10.

Common Stock and Stockholders’ Equity

Common stock reserved for issuance—The Company had reserved shares of common stock for future issuance as follows (in thousands):


	As of March 31,
	2016		2015
Common stock options outstanding		7,050		9,422
RSUs outstanding		1,549		723
Common stock reserved for issuance in connection with acquisition		90		129
Available for future stock option and RSU grants		6,561		5,149
Available for future employee stock purchase plan awards		1,360		1,000

		16,610		16,423

Common stock authorized—Upon the completion of the IPO, the Company’s certificate of incorporation was amended and restated to increase the amount of common stock authorized for issuance from 55,000,000 to 100,000,000 common shares with a par value of $0.001 per share.

Employee Stock Purchase Plan—The Company’s board of directors adopted, and the Company’s stockholders approved, the Company’s ESPP, which became effective in December 2014. The ESPP initially reserved and authorized the issuance of up to 1,000,000 shares of common stock. The ESPP provides that the number of shares reserved and available for issuance under the ESPP will automatically increase each April, beginning on April 1, 2015, by the lesser of 500,000 shares, 1% of the number of the Company’s common stock shares issued and outstanding on the immediately preceding March 31, or such lesser number of shares as determined by the Company’s board of directors. For the year ended March 31, 2016, 111,150 shares of common stock were purchased under the ESPP and a total of $0.9 million of stock-based compensation expense was recorded. As of March 31, 2016, 1,360,019 shares of common stock were available for issuance under the ESPP.

2008 Equity Incentive Plan—The Company’s board of directors adopted the 2008 Equity Incentive Plan, or the 2008 Plan, in February 2008. The 2008 Plan was terminated in connection with the Company’s IPO, and accordingly, no shares are available for future issuance under this plan. The 2008 Plan continues to govern outstanding awards granted thereunder.

2014 Equity Incentive Plan—The Company’s board of directors adopted, and the Company’s stockholders approved, the Company’s 2014 Equity Incentive Plan, or the 2014 Plan, which became effective in December 2014. The 2014 Plan serves as the successor to the Company’s 2008 Plan. The 2014 Plan initially reserved and authorized the issuance of 5,000,000 shares of the Company’s common stock. Additionally, shares not issued or subject to outstanding grants under the 2008 Plan upon its termination became available under the 2014 Plan, resulting in a total of 5,184,878 available shares under the 2014 Plan as of the effective date of the 2014 Plan. Pursuant to the terms of the 2014 Plan, any shares subject to outstanding stock options or other stock awards under the 2008 Plan that (i) expire or terminate for any reason prior to exercise or settlement, (ii) are forfeited because of the failure to meet a contingency or condition required to vest such shares or otherwise return to the Company or (iii) are reacquired, withheld (or not issued) to satisfy a tax withholding obligation in connection with an award or to satisfy the purchase price or exercise price of a stock award will become available for issuance pursuant to awards granted under the 2014 Plan. The 2014 Plan provides that the number of shares reserved and available for issuance under the plan will automatically increase each April 1, beginning on April 1, 2015, by 5% of the outstanding number of shares of the Company’s common stock shares issued and outstanding on the immediately preceding March 31, or such lesser number of shares as determined by the Company board of directors. As of March 31, 2016, there were 6,560,777 shares available for issuance under the 2014 Plan.

The following table summarizes the Company’s stock option and RSU award activities for the fiscal year ended March 31, 2016 (in thousands, except per share information):


	Options Outstanding									RSUs Outstanding
	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value		Number of Shares			Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding—April 1, 2015		9,422		$	10.08		7.9	$	231,964		723		$	23.87		3.5	$	25,098
Stock options granted		685			32.17
RSUs granted											1,155			32.45
Stock options exercised		(2,324	)		5.39				65,572
RSUs vested											(166	)		25.17
Stock options canceled/forfeited		(733	)		15.58
RSUs canceled/forfeited											(163	)		27.71

Outstanding—March 31, 2016		7,050		$	13.20		6.5	$	95,326		1,549		$	29.73		3.1	$	40,387

Options vested and expected to vest— March 31, 2016		7,011		$	13.12		6.5	$	95,226
Options vested and exercisable— March 31, 2016		3,840		$	7.82		5.1	$	70,300
RSUs expected to vest—March 31, 2016											1,459		$	29.57		3.1	$	43,139

The weighted-average grant-date fair value of options granted during the fiscal years ended March 31, 2016, 2015, and 2014 was $14.41, $9.20, and $6.42, respectively. Intrinsic value of options exercised during the fiscal years ended March 31, 2016, 2015, and 2014 was $65.6 million, $8.7 million, and $2.1 million, respectively. The total fair value of RSUs vested during the fiscal year ended March 31, 2016 was $5.5 million. There were no RSUs vested during the fiscal years ended March 31, 2015 and 2014.

