10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2016

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-35584

EXA CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Delaware	04-3139906
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

55 Network Drive

Burlington, MA 01803

(Address of Principal Executive Offices, Including Zip Code)

(781) 564-0200

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐  (Do not check if a smaller reporting company)	Smaller reporting company	☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of November 28, 2016, 14,851,501 shares of the registrant’s outstanding common stock, $0.001 par value per share, were outstanding.

EXA CORPORATION

FORM 10-Q

FOR THE QUARTER ENDED October 31, 2016

TABLE OF CONTENTS

	Pages
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS	3
Condensed Consolidated Balance Sheets (Unaudited) as of October 31, 2016 and January 31, 2016	3
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) for the three and nine months ended October 31, 2016 and 2015	4
Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended October 31, 2016 and 2015	5
Notes to Condensed Consolidated Financial Statements (Unaudited)	6
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	14
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	27
ITEM 4. CONTROLS AND PROCEDURES	28
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS	29
ITEM 1A. RISK FACTORS	29
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	29
ITEM 6. EXHIBITS	30
SIGNATURES	31

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

EXA CORPORATION

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except share and per share data)

	October 31,			January 31,
	2016				2016
ASSETS
Current assets:
Cash and cash equivalents	$	25,033			$	27,649
Accounts receivable		16,663				32,072
Prepaid expenses and other current assets		2,862				3,707
Total current assets		44,558				63,428
Property and equipment, net		10,897				12,032
Intangible assets, net		1,782				2,044
Deferred tax assets		432				428
Restricted cash		352				352
Other assets		744				737
Total assets	$	58,765			$	79,021
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,218			$	3,462
Accrued expenses		8,739				12,199
Current portion of deferred revenue		23,421				32,849
Current portion of capital lease obligations		1,997				2,823
Total current liabilities		35,375				51,333
Deferred revenue		699				4,484
Capital lease obligations		1,286				2,549
Deferred rent		2,537				2,490
Other long-term liabilities		719				678
Total liabilities		40,616				61,534
Commitments and contingencies (Note 9)
Stockholders’ equity :
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued    and outstanding		—				—
Common stock, $0.001 par value; 30,000,000 shares authorized; 14,882,446 and    14,663,621 shares issued, respectively; 14,849,944 and 14,631,119 shares    outstanding, respectively		15				15
Additional paid-in capital		93,767				91,626
Accumulated deficit		(75,151	)			(73,685	)
Treasury stock (32,502 common shares, at cost)	0					0
Accumulated other comprehensive loss		(482	)			(469	)
Total stockholders’ equity		18,149				17,487
Total liabilities and stockholders’ equity	$	58,765			$	79,021

The accompanying notes are an integral part of the consolidated financial statements

3

EXA CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

(in thousands, except share and per share data)

	Three Months Ended October 31,						Nine Months Ended October 31,
	2016			2015			2016			2015
Revenue:
License revenue	$	15,967		$	13,966		$	44,836		$	39,185
Project revenue		3,191			2,998			8,219			8,002
Total revenue		19,158			16,964			53,055			47,187
Operating expenses:
Cost of revenues		4,904			5,118			14,340			14,516
Sales and marketing		3,357			2,336			10,080			7,264
Research and development		6,234			6,143			18,468			18,265
General and administrative		3,952			3,456			10,858			9,849
Total operating expenses		18,447			17,053			53,746			49,894
Income (loss) from operations		711			(89	)		(691	)		(2,707	)
Other (expense) income, net
Foreign exchange (loss) gain		(99	)		51			94			(172	)
Interest expense		(30	)		(60	)		(116	)		(179	)
Interest income		12			3			33			8
Other (expense) income, net		(3	)		6			9			6
Total other (expense) income, net		(120	)		0			20			(337	)
Income (loss) before income taxes		591			(89	)		(671	)		(3,044	)
Provision for income taxes		(436	)		(344	)		(795	)		(472	)
Net income (loss)	$	155		$	(433	)	$	(1,466	)	$	(3,516	)
Net income (loss) per share:
Basic	$	0.01		$	(0.03	)	$	(0.10	)	$	(0.24	)
Diluted	$	0.01		$	(0.03	)	$	(0.10	)	$	(0.24	)
Weighted average shares outstanding used in computing net    income (loss) per share:
Basic		14,826,758			14,610,479			14,750,153			14,484,563
Diluted		15,261,996			14,610,479			14,750,153			14,484,563
Comprehensive income (loss):
Net income (loss)	$	155		$	(433	)	$	(1,466	)	$	(3,516	)
Foreign currency translation adjustment		(55	)		6			(13	)		34
Comprehensive income (loss)	$	100		$	(427	)	$	(1,479	)	$	(3,482	)

The accompanying notes are an integral part of the consolidated financial statements

4

EXA CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

	Nine Months Ended October 31,
	2016			2015
Cash flows provided by operating activities:
Net loss	$	(1,466	)	$	(3,516	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		2,987			2,487
Stock-based compensation expense		1,458			1,766
Deferred rent expense		286			472
Deferred income taxes		(4	)		4
Net change in operating assets and liabilities:
Accounts receivable		15,201			15,948
Prepaid expenses and other current assets		1,044			54
Other assets		(7	)		11
Accounts payable		(1,865	)		694
Accrued expenses		(3,755	)		(2,946	)
Other liabilities		40			(69	)
Deferred revenue		(13,392	)		(11,007	)
Net cash provided by operating activities		527			3,898
Cash flows used in investing activities:
Purchases of property and equipment		(1,881	)		(1,571	)
Change in restricted cash		—			173
Net cash used in investing activities		(1,881	)		(1,398	)
Cash flows used in financing activities:
Proceeds from stock option and warrant exercises		453			1,168
Payments of capital lease obligations		(2,151	)		(2,131	)
Net cash used in financing activities		(1,698	)		(963	)
Effect of exchange rate changes on cash		436			(136	)
Net (decrease) increase in cash and cash equivalents		(2,616	)		1,401
Cash and cash equivalents, beginning of period		27,649			21,785
Cash and cash equivalents, end of period	$	25,033		$	23,186
Supplemental cash flow disclosures:
Cash paid for interest	$	116		$	179
Cash paid for income taxes	$	1,367		$	1,214
Supplemental disclosure of non-cash investing activities:
Acquisition of equipment through capital leases	$	62		$	4,351
Construction costs funded by landlord tenant improvement allowance	$	—		$	554
Decrease in unpaid purchases of property and equipment	$	(381	)	$	—

The accompanying notes are an integral part of the consolidated financial statements

5

EXA CORPORATION

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in thousands except per share amounts)

1. Description of Business

Exa Corporation (the “Company” or “Exa”), a Delaware corporation, develops, sells and supports simulation software and services used primarily by vehicle manufacturers to enhance the performance of their products, reduce product development costs and improve the efficiency of their design and engineering processes. The Company’s solutions enable engineers and designers to augment or replace conventional methods of evaluating designs that rely on expensive and inefficient physical prototypes and test facilities with accurate digital simulations that are more useful, cost effective and timely. The Company’s simulation solutions enable customers to gain crucial insights about design performance early in the design cycle, reducing the likelihood of expensive redesigns and late-stage engineering changes, which results in cost savings and fundamental improvements in the development process. The Company is primarily focused on the ground transportation market, but is also exploring the application of its capabilities in the aerospace, oil and gas production, chemical processing, architecture, engineering and construction, power generation, biomedical and electronics industries.

Exa has offices and sells directly in the United States and through subsidiaries in France, Germany, Italy, Japan, Korea, China, and the United Kingdom. The Company also conducts business in Sweden, India, Brazil, Russia, Canada, Finland, Spain and Australia.

2. Summary of Significant Accounting Policies

Applicable Accounting Guidance

Any reference in these notes to applicable accounting guidance is meant to refer to the authoritative United States generally accepted accounting principles (“GAAP”) as found in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”).

Basis of Presentation

The interim financial data as of October 31, 2016 and for the three and nine months ended October 31, 2016 and 2015 are unaudited; however, in the opinion of the Company’s management, the interim data includes all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the interim periods presented. The condensed consolidated balance sheet presented as of January 31, 2016 has been derived from the audited consolidated financial statements as of that date. The unaudited condensed consolidated financial statements presented herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all of the information and note disclosures required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Exa annual report on Form 10-K for the year ended January 31, 2016 filed with the Securities and Exchange Commission on March 21, 2016.

Reclassification

Certain prior year amounts have been reclassified to be consistent with current year classifications.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from management’s estimates if future events differ substantially from past experience, or other assumptions, which reasonable when made, do not turn out to be substantially accurate.

Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle, as a result of which more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP. The

6

EXA CORPORATION

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

(Dollars in thousands except per share amounts)

standard is effective for annual periods beginning after December 15, 2018, and interim periods therein. The two permitted transition methods under the new standard are: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). The Company is currently evaluating the impact of its pending adoption of ASU 2014-09 on its consolidated financial statements and has not yet determined the method by which it will adopt the standard when it becomes effective.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. Under the new guidance, management will be required to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosures in certain circumstances. The provisions of this ASU are effective for annual periods beginning after December 15, 2016, and for interim periods therein. This ASU is not expected to have a material impact on the Company’s financial statements or disclosures.

In April 2015, the FASB issued ASU No. 2015-05, Intangibles – Goodwill and Other – Internal-Use Software: Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The guidance clarifies the circumstances under which a cloud computing customer would account for the arrangement as a license of internal-use software. The standard will be effective for annual reporting periods beginning after December 15, 2016, and for interim periods therein. Early adoption is permitted. This ASU is not expected to have an impact on the Company’s financial statements or disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This standard requires the recognition of lease assets and liabilities for all leases, with certain exceptions, on the balance sheet. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. This ASU is effective for annual periods beginning after December 15, 2018, and for interim periods therein. The Company is currently evaluating the requirements of this ASU and has not yet determined its impact on the Company’s consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718)—Improvements to Employee Share-Based Payment Accounting. This standard simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The provisions of this ASU are effective for annual periods beginning after December 15, 2016, and for interim periods therein. Early adoption is permitted. The Company is currently evaluating the requirements of this ASU and has not yet determined its impact on the Company’s consolidated financial statements.

3. Computation of Net Income (Loss) Per Share

Basic earnings per share (“EPS”) is computed by dividing income available to common stockholders by the weighted-average number of shares of common stock outstanding during the period. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding (using the treasury stock method) if securities convertible into or exercisable for potentially dilutive shares of common stock (stock options, restricted stock units and warrants) had been converted into or exercisable for such shares of common stock, and if such assumed conversion or exercise would have been dilutive. Exercises or conversions that would have been anti-dilutive are excluded from the calculation of diluted EPS.

7

EXA CORPORATION

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

(Dollars in thousands except per share amounts)

The following summarizes the calculation of basic and diluted net income (loss) per share:

	Three Months Ended October 31,					Nine Months Ended October 31,
	2016		2015			2016			2015
Numerator:
Net income (loss)	$	155	$	(433	)	$	(1,466	)	$	(3,516	)
Denominator:
Weighted average common shares outstanding, basic		14,826,758		14,610,479			14,750,153			14,484,563
Dilutive effect of:
Options to purchase common stock		413,275		—			—			—
Options to purchase preferred stock		21,963		—			—			—
Weighted average common shares outstanding, fully    diluted		15,261,996		14,610,479			14,750,153			14,484,563
Basic net income (loss) per share	$	0.01	$	(0.03	)	$	(0.10	)	$	(0.24	)
Diluted net income (loss) per share	$	0.01	$	(0.03	)	$	(0.10	)	$	(0.24	)

The table below represents outstanding options, restricted stock unit awards and warrants that were excluded from the computation of diluted net income (loss) per share for the periods indicated because including them would have had an anti-dilutive effect. All of the Company’s outstanding stock options, unvested restricted stock units and warrants were anti-dilutive for the three months ended October 31, 2015 and for the nine months ended October 31, 2016 and 2015, respectively, due to the net loss incurred by the Company.

	Three Months Ended October 31,				Nine Months Ended October 31,
	2016		2015		2016		2015
Options, restricted stock unit awards and warrants to    purchase common and preferred stock		543,276		2,514,955		1,951,713		2,514,955

4. Property and Equipment, net

Property and equipment, net consists of the following:

	October 31, 2016			January 31, 2016
Computer software and equipment	$	19,407		$	17,964
Office equipment and furniture		1,554			1,349
Leasehold improvements		1,630			1,562
Construction-in-process		110			169
Total property and equipment		22,701			21,044
Less accumulated depreciation		(11,804	)		(9,012	)
Property and equipment, net	$	10,897		$	12,032

For the three and nine months ended October 31, 2016, depreciation expense was $908 and $2,724, respectively. For the three and nine months ended October 31, 2015, depreciation expense was $871 and $2,224, respectively. Included in computer software and equipment and office equipment and furniture is equipment held pursuant to capital leases with costs of $14,883 and $14,809 and accumulated depreciation of $8,712 and $6,808 as of October 31, 2016 and January 31, 2016, respectively.

8

EXA CORPORATION

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

(Dollars in thousands except per share amounts)

5. Accrued Expenses

Accrued expenses consist of the following:

	October 31, 2016		January 31, 2016
Accrued payroll	$	1,958	$	1,828
Sales and value added taxes		1,763		4,075
Accrued commissions and bonuses		1,996		3,900
Accrued income taxes payable		833		541
Deferred rent, current portion		429		186
Legal and professional		651		805
Other		1,109		864
Total accrued expenses	$	8,739	$	12,199

6. Deferred Rent

Payment escalations, rent holidays and lease incentives specified in the Company’s non-cancelable operating lease and hosting agreements are recognized on a straight-line basis over the terms of the agreements. For purposes of recognizing incentives and minimum rental expenses on a straight-line basis, the Company uses the date it obtains the legal right to use and control the leased space to begin amortization. The differences arising from straight-line expense recognition and cash payments are recorded as deferred rent in the accompanying consolidated balance sheets. Tenant leasehold improvement allowances received from landlords are recorded as deferred rent and are amortized to operating expenses over the applicable lease terms.

Deferred rent consists of the following:

	October 31, 2016			January 31, 2016
Leasehold improvement incentive	$	1,646		$	1,839
Non-cash rent expense		1,320			837
Total deferred rent		2,966			2,676
Less current portion included in accrued expenses		(429	)		(186	)
Deferred rent, net of current portion	$	2,537		$	2,490

7. Fair Value Measurements

Financial instruments consist primarily of cash and cash equivalents, accounts receivable and capital lease obligations. As of October 31, 2016 and January 31, 2016, the carrying amounts of these instruments approximate their fair values. The estimated fair values have been determined from information obtained from market sources and management estimates.

In determining the fair value of its financial assets and liabilities, the Company uses various valuation approaches. ASC 820, Fair Value Measurements and Disclosures, establishes a hierarchy of inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances. The fair value hierarchy is broken down into three levels based on the source of inputs as follows:

Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

Level 2 – Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly.

9

EXA CORPORATION

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

(Dollars in thousands except per share amounts)

Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement and that are based on management’s best estimate of inputs market participants would use for pricing the asset or liability at the measurement date, including assumptions about risk.

The following table summarizes the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value as of October 31, 2016:

	Total		Level 1		Level 2		Level 3
Assets:
Money market funds	$	10,048	$	10,048	$	—	$	—

The following table summarizes the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value as of January 31, 2016:

	Total		Level 1		Level 2		Level 3
Assets:
Money market funds	$	11,019	$	11,019	$	—	$	—

The availability of observable inputs can vary among the various types of financial assets and liabilities. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for financial statement disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is categorized is based on the lowest level input that is significant to the overall fair value measurement.

8. Acquired Intangible Assets

Intangible assets acquired in a business combination are recorded under the purchase method of accounting at their estimated fair values at the date of acquisition. The Company amortizes acquired intangible assets over their estimated useful lives.

The following table reflects the carrying value of intangible assets as of October 31, 2016: 

	Cost		Accumulated Amortization			Net Book Value
Intellectual property	$	3,505	$	(1,723	)	$	1,782
Access to facilities contract		38		(38	)		—
Total	$	3,543	$	(1,761	)	$	1,782

The following table reflects the carrying value of intangible assets as of January 31, 2016:

	Cost		Accumulated Amortization			Net Book Value
Intellectual property	$	3,505	$	(1,461	)	$	2,044
Access to facilities contract		38		(38	)		—
Total	$	3,543	$	(1,499	)	$	2,044

For each of the three months ended October 31, 2016 and 2015, amortization expense of intangible assets was $88. For each of the nine months ended October 31, 2016 and 2015, amortization expense of intangible assets was $263.

