of the Plans. Restricted common stock is not deemed to be outstanding for accounting purposes until it vests. A summary of restricted common stock activity during the nine months ended October 31, 2024 is as follows: Outside of the Plans Number of Shares Weighted-Average Grant Date Unvested Balance—January 31, 2024 671 $ 209.15 Vested (146) $ 223.42 Unvested Balance—April 30, 2024 525 $ 205.15 Vested (25) $ 194.28 Unvested Balance—July 31, 2024 500 $ 205.68 Granted 68 $ 110.78 Vested (23) $ 194.28 Forfeited (71) $ 229.13 Unvested Balance—October 31, 2024 474 $ 189.12 Stock-Based Compensation — The following table summarizes the assumptions used in estimating the fair values of stock options granted to employees during the nine months ended October 31, 2024: Nine Months Ended October 31, 2024 Expected term (in years) 4.8 - 6.0 Expected volatility 56.6% - 56.7% Risk-free interest rate 4.2% - 4.4% Expected dividend yield — % In addition, for the stock option granted during the three months ended April 30, 2024, the shares to be issued upon exercise are subject to a one-year holding period. As such, the Company applied a 7.6% discount for lack of marketability to the fair value estimated using the Black-Scholes option-pricing model, based on the assumptions included in the table above. No stock options were granted during the three months ended October 31, 2024, or each of the three and nine months ended October 31, 2023. The following table summarizes the assumptions used in estimating the fair values of employee stock purchase rights granted under the 2020 ESPP (ESPP Rights) during each of the three and nine months ended October 31, 2024 and 2023: Three Months Ended October 31, Nine Months Ended October 31, 2024 2023 2024 2023 Expected term (in years) 0.5 0.5 0.5 0.5 Expected volatility 46.3 % 48.4 % 46.3% - 49.6% 48.4% - 71.3% Risk-free interest rate 4.5 % 5.5 % 4.5% - 5.4% 4.7% - 5.5% Expected dividend yield — % — % — % — % Expected term —For stock options considered to be “plain vanilla” options, the Company estimates the expected term based on the simplified method, which is essentially the weighted average of the vesting period and contractual term, as the Company’s historical option exercise experience does not provide a reasonable basis upon which to estimate the expected term. The expected term for ESPP Rights approximates the offering period. Expected volatility —In fiscal 2023 and 2024, the Company used the average volatility of its Class A common stock and the stocks of a peer group of representative public companies to develop an expected volatility assumption. During the nine months ended October 31, 2024, the Company began using the average of (i) the historical volatility of its Class A common stock, and (ii) the implied volatility from publicly traded options on its Class A common stock to develop an expected volatility assumption. Risk-free interest rate —Risk-free rate is estimated based upon quoted market yields for the United States Treasury debt securities for a term consistent with the expected life of the awards in effect at the time of grant. Expected dividend yield —Because the Company has never paid and has no intention to pay cash dividends on common stock, the expected dividend yield is zero. Fair value of underlying common stock —Since the completion of the IPO, the fair value of the Company’s common stock is determined by the closing price, on the date of grant, of its common stock, which is traded on the New York Stock Exchange. The following table summarizes the assumptions used in estimating the fair value of liability-classified Acquisition PRSUs as of October 31, 2024 and January 31, 2024: October 31, 2024 January 31, 2024 Expected volatility 53.0 % 60.0 % Risk-free interest rate 4.1 % 4.0 % Expected volatility —In fiscal 2024, expected volatility was estimated based on the historical volatility of the Company’s Class A common stock. During the nine months ended October 31, 2024, the Company began using the average of (i) the historical volatility of its Class A common stock, and (ii) the implied volatility from publicly traded options on its Class A common stock to develop an expected volatility assumption. Risk-free interest rate —Risk-free rate is estimated based upon quoted market yields for the United States Treasury debt securities for a term that approximates the period from the reporting date to January 31, 2027. Stock-based compensation included in the condensed consolidated statements of operations was as follows (in thousands): Three Months Ended October 31, Nine Months Ended October 31, 2024 2023 2024 2023 Cost of revenue $ 36,358 $ 30,530 $ 103,581 $ 93,294 Sales and marketing 86,035 75,708 240,118 226,841 Research and development 199,980 167,445 599,569 466,867 General and administrative 40,886 24,603 107,927 75,515 Stock-based compensation, net of amounts capitalized 363,259 298,286 1,051,195 862,517 Capitalized stock-based compensation 11,940 12,608 29,081 37,230 Total stock-based compensation $ 375,199 $ 310,894 $ 1,080,276 $ 899,747 As of October 31, 2024, total compensation cost related to unvested awards not yet recognized was $3.8 billion, which will be recognized over a weighted-average period of 2.9 years. |