Aggregate intrinsic value for options and RSUs outstanding represents the difference between the closing stock price of the Company’s common stock and the exercise price of outstanding, in-the-money awards. The Company’s closing stock price as reported on the New York Stock Exchange as of March 31, 2016 was $26.08.

Employee Stock Options and ESPP Valuation—The Company estimates the fair value of stock options and ESPP shares on the date of grant using the Black-Scholes option-pricing model. Each of the Black-Scholes inputs is subjective and generally requires significant judgments to determine. The assumptions used to estimate the fair value of stock options granted and ESPP shares to be issued during the fiscal years ended March 31, 2016, 2015, and 2014 were as follows:


Stock Options:
	Year Ended March 31,
	2016	2015		2014
Expected term (years)	6		5 - 6		5 - 6
Expected volatility	45 - 47%		45 - 51%		47 - 52%
Risk-free interest rate	1.39 - 1.93%		1.40 - 2.01%		0.74 - 1.87%
Dividend yield	—		—		—

ESPP:
	Year Ended March 31,
	2016	2015		2014
Expected term (years)	0.5		—		—
Expected volatility	35 - 54%		—		—
Risk-free interest rate	0.25 - 0.42%		—		—
Dividend yield	—		—		—

Fair Value of Common Stock

Prior to its IPO, the fair value of the common stock underlying the stock-based awards was determined by the Company’s board of directors. Given the absence of a public trading market, the Company’s board of directors considered numerous objective and subjective factors to determine the fair value of the Company’s common stock at each meeting at which awards were approved. These factors included, but were not limited to (i) contemporaneous third-party valuations of common stock; (ii) the rights and preferences of convertible preferred stock relative to common stock; (iii) the lack of marketability of common stock; (iv) developments in the business; and (v) the likelihood of achieving a liquidity event, such as an IPO or sale of the Company, given prevailing market conditions. Since the Company’s IPO, it has used the market closing price of its common stock as reported on the New York Stock Exchange.

Risk-Free Interest Rate

The Company bases the risk-free interest rate used in the Black-Scholes option-pricing model on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent expected term of the options for each option group.

Expected Term

The expected term represents the period that the Company’s stock-based awards are expected to be outstanding. The Company bases the expected term assumption on its historical behavior combined with estimates of post-vesting holding period.

Expected Volatility

The Company determines the price volatility factor based on the historical volatilities of its peer group as the Company did not have significant trading history for its common stock.

Dividend Yield

The expected dividend assumption is based on the Company’s current expectations about its anticipated dividend policy.

Restricted Stock Awards—During the fiscal years ended March 31, 2015 and 2014, the Company granted restricted stock awards covering an aggregate of 40,000 and 100,000 shares of common stock, respectively, to two board members that vest over four years, subject to the continued service relationship with the Company or become fully vested upon a change of control. The grant date fair value of the restricted stock awards was $0.7 million, or $16.93 per share, and $0.9 million, or $9.37 per share, for awards granted during the fiscal years ended March 31, 2015 and 2014, respectively. Stock-based compensation expense recognized related to these restricted stock awards was $0.4 million, $0.4 million, and $0.2 million for the fiscal years ended March 31, 2016, 2015, and 2014, respectively. The Company recognizes the expense using a straight-line basis over the requisite service periods of the award.

Stock Options Granted to Nonemployees—During the fiscal years ended March 31, 2016, 2015, and 2014, the Company granted 27,203 shares, 181,095 shares, and 7,000 shares, respectively, to nonemployee consultants and recorded stock-based compensation expense of $0.9 million, $0.8 million, $0.2 million, respectively.

Stock-Based Compensation Expense—Stock-based compensation expense for both employees and nonemployees was $23.3 million, $11.7 million, and $6.2 million for the fiscal years ended March 31, 2016, 2015, and 2014, respectively. Cost of revenue, research and development, sales and marketing, and general and administrative expenses were as follows (in thousands):


	Year Ended March 31,
	2016		2015		2014
Cost of revenue	$	1,238	$	591	$	159
Research and development		6,659		2,055		1,425
Sales and marketing		9,258		5,108		1,373
General and administrative		6,113		3,912		3,263

Total stock-based compensation expense	$	23,268	$	11,666	$	6,220

As of March 31, 2016, unrecognized stock-based compensation cost related to outstanding unvested stock options was $28.9 million, which is expected to be recognized over a weighted-average period of approximately 2.4 years. As of March 31, 2016, unrecognized stock-based compensation cost related to outstanding unvested stock awards was $43.3 million, which is expected to be recognized over a weighted-average period of approximately 3.0 years.