9. Commitments and Contingencies

Legal Contingencies

From time to time the Company is involved in legal proceedings arising in the ordinary course of business. There is no litigation pending that could, individually or in the aggregate, reasonably be expected to have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

10

EXA CORPORATION

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

(Dollars in thousands except per share amounts)

Indemnification Obligations

The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to these agreements, the Company indemnifies, holds harmless, and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally the Company’s business partners or customers, in connection with any United States patent, or any copyright or other intellectual property infringement claim by any third party with respect to the Company’s products. The term of these indemnification provisions is generally perpetual after execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these agreements is unlimited.

Based on historical experience and information known as of October 31, 2016 and January 31, 2016, the Company has not recorded any liabilities for these indemnities.

Operating Leases

During the second quarter of fiscal year 2017, the Company entered into an agreement to lease space and high performance computing capacity at a data center located in Virginia. The three-year agreement will provide access to up to 300 KW hours of computing capacity, which the Company believes will be suitable and adequate to meet the growing demands of its customers.

As of October 31, 2016, after taking into consideration the above agreement, total future minimum lease payments under non-cancelable lease arrangements are as follows:

Year ended January 31,
2017 (Remainder as of October 31, 2016)	$	1,588
2018		6,061
2019		5,503
2020		3,916
2021		2,062
Thereafter		4,898
	$	24,028

10. Stock-Based Compensation

The fair value of common stock service-based options for employees is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used: 

	Nine Months Ended October 31,
	2016		2015
Expected life (years)		6.25		6.23
Risk-free interest rate		1.4%		2.0%
Expected volatility		35.0%		36.8%
Expected dividend yield		0.0%		0.0%

The weighted-average grant date fair value per share for service-based stock options granted in the three and nine months ended October 31, 2016 was $5.24 and $5.12, respectively. The weighted-average grant date fair value per share for service-based stock options granted in the three and nine months ended October 31, 2015 was $4.14 and $4.21, respectively.

For standard service-based stock options and restricted stock units, the Company records stock-based compensation expense over the estimated service/vesting period. The amount of stock-based compensation expense recognized during a period is based on the value of the portion of the awards that is ultimately expected to vest.

Performance-based stock options are recognized as expense over the requisite service period when it becomes probable that performance measures triggering vesting will be met. Certain grants vested during the first quarter of fiscal year 2017 based on achieved performance metrics. As of October 31, 2016, the Company has concluded that it is not probable that the required metrics for vesting of the remaining unvested options will be achieved. As such, the Company has not recognized any additional share-based compensation expense associated with the unvested portion of these performance-based options.

11

EXA CORPORATION

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

(Dollars in thousands except per share amounts)

During the first quarter of fiscal year 2017, the Company granted performance-based restricted stock units (“PSUs”).PSUs are recognized as expense when it becomes probable that performance measures triggering vesting will be achieved. As of October 31, 2016, the Company has concluded that it is not probable that any of the required metrics for vesting of the PSUs will be achieved. As a result, the Company has not recognized any share-based compensation expense associated with these awards.

Total stock-based compensation expense related to stock options and restricted stock units issued by the Company is as follows: 

	Three Months Ended October 31,				Nine Months Ended October 31,
	2016		2015		2016		2015
Cost of revenues	$	41	$	64	$	124	$	186
Sales and marketing		54		117		202		317
Research and development		222		265		567		691
General and administrative		215		215		565		572
Total	$	532	$	661	$	1,458	$	1,766

The total unrecognized compensation cost related to all outstanding stock options and restricted stock units is $10,637 at October 31, 2016. This amount is expected to be recognized over a weighted-average period of 1.65 years.

11. Income Taxes

For the three and nine months ended October 31, 2016, the Company’s income tax provision was $436 and $795, respectively. For the three and nine months ended October 31, 2015, the income tax provision was $344 and $472, respectively. The provision for all periods primarily consists of the tax effects of foreign operating results and foreign withholding taxes.

In determining the realizability of the net United States federal and state deferred tax assets, the Company considers numerous factors including historical profitability, estimated future taxable income, prudent and feasible tax planning strategies and the industry in which it operates. Management reassesses the realization of the deferred tax assets each reporting period, which resulted in a valuation allowance against the full amount of the Company’s United States deferred tax assets in the first quarter of fiscal year 2015. To the extent that the financial results of the United States operations improve in the future and the deferred tax assets become realizable, the Company will reduce the valuation allowance through earnings.

The Company and one or more of its subsidiaries file United States federal income tax returns and tax returns in various state and foreign jurisdictions. With limited exceptions, the Company is no longer subject to federal, state, local or foreign examinations for years ending prior to January 31, 2011. However, carryforward attributes that were generated in tax years ending prior to January 31, 2012 may still be adjusted upon examination by state or local tax authorities if they either have been or will be used in a future period.

Under Section 382 of the Internal Revenue Code of 1986, as amended, substantial changes in the Company’s ownership may limit the amount of net operating loss carryforwards that could be utilized annually in the future to offset its taxable income. Specifically, this limitation may arise in the event of a cumulative change in ownership of the Company of more than 50% within a three-year period. During the first quarter of fiscal year 2015, management determined that the Company had experienced an ownership change for purposes of Section 382. This ownership change resulted in annual limitations to the amount of net operating loss carryforwards that can be utilized to offset future taxable income, if any, at the federal level. The Company’s management has determined that, as of October 31, 2016, it had not experienced another ownership change for purposes of Section 382. However, future transactions in the Company’s common stock could trigger an ownership change for purposes of Section 382, which could further limit the amount of net operating loss carryforwards that could be utilized annually in the future to offset the Company’s taxable income, if any. Any such limitation, whether as the result of sales of common stock by the Company’s existing stockholders or sales of common stock by the Company, could have a material adverse effect on the Company’s results of operations in future years.

12

EXA CORPORATION

Notes to Condensed Consolidated Financial Statements (Unaudited) — (Continued)

(Dollars in thousands except per share amounts)

12. Geographic Information

Revenue by geographic area, attributed to individual countries based upon location of the external customer, is as follows:

	Three Months Ended October 31,				Nine Months Ended October 31,
	2016		2015		2016		2015
United States	$	4,805	$	5,320	$	13,526	$	13,462
Germany		2,797		2,431		8,089		7,081
Japan		4,045		2,917		10,367		7,396
France		2,199		1,768		6,111		5,387
Korea		1,465		1,464		4,257		4,170
United Kingdom		1,839		1,700		5,220		5,403
China		960		520		2,530		1,544
Sweden		428		420		1,275		1,377
Italy		427		294		1,159		996
Other		193		130		521		371
	$	19,158	$	16,964	$	53,055	$	47,187

Net long-lived assets, consisting of net property and equipment, are subject to geographic risks because they are generally difficult to move and to effectively utilize in another geographic area in a reasonable time period and because they are relatively illiquid. Net long-lived assets by principal geographic areas were as follows:

	October 31,		January 31,
	2016		2016
United States	$	10,284	$	11,346
France		242		388
Germany		101		110
Japan		144		116
Other		126		72
	$	10,897	$	12,032

13

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Result of Operations appearing in our Annual Report on Form 10-K, filed with the SEC on March 21, 2016. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, assumptions and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this report. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies and operations, financing plans, potential growth opportunities, potential market opportunities and the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions and the negatives of those terms. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management’s plans, estimates, assumptions and beliefs only as of the date of this report. Except as required by law, we assume no obligation to update these forward-looking statements publicly or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

As used herein, except as otherwise indicated by context, references to “we,” “us,” “our,” or the “Company” refer to Exa Corporation.

Overview

We develop, sell and support simulation software and services that manufacturers use to enhance the performance of their products, reduce product development costs and improve the efficiency of their design and engineering processes. Our solutions enable engineers and designers to augment or replace conventional methods of evaluating design alternatives that rely on expensive and inefficient physical prototypes and test facilities, such as wind tunnels used in vehicle design, with accurate digital simulations that are more useful and timely. Our simulation solutions enable our customers to gain crucial insights about design performance early in the design cycle, reducing the likelihood of expensive redesigns and late-stage engineering changes. As a result, our customers realize significant cost savings and fundamental improvements in their vehicle development process.

We currently focus primarily on the ground transportation market, including manufacturers in the passenger vehicle, highway truck, off-highway vehicle and train markets, as well as their suppliers. Over 150 manufacturers currently utilize our products and services, including 14 of the global top 15 passenger vehicle manufacturer groups such as BMW, Ford, Hyundai, Jaguar Land Rover, Nissan, Porsche, Renault, Toyota and Volkswagen; truck and off-highway vehicle manufacturers such as Hyundai, Kenworth, Kobelco, MAN, Peterbilt, Scania and Volvo Truck; and suppliers to these manufacturers, such as Cummins, Denso and Delphi. We are also exploring other markets in which we believe the capabilities of PowerFLOW have broad application, such as the aerospace, oil and gas production, chemical processing, architecture, engineering and construction, power generation, biomedical and electronics industries.

One of the most critical challenges for our customers in their vehicle development processes is measuring or predicting how a vehicle feature or a mechanical system will interact with air, water or other fluids. For example, developing vehicles with reduced aerodynamic drag is critical to achieving the improvements in fuel efficiency that are increasingly desired by customers and mandated by government regulations. Our core product, PowerFLOW, is an innovative software solution for simulating complex fluid flow problems, including aerodynamics, thermal management, and aeroacoustics, or wind noise. PowerFLOW relies upon proprietary technology that enables it to predict complex fluid flows with a level of reliability comparable to or better than physical testing. The combination of PowerFLOW’s accuracy and timeliness provides results that are superior to those of alternative computational fluid dynamics, or CFD, methods.

We derive our revenue primarily from the sale of our simulation software, using an annual capacity-based licensing model. Our customers usually purchase PowerFLOW simulation capacity under one-year term licenses, with a minority utilizing multi-year arrangements or a “pay as you go” model. Simulation capacity may be purchased as software-only, to be run on the customer’s own computer hardware, or provided in the form of software-as-a-service, via our hosted PowerFLOW ExaCLOUD offering. To introduce new customers to our simulation solutions, we typically perform fixed-price projects that include simulation services, along with engineering and consulting services. ExaCLOUD continues to play an increasingly important role in our new customer acquisition go-to-market model, as virtually all of our projects are now being delivered using that facility, thereby familiarizing our customers with its capabilities. Customers typically license our products for one application, such as aerodynamics, and over time expand to other applications such as thermal management or aeroacoustics.

14

During the nine months ended October 31, 2016, revenue growth was driven by continued deployment of our simulation solutions in the installed base as well as by the addition of new customers. Investments made in field resources in prior fiscal years are yielding growth in both project and license revenue. The weakening U.S. dollar, particularly against the Euro and yen, had a material positive impact on revenue performance as compared to the same period last year. The geographic mix of revenue outside of the Americas is consistent with historical trends and reflects the impact of the stronger Euro and yen. During the nine months ended October 31, 2016 and 2015, 75% and 73% of our revenue, respectively, came from outside of the Americas. Revenue for the nine months ended October 31, 2016 was $53.1 million, with growth of 12.4% over the same period a year ago and 10.1% when measured on a constant currency basis. See “— Non-GAAP Measures” below for information about how we calculate and use revenue on a constant currency basis.

As a percent of revenue, our total operating expenses for the nine months ended October 31, 2016 decreased approximately 4.4% when compared to the same period last year. This decrease is a result of our prior investments in resources to drive top line growth, including sales, marketing and research and development. While the majority of our expense base is in the United States, we have field resources based in our international offices, which provide some natural foreign exchange hedge. As a result, the weakening dollar had the effect of increasing total operating expenses when compared to the same period last year. For the nine months ended October 31, 2016, total operating expenses were $53.7 million, with growth of 7.7% over the same period a year ago and 7.3% when measured on a constant currency basis. See “— Non-GAAP Measures” below for information about how we calculate and use operating expenses on a constant currency basis.

As a percent of revenue, our loss from operations for the nine months ended October 31, 2016 was 4.4% lower than the same period last year, primarily as a result of the impacts described above. Adjusted EBITDA for the nine months ended October 31, 2016, as described in “Non-GAAP Measures” below, was improved at $3.8 million when compared to $1.5 million in the same period last year.

We ended the quarter with cash and cash equivalents of $25.0 million compared to $27.6 million as of January 31, 2016. This reflects strong accounts receivable collections activity and normal seasonal cash flows. Capital expenditures increased during the nine months ended October 31, 2016 over the same period last year, primarily due to investments related to renovations to our headquarters office in Burlington, Massachusetts and expansion of our high performance computing capacity with our new data center in Virginia.

Results of operations for the three months ended October 31, 2016 and 2015

The following table sets forth, for the periods presented, data from our consolidated statements of operations:

	Three Months Ended October 31,
(in thousands)	2016			2015
Revenue:
License revenue	$	15,967		$	13,966
Project revenue		3,191			2,998
Total revenues		19,158			16,964
Operating expenses: (1)
Cost of revenues		4,904			5,118
Sales and marketing		3,357			2,336
Research and development		6,234			6,143
General and administrative (2)		3,952			3,456
Total operating expenses		18,447			17,053
Income (loss) from operations		711			(89	)
Other expense, net
Foreign exchange (loss) gain		(99	)		51
Interest expense		(30	)		(60	)
Interest income		12			3
Other (expense) income, net		(3	)		6
Total other expense, net		(120	)		0
Income (loss) before income taxes		591			(89	)
Provision for income taxes		(436	)		(344	)
Net income (loss)	$	155		$	(433	)

(1) Amounts include stock-based compensation expense as follows:

15

	Three Months Ended October 31,
(in thousands)	2016		2015
Cost of revenues	$	41	$	64
Sales and marketing		54		117
Research and development		222		265
General and administrative		215		215
Total stock-based compensation expense	$	532	$	661

(2) Includes amortization expense related to intangible assets as follows:

	Three Months Ended October 31,
(in thousands)	2016		2015
General and administrative	$	88	$	88

The following table sets forth, for the periods presented, data from our consolidated statements of operations as a percentage of total revenues:

	Three Months Ended October 31,
(as a percent of total revenue)	2016			2015
Revenue:
License revenue		83.3	%		82.3	%
Project revenue		16.7			17.7
Total revenues		100.0			100.0
Operating expenses:
Cost of revenues		25.6			30.2
Sales and marketing		17.5			13.8
Research and development		32.5			36.2
General and administrative		20.6			20.4
Total operating expenses		96.3			100.5
Income (loss) from operations		3.7			(0.5	)
Other expense, net
Foreign exchange (loss) gain		(0.5	)		0.3
Interest expense		(0.2	)		(0.4	)
Interest income		0.1			0.0
Other (expense) income, net		(0.0	)		0.0
Total other expense, net		(0.6	)		0.0
Income (loss) before income taxes		3.1			(0.5	)
Provision for income taxes		(2.3	)		(2.0	)
Net income (loss)		0.8	%		(2.6	)%

Due to rounding, totals may not equal the sum of line items in the table above.

Comparison of three months ended October 31, 2016 and 2015

Revenue

	Three Months Ended October 31,
(in thousands, except percentages)	2016		2015		Change		% Change
License revenue	$	15,967	$	13,966	$	2,001		14.3	%
Project revenue		3,191		2,998		193		6.4	%
Total revenues	$	19,158	$	16,964	$	2,194		12.9	%

License revenue increased 14.3% from $14.0 million for the three months ended October 31, 2015 to $16.0 million for the three months ended October 31, 2016. The $2.0 million increase was driven almost entirely by increased consumption of simulation capacity by existing customers and the addition of new license customers during the quarter compared with the same period last year. Deployment continues to expand in our core customer base across our portfolio of applications. We experienced particularly strong

16

demand in our Asian markets. Project revenue for the three months ended October 31, 2016 increased by approximately $0.2 million, which reflects stronger demand in the quarter as well as the completion of projects that had been expected to be delivered in the quarter ended July 31, 2016. We expect our project revenue growth will continue to fluctuate from quarter to quarter, and our capacity to deliver projects will continue to support new opportunities to drive license growth. Both license and project revenue, particularly new customer opportunities, are leveraging the capabilities of our ExaCLOUD platform. Virtually all of our projects are now being delivered using ExaCLOUD, exposing our customers to its capabilities. ExaCLOUD continues to play an increasingly important role in our new customer acquisition go-to-market model.

