Stockholders’ Equity and Stock-based Compensation

Stock-based Compensation Expense

Stock-based compensation expense related to all stock-based awards is as follows:



	Three Months Ended April 30,				Nine Months Ended April 30,
	2014		2013		2014		2013 ⁽¹⁾
Stock-based compensation expenses:	(in thousands)
Cost of license and other	$	41	$	—	$	245	$	—
Cost of maintenance revenues	309		313		932		914
Cost of services revenues	3,927		3,150		13,869		9,205
Research and development	3,075		2,056		10,147		6,544
Sales and marketing	3,440		676		12,153		4,269
General and administrative	3,121		2,077		10,174		7,498
Total stock-based compensation expenses	$	13,913	$	8,272	$	47,520	$	28,430

(1) Expenses shown include $1.0 million of expense recognized in 2013 related to the modification of RSUs upon accelerated vesting terms for the retirement of one of the Company's executives.

As of April 30, 2014, total unrecognized compensation cost, adjusted for estimated forfeitures, was as follows:



	As of April 30, 2014
	Unrecognized Expense		Average Expected Recognition Period
	(in thousands)		(in years)
Restricted stock units	$	64,759	1.2
Stock options	4,464		1.1
	$	69,223

RSUs

RSU activity under the Company's equity incentive plans is as follows:



	RSUs Outstanding
	Number of RSUs Outstanding		Weighted Average Grant Date Fair Value
Balance as of July 31, 2013	4,027,601		$	19.27
Granted	1,543,578		44.47
Released	(1,491,302	)	18.04
Cancelled	(245,458	)	29.83
Balance as of April 30, 2014	3,834,419		$	29.21

The fair value of RSUs released during the three and nine month periods ended April 30, 2014 was $28.0 million and $71.6 million, respectively, and $14.9 million and $40.4 million for the three and nine month periods ended April 30, 2013, respectively.

Stock Options

Stock option activity under the Company's equity incentive plans is as follows:



	Stock Options Outstanding
	Number of Stock Options Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value⁽¹⁾
					(in years)	(in thousands)
Balance as of July 31, 2013	3,763,228		$	6.74	5.7	$	139,315
Granted	215,930		47.10
Exercised	(1,383,388	)	5.31
Cancelled	(8,561	)	21.75
Balance as of April 30, 2014	2,587,209		$	10.82	5.7	$	71,667
Vested and expected to vest as of April 30, 2014	2,543,086		$	10.44	5.7	$	71,281
Exercisable as of April 30, 2014	1,972,111		$	5.60	4.9	$	63,699


⁽¹⁾	Aggregate intrinsic value represents the difference between the Company's closing stock price of $37.76 and $43.76 on April 30, 2014 and July 31, 2013, respectively, and the exercise price of outstanding, in-the-money options.

The options exercisable as of April 30, 2014 include options that are exercisable prior to vesting. The total intrinsic value of options exercised was approximately $9.9 million and $58.8 million for the three and nine months ended April 30, 2014, respectively, and $23.3 million and $76.4 million for the three and nine months ended April 30, 2013, respectively.

Valuation of Awards

The per share fair value of each stock option was determined on the date of grant using the Black-Scholes option-pricing model and the following weighted average assumptions:



	Three Months Ended April 30,		Nine Months Ended April 30,
	2014	2013	2014	2013
Expected life (in years)	5.3	6.1	5.0 - 6.1	5.1 - 6.1
Risk-free interest rate	1.7%	1.2%	1.5% - 2.0%	0.6% - 1.2%
Expected volatility	42.3%	46.9%	41.3% - 46.2%	45.1% - 48.7%
Expected dividend yield	—%	—%	—%	—%

Common Stock Reserved for Issuance

As of April 30, 2014 and July 31, 2013, the Company was authorized to issue 500,000,000 shares of common stock with a par value of $0.0001 per share. As of April 30, 2014 and July 31, 2013, the Company had reserved shares of common stock for issuance as follows:



	April 30, 2014	July 31, 2013
Exercise of stock options to purchase common stock	2,587,209	3,763,228
Vesting of restricted stock units	3,834,419	4,027,601
Issuances of shares available under stock plans	11,591,985	9,194,058
Total common stock reserved for issuance	18,013,613	16,984,887