Note 10.

Stockholders’ Equity

Stock Option Activity

A summary of stock option activity for the six months ended July 31, 2016 is as follows:

						Weighted
				Weighted		average
				average		remaining		Aggregate
	Number			exercise		contractual		intrinsic
	of shares			price		term (in years)		value
Options outstanding at January 31, 2016		18,549,702		$	5.01		6.8	$	359,306,108
Options granted		1,075,000			25.41
Options exercised		(2,006,882	)		2.27
Options forfeited/cancelled		(212,452	)		4.40
Options outstanding at July 31, 2016		17,405,368		$	6.60		6.7	$	546,431,136
Options vested and exercisable at July 31, 2016		16,731,371		$	6.54		6.7	$	526,238,982
Options vested and exercisable at July 31, 2016 and expected to vest thereafter		5,333,997		$	5.17		6.1	$	175,053,298

During the three months ended July 31, 2016, we did not grant any stock options. The weighted average grant-date fair value of options granted was $11.99 for the six months ended July 31, 2016 and $12.40 and $12.36 for the three and six months ended July 31, 2015, respectively.

As of July 31, 2016, there was $37.0 million in unrecognized compensation cost, net of estimated forfeitures, related to unvested stock options granted under the 2007 Plan, 2012 Equity Incentive Plan and 2013 Equity Incentive Plan (2013 EIP). This cost is expected to be recognized over a weighted average period of 3.7 years.

As of July 31, 2016, we had authorized and unissued shares of common stock sufficient to satisfy exercises of stock options.

The total intrinsic value of options exercised was approximately $42.6 million and $57.9 million for the three and six months ended July 31, 2016.

Restricted Stock Units

A summary of restricted stock unit (RSU) activity for the six months ended July 31, 2016 is as follows:

				Weighted
	Unreleased			average
	Restricted			grant date
	Stock Units			fair value
Balance at January 31, 2016		2,219,425		$	26.80
RSUs granted		1,876,140			26.85
RSUs vested		(420,845	)		26.57
RSUs forfeited/cancelled		(202,939	)		26.23
Balance at July 31, 2016		3,471,781		$	26.89

During the three and six months ended July 31, 2016, we issued 414,035 and 1,876,140 RSUs under the 2013 EIP with a weighted-average grant date fair value of $31.82 and $26.85, respectively.

As of July 31, 2016, there was a total of $88.5 million in unrecognized compensation cost, net of estimated forfeitures, related to unvested RSUs. This cost is expected to be recognized over a weighted-average period of approximately 3.2 years.

Stock-Based Compensation

Compensation expense related to share-based transactions, including employee, consultant, and non-employee director stock option awards, is measured and recognized in the condensed consolidated financial statements based on fair value. The fair value of each option award is estimated on the grant date using the Black-Scholes option-pricing model. The stock-based compensation expense, net of forfeitures, is recognized using a straight-line basis over the requisite service periods of the awards, which is generally four to nine years. For restricted stock awards, fair value is based on the closing price of our common stock on the grant date.

Our option-pricing model requires the input of subjective assumptions, including the fair value of the underlying common stock, the expected term of the option, the expected volatility of the price of our common stock, risk-free interest rates, and the expected dividend yield of our common stock. The assumptions used in our option-pricing model represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. If factors change and different assumptions are used, our stock-based compensation expense could be materially different in the future.

The following table presents the weighted-average assumptions used to estimate the grant date fair value of options granted during the periods presented:

	Three Months Ended July 31,			Six Months Ended July 31,
	2016	2015		2016		2015
Volatility	—	45% – 46%		45% – 46%		45% – 46%
Expected term (in years)	—	5.50 – 6.32		6.31 – 7.56		5.50 – 6.32
Risk-free interest rate	—	1.69% – 1.84%		1.48% – 1.67%		1.69% – 1.84%
Dividend yield	—		0%		0%		0%

For the three and six months ended July 31, 2016 and 2015, we capitalized an immaterial amount of stock-based compensation as part of our internal-use software capitalization.

Early Exercise of Employee Options

We historically have allowed for the early exercise of options granted under the 2007 Stock Plan (2007 Plan) prior to vesting. Historically, all such early exercises have been through cash payment. The unvested shares are subject to our repurchase right at the original purchase price. The proceeds initially are recorded as an accrued liability from the early exercise of stock options, and reclassified to common stock as our repurchase right lapses. At July 31, 2016, the amount of unvested shares and the aggregate price for those shares that were subject to repurchase were immaterial. At January 31, 2016, there were 56,666 unvested shares which were subject to repurchase at an aggregate price of an immaterial amount.