Foreign exchange fluctuations, particularly the strengthening of the Japanese yen against the U.S. dollar, positively impacted total revenue in the three months ended October 31, 2016 by $0.6 million as compared to the three months ended October 31, 2015. On a constant currency basis, our total revenues in the three months ended October 31, 2016 increased 9.7% compared with the three months ended October 31, 2015.

Cost of revenues

	Three Months Ended October 31,
(in thousands, except percentages)	2016		2015		Change			% Change
Cost of revenues	$	4,904	$	5,118	$	(214	)		(4.2	)%

Cost of revenues for the three months ended October 31, 2016 was $4.9 million, a decrease of approximately $0.2 million, or 4.2%, compared with $5.1 million during the three months ended October 31, 2015. As a percentage of revenues, cost of revenues decreased to 25.6% for the three months ended October 31, 2016 compared to 30.2% for the three months ended October 31, 2015. The decrease is attributable to approximately $0.5 million of decreased personnel-related costs, which was driven by a change in the headcount mix, and partially offset by increased costs of approximately $0.2 million related to software consulting fees and royalty expenses and $0.1 million related to increased depreciation expense associated with equipment purchases.

Sales and marketing

	Three Months Ended October 31,
(in thousands, except percentages)	2016		2015		Change		% Change
Sales and marketing	$	3,357	$	2,336	$	1,021		43.7	%

Sales and marketing expenses for the three months ended October 31, 2016 were $3.4 million, an increase of $1.0 million, or 43.7%, compared with $2.3 million during the three months ended October 31, 2015. As a percentage of revenues, sales and marketing expenses increased to 17.5% for the three months ended October 31, 2016 compared to 13.8% for the three months ended October 31, 2015. The period-over-period increase is attributable to increased personnel-related costs of approximately $0.8 million driven by a higher headcount, primarily due to the reassignment of certain application engineers into dedicated customer-facing sales roles, along with increased travel costs of approximately $0.2 million associated with expanded customer sales initiatives and a global meeting at our company headquarters.

Research and development

	Three Months Ended October 31,
(in thousands, except percentages)	2016		2015		Change		% Change
Research and development	$	6,234	$	6,143	$	91		1.5	%

Research and development expenses for the three months ended October 31, 2016 were $6.2 million, an increase of $0.1 million, or 1.5%, compared with $6.1 million during the three months ended October 31, 2015. As a percentage of revenues, research and development expense decreased to 32.5% for the three months ended October 31, 2016 compared to 36.2% for the three months ended October 31, 2015. The period-over-period increase in expense is attributable to increased personnel-related costs of $0.3 million due to the net addition of seven full-time employees and annual merit increases, which were partially offset by a $0.2 million reduction in costs, primarily driven by savings from an amended hosting agreement at our high performance computing data center in New Jersey.

17

General and administrative

	Three Months Ended October 31,
(in thousands, except percentages)	2016		2015		Change		% Change
General and administrative	$	3,952	$	3,456	$	496		14.4	%

General and administrative expenses for the three months ended October 31, 2016 were $4.0 million, an increase of $0.5 million, or 14.4%, compared to $3.5 million for the three months ended October 31, 2015. As a percentage of revenues, general and administrative expenses increased to 20.6% for the three months ended October 31, 2016 compared to 20.4% the three months ended October 31, 2015. The increase in general and administrative expenses is primarily attributable to a $0.3 million increase in employee-related expenses due to newly-hired full-time employees, annual merit increases and increased stock-based compensation expense, along with a $0.3 million increase in other pre-launch hosting costs associated with the commencement of a new agreement at our new high performance computing data center in Virginia. These increases were partially offset by a decrease of $0.1 million in recruiting fees due to the hiring of a full-time recruiter.

Total other expense, net

	Three Months Ended October 31,
(in thousands, except percentages)	2016			2015		Change			% Change
Total other expense, net	$	(120	)	$	0	$	(120	)		100.0	%

Total other expense, net for the three months ended October 31, 2016 was $(0.1) million compared to total other expense, net of $0 for the three months ended October 31, 2015. Total other expense, net consists primarily of foreign exchange gains and losses and interest expense associated with our capital lease obligations. The period-over-period change in total other expense, net is primarily attributed to foreign exchange fluctuations in the Euro and Japanese yen.

Provision for income taxes

	Three Months Ended October 31,
(in thousands, except percentages)	2016			2015			Change			% Change
Provision for income taxes	$	(436	)	$	(344	)	$	(92	)		26.7	%

For the three months ended October 31, 2016, our income tax provision was $0.4 million. For the three months ended October 31, 2015, our income tax provision was $0.3 million. The provision for both periods primarily consists of the tax effects of foreign operating results and foreign withholding taxes.

In determining the realizability of the net United States federal and state deferred tax assets, we consider numerous factors including historical profitability, estimated future taxable income, prudent and feasible tax planning strategies and the industry in which we operate. Management reassesses the realization of the deferred tax assets each reporting period, which resulted in a valuation allowance against the full amount of our United States deferred tax assets in the first quarter of fiscal year 2015. To the extent that the financial results of the United States operations improve in the future and the deferred tax assets become realizable, we will reduce the valuation allowance through earnings.

We and one or more of our subsidiaries file United States federal income tax returns and tax returns in various state and foreign jurisdictions. With limited exceptions, we are no longer subject to federal, state, local or foreign examinations for years ending prior to January 31, 2011. However, carryforward attributes that were generated in tax years ending prior to January 31, 2012 may still be adjusted upon examination by state or local tax authorities if they either have been or will be used in a future period.

18

Under Section 382 of the Internal Revenue Code of 1986, as amended, substantial changes in our ownership may limit the amount of net operating loss carryforwards that could be utilized annually in the future to offset its taxable income. Specifically, this limitation may arise in the event we undergo a cumulative change in ownership of more than 50% within a three-year period. During the first quarter of fiscal year 2015, our management determined that the Company had experienced an ownership change for purposes of Section 382. This ownership change resulted in annual limitations to the amount of net operating loss carryforwards that can be utilized to offset future taxable income, if any, at the federal level. Our management has determined that, as of October 31, 2016, we have not experienced another ownership change for purposes of Section 382. However, future transactions in our common stock could trigger an ownership change for purposes of Section 382, which could further limit the amount of net operating loss carryforwards that could be utilized annually in the future to offset our taxable income, if any. Any such limitation, whether as the result of sales of common stock by our existing stockholders or sales of common stock by us, could have a material adverse effect on our results of operations in future years.

Results of operations for the nine months ended October 31, 2016 and 2015

The following table sets forth, for the periods presented, data from our consolidated statements of operations:

	Nine Months Ended October 31,
(in thousands)	2016			2015
Revenue:
License revenue	$	44,836		$	39,185
Project revenue		8,219			8,002
Total revenues		53,055			47,187
Operating expenses: (1)
Cost of revenues		14,340			14,516
Sales and marketing		10,080			7,264
Research and development		18,468			18,265
General and administrative (2)		10,858			9,849
Total operating expenses		53,746			49,894
Loss from operations		(691	)		(2,707	)
Other income (expense), net
Foreign exchange gain (loss)		94			(172	)
Interest expense		(116	)		(179	)
Interest income		33			8
Other income, net		9			6
Total other income (expense), net		20			(337	)
Loss before income taxes		(671	)		(3,044	)
Provision for income taxes		(795	)		(472	)
Net loss	$	(1,466	)	$	(3,516	)

(1) Amounts include stock-based compensation expense as follows:

	Nine Months Ended October 31,
(in thousands)	2016		2015
Cost of revenues	$	124	$	186
Sales and marketing		202		317
Research and development		567		691
General and administrative		565		572
Total stock-based compensation expense	$	1,458	$	1,766

(2) Includes amortization expense related to intangible assets as follows:

	Nine Months Ended October 31,
(in thousands)	2016		2015
General and administrative	$	263	$	263

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The following table sets forth, for the periods presented, data from our consolidated statements of operations as a percentage of total revenues:

	Nine Months Ended October 31,
(as a percent of total revenue)	2016			2015
Revenue:
License revenue		84.5	%		83.0	%
Project revenue		15.5			17.0
Total revenues		100.0			100.0
Operating expenses:
Cost of revenues		27.0			30.8
Sales and marketing		19.0			15.4
Research and development		34.8			38.7
General and administrative		20.5			20.9
Total operating expenses		101.3			105.7
Loss from operations		(1.3	)		(5.7	)
Other income (expense), net
Foreign exchange gain (loss)		0.2			(0.4	)
Interest expense		(0.2	)		(0.4	)
Interest income		0.1			0.0
Other income, net		0.0			0.0
Total other income (expense), net		0.0			(0.7	)
Loss before income taxes		(1.3	)		(6.5	)
Provision for income taxes		(1.5	)		(1.0	)
Net loss		(2.8	)%		(7.5	)%

Due to rounding, totals may not equal the sum of line items in the table above.

Comparison of nine months ended October 31, 2016 and 2015

Revenue

	Nine Months Ended October 31,
(in thousands, except percentages)	2016		2015		Change		% Change
License revenue	$	44,836	$	39,185	$	5,651		14.4	%
Project revenue		8,219		8,002		217		2.7	%
Total revenues	$	53,055	$	47,187	$	5,868		12.4	%

License revenue increased 14.4% from $39.2 million for the nine months ended October 31, 2015 to $44.8 million for the nine months ended October 31, 2016. The $5.7 million increase was driven almost entirely by increased consumption of simulation capacity by existing customers and the addition of new license customers during the period. Deployment continues to expand in our core customer base across our portfolio of applications. We experienced particularly strong demand in our Asian markets. Project revenue for the nine months ended October 31, 2016 increased 2.7% from $8.0 million to $8.2 million as compared with the nine months ended October 31, 2015. Project revenue growth reflects stronger demand in the current quarter as well as the completion of projects that had been expected to be delivered during the quarter ended July 31,2016. We expect our project revenue growth will continue to fluctuate from quarter to quarter as our investment in project capacity has slowed, but our capacity to deliver projects will continue to support new opportunities to drive license growth. Both license and project revenue, particularly new customer opportunities, are leveraging the capabilities of our ExaCLOUD platform. Virtually all of our projects are now being delivered using ExaCLOUD exposing our customers to its capabilities. ExaCLOUD continues to play an increasingly important role in our new customer acquisition go-to-market model.

Foreign exchange fluctuations, particularly the strengthening of the Euro and the Japanese yen against the U.S. dollar, positively impacted total revenue in the nine months ended October 31, 2016 by $1.1 million as compared to the nine months ended October 31, 2015. On a constant currency basis, our total revenues in the nine months ended October 31, 2016 increased 10.1% compared with the nine months ended October 31, 2015.

20

Cost of revenues

	Nine Months Ended October 31,
(in thousands, except percentages)	2016		2015		Change			% Change
Cost of revenues	$	14,340	$	14,516	$	(176	)		-1.2	%

Cost of revenues for the nine months ended October 31, 2016 was $14.3 million, a decrease of approximately $0.2 million, or 1.2%, compared with $14.5 million during the nine months ended October 31, 2015. As a percentage of revenues, cost of revenues decreased to 27.0% for the nine months ended October 31, 2016 compared to 30.8% for the nine months ended October 31, 2015. The period-over-period decrease is primarily attributable to a decrease of $0.8 million in personnel-related costs driven by a change in the headcount mix and $0.1 million of savings from an amended hosting agreement at our high performance computing data center in New Jersey. These decreases were partially offset by increases in depreciation expense of $0.3 million attributable to additional computing equipment for our high performance computing data center in New Jersey and increases in royalty costs of $0.4 million.

Sales and marketing

	Nine Months Ended October 31,
(in thousands, except percentages)	2016		2015		Change		% Change
Sales and marketing	$	10,080	$	7,264	$	2,816		38.8	%

Sales and marketing expenses for the nine months ended October 31, 2016 were $10.1 million, an increase of $2.8 million, or 38.8%, compared with $7.3 million during the nine months ended October 31, 2015. As a percentage of revenues, sales and marketing expenses increased to 19.0% for the nine months ended October 31, 2016 compared to 15.4% for the nine months ended October 31, 2015. The period-over-period increase in cost was driven by an increase of $2.3 million in personnel-related costs due to merit increases and the reassignment of certain application engineers into dedicated customer-facing sales roles and a $0.5 million increase in travel costs associated with expanded customer sales initiatives, higher headcount and a global meeting hosted at our headquarters.

Research and development

	Nine Months Ended October 31,
(in thousands, except percentages)	2016		2015		Change		% Change
Research and development	$	18,468	$	18,265	$	203		1.1	%

Research and development expenses for the nine months ended October 31, 2016 were $18.5 million, an increase of $0.2 million, or 1.1%, compared with $18.3 million during the nine months ended October 31, 2015. As a percentage of revenues, research and development expenses decreased to 34.8% for the nine months ended October 31, 2016 compared to 38.7% for the nine months ended October 31, 2015. The period-over-period increase in cost was primarily attributable to an increase of $0.2 million in personnel-related costs due to the net addition of seven full-time employees and annual merit increases, along with $0.2 million in increased consulting costs. These increases were partially offset by a $0.2 million reduction in costs, primarily driven by savings from an amended hosting agreement at our high performance computing data center in New Jersey.

General and administrative

	Nine Months Ended October 31,
(in thousands, except percentages)	2016		2015		Change		% Change
General and administrative	$	10,858	$	9,849	$	1,009		10.2	%

General and administrative expenses for the nine months ended October 31, 2016 were $10.9 million, an increase of $1.0 million, or 10.2%, compared to $9.8 million for the nine months ended October 31, 2015. As a percentage of revenues, general and administrative expenses decreased to 20.5% for the nine months ended October 31, 2016 compared to 20.9% for the nine months ended October 31, 2015. The period-over-period increase in cost is primarily attributable to an increase of $0.5 million in employee-related costs due to new full-time employees, including one executive, and annual merit increases, an increase of $0.3 million in network and facility costs primarily driven by pre-launch hosting costs associated with the commencement of a new agreement at our new data center in Virginia, an increase of $0.1 million in information technology support costs, and $0.1 million of increased professional fees associated with patent procurement and other legal matters.

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Total other income (expense), net

	Nine Months Ended October 31,
(in thousands, except percentages)	2016		2015			Change		% Change
Total other income (expense), net	$	20	$	(337	)	$	357		(105.9	)%

Total other income (expense), net for the nine months ended October 31, 2016 was less than $0.1 million compared to total other income (expense), net of $(0.3) million for the nine months ended October 31, 2015. Total other income (expense), net consists primarily of foreign exchange gains and losses offset by interest expense associated with our capital lease obligations. The period-over-period change in total other income (expense), net is primarily attributed to foreign exchange fluctuations in the Euro and Japanese yen.

Provision for income taxes

	Nine Months Ended October 31,
(in thousands, except percentages)	2016			2015			Change			% Change
Provision for income taxes	$	(795	)	$	(472	)	$	(323	)		68.4	%

For the nine months ended October 31, 2016, our income tax provision was $0.8 million. For the nine months ended October 31, 2015, our income tax provision was $0.5 million. The provision for both periods primarily consists of the tax effects of foreign operating results and foreign withholding taxes.

In determining the realizability of the net United States federal and state deferred tax assets, we consider numerous factors including historical profitability, estimated future taxable income, prudent and feasible tax planning strategies and the industry in which we operate. Management reassesses the realization of the deferred tax assets each reporting period, which resulted in a valuation allowance against the full amount of our United States deferred tax assets in the first quarter of fiscal year 2015. To the extent that the financial results of the United States operations improve in the future and the deferred tax assets become realizable, we will reduce the valuation allowance through earnings.

We and one or more of our subsidiaries file United States federal income tax returns and tax returns in various state and foreign jurisdictions. With limited exceptions, we are no longer subject to federal, state, local or foreign examinations for years ending prior to January 31, 2011. However, carryforward attributes that were generated in tax years ending prior to January 31, 2012 may still be adjusted upon examination by state or local tax authorities if they either have been or will be used in a future period.

Under Section 382 of the Internal Revenue Code of 1986, as amended, substantial changes in our ownership may limit the amount of net operating loss carryforwards that could be utilized annually in the future to offset its taxable income. Specifically, this limitation may arise in the event we undergo a cumulative change in ownership of more than 50% within a three-year period. During the first quarter of fiscal year 2015, our management determined that the Company had experienced an ownership change for purposes of Section 382. This ownership change resulted in annual limitations to the amount of net operating loss carryforwards that can be utilized to offset future taxable income, if any, at the federal level. Our management has determined that, as of October 31, 2016, we have not experienced another ownership change for purposes of Section 382. However, future transactions in our common stock could trigger an ownership change for purposes of Section 382, which could limit the amount of net operating loss carryforwards that could be utilized annually in the future to offset our taxable income, if any. Any such limitation, whether as the result of sales of common stock by our existing stockholders or sales of common stock by us, could have a material adverse effect on our results of operations in future years.

Non-GAAP Measures

We provide certain non-GAAP financial measures to investors as additional information in order to supplement our consolidated financial statements, which are presented in accordance with accounting principles generally accepted in the United States, or GAAP. The non-GAAP financial information presented here should be considered in conjunction with, and not as a substitute for, or superior to, the financial information presented in accordance with GAAP and should not be considered a measure of our liquidity. There are significant limitations associated with the use of non-GAAP financial measures. Further, these measures may differ from the non-GAAP information, even where similarly titled or used by other companies and therefore should not be used to compare our performance to that of other companies.

Revenue and total operating expenses on a constant currency basis. Our international operations generate revenue and incur expenses that are denominated in foreign currencies, and changes in currency exchange rates can materially affect our consolidated results of operations. Our principal exposures are to fluctuations in exchange rates for the United States dollar versus the British pound, Chinese

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yuan, Euro, Japanese yen, and Korean won. To provide investors with information concerning underlying trends in our business, we disclose revenue and total operating expenses on a constant currency basis, which we define as GAAP revenue or operating expenses, adjusted to reverse the impact of changes in the exchange rates of the principal currencies in which our international operations generated revenue and incurred expenses. We calculate revenue and total operating expenses on a constant currency basis by converting revenue or operating expenses that were generated in the currencies specified above during the three and nine months ended October 31, 2016 to United States dollars at assumed exchange rates equal to the exchange rates in effect for such currencies during the corresponding period of the previous fiscal period, rather than the exchange rates actually in effect during the current fiscal period.

Adjusted EBITDA. We define Adjusted EBITDA as EBITDA, excluding non-cash, stock-based compensation expense. We define EBITDA as net income (loss), excluding depreciation and amortization, interest expense, net, other income, net, foreign exchange (loss) gain and provision for income taxes. The GAAP measure most comparable to Adjusted EBITDA is net income (loss).

Non-GAAP operating income (loss). We define non-GAAP operating income (loss) as GAAP operating income (loss) excluding non-cash, stock-based compensation expense and amortization of acquired intangible assets. The GAAP measure most comparable to non-GAAP operating income (loss) is operating income (loss).

Non-GAAP net income (loss). We define non-GAAP net income (loss) as GAAP net income (loss) excluding the after tax impact of non-cash, stock-based compensation expense and amortization of acquired intangible assets. The GAAP measure most comparable to non-GAAP net income (loss) is net income (loss).

Non-GAAP net income (loss) per diluted share. We define non-GAAP net income (loss) per diluted share as GAAP net income (loss) per diluted share excluding the after tax impact of non-cash, stock-based compensation expense and amortization of acquired intangible assets. The GAAP measure most comparable to non-GAAP net income (loss) per diluted share is net income (loss) per diluted share.

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Our management uses these non-GAAP financial measures to evaluate our operating performance and for internal planning and forecasting purposes. By excluding material non-cash expenses related to stock-based compensation and depreciation, we believe that these measures more clearly reflect the underlying trends in our business, are useful for comparing current results with prior period results, and are helpful to investors and financial analysts in assessing our operating performance. For example, our management considers Adjusted EBITDA to be an important indicator of our operational strength and the performance of our business and a good measure of our historical operating trends. However, each of these non-GAAP financial measures may have limitations as an analytical tool. In considering our Adjusted EBITDA, non-GAAP operating income (loss), non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share, investors should take into account the following reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures:

Adjusted EBITDA:	Three Months Ended October 31,						Nine Months Ended October 31,
	2016			2015			2016			2015
(in thousands)
Net income (loss)	$	155		$	(433	)	$	(1,466	)	$	(3,516	)
Add back:
Depreciation and amortization		996			959			2,987			2,487
Interest expense, net		18			57			83			171
Other income, net		3			(6	)		(9	)		(6	)
Foreign exchange loss (gain)		99			(51	)		(94	)		172
Provision for income taxes		436			344			795			472
EBITDA		1,707			870			2,296			(220	)
Stock-based compensation expense		532			661			1,458			1,766
Adjusted EBITDA	$	2,239		$	1,531		$	3,754		$	1,546
Non-GAAP operating income (loss):	Three Months Ended October 31,						Nine Months Ended October 31,
	2016			2015			2016			2015
(in thousands)
Operating income (loss)	$	711		$	(89	)	$	(691	)	$	(2,707	)
Add back:
Stock-based compensation expense		532			661			1,458			1,766
Amortization of acquired intangible assets	88			88			263			263
Non-GAAP operating income (loss)	$	1,331		$	660		$	1,030		$	(678	)
Non-GAAP net income (loss):	Three Months Ended October 31,						Nine Months Ended October 31,
	2016			2015			2016			2015
(in thousands)
Net income (loss)		155			(433	)		(1,466	)		(3,516	)
Add back:
Stock-based compensation expense		532			661			1,458			1,766
Amortization of acquired intangible assets		88			88			263			263
Income tax effect (1)		(217	)		(265	)		(602	)		(710	)
Non-GAAP net income (loss)	$	558		$	51		$	(347	)	$	(2,197	)
Non-GAAP net income (loss), per diluted share:	Three Months Ended October 31,						Nine Months Ended October 31,
	2016			2015			2016			2015
Net income (loss), per diluted share (2)	$	0.01		$	(0.03	)	$	(0.10	)	$	(0.24	)
Add back:
Stock-based compensation expense		0.03			0.05			0.10			0.12
Amortization of acquired intangible assets		0.01			0.01			0.02			0.02
Income tax effect (1)		(0.01	)		(0.02	)		(0.04	)		(0.05	)
Non-GAAP net income (loss), per diluted share (2)(3):	$	0.04		$	—		$	(0.02	)	$	(0.15	)

(1) The tax effect of non-cash stock-based compensation expense and non-cash amortization of acquired intangibles is estimated using a blended rate equivalent to our annual statutory United States federal tax rate and our estimated state tax rate. The tax effect is exclusive of any impact from valuation allowances established against our United States net deferred tax assets and

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other discrete items. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.

(2) Share amounts utilized on a fully diluted basis were approximately 15.3 million and 14.6 million for the three months ended October 31, 2016 and 2015, respectively, and 14.8 million and 14.5 million for the nine months ended October 31, 2016 and 2015, respectively.

(3) Due to rounding, totals may not equal the sum of line items in the table above.

Liquidity

Overview

Our primary sources of liquidity during the nine months ended October 31, 2016 were cash and cash equivalents on hand, cash flows provided by operating activities and cash proceeds from stock option exercises. Our primary uses of cash during the nine months ended October 31, 2016 were capital expenditures and payments of capital lease obligations. As of October 31, 2016, we had $25.0 million in cash and cash equivalents.

On December 10, 2013, we filed a shelf registration statement on Form S-3, which included a base prospectus relating to, among other things, the registration of $75 million of our common stock that may be offered and sold by us from time to time pursuant to Rule 415 promulgated under the Securities Act of 1933, in amounts, at prices and on terms to be determined at the time of the offering. We may sell shares of our common stock pursuant to this registration statement at any time through December 27, 2016, the third anniversary of the effective date of the registration statement.

Net Cash Flows from Operating Activities

Variations in the amount of our net cash provided or used by operating activities are primarily the result of changes in the amount of our working capital accounts, mainly accounts receivable and deferred revenue, the timing of cash payments from our customers and of our cash expenditures, principally employee salaries, accounts payable and payments of value added taxes and consumption taxes on the receivables of our foreign subsidiaries.

Cash payments from our customers fluctuate due to timing of new and renewal license sales, which typically coincide with our customers’ budget cycles. The fourth quarter of each fiscal year generally has the highest license sales, with payment of the license fee typically becoming due at the commencement of the license term. As a result, our cash flows from operations are typically highest in the first quarter of each fiscal year. Generally, customers are invoiced in advance for their annual subscription fee and the invoices are recorded in accounts receivable and deferred revenue, with deferred revenues being recognized ratably over the term of the subscription agreement.

Net cash provided by operating activities for the nine months ended October 31, 2016 and 2015 was $0.5 million and $3.9 million, respectively. The decrease during the current year period is primarily the result of decreases in accounts payable and deferred revenue, and partially offset by increases in prepaid expenses and other current assets.

Net Cash Flows from Investing Activities

Net cash used in investing activities for the nine months ended October 31, 2016 and 2015 was $1.9 million and $1.4 million, respectively. Capitalized renovations to our Burlington, Massachusetts headquarters office and capital expenditures for our new data center in Virginia accounted for the majority of the increase in purchases of property and equipment during the current year period.

Net Cash Flows from Financing Activities

Net cash used in financing activities for the nine months ended October 31, 2016 was $1.7 million, which consisted of payments on our capital lease obligations of $2.2 million, partially offset by proceeds from stock option exercises of $0.5 million. Net cash used in financing activities for the nine months ended October 31, 2015 was $1.0 million, which consisted of $2.1 million of payments on our capital lease obligations, partially offset by proceeds from stock options and warrant exercises of $1.2 million.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of either October 31, 2016 or January 31, 2016.

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Contractual Commitments

Operating Leases

Effective July 1, 2016, we entered into an agreement to lease space and high performance computing capacity at a data center located in Virginia. The three-year agreement will provide access to up to 300 KW hours of computing capacity, which we believe will be suitable and adequate to meet the growing demands of our customers.

As of October 31, 2016, after taking into consideration the above agreement, total future minimum lease payments under non-cancelable lease arrangements are as follows (in millions):

Year ended January 31,
2017 (Remainder as of October 31, 2016)	$	1.6
2018		6.1
2019		5.5
2020		3.9
2021		2.1
Thereafter		4.8
	$	24.0

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle, as a result of which more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP. The standard is effective for annual periods beginning after December 15, 2018, and interim periods therein. The two permitted transition methods under the new standard are: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard when it becomes effective.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. Under the new guidance, we will be required to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosures in certain circumstances. The provisions of this ASU are effective for annual periods beginning after December 15, 2016, and for interim periods therein. This ASU is not expected to have a material impact on our financial statements or disclosures.

In April 2015, the FASB issued ASU No. 2015-05, Intangibles – Goodwill and Other – Internal-Use Software: Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The guidance clarifies the circumstances under which a cloud computing customer would account for the arrangement as a license of internal-use software. The standard will be effective for annual reporting periods beginning after December 15, 2016, and for interim periods therein. Early adoption is permitted. This ASU is not expected to have an impact on our financial statements or disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This standard requires the recognition of lease assets and liabilities for all leases, with certain exceptions, on the balance sheet. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. This ASU is effective for annual periods beginning after December 15, 2018, and for interim periods therein. We are currently evaluating the requirements of this ASU and have not yet determined its impact on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718)—Improvements to Employee Share-Based Payment Accounting. This standard simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The provisions of this ASU are effective for annual periods beginning after December 15, 2016, and for interim periods therein. Early adoption is permitted. We are currently evaluating the requirements of this ASU and have not yet determined its impact on our consolidated financial statements.

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Capital Resources

Our future capital requirements may vary materially from those now planned and will depend on many factors, including the costs to develop and implement new solutions and applications, the sales and marketing resources needed to further penetrate our market and gain acceptance of new solutions and applications we develop, the expansion of our operations in the United States and internationally and the response of competitors to our solutions and applications. Historically, we have experienced increases in our expenditures consistent with the growth in our operations and personnel, and we anticipate that our expenditures will continue to increase as we grow our business. Our practice has been to reinvest the undistributed earnings of our foreign subsidiaries in their local jurisdictions, and we currently do not intend to repatriate such earnings. As of October 31, 2016 and January 31, 2016, $7.7 million and $12.8 million, respectively, of our cash is held in bank accounts outside the United States and may not be available to fund our domestic operations and obligations without paying taxes upon repatriation.

We expect to be able to meet the funding needs of our United States operations and do not currently intend to repatriate undistributed earnings that have been indefinitely reinvested in our international subsidiaries.

We believe our cash on hand and cash flows from our operations will be sufficient to meet our working capital and capital expenditure requirements for the foreseeable future, including at least the next twelve months.

Seasonality

We have experienced and expect to continue to experience seasonal variations in the timing of customers’ purchases of our software products. Many customers make purchase decisions based on their budget cycles, which typically coincide with the calendar year, except in Japan, where our customer budget cycles typically begin on April 1. Because our software products are sold pursuant to annual subscription agreements and we recognize revenue from these subscriptions over the term of the agreement, downturns or upturns in invoices may not be immediately reflected in our operating results. However, these seasonal trends materially affect the timing of our cash flows, as we generally receive the annual license fee at the time the license term commences. As a result, our cash flows from operations are typically highest in the first quarter of each fiscal year.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Exchange Risk

As we conduct business in multiple international currencies throughout the world, our international operations generate and incur expenses that are denominated in foreign currencies. These amounts could be materially affected by currency fluctuations. Our principal exposures are to fluctuations in exchange rates for the United States dollar versus the British pound, Chinese yuan, Euro, Japanese yen, and Korean won. Changes in currency exchange rates could adversely affect our consolidated results of operations or financial position. Additionally, our international operations maintain cash balances denominated in foreign currencies. To reduce the risk associated with translation of foreign cash balances into our reporting currency, we typically avoid maintaining excess cash balances in foreign currencies. To date, we have not hedged our exposure to changes in foreign currency exchange rates and, as a result, we could incur unanticipated translation gains and losses.

The Euro was approximately 0.1% stronger against the United States dollar, on average, for the nine months ended October 31, 2016, when compared with the nine months ended October 31, 2015. The resulting net overall impact to both revenue and operating expense was an increase of $0.1 million during the nine months ended October 31, 2016.

The exchange rate impact of other currencies for the nine months ended October 31, 2016, primarily driven by a stronger Japanese yen, was an increase to revenue and operating expense of approximately $1.0 million and $0.2 million, respectively.

For the nine months ended October 31, 2016, a 10% change in the exchange rates for the United States dollar versus the British pound, Chinese yuan, Euro, Japanese yen, and Korean won would have resulted in a $1.1 million change in revenue.

Interest Rate Sensitivity

Our interest expense consists solely of fixed-rate interest under our outstanding capital lease obligations. As a result, we do not believe that we are exposed to material interest rate risk at this time. Interest income is sensitive to changes in the general level of United States and international interest rates. The primary objective of our investment activities is to preserve principal while maximizing income without significantly increasing risk. Our cash and cash equivalents are relatively insensitive to interest rate changes. In future periods, we will continue to evaluate our investment policy in order to ensure that we continue to meet our overall objectives.

We do not believe that a 10% change in interest rates would have a material impact on our financial position or results of operations.

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ITEM  4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the rules and forms, and that such information is accumulated and communicated to us, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and we necessarily were required to apply our judgment in evaluating whether the benefits of the controls and procedures that we adopt outweigh their costs.

As required by Rule 13a-15(b) under the Exchange Act, an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of October 31, 2016 was conducted under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of October 31, 2016.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the fiscal quarter ended October 31, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM  1. LEGAL PROCEEDINGS

We are not a party to any pending material legal proceedings. However, because of the nature of our business, we may be subject at any particular time to lawsuits or other claims arising in the ordinary course of our business, and we expect that this will continue to be the case in the future.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risks and uncertainties described in our Annual Report on Form 10-K for the fiscal year ended January 31, 2016, filed with the SEC on March 21, 2016 and other documents we file with the SEC. The risks and uncertainties described are those that we have identified as material, but are not the only risks and uncertainties facing us. Our business is also subject to general risks and uncertainties that affect many other companies, such as overall U.S. and non-U.S. economic and industry conditions including a global economic slowdown, geopolitical events, changes in laws or accounting rules, fluctuations in interest and exchange rates, terrorism, international conflicts, major health concerns, natural disasters or other disruptions of expected economic and business conditions. Additional risks and uncertainties not currently known to us or that we currently believe are immaterial also may impair our business operations and liquidity.

Our business could be negatively impacted by the United Kingdom’s vote to exit the European Union.

On June 23, 2016, voters in the U.K. approved an advisory vote calling for that country’s exit from the E.U., commonly referred to as “Brexit”. As a result of the referendum, it is expected that the British government will begin negotiating the terms of the U.K.’s future relationship with the E.U. Although it is unknown what those terms will be, the effects of Brexit will depend on any agreements the U.K. makes to retain access to E.U. markets either during a transitional period or more permanently. The measures could potentially disrupt the markets we serve and the jurisdictions in which we operate and adversely change tax benefits or liabilities in these or other jurisdictions, and may cause us to lose customers and employees. In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the U.K. determines which E.U. laws to replace or replicate.

The announcement of Brexit has created, and terms of the U.K.’s relationship with the E.U. may continue to create, global economic uncertainty, which may cause our customers to closely monitor their costs and reduce their spending budget on our offerings. Any of these effects of Brexit, among others, could adversely affect our business, business opportunities, results of operations, financial condition and cash flows.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(b) Use of Proceeds

On July 3, 2012, we completed the initial public offering of our common stock pursuant to our Registration Statement on Form S-1 (File No. 333-176019), which was declared effective by the Securities and Exchange Commission on June 27, 2012. The underwriters for the offering were Stifel Nicolaus & Company, Incorporated, Robert W. Baird & Co. Incorporated, Canaccord Genuity Inc. and Needham & Company, LLC. We did not use any of the net proceeds from this offering during the three months ended October 31, 2016.

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ITEM 6. EXHIBITS

Exhibit Number	Description
3.1	Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, event date June 27, 2012, filed on July 3, 2012).
3.2	Amended and Restated By-laws (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, event date June 27, 2012, filed on July 3, 2012).
3.3	Amendment to Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.3 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2013).
10.1*	Employment Agreement dated August 1, 2016 between Exa Corporation and Joel Dube.
10.2*	Employment Agreement dated August 8, 2016 between Exa Corporation and Suresh Sundaram.
31.1*	Rule 13a-14(a)/15d-14(a) Certification, executed by Stephen A. Remondi, President and Chief Executive Officer of Exa Corporation.
31.2*	Rule 13a-14(a)/15d-14(a) Certification, executed by Richard F. Gilbody, Chief Financial Officer of Exa Corporation.
32.1**	Section 1350 Certification, executed by Stephen A. Remondi, President and Chief Executive Officer of Exa Corporation.
32.2**	Section 1350 Certification, executed by Richard F. Gilbody, Chief Financial Officer of Exa Corporation.
101*	Interactive Data Files pursuant to Rule 405 of Regulation S-T (XBRL)

* Filed herewith.

** Furnished herewith.

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EXA CORPORATION

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

EXA CORPORATION (Registrant)
By:	/s/ Richard F. Gilbody
	Richard F. Gilbody
	Chief Financial Officer
	Date: November 30, 2016

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EX-10.1

Exhibit 10.1

Exa Corporation

EMPLOYMENT AGREEMENT

Joel Dube

This Agreement effective the 1st Day of August 2016 ("Effective Date"), between Exa Corporation ("Exa" or the “Company”) and Joel Dube ("You") is entered into (a) in recognition of your senior executive role at Exa and (b) to outline the terms and conditions of your continued employment with Exa.

1. Duties: You are currently employed by Exa as Vice President and Principal Accounting Officer working out of the Burlington office and you accept the continuation of that employment under the terms set out in this Agreement. In the course of your employment and subject to your rights under Section9ofthisAgreement,youmaybeappointedtootherpositionswithintheCompanyorto positions with any one of the associated companies of Exa and you may be assigned additional or other duties.

2. Term: Your employment will continue until terminated by either you or the Company in accordance with the provisions of this Agreement.

3. Base Salary. You will be paid an annual base salary less applicable taxes, deductions and withholdings, payable in regular installments as determined by the Chief Executive Officer. This base salary will be subject to an annual review by the Compensation Committee.

4. Incentive Compensation. You will continue to be eligible to participate in the Company’s annual incentive plan on substantially the same terms as other senior executives, at an agreed upon target bonus amount (the “Target Bonus”). The amount of your fiscal year Target Bonus will be determined by the achievement of specific performance objectives established by Executive Management and the Board of Directors at the beginning of each fiscal year. To qualify for the Target Bonus, you must remain employed with the Company through the date that the Target Bonus is determined and paid which will be no later than seventy-five (75) days after the close of the fiscal year.

5. Equity Arrangements. You will continue to be eligible to participate in and receive grants in any stock option agreement and restricted stock agreement or other equity-based or equity related compensation agreement, programs or agreements of the Company, as determined by the Board.

6. Benefits. The Company will continue to provide you the opportunity to enroll in the company’s benefit programs currently offered to other senior executives in your geographic region. Each plan is offered to you, subject to the employee premium co-pay policies currently in effect. In addition, subject to approval of the Board of Directors, you will also continue to receive any other benefits offered or available to employees in similar senior roles at the Company.

7. Paid Time Off. Vacation and holidays are governed by Company policy. Those policies may be modified to comply with local statutory requirements.

8. Travel and Expenses. You will be reimbursed for reasonable business expenses incurred in connection with your employment, upon presentation of appropriate documentation in accordance with the Company’s expense reimbursement policies.

9. Employment Terms/Severance. Either party may terminate this agreement at any time with or without notice, subject to the terms of this agreement and the severance provisions set forth in Exhibit A.

10. Obligations. During your employment, you shall devote your full business efforts to the Company. This obligation, however, shall not preclude you from engaging in appropriate civic, charitable or religious activities or, with the consent of the Board, serving on the boards of directors of companies that are not competitors to the Company, as long as the activities do not materially interfere or conflict with your responsibilities to or your ability to perform your duties of employment with the Company.

11. Exa Policies. Your employment is governed by the Company’s corporate policies and procedures as they currently exist and as they are developed in the future for general application to employees. In particular, and as a condition of your continued employment, you will be subject to the terms and conditions related to the Company’s Intellectual Property, Proprietary Information and Confidentiality Agreement as outlined in Exhibit B, and its Security Policy and Insider Trading Policy.

12. Confidentiality. During the term of your employment by the Company and thereafter, you will not, directly or indirectly, use any Confidential Information (as hereinafter defined) other than pursuantto your employment by the Company or disclose to anyone outside of the Company any such Confidential Information whether by private communication, public address, publication or otherwise or to anyone within the Company who has not been authorized to receive such information, except as directed in writing by an authorized representative of the Company. The term “Confidential Information” as used throughout this Agreement means all trade secrets, proprietary information, know-how, data, designs, specifications, processes, customer lists, client lists and other technical or business information (and any tangible evidence, record or representation thereof), disclosed to or made known to you at any time, whether prepared, conceived or developed by you or by an officer, director, consultant or employee of the Company, or received by the Company from an outside source, which is in the possession of the Company (whether or not the property of the Company), which in any way relates to the present or future business of the Company, which is maintained in confidence by the Company, or which might permit the Company or its clients or customers to obtain a competitive advantage over competitors who do not have access to such trade secrets, proprietary information, or other data or information. Without limiting the generality of the foregoing, Confidential Information includes:

(a) any idea, improvement, invention, innovation, development, technical data, design, formula, device, pattern, concept, art, method, process, machine, manufacturing method, composition of matter, computer program, software, firmware, source code, object code, algorithm, subroutine, object module, schematic, model, diagram, flow chart, chip masking specification, user manual, training or service manual, product specification, plan for a new or revised product, sample, compilation of information, or work in process, and any and all revisions and improvements relating to any of the foregoing (in each case whether or not reduced to tangible form); and

(b) the name or other information of any employee, consultant, supplier, customer or client, or prospective customer or client, any sales plan, marketing material, plan or survey, business plan or opportunity, product or development plan or specification, business proposal, financial record, or business record or other record or information relating to the present or proposed business of the Company or any customer or client.

Notwithstanding the foregoing, the term Confidential Information does not apply to information which the Company has voluntarily disclosed to the public without restriction, or which has otherwise lawfully entered the public domain. In the event that you are requested or required (whether by applicable laws, the requirements of any stock exchange, an order of a court of competentjurisdiction,avalidadministrative,congressionalorotherorder,asubpoena,acivil investigative demand or similar legal process) to disclose Confidential Information, you agree to notify the Company promptly of the request or requirement so that the Company may seek an appropriate protective order or waive compliance with the provisions of this Section 12. In the event that no such protective order or other remedy is obtained and that the Company does not waive compliance with this Section 12, you agree to furnish only that portion of the Confidential Information which you are reasonably advised by counsel is legally required and will exercise your best efforts to obtain reliable assurance that confidential treatment will be accorded the Confidential Information to the extent possible. You agree to cooperate with the Company and use your best efforts to prevent the unauthorized disclosure of all Confidential Information. You will notify the Company as soon as possible in the event of any unauthorized disclosure of Confidential Information under this Agreement and will cooperate fully with the Company in remedying or mitigating the impact and extent of such disclosure. You understand that the Company from time to time has in its possession information which is claimed by customers, clients and others to be proprietary and which the Company has agreed to keep confidential. You agree that all such information will be Confidential Information for purposes of this Agreement.

13. Non-Solicitation of Employees and Customers. During the Restricted Periods below, on your own behalf, or as owner, manager, stockholder, consultant, director, officer, or employee of any business entity other than the Company:

(a) During the term of your employment by the Company and for a period of one year after the termination,youwillnotdirectlyorindirectlyhire,attempttohire,orinduceorsolicittobe hired,asanemployeeorconsultantorinanyothercapacity,anyemployeeorconsultantofthe Company (or any person who may have been employed or engaged as a consultant by the Company during the one year prior to the termination of your employment by the Company), or assist in such hiring by any other person or business entity or encourage any such employee or consultant to terminate his or her employment or consultancy relationship with the Company; or

(b) During the term of your employment by the Company and for the duration of your Severance period, you will not directly or indirectly solicit, induce, or divert any current or client of the Company, or any person or entity reasonably understood to be a prospective customer or client of the Company at the time of the termination (each of the foregoing a “Company Client”). You acknowledge that if you violate any of the provisions of this

Section 13, the running of the Restricted Period will be extended by the time during which you engage in such violation(s).

14. Non-Disparagement. You agree, other than with regard to employees in the good faith performance of your duties with the Company while employed by the Company, both during and for two (2) years after your employment with the Company terminates for any reason, not to knowingly disparage the Company or its officers, directors, employees or agents in any manner likely to be harmful to it or them or its or their business, business reputation or personal reputation. This paragraph will not be deemed to be violated by statements that are truthful, materially complete and made in good faith in required response to legal process or governmental inquiry.

15. Legal Assistance. You will, both during and for five (5) years after your employment with the Company terminates for any reason, supply such information and render such assistance as may be reasonably required by the Company, its subsidiaries or affiliated companies in connection with any legal or quasi-legal proceeding to which either is or becomes a party. The foregoing will be at the full expense of the Company, including reasonable compensation and the expense of seeking advice of counsel in relation to the proceedings.

16. Assignment of Rights. The Company shall have the right to assign this letter agreement to its successors and assigns, and all covenants and agreements hereunder shall inure to the benefit of and be enforceable by said successors or assigns. You shall not assign or transfer this letter agreement or any rights or obligations hereunder without the prior written consent of the Company, and any attempt to do so shall be void and of no force and effect.

17. Notices. Any notice required or permitted to be given under this letter agreement will be given in writing by personal delivery, registered mail or by facsimile, to you at your last known address and to the Company at 55 Network Drive, Burlington, Massachusetts 01803, to the attention of Human Resources Manager.

18. Amendments. This Agreement may not be changed, modified, released, discharged, abandoned, or otherwise amended, in whole or in part, except by an instrument in writing signed by you and the Company.

19. Governing Law. This Agreement will be deemed to be made and entered into in The Commonwealth of Massachusetts, and be governed by, and construed and enforced in accordance with, the laws of The Commonwealth of Massachusetts, without regard to its principles of conflicts of laws. You hereby agree to consent to personal jurisdiction of the state and federal courts situated within Suffolk County, Massachusetts for purposes of enforcing this Agreement, and waive any objection that you might have to personal jurisdiction or venue in those courts. This Agreement is executed under seal.

20. Entire Agreement. This Agreement, including Exhibit A and Exhibit B hereto, contains the entire and only agreement between you and the Company with respect to the subject matter hereof, superseding any previous oral or written communications, representations, understandings, or agreements with the Company or any officer or representative hereof. In the event of any inconsistency between this Agreement and any other contract between you and the Company, the provisions of this Agreement will prevail.

21. Binding on Successors & Assigns. This agreement will be binding upon your heirs, assigns, executors, administrators and representatives, and the provisions of this Agreement will inure to the benefit of and be binding on the successors and assigns of the Company

22. Other Terms.

(a) Your obligations under this Agreement will continue in accordance with its express terms regardless of any changes in your title, position, duties, salary, compensation or benefits or other terms and conditions of your employment by the Company. Your obligations under this Agreement will survive the termination of your employment by the Company regardless of the manner of or reasons for such termination, and regardless of whether such termination constitutes a breach of any other agreement you may have with the Company. You expressly consent to be bound by the provisions of this Agreement for the benefit of the Company or any parent, subsidiary or affiliate to whose employ you may be transferred without the necessity that this Agreement be re-signed at the time of such transfer. You agree to provide a copy of this Agreement to any prospective employer, partner or coventurer prior to entering into an employment, partnership or other business relationship with such person or entity.

(b) If any provision of this Agreement is determined to be unenforceable by any court of competent jurisdiction by reason of its extending for too great a period of time or over too large a geographic area or over too great a range of activities, such provision will be interpreted to extend only over the maximum period of time,

geographic area or range of activities as to which it may be enforceable. If, after application of the immediately preceding sentence, any provision of this Agreement shall be determined to be invalid, illegal or otherwise unenforceable by any court of competent jurisdiction, the validity, legality and enforceability of the other provisionsofthis Agreement shall not be affected thereby. Except as otherwise provided in this paragraph,any invalid, illegal or unenforceable provision of this Agreement shall be severable, and afterany such severance, all other provisions hereof shall remain in full force and effect.

(c) You acknowledge and agree that violation of this Agreement by you would cause irreparable harm to the Company not adequately compensable by money damages alone, and you therefore agree that, in addition to all other remedies available to the Company at law, in equity or otherwise, the Company shall be entitled to injunctive relief to prevent an actual or threatened violation of this Agreement and to enforce the provisions hereof, without showing or proving any actual damage to the Company or posting any bond in connection therewith.

(d) No failure by the Company to insist upon strict compliance with any of the terms, covenants, or conditions hereof, and no delay or omission by the Company in exercising any right under this Agreement, will operate as a waiver of such terms, covenants, conditions or rights. A waiver or consent given by the Company on any one occasion is effective only in that instance and will not be construed as a bar to or waiver of any right on any other occasion.

Accepted:			Executed on behalf of ExaCorporation:
	/s/ Joel Dube		/s/ Richard F. Gilbody
Name:	Joel Dube	Name:	Richard F. Gilbody
Title:	VP, Principal Accounting Officer	Title:	Chief Financial Officer
Date:	August 1, 2016	Date:	August 1, 2016

Exhibit A to

Employment Agreement dated August 1st, 2016 (the “Agreement”)

between

Exa Corporation and

Joel Dube

EXA CORPORATION EXECUTIVE ADDITIONAL EMPLOYMENT CONDITIONS RELATED TO TERMINATION

1. Definitions. As used herein, the following terms shall be defined as follows:

(a) “Cause” means one or more of the following:

(i) a conviction of, or pleading of guilty or nolo contendere to, a felony;

(ii) a conviction of, or pleading of guilty or nolo contendere to, a misdemeanor resulting in material reputational harm to the Company;

(iii) a commission of an act of moral turpitude;

(iv) a commission of an act of material fraud, dishonesty, theft, misappropriation or embezzlement against the Company or a subsidiary of the Company;

(v) a continuing failure to substantially perform his or her assigned duties after receiving a written demand for substantial performance that identifies the manner in which the Company believes you have failed to perform;

(vi) a material breach of the Company’s Code of Ethics;

(vii) a material breach of the terms and conditions of any non-competition, non-solicitation, non-disparagement or confidentiality agreement between you and the Company;

(viii) a commission of willful misconduct resulting in material harm to the Company.

(b) “Change in Control” shall mean the occurrence of any one of the following events:

(i) any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) becomes, after the Effective Date, a “beneficial owner” (as such term is defined in Rule 13d-3 promulgated under the Exchange Act) (other than the Company, any trustee or other fiduciary holding securities under an employee benefit agreement of the Company, or any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company’s then outstanding securities; or; or

(ii) the consummation of a merger or consolidation of the Company with any other corporation or other entity, other than a merger or consolidation which would resultin the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation (and such voting power among the holders thereof is in substantially the same proportion as the voting power among the holders thereof immediately prior such merger or consolidation); or

(iii) the closing of a sale or disposition by the Company of all or substantially all of the Company’s assets; or

(iv) individuals who constitute the Board on the Effective Date (“Incumbent Directors”) cease for any reason to constitute at least a majority of the Board; provided that any individual who becomes a member of the Board subsequent to the Effective Date, whose election or nomination for election was approved by a vote of at least two- thirds of the Incumbent Directors shall be treated as an Incumbent

Director unless he or she assumed office as a result of an actual or threatened election contest with respect to the election or removal of directors; or

(v) a complete liquidation or dissolution of the Company.

(c) “Good Reason” means any one or more of the following:

(i) a material diminishment of the nature or scope of your employment-related responsibilities or duties (provided, however, that a change in reporting structure or a change in the number of your direct reports shall not in and of itself constitute a material diminishment); or

(ii) a material reduction in the aggregate compensation opportunity made available to you by the Company, except for a reduction that is applicable equally to similarly situated executives and that is not greater than 10%; or

(iii) the required relocation, without your consent, of more than 50 miles from your current office location, unless the new location is closer to your primary residence; or

(iv) following a Change in Control, the failure of the surviving company to assume the obligations of the Agreement.

2. Severance Pay Benefits Not in Connection with a Change in Control. In the event your employment by the Company is involuntarily terminated by the Company without Cause or by you for Good Reason not in connection with a Change in Control, you shall be entitled to the severance pay benefits set forth in Section 2a. below following the termination date (the “Severance Period”); provided that you execute and do not revoke the Release and Waiver of Claims attached to this Agreement as Exhibit A-1 and provided, that the number of months of severance payments may not exceed the number of full months that you have been employed by the Company. All severance payments shall be paid in installments in accordance with the Company’s regular payroll schedule.

a. Continue payment of: (i) twelve (12) months of base salary plus, in the event you have electedCOBRAcontinuationcoverage,paymentofyourCOBRApremiumsonthe same cost-sharing basis as during employment. The payment of COBRA premiums will be taxable to you. If you become eligible for substantially similar benefits from a subsequent employer prior to the end of the Severance Period, the Company will cease to pay its share of your COBRA premiums. You agree to notify the Company if and when you become eligible for such other benefits within five (5) business days of such eligibility.

3. Severance Pay Benefits in Connection with a Change in Control. In the event that there isaChangeinControland,withintwo(2)yearsaftertheChangeinControl,youterminate employment with the Company for Good Reason or your employment with the Company is involuntarily terminated by the Company without Cause, you shall be entitled to the enhanced severance pay benefits set forth below, provided that you execute and do not revoke the Release and Waiver of Claims attached to this Agreement as Exhibit A-1. Payments made hereunder shall be paid in a single, lump sum payment within 60 days of termination of employment.

a. Payment in a single, lump sum equal to: (i) twelve (12) months of base salary; and (ii) the target bonus for which you were eligible. In addition, in the event you have elected COBRA continuation coverage, the Company will make payment of your COBRA premiums on the same cost-sharing basis as during employment. The payment of COBRA premiums will be taxable to you. If you become eligible for substantially similar benefits from a subsequent employer prior to the end of the Severance Period, theCompanywillceasetopayitsshareofyourCOBRApremiums. Youagreeto notify the Company if and when you become eligible for such other benefits within five (5) business days of such eligibility.

b. The vesting of all (time-based) equity incentives will accelerate in full at the date of termination of employment by the Company without Cause or by the employee for Good Reason. The vesting of all Performance-based awards for any current or future fiscal year will be deemed to be fully earned upon a Change in Control and will convert to time-based options that will cliff vest two (2) years after the award’s grant date.

4. Notice and Opportunity to Cure Basis of Termination for Cause. In the event of an occurrence constituting the basis of termination for Cause, with the exception of the basis for Cause under subsections 1(a)(i), 1(a)(ii), 1(a)(iii) or 1(a)(iv) of this agreement, the Company shall provide you with 60 days’ written notice regarding the basis of termination for Cause, and you may then take action to cure the basis of termination for Cause within 60 days of receipt of the written notice. If you do not remedy the basis of termination for Cause, you will be terminatedfor Cause upon the conclusion of the 60-day period. In the event of your termination for Cause pursuant to subsections 1(a)(i), 1(a)(ii), 1(a)(iii) or 1(a)(iv), no notice will be required and no opportunity to cure will be available.

5. Notice and Opportunity to Cure Basis of Termination for Good Reason. In the event of any of occurrence constituting the basis of a termination for Good Reason, you shall notify the Company of the initial event or condition constituting the basis of a termination for Good Reason by a written “Notice of Termination” within no more than 60 days of the initial event or condition. A “Notice of Termination” means a notice indicating the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated. The Company may then take action to cure the Good Reason event or conditionwithin 30 days after receipt of the Notice of Termination. A termination for Good Reason does not occur if the basis of the termination for Good Reason is remedied. If the Company does not remedy the basis of the termination for Good Reason after 30 days of receipt of the Notice of Termination, your termination for Good Reason shall occur upon the Company’s receipt of your written notice alleging that the Company failed to cure the event or condition constituting the basis of a termination for Good Reason, provided that such notice is received no later than 30 days following the end of such 30 day cure period.

6. Tax Code. If any payment or benefit you would receive pursuant to this Agreement or any other agreement, agreement, or arrangement would (i) constitute a “parachute payment” within the meaning of Section 280G Internal Revenue Code of 1986, as amended (the “Code”), and, but for this sentence, be subject to the excise taxed imposed by Section 4999 of the Code (the “Excise Tax”), and (ii) the net after-tax amount (taking into account all applicable taxes payable by you, including any Excise Taxes) that you would receive with respect to such “parachute payments” does not exceed the net after-tax amount you would receive if the amount of such payments were reduced to the maximum amount that could otherwise be payable without the imposition of the Excise Tax, then you and the Company shall work together in good faith to agree on an alternative payment schedule acceptable to both parties, or to amend this Agreement in a manner acceptable to both parties, where necessary or desirable, so that you do not incur an excise tax or you incur the least amount of excise Tax as is possible under the circumstances. If a satisfactory alternative payment schedule or amendment cannot be agreed to by the originally scheduled payment, distribution or benefit date, then the Company shall provide such payment, distribution or benefit to you on the originally scheduled date and shall be reduced to the extent necessary to eliminate the imposition of the Excise Tax. To the extent that any such payments are subject to Section 409A of the Code, any reduction in the payments required to be made pursuant to this section shall be made first with respect to payments payable in cash before being made in respect to any payments to be provided in the form of benefits or equity award acceleration, and in the form of benefits before being made with respect to equity award acceleration, and in any case, shall be made with respect to such payments in inverse order of the scheduled dates or times for the payment or provision of such payments.

It is intended that the agreement and all benefits provided pursuant to the agreement shall be exempt from, or in compliance with, Section 409A of the Code and the Treasury Regulations and IRS guidance thereunder (collectively referred to as “Section 409A”), and all provisions of the agreement shall be interpreted in a manner to avoid the imposition of any penalties. If and to the extent required to comply with Section 409A, (i) no payment or benefit required to be paid under this agreement on account of termination of employment shall be made unless and until the participant incurs a “separation from service” within the meaning of Section 409A, and (ii) any change in the time or form of payment upon or following a Change in Control shall be effective only if such event constitutes a Change in Control within the meaning of Section 409A. In the case of any amounts payable under this agreement that may be treated as payable in the form of “a series of installment payments”, as defined in Treasury Regulation Section 1.409A-2(b)(2)(iii), your right to receive such payments shall be treated as a right to receive a series of separate payments for purposes of such Treasury Regulation. If any provision of this agreement provides for payment within a time period, the determination of when such payment shall be made within such time period shall be solely in the discretion of the Company, and if such time period spans two calendar years the payment shall be made in the second year.

If you are a “specified employee” as determined pursuant to Section 409A as of the date of termination of employment and if any payment or benefit provided for in this Agreement or otherwise both (x) constitutes a “deferral of compensation” within the meaning of Section 409A and (y) cannot be paid or provided in the

manner otherwise provided without subjecting you to additional tax, interest, or penalties under Section 409A, then any such payment or benefit shall be delayed until the earlier of (i) the date which is 6 months after your “separation from service” within the meaning of Section 409A for any reason other than death, or (ii) the date of your death. The provisions of this paragraph shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty, or interest pursuant to Section 409A. Any payment or benefit otherwise payable or to be provided to you upon or in the 6 month period following “separation from service” that is not so paid or provided by reason of this paragraph shall be accumulated and paid or provided to you in a single lump sum, as soon as practicable (and in all events within 15 days) after the date that is 6 months after your “separation from service” (or, if earlier, as soon as practicable, and in all events within 15 days, after the date your death).

7. Tax and Other Withholdings. The Company may withhold from any payment under the Agreement any federal, state, or local taxes required by law to be withheld with respect to such payment and such sum as the Company may reasonably estimate is necessary to cover any taxes for which the Company may be liable and which may be assessed with regard to such payment. The Company may also withhold sums to cover an employee’s share of any applicable group health insurance premiums. The Company may also withhold sums owed to the Company by an employee which have not been repaid in full before the time for payment of any benefits due under this Agreement.

8. Agent for Service of Legal Process. Legal process with respect to claims under the agreement may be served on the Chief Financial Officer.

9. Separability. In case any one or more of the provisions of this agreement (or part thereof) shall be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect the other provisions hereof, and this agreement shall be construed as if such invalid, illegal or unenforceable provisions (or part thereof) never had been contained herein.

10. Non-Assignability. No right or interest of yours in the agreement shall be assignable or transferable in whole or in part either directly or by operation of law or otherwise, including, but not limited to, execution, levy, garnishment, attachment, pledge or bankruptcy, provided, however, that this provision shall not be applicable in the case of obligations of you to the Company. This agreement and the rights and obligations of the Company hereunder shall inure to the benefit of and be binding upon any successor to the Company (whether as a result of a Change of Control or other event, or by operation of law or otherwise).

11. Gender and Number. Except where otherwise indicated by the context, any masculine gender used herein shall also include the feminine and vice versa, and the definition of any term herein in the singular shall also include the plural, and vice versa.

Exhibit A-1

to

Employment Agreement dated August 1st, 2016 (the “Agreement”)

between

Exa Corporation

and

Joel Dube

In exchange for the Severance Pay Benefits offered to you under Exhibit A to this Agreement, to which you acknowledge and agree you are not otherwise entitled, you and your heirs, executors, administrators, successors and assigns hereby IRREVOCABLY AND UNCONDITIONALLY RELEASE AND FOREVER DISCHARGE Exa Corporation (the “Company”) and all of its predecessor, successor, parent, subsidiary, affiliated and related companies and entities, and any and all past, present and future directors, officers, attorneys, employees, shareholders, agents, successors, assigns and/or representatives thereof, jointly and severally, and individually and in their official capacities (collectively, “Releasees”) from, any and all claims, agreements, promises, liabilities, rights and demands of any kind whatsoever, in law or equity, whether known or unknown, suspected or unsuspected, apparent or concealed, which you, your heirs, executors, administrators, successors or assigns ever had, now have or hereafter can, shall or may have for, upon, or by reason of any matter, cause or thing whatsoever, prior to and including the date you execute this Agreement, including, but not limited to, any and all claims arising out of or relating to your employment, compensation and benefits with the Company and/or the termination thereof, and claims for costs, expenses and attorneys’ fees with respect thereto, except for claims for breach of this Agreement.

This release and waiver of claims includes, but is not limited to, claims for breach of contract, libel, slander, wrongful discharge, intentional infliction of emotional harm, or other tort, or discrimination or harassment based upon any federal, state, or municipal statute or local ordinance relating to discrimination in employment, including, but in no way limited to, the Age Discrimination in Employment Act of 1967; the Older Workers Benefit Protection Act; the Worker Adjustment and Retraining Notification Act; Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Employee Retirement Income Security Act of 1974; the Americans with Disabilities Act of 1990; the Occupational Safety and Health Act, the Family and Medical Leave Act, the Massachusetts Fair Employment Practices Act, Mass. Gen. L. c. 151B; the Massachusetts Payment of Wages Statute, Mass. Gen. L. c. 149, section 148 et seq., including claims for timely and proper payment of wages; the Massachusetts overtime pay law, Mass. Gen. L. c. 151, section 1A, et seq.; the Massachusetts Equal Rights Act; and the Massachusetts Civil Rights Act. This means that you may not sue Releasees for any current or prior claims, including those arising out of his employment with or separation from the Company and including those for unpaid wages under state law.

You covenant not to sue the Releasees with respect to any of the claims covered by the foregoing release. Notwithstanding the foregoing, this Agreement, including the claims released in this paragraph, does not preclude: (a) claims for breach of this Agreement; (b) any acts that occur after the date you sign this Release; (c) any rights or claims to vested benefits (including and such benefits under a retirement plan governed by ERISA); (d) any claims that may not be released by applicable law; (e) any rights you may have to file, cooperate or participate in any proceeding before the Equal Employment Opportunity Commission (“EEOC”) or any other state or local fair employment practices agency, except, however, you waive any right to recover any monetary damages or award in connection with any such proceeding before the EEOC or any state or local fair employment practices agency; (f) any rights pursuant to any Workers’ Compensation claim; or (g) any rights to unemployment benefits.

You represent that (a) the Company has advised you to consult with an attorney of your choosing concerning the rights waived in this Agreement; (b) you have carefully read this agreement and that you are fully aware of the Agreement’s contents and legal effect, including the waiver of any legal claims; (c) you are voluntarily and knowingly entering this Agreement, including the General Release; and (d) you understand that you are receiving benefits pursuant to this Agreement that you would not otherwise be entitled to if you did not enter this Agreement.

You acknowledge that you have had a period of at least forty-five (45) days to consider the terms of this Agreement. However, you may sign this Agreement and return it to me at any time after the Separation Date and within this forty-five (45) day period. Returning the Agreement to me before the expiration of the forty-five (45) day period is considered a voluntary waiver of any of the time remaining in the forty-five (45) day period. You may revoke this Agreement during the seven (7) days immediately following your execution of this Agreement by submitting a revocation, in writing, to Richard F. Gilbody, Chief Financial Officer at Exa. If you do not revoke this Agreement prior to the expiration of this seven

(7) day period, this Agreement shall take effect at that time as a legally binding agreement between you and the Company on the basis set forth herein (the “Effective Date”).

If you accept the terms of this Agreement, please sign below and return this Agreement to Richard

F.Gilbody on or before the first business day following the forty-five (45th) day after your receipt of this Agreement.

Accepted:			Executed on behalf of ExaCorporation:
Name:	/s/ Joel Dube	Name:	/s/ Richard F. Gilbody

Exhibit B to

Employment Agreement dated August 1st, 2016 (the “Agreement”)

between

Exa Corporation

and

Joel Dube

EXA CORPORATION EXECUTIVE ADDITIONAL EMPLOYMENT CONDITIONS RELATED TO INTELLECTUAL PROPERTY, PROPRIETORY INFORMATION AND CONFIDENTIALITY

In consideration of your continued employment at will by Exa Corporation, a Delaware corporation (“Exa”), or by any of its subsidiaries or affiliated companies (together with Exa, the “Company”), and in recognition of the fact that, due to such role, you will or may have access to Confidential Information (as defined herein), you agree with the Company as follows:

1.Prior Obligations. You hereby represent, warrant and agree (i) that you have the full right to enter into this Agreement and to perform the services that you have been engaged to provide for or on behalf of the Company (the “Services”), without any restriction whatsoever; (ii) that in the course of performing the Services, you will not violate the terms or conditions of any agreement between you and any third party or infringe or wrongfully appropriate any patents, copyrights, trade secrets or other intellectual property rights of any person or entity anywhere in the world; (iii) that you have not and will not disclose or use during the course of your employment by the Company any confidential information that you acquired or will acquire as a result of any current or previous employment or consulting arrangement, or under a previous obligation of and all continuing obligations to current and previous employers and others that require you not to disclose any information to the Company.

2.Ownership and Assignment of Intellectual Property. You agree that all originalsand all copies of all manuscripts, drawings, prints, manuals, diagrams, letters, notes,notebooks,reports, models,records,files,memoranda,plans,sketchesandallotherdocumentsandmaterialscontaining, representing,evidencing,recording,orconstitutinganyConfidentialInformation(asdefinedinSection12oftheAgreement),howeverandwheneverproduced(whetherbyyouorothers)duringthecourseof and in connection with your employment by the Company, and whether before or after your entryintothe Agreement, is and will be the sole property of the Company. You agree that allConfidentialInformation and all other discoveries, inventions, ideas, specifications, designs, concepts, researchandother information,processes,products,methodsandimprovements,orpartsthereofconceived,developed,or otherwisemadebyyou,aloneorjointlywithothersandinanywayrelatingtotheCompany’sbusiness, including but not limited to its present or proposed products, programs or services or to tasksassignedto youduringthetermofyouremploymentbytheCompany,whetherornotmadeduringyournormal workinghours,whetherornotpatentableorsubjecttocopyrightprotection,whetherornotreducedto tangibleformorreducedtopractice,duringthetermofyouremploymentbytheCompany,whetheror not developed, reduced to practice or made on the Company’s premises, and whether or notdisclosedby youtotheCompany(hereinafterreferredtoas“CompanyIntellectualProperty”),togetherwithall products or services which embody or emulate such Company Intellectual Property, is and will bethesole property of the Company and to the fullest extent permitted by law will be deemed “works made for hire”.

You agree to, and hereby do, assign to the Company all your rights, title and interest throughout the world in and to all Company Intellectual Property and to anything tangible which evidences, incorporates, constitutes, represents or records any such Company Intellectual Property.Youhereby assign and, to the extent any such assignment cannot be made at present, you hereby agree to assign to the Company all copyrights, patents and other proprietary rights you may have in any such Company Intellectual Property, together with the right to file for and/or own wholly without restriction United States and foreign patents, trademarks, and copyrights. You agree to waive, and hereby waive, all moral rights or proprietary rights in or to any Company Intellectual Property and, to the extent that such rights may not be waived, agree not to assert such rights against the Company or its licensees, successors or assigns.

You hereby certify that Exhibit B-1 sets forth any and all confidential information and intellectual property that you claim as your own or otherwise intend to exclude from this Agreement because it was developed by you prior to the commencement of your employment by the Company (“Prior Inventions”). You understand that after execution of this Agreement you will have no right to exclude Confidential Information or Company Intellectual Property from this Agreement.

You hereby represent and warrant to the Company that all work product delivered to the Company by you has not incorporated and will not, without the Company’s written consent, incorporate any Prior Invention. If you do incorporate a Prior Invention into work product delivered to the Company, you hereby grant to the Company a nonexclusive, royalty-free, paid-up, irrevocable, worldwide license (with the full right to sublicense) to make, have made, modify, use, sell, offer for sale and import such Prior Invention.

You hereby represent and warrant to the Company that all work product delivered to the Company by you has been and will be original and has not and will not without disclosure to the Company incorporate any “open source” computer code or be in any way subject to any open source license, including, by way of example, the GNU General Public License or Lesser General Public License, the Apache Software License, the Mozilla Public License or any other license that requires disclosure of source code or otherwise would limit the Company’s proprietary rights in such computer code.

3.Obligation to Keep Records. During the course of your employment by the Company, you represent that you have made and maintained and agree to continue to make and maintain adequate and current written records of all Company Intellectual Property, including notebooks and invention disclosures, which records will be available to and remain the property of the Company at all times. You will disclose all Company Intellectual Property promptly, fully and in writing to the Company immediately upon production or development of the same and at any time upon request.

4.Obligation to Cooperate. You will, at any time during your employment by the Company, or after the termination of such employment, upon request of the Company, execute all documents and perform all lawful acts which the Company considers necessary or advisable to secure its rights hereunder and to carry out the intent of this Agreement. Without limiting the generality of the foregoing, you will assist the Company in any reasonable manner to obtain for its own benefit patents or copyrights in any and all countries with respect to all Company Intellectual Property and Existing IP assigned pursuant to Section 2 of this Exhibit B, and you will execute, when requested, patent and other applications and assignments thereof to the Company, or persons designated by it, and any other lawful documents deemed necessary by the Company to carry out the purposes of this Agreement, and you will further assist the Company in every way to enforce any patents and copyrights obtained, including, without limitation, testifying in any suit or proceeding involving any of said patents or copyrights or executing any documents deemed necessary by the Company, all without further consideration than provided for herein. It is understood that reasonable out-of-pocket expenses for your assistance incurred at the request of the Company under this Section 4 will be reimbursed by the Company. If the Company is unable to obtain your signature on any document which you may be required to sign pursuant to this Agreement, whether because of your physical or mental incapacity or for any other reason whatsoever, you hereby irrevocably designate and appoint each of the President and the Secretary of the Company (whether now or hereafter in office) as your agent and attorney-in-fact to execute any such document on your behalf, and to take any and all actions as the Company may deem necessary or desirable in order to protect its rights and interests in any Company Intellectual Property.

5.Return of Property. Upon termination of your employment by the Company foranyreason, or at any other time upon request of the Company, you will promptly return or destroy any and all customer or prospective customer, or client or prospective client, lists, information or related materials, computer programs, software, electronic data, specifications, drawings, blueprints, data storage devices, reproductions, sketches, notes, notebooks, memoranda, reports, records, proposals, business plans, or copies of them, other documents or materials, tools, equipment, or other property belongingtothe Company or its customers which you may then possess or have under my control. You furtheragreethat uponterminationofyouremploymentbytheCompanyforanyreason,youwillnottakewithyouany documents or data in any form or of any description containing or pertaining to Confidential Information or Company Intellectual Property.

6.Other Obligations. You acknowledge that the Company from time to time may have agreements with other persons, including the government of the United States or other countries and agencies thereof, which impose obligations or restrictions on the Company regarding inventions made during the course of work thereunder or regarding the confidential nature of such work. You agree to be bound by all such obligations and restrictions and to take all action necessary to discharge the obligations of the Company thereunder.

7.Publications and Public Statements. You will obtain the Company’s written approval before publishing or submitting for publication any material that relates to your work at the Company and/or incorporates any Confidential Information. To ensure that the Company delivers a consistent message about its products, services and operations to the public, and further in recognition that even positive statementsmayhaveadetrimentaleffectontheCompanyincertainsecuritiestransactionsandother contexts, any statement about the Company that you create, publish or post during the term of your employment by the Company and for six (6) months after termination of your employment by the Company, on any media accessible by the public, including but not limited to electronic bulletin boards or Internet-based chat rooms, must first be reviewed and approved by an officer of the Company before it is released in the public domain.

EXHIBIT B – 1

to

Employment Agreement dated August 1st, 2016 (the “Agreement”)

between

Exa Corporation and

Joel Dube

EXCLUDED CONFIDENTIAL INFORMATION AND INTELLECTUAL PROPERTY

(“Prior Inventions”)

EX-10.2

Exhibit 10.2

Exa Corporation

EMPLOYMENT AGREEMENT

Suresh Sundaram

This Agreement effective the 8th Day of August 2016 ("Effective Date"), between Exa Corporation ("Exa'' or the "Company") and Suresh Sundaram ("You") is entered into (a) in recognition of your senior executive role at Exa and (b) to outline the terms and conditions of your continued employment withExa.

1. Duties: You are currently employed by Exa as Senior Vice President of Products and Marketing working out of the Burlington office and you accept the continuation of that employment under the terms set out in this Agreement. In the course of your employment and subject to your rights under Section 9 of this Agreement, you may be appointed to other positions within the Company or to positions with any one of the associated companies of Exa and you may be assigned additional or otherduties.

2. Term:Youremployment willcontinueuntilterminatedbyeitheryouortheCompany inaccordance withtheprovisionsofthisAgreement.

3. Base Salary. You will be paid an annual base salary less applicable taxes, deductions and withholdings, payable in regular installments as determined by the Chief Executive Officer. This basesalarywillbesubjecttoanannualreviewbytheCompensationCommittee.

4. Incentive Compensation. You will continue to be eligible to participate in the Company's annual incentive plan on substantially the same terms as other senior executives, at an agreed upon target bonus amount (the "Target Bonus"). The amount of your fiscal year Target Bonus will be determined by the achievement of specific performance objectives established by Executive Management and the Board of Directors at the beginning of each fiscal year. To qualify for the TargetBonus,youmustremain employed withtheCompanythroughthedatethattheTargetBonus isdeterminedandpaidwhichwillbenolaterthanseventy-five(75)daysafterthecloseofthefiscal year.

5. Equity Arrangements. You will continue to be eligible to participate in and receive grants in any stock option agreement and restricted stock agreement or other equity-based or equity related compensation agreement, programs or agreements of the Company, as determined by the Board.

6. Benefits. The Company will continue to provide you the opportunity to enroll in the company's benefit programs currently offered to other senior executives in your geographic region. Each plan is offered to you, subject to the employee premium co-pay policies currently in effect. In addition, subject to approval of the Board of Directors, you will also continue to receive any other benefits offeredoravailabletoemployeesinsimilarseniorrolesattheCompany.

7. Paid Time Off. Vacation and holidays are governed by Company policy. Those policies may be modified to comply with local statutory requirements.

8. Travel and Expenses. You will be reimbursed for reasonable business expenses incurred in connection with your employment, upon presentation of appropriate documentation in accordance with the Company's expense reimbursement policies.

9. Employment Terms/Severance. Either party may terminate this agreement at any time with or without notice, subject to the terms of this agreement and the severance provisions set forth in ExhibitA.

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10. Obligations. During your employment, you shall devote your full business efforts to theCompany. This obligation, however, shall not preclude you from engaging in appropriate civic, charitable or religiousactivitiesor,withtheconsentoftheBoard,servingontheboardsofdirectorsofcompanies that are not competitors to the Company, as long as the activities do not materially interfere or conflict with your responsibilities to or your ability to perform your duties of employment with the Company.

11. Exa Policies. Your employment is governed by the Company's corporate policies and proceduresas they currently exist and as they are developed in the future for general application to employees. In particular, and as a condition of your continued employment, you will be subject to the terms and conditions related to the Company's Intellectual Property, Proprietary Information and Confidentiality Agreement as outlined in Exhibit B and its Security Policy and Insider Trading Policy.

12. Confidentiality. During the term of your employment by the Company and thereafter, you will not, directly or indirectly, use any Confidential Information (as hereinafter defined) other than pursuant to your employment by the Company or disclose to anyone outside of the Company any such Confidential Information whether by private communication, public address, publication or otherwise or to anyone within the Company who has not been authorized to receive such information, except as directed in writing by an authorized representative of the Company. The term "Confidential Information" as used throughout this Agreement means all trade secrets, proprietary information, know-how, data, designs, specifications, processes, customer lists, client lists and other technical or business information (and any tangible evidence, record or representation thereof), disclosed toormadeknowntoyouatanytime,whetherprepared, conceivedordevelopedbyyouor byanofficer,director,consultant oremployeeoftheCompany,orreceivedbytheCompanyfroman outside source, which is in the possession of the Company (whether or not the property of the Company), which in any way relates to the present or future business of the Company, which is maintained in confidence by the Company, or which might permit the Company or its clients or customers to obtain a competitive advantage over competitors who do not have access to such trade secrets, proprietary information, or other data or information. Without limiting the generality of the foregoing,ConfidentialInformationincludes:

(a) any idea, improvement, invention, innovation, development, technical data, design, formula, device, pattern, concept, art, method, process, machine, manufacturing method, composition of matter, computer program, software, firmware, source code, object code, algorithm, subroutine, object module, schematic, model, diagram, flow chart, chip masking specification, user manual, training or service manual, product specification, plan for a new or revised product, sample, compilation of information, or work in process, and any and all revisions and improvements relating to any of the foregoing (in each case whether or not reduced to tangible form);and

(b) the name or other information of any employee, consultant, supplier, customer or client, or prospective customer or client, any sales plan, marketing material, plan or survey, business plan or opportunity, product or development plan or specification, business proposal, financial record, or business record or other record or information relating to the present or proposedbusinessoftheCompanyoranycustomer orclient.

Notwithstanding the foregoing, the term Confidential Information does not apply to information which the Company has voluntarily disclosed to the public without restriction, or which has otherwise lawfully entered the public domain. In the event that you are requested or required (whether by applicable laws, the requirements of any stock exchange, an order of a court of competent jurisdiction, a valid administrative, congressional or other order, a subpoena, a civil investigative demand or similar legal process) to disclose Confidential Information, you agree to notify the Company promptly of the request or requirement so that the Company may seek an appropriate protective order or waive compliance with the provisions of this Section 12. In the eventthatnosuchprotectiveorderorotherremedyisobtainedandthattheCompanydoesnotwaive compliance with this Section 12, you agree to furnish only that portion of the Confidential Information which you are reasonably advised by counsel is legally required and will exercise your best efforts to obtain reliable assurance that confidential treatment will be accorded the Confidential Information to the extent possible. You agree to cooperate with the Company and use your best efforts to prevent the unauthorized disclosure of all Confidential Information. You will notify the Company as soon as possible in the event of

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any unauthorized disclosure of Confidential Information under this Agreement and will cooperate fully with the Company in remedying or mitigating the impact and extent of such disclosure. You understand that the Company from time to time has in its possession information which is claimed by customers, clients and others to be proprietary and which the Company has agreed to keep confidential. You agree that all such informationwillbeConfidentialInformationforpurposesofthisAgreement.

13. Non-SolicitationofEmployeesandCustomers.DuringtheRestrictedPeriodsbelow,onyourown behalf, or as owner, manager, stockholder, consultant, director, officer, or employee of anybusiness entityotherthantheCompany:

(a) During the term of your employment by the Company and for a period of one year after the termination, you will not directly or indirectly hire, attempt to hire, or induce or solicit to be hired, as an employee or consultant or in any other capacity, any employee or consultant of the Company (or any person who may have been employed or engaged as a consultant by the Company during the one year prior to the termination of your employment by the Company), or assist in such hiring by any other person or business entity or encourage any such employee or consultanttoterminatehisorheremployment orconsultancy relationshipwiththeCompany;or

(b) During the term of your employment by the Company and for the duration of your Severanceperiod,youwillnotdirectlyorindirectlysolicit, induce,ordivertanycurrentorclient of the Company, or any person or entity reasonably understood to be a prospective customer or client of the Company at the time of the termination (each of the foregoing a "Company Client"). You acknowledge that if you violate any of the provisions of this Section 13, the running of the Restricted Period will be extended by the time during which you engage in such violation(s).

14. Non-Disparagement. You agree, other than with regard to employees in the good faith performanceofyourdutieswiththeCompanywhileemployedbytheCompany,bothduringandfor two (2) years after your employment with the Company terminates for any reason, not to knowingly disparage the Company or its officers, directors, employees or agents in any manner likely to be harmful to it or them or its or their business, business reputation or personal reputation. This paragraph will not be deemed to be violated by statements that are truthful, materially complete and madeingoodfaithinrequiredresponseto legalprocessorgovernmentalinquiry.

15. Legal Assistance. You will, both during and for five (5) years after your employment with the Company terminates for any reason, supply such information and render such assistance as may be reasonably required by the Company, its subsidiaries or affiliated companies in connection with any legal or quasi-legal proceeding to which either is or becomes a party. The foregoing will be at the full expense of the Company, including reasonable compensation and the expense of seeking advice ofcounselinrelationtotheproceedings.

16. Assignment of Rights. The Company shall have the right to assign this letter agreement to its successors and assigns, and all covenants and agreements hereunder shall inure to the benefit ofand beenforceablebysaidsuccessorsorassigns.Youshallnotassignortransferthisletteragreementor any rights or obligations hereunder without the prior written consent of the Company, and any attempttodososhallbevoidandofnoforceandeffect.

17. Notices. Any notice required or permitted to be given under this letter agreement will be given in writing by personal delivery, registered mail or by facsimile, to you at your last known address and to the Company at 55 Network Drive, Burlington, Massachusetts O1803, to the attention of Human Resources Manager.

18. Amendments. This Agreement may not be changed, modified, released, discharged, abandoned, or otherwise amended, in whole or in part, except by an instrument in writing signed by you and the Company.

19. Governing Law. This Agreement will be deemed to be made and entered into in The Commonwealth of Massachusetts, and be governed by, and construed and enforced in accordance with, the laws of The Commonwealth of Massachusetts, without regard to its principles of conflicts of laws. You hereby agree to consent to personal jurisdiction of the state and federal courts situated within Suffolk County, Massachusetts for purposes of enforcing this Agreement, and waive any objection that you might have to personal jurisdiction or venue in those courts. This Agreement is executed underseal.

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20. Entire Agreement. This Agreement, including Exhibit A and Exhibit B hereto, contains the entire and only agreement between you and the Company with respect to the subject matter hereof, superseding any previous oral or written communications, representations, understandings, or agreements with the Company or any officer or representative hereof. In the event of any inconsistency between this Agreement and any other contract between you and the Company, the provisionsofthisAgreementwillprevail.

21. Binding on Successors & Assigns. This agreement will be binding upon your heirs, assigns, executors, administrators and representatives, and the provisions of this Agreement will inure to the benefitofandbebindingonthesuccessorsandassignsoftheCompany

22. OtherTerms.

(a) Your obligations under this Agreement will continue in accordance with its express terms regardlessofanychangesinyourtitle,position,duties,salary,compensationorbenefitsorother terms and conditions of your employment by the Company. Your obligations under this Agreement will survive the termination of your employment by the Company regardless of the manner of or reasons for such termination, and regardless of whether such termination constitutes a breach of any other agreement you may have with the Company. You expressly consent to be bound by the provisions of this Agreement for the benefit of the Company or any parent, subsidiary or affiliate to whose employ you may be transferred without the necessitythat this Agreement be re-signed at the time of such transfer. You agree to provide a copy of this Agreement to any prospective employer, partner or coventurer prior to entering into an employment,partnershiporotherbusinessrelationshipwithsuchpersonorentity.

(b) If any provision of this Agreement is determined to be unenforceable by any court of competentjurisdictionbyreasonofitsextendingfortoogreataperiodoftimeorovertoolargea geographic area or over too great a range of activities, such provision will be interpreted to extend only over the maximum period of time, geographic area or range of activities as towhich it may be enforceable. If, after application of the immediately preceding sentence, any provision of this Agreement shall be determined to be invalid, illegal or otherwise unenforceable by any courtofcompetentjurisdiction,thevalidity,legality andenforceabilityoftheotherprovisions of this Agreement shall not be affected thereby. Except as otherwise provided in this paragraph, any invalid, illegal or unenforceable provision of this Agreement shall be severable, and after any such severance, all other provisions hereof shall remain in full force and effect.

(c) YouacknowledgeandagreethatviolationofthisAgreementbyyouwouldcauseirreparable harm to the Company not adequately compensable by money damages alone, and you therefore agree that, in addition to all other remedies available to the Company at law, in equity or otherwise, the Company shall be entitled to injunctive relief to prevent an actual or threatened violation of this Agreement and to enforce the provisions hereof, without showing or proving anyactualdamagetotheCompanyorpostinganybondinconnection therewith.

(d) NofailurebytheCompany toinsistuponstrictcompliancewithanyoftheterms,covenants, orconditionshereof,andnodelayoromissionbytheCompanyinexercisinganyrightunderthis Agreement, will operate as a waiver of such terms, covenants, conditions or rights. A waiver or consentgivenbytheCompanyonanyoneoccasioniseffectiveonlyinthatinstanceandwillnot beconstruedasabartoorwaiverofanyrightonanyotheroccasion.

Accepted:Executed on behalf of ExaCorporation:

	/s/ Suresh Sundaram		/s/ Stephen A. Remondi
Name:	Suresh Sundaram	Name:	Stephen A. Remondi
Title:	SVP, Products & Marketing	Title:	Chief Executive Officer
Date:	June 4, 2016	Date:	June 8, 2016

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Exhibit A

to

Employment Agreement dated August 8^th, 2016 (the “Agreement”)

between

Exa Corporation

and

Suresh Sundaram

EXA CORPORATION EXECUTIVE ADDITIONAL EMPLOYMENT CONDITIONS RELATED TO TERMINATION

1. Definitions.Asusedherein,thefollowingtermsshallbedefinedasfollows:

(a)"Cause"meansoneormoreofthefollowing:

(i) aconvictionof,orpleadingofguiltyornolocontendereto,afelony;

(ii) a conviction of, or pleading of guilty or nolo contendere to, a misdemeanor resulting inmaterialreputationalharmtotheCompany;

(iii) acommissionofanactofmoralturpitude;

(iv) a commission of an act of material fraud, dishonesty, theft, misappropriation or embezzlement againsttheCompanyorasubsidiaryoftheCompany;

(v) a continuing failure to substantially perform his or her assigned duties after receiving a written demand for substantial performance that identifies the manner in which the Companybelievesyouhavefailedtoperform;

(vi) a material breach of the Company's Code ofEthics;

(vii) amaterialbreachofthetermsandconditionsofanynon-competition,non-solicitation, non-disparagementorconfidentialityagreementbetweenyouandtheCompany;

(viii) acommissionofwillfulmisconductresultinginmaterial harmtotheCompany.

(b)"ChangeinControl"shallmeantheoccurrenceofanyoneofthefollowingevents:

(i) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) becomes, after the Effective Date, a "beneficial owner" (as such term is defined in Rule 13d-3 promulgated under the Exchange Act) (other than the Company, any trustee or other fiduciary holding securities under an employee benefit agreement of the Company, or any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company's then outstanding securities; or;or

(ii) the consummation of a merger or consolidation of the Company with any other corporationorotherentity,otherthanamergerorconsolidationwhichwouldresultin thevotingsecuritiesoftheCompanyoutstandingimmediatelypriortheretocontinuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation (and such voting power among the holders thereof is in substantially the same proportion as the voting power amongtheholdersthereofimmediatelypriorsuchmergerorconsolidation);or

(ii) the closing of a sale or disposition by the Company of all or substantially all of the Company's assets;or

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(iii) individuals who constitute the Board on the Effective Date ("Incumbent Directors") cease for any reason to constitute at least a majority of the Board; provided that any individual who becomes a member of the Board subsequent to the Effective Date, whose election or nomination for election was approved by a vote of at least two­ thirds of the Incumbent Directors shall be treated as an Incumbent Director unless he or she assumed office as a result of an actual or threatened election contest with respecttotheelectionorremovalofdirectors;or

(iv) acompleteliquidationordissolutionoftheCompany.

(c)"GoodReason"meansanyoneormoreofthefollowing:

(i) a material diminishment of the nature or scope of your employment-related responsibilities or duties (provided, however, that a change in reporting structure or a change in the number of your direct reports shall not in and of itself constitute a material diminishment);or

(ii) a material reduction in the aggregate compensation opportunity made available to you by the Company, except for a reduction that is applicable equally to similarly situated executives and that is not greater than 10%; or

(iii) therequiredrelocation,withoutyourconsent,ofmorethan50milesfromyourcurrent officelocation,unlessthenewlocationisclosertoyourprimaryresidence;or

(iv) following a Change in Control, the failure of the surviving company to assume the obligations of theAgreement.

2.Severance Pay Benefits Not in Connection with a Change in Control. In the event your employment by the Company is involuntarily terminated by the Company without Cause or by you for Good Reason not in connection with a Change in Control, you shall be entitled to the severance pay benefits set forth in Section 2a. below following the termination date (the "Severance Period"); provided that you execute and do not revoke the Release and Waiver of Claims attached to this Agreement as Exhibit A-1 and provided, that the number of months of severance payments may not exceed the number of full months that you have been employed by the Company. All severance payments shall be paid in installments in accordance with the Company's regular payrollschedule.

a. Continue payment of: (i) twelve (12) months of base salary plus, in the event youhave elected COBRA continuation coverage, payment of your COBRA premiums onthe same cost-sharing basis as during employment. The payment of COBRA premiums will be taxable to you. If you become eligible for substantially similar benefits from a subsequent employer prior to the end of the Severance Period, the Company will cease to pay its share of your COBRA premiums. You agree to notify the Company if and when you become eligible for such other benefits within five (5) business days of such eligibility.

3.Severance Pay Benefits in Connection with a Change in Control. In the event that there is a Change in Control and, within two (2) years after the Change in Control, you terminate employment with the Company for Good Reason or your employment with the Company is involuntarily terminated by the Company without Cause, you shall be entitled to the enhanced severance pay benefits set forth below, provided that you execute and do not revoke the Release and Waiver of Claims attached to this Agreement as Exhibit A-1. Payments made hereunder shall be paid in a single, lump sum payment within 60 days of termination of employment.

a. Payment in a single, lump sum equal to: (i) twelve (12) months of base salary; and (ii) the target bonus for which you were eligible. In addition, in the event you haveelected COBRA continuation coverage, the Company will make payment of your COBRA premiums on the same cost-sharing basis as during employment The payment of COBRA premiums will be taxable to you. If you become eligible for substantially similar benefits from a subsequent employer prior to the end of the Severance Period, the Company will cease to pay its share of your COBRA premiums. You agree to notify the Company if and when you become eligible for such other benefits within five(5)businessdaysofsucheligibility.

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b. The vesting of all (time-based) equity incentives will accelerate in full at the date of termination of employment by the Company without Cause or by the employee for Good Reason. The vesting of all Performance-based awards for any current or future fiscal year will be deemed to be fully earned upon a Change in Control and will convert to time-based options that will cliff vest two (2) years after the award's grant date.

4.Notice and Opportunity to Cure Basis of Termination for Cause. In the event of an occurrence constituting the basis of termination for Cause, with the exception of the basis for Cause under subsections l(a)(i), l(a)(ii), l(a)(iii) or l(a)(iv) of this agreement, the Company shall provide you with 60 days' written notice regarding the basis of termination for Cause, and you may then take action to cure the basis of termination for Cause within 60 days of receipt of the written notice. If you do not remedy the basis of termination for Cause, you will be terminated for Cause upon the conclusion of the 60-day period. In the event of your termination for Cause pursuant to subsections l(a)(i), l(a)(ii), l(a)(iii) or l(a)(iv), no notice will be required and no opportunitytocurewillbeavailable.

5.Notice and Opportunity to Cure Basis of Termination for Good Reason. In the event of any of occurrence constituting the basis of a termination for Good Reason, you shall notify the Company of the initial event or condition constituting the basis of a termination for Good Reason by a written "Notice of Termination" within no more than 60 days of the initial event or condition. A "Notice of Termination" means a notice indicating the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated. The Company may then take action to cure the Good Reason event or condition within 30 days after receipt of the Notice of Termination. A termination for Good Reason does not occur if the basis of the termination for Good Reason is remedied. If the Company does not remedy the basis of the termination for Good Reason after 30 days of receipt of the Notice of Termination, your termination for Good Reason shall occur upon the Company's receipt of your written notice alleging that the Company failed to cure the event or condition constituting the basis of a termination for Good Reason, provided that such notice is received no later than 30 days following the end of such 30-day cure period.

6.Tax Code. If any payment or benefit you would receive pursuant to this Agreement or any other agreement, agreement, or arrangement would (i) constitute a "parachute payment" within the meaning of Section 280G Internal Revenue Code of 1986, as amended (the "Code"), and, but forthissentence, besubjecttotheexcisetaxedimposedbySection4999oftheCode(the"Excise Tax"), and (ii) the net after-tax amount (taking into account all applicable taxes payable by you, including any Excise Taxes) that you would receive with respect to such "parachute payments" doesnotexceedthenetafter-taxamountyouwouldreceive iftheamountofsuchpaymentswere reduced to the maximum amount that could otherwise be payable without the imposition of the Excise Tax, then you and the Company shall work together in good faith to agree on an alternative payment schedule acceptable to both parties, or to amend this Agreement in a manner acceptable to both parties, where necessary or desirable, so that you do not incur an excise tax or you incur the least amount of excise Tax as is possible under the circumstances. If a satisfactory alternative payment schedule or amendment cannot be agreed to by the originally scheduled payment, distribution or benefit date, then the Company shall provide such payment, distribution or benefit to you on the originally scheduled date and shall be reduced to the extent necessary to eliminate the imposition of the Excise Tax. To the extent that any such payments are subject to Section 409A of the Code, any reduction in the payments required to be made pursuant to this sectionshallbemadefirstwithrespect topaymentspayableincashbeforebeingmadeinrespect to any payments to be provided in the form of benefits or equity award acceleration, and in the form of benefits before being made with respect to equity award acceleration, and in any case, shall be made with respect to such payments in inverse order of the scheduled dates or times for thepaymentorprovisionofsuchpayments.

It is intended that the agreement and all benefits provided pursuant to the agreement shall be exemptfrom,orincompliancewith,Section409AoftheCodeandtheTreasuryRegulationsand IRS guidance thereunder (collectively referred to as "Section 409A"), and all provisions of the agreement shall be interpreted in a manner to avoid the imposition of any penalties. If and to the extent required to comply with Section 409A, (i) no payment or benefit required to be paidunder this agreement on account of termination of employment shall be made unless and until the participant incurs a "separation from

7

service" within the meaning of Section 409A, and (ii) any change in the time or form of payment upon or following a Change in Control shall be effective only if such event constitutes a Change in Control within the meaning of Section 409A. In the case of any amounts payable under this agreement that may be treated as payable in the form of "aseriesofinstallmentpayments",asdefinedinTreasuryRegulationSection1.409A-2(b)(2)(iii), your right to receive such payments shall be treated as a right to receive a series of separate payments for purposes of such Treasury Regulation. If any provision of this agreement provides for payment within a time period, the determination of when such payment shall be made within such time period shall be solely in the discretion of the Company, and if such time period spans twocalendaryearsthepaymentshallbemadeinthesecondyear.

If you are a "specified employee" as determined pursuant to Section 409A as of the date of termination of employment and if any payment or benefit provided for in this Agreement or otherwise both (x) constitutes a "deferral of compensation" within the meaning of Section 409A and (y) cannot be paid or provided in the manner otherwise provided without subjecting you to additional tax, interest, or penalties under Section 409A, then any such payment or benefit shall be delayed until the earlier of (i) the date which is 6 months after your "separation from service" withinthemeaningofSection409Aforanyreasonotherthandeath,or(ii)thedateofyourdeath. The provisions of this paragraph shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty, or interest pursuant to Section 409A. Any payment or benefit otherwise payable or to be provided to you upon or in the 6 month period following "separation fromservice"thatisnotsopaidorprovidedbyreasonofthisparagraph shallbeaccumulatedand paid or provided to you in a single lump sum, as soon as practicable (and in all events within 15 days) after the date that is 6 months after your "separation from service" (or, if earlier, as soon as practicable, andinalleventswithin15days,afterthedateyourdeath).

7.Tax and Other Withholdings. The Company may withhold from any payment under the Agreement any federal, state, or local taxes required by law to be withheld with respect to such payment and such sum as the Company may reasonably estimate is necessary to cover any taxes for which the Company may be liable and which may be assessed with regard to such payment. The Company may also withhold sums to cover an employee's share of any applicable group health insurance premiums. The Company may also withhold sums owed to the Company by an employee which have not been repaid in full before the time for payment of any benefits due under thisAgreement.

8.Agent for Service of Legal Process. Legal process with respect to claims under the agreement may be served on the Chief Financial Officer.

9.Separability. In case any one or more of the provisions of this agreement (or part thereof) shall be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect the other provisions hereof, and this agreement shall be construed as if such invalid, illegal or unenforceable provisions (or part thereof) never had been containedherein.

10.Non-Assignabilitv. No right or interest of yours in the agreement shall be assignable or transferable in whole or in part either directly or by operation of law or otherwise, including, but not limited to, execution, levy, garnishment, attachment, pledge or bankruptcy, provided, however, that this provision shall not be applicable in the case of obligations of you to the Company. This agreement and the rights and obligations of the Company hereunder shall inure to the benefit of and be binding upon any successor to the Company (whether as a result of a Change ofControlorotherevent,orbyoperationoflaworotherwise).

11.Gender and Number. Except where otherwise indicated by the context, any masculine gender used herein shall also include the feminine and vice versa, and the definition of any term herein in the singular shall also include the plural, and vice versa.

8

Exhibit A-1

to

Employment Agreement dated August 8^th, 2016 (the “Agreement”)

between

ExaCorporation

and

SureshSundaram

In exchange for the Severance Pay Benefits offered to you under Exhibit A to this Agreement, to which you acknowledge and agree you are not otherwise entitled, you and your heirs, executors, administrators,successorsandassignsherebyIRREVOCABLYANDUNCONDITIONALLYRELEASE AND FOREVER DISCHARGE Exa Corporation (the "Company") and all of its predecessor, successor, parent, subsidiary, affiliated and related companies and entities, and any and all past, present and future directors, officers, attorneys, employees, shareholders, agents, successors, assigns and/or representatives thereof,jointly and severally, and individually and in their official capacities (collