Stock-Based Compensation | Stock-Based Compensation Equity Incentive Plans We adopted the Fiscal Year 2018 Equity Incentive Plan (the "2018 Plan") in fiscal 2018 and the 2007 Stock Plan (the "2007 Plan") in fiscal 2008, collectively referred to as the "Plans." Equity incentive awards which may be granted to eligible participants under the Plans include restricted stock units, restricted stock, stock options, nonstatutory stock options, stock appreciation rights, performance units and performance shares. With the establishment of the 2018 Plan, we no longer grant stock-based awards under the 2007 Plan and any shares underlying stock options that expire or terminate or are forfeited or repurchased by us under the 2007 Plan are automatically transferred to the 2018 Plan. Stock Options As of January 31, 2020, a total of 25.1 million shares of common stock have been reserved for the issuance of equity awards under the 2018 Plan, of which 20.6 million shares were available for grant. The number of shares of common stock available for issuance under the 2018 Plan also includes an annual increase on the first day of each fiscal year pursuant to its automatic annual increase provision. The stock option activity consisted of the following for the six months ended January 31, 2020: Outstanding Weighted-Average Weighted-Average Aggregate (in thousands, except per share amounts) Balance as of July 31, 2019 8,861 $ 7.16 4.6 $ 683,294 Granted 150 49.59 Exercised (1,220) 5.54 62,182 Canceled, forfeited or expired (297) 8.14 Balance as of January 31, 2020 7,494 $ 8.24 4.3 $ 358,629 Exercisable and expected to vest as of July 31, 2019 3,311 $ 5.60 4.0 $ 260,479 Exercisable and expected to vest as of January 31, 2020 3,469 $ 6.06 3.8 $ 173,540 The aggregate intrinsic value of the options exercised represents the difference between the estimated fair value of our common stock on the date of exercise and their exercise price. The total intrinsic value of options exercised for the six months ended January 31, 2020 and 2019 was $62.2 million and $129.6 million, respectively. The weighted-average grant- date fair value per share of stock options granted for the six months ended January 31, 2020 was $22.76. There were no stock options granted during the six months ended January 31, 2019. We estimated the fair value of stock options using the Black-Scholes option pricing model with the following assumptions: Six Months Ended January 31, 2020 Expected term (in years) 6.1 Expected stock price volatility 46.1% Risk-free interest rate 1.7% Dividend yield 0.0% Restricted Stock Units and Performance Stock Units The 2018 Plan allows for the grant of restricted stock units ("RSUs"). Generally, RSUs are subject to a four The 2018 Plan allows for the grant of performance stock units ("PSUs"). The right to earn the PSUs is subject to achievement of the defined performance metrics and continuous employment service. The performance metrics are defined and approved by the compensation committee of our board of directors. Generally, earned PSUs are subject to additional time-based vesting in accordance with the respective award agreement. As of January 31, 2020, there were 0.4 million outstanding PSUs for which the performance metrics have not been defined or approved by the compensation committee. Accordingly, such awards are not considered granted for accounting purposes as of January 31, 2020 and have been excluded from the below table. The RSU and PSU activity consisted of the following for the six months ended January 31, 2020: Underlying Shares Weighted-Average Grant Date Fair Value Aggregate (in thousands, except per share data) Balance as of July 31, 2019 4,152 $ 48.51 $ 349,872 Granted 2,106 48.63 Vested (509) 39.20 23,987 Canceled or forfeited (318) 53.77 Balance as of January 31, 2020 5,431 $ 49.12 $ 304,659 Employee Stock Purchase Plan We adopted the Fiscal Year 2018 Employee Stock Purchase Plan (the "ESPP") in the third quarter of fiscal 2018. As of January 31, 2020, a total of 4.7 million shares of common stock have been reserved for issuance under the ESPP, of which 3.3 million shares were available for grant. The number of shares reserved includes an annual increase on the first day of each fiscal year pursuant to its automatic annual increase provision. The ESPP provides for consecutive offering periods that will typically have a duration of approximately 24 months in length and is comprised of four purchase periods of approximately six ESPP employee payroll contributions accrued at January 31, 2020 and July 31, 2019 were $2.6 million and $2.1 million, respectively, and are included within accrued compensation in the condensed consolidated balance sheets. Payroll contributions accrued as of January 31, 2020 will be used to purchase shares at the end of the current ESPP purchase period ending on June 15, 2020. Payroll contributions ultimately used to purchase shares will be reclassified to stockholders' equity on the purchase date. The fair value of the purchase right for the ESPP is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: Six Months Ended January 31, 2020 Six Months Ended January 31, 2019 Expected Term in Years 0.5 - 2.0 0.5 - 2.0 Expected stock price volatility 53.6% - 57.6% 44.0% - 61.9% Risk-free interest rate 1.5% - 1.7% 2.5% - 2.7% Dividend Yield 0.0% 0.0% Early Exercised Stock Options During the six months ended January 31, 2020 and 2019, we reclassified to additional paid-in capital $0.3 million and $0.6 million, respectively, related to common stock issued upon early exercise of stock options which vested during these periods. As of January 31, 2020 and July 31, 2019, the number of shares of early exercised common stock subject to repurchase was approximately 63,000 shares and 122,000 shares with an aggregate exercise price of $0.3 million and $0.6 million, respectively. The liability for early exercised stock options is included within accrued expenses and other current liabilities in the condensed consolidated balance sheets. Notes Receivable from Stockholders Prior to fiscal 2017, we entered into notes receivable agreements with certain of our current and former executives and employees in connection with the exercise of their stock options. During the six months ended January 31, 2019, the outstanding principal amount of $1.9 million and accrued interest of $0.2 million were fully repaid. Stock-based Compensation Expense The components of stock-based compensation expense recognized in the condensed consolidated statements of operations consisted of the following: Three Months Ended January 31, Six Months Ended January 31, 2020 2019 2020 2019 (in thousands) Cost of revenue $ 1,580 $ 619 $ 2,961 $ 1,122 Sales and marketing 11,943 5,517 21,982 8,318 Research and development 6,077 4,398 10,951 7,193 General and administrative 4,266 2,693 6,348 4,180 Total $ 23,866 $ 13,227 $ 42,242 $ 20,813 As of January 31, 2020, the unrecognized stock-based compensation cost related to outstanding equity-based awards was $239.7 million, which we expect to be amortized over a weighted-average period of 2.9 years. During the three and six months ended January 31, 2020, we capitalized $1.2 million and $2.0 million, respectively of stock-based compensation associated with the development of software for internal-use. Stock-based compensation related to projects capitalized in the prior comparative period was immaterial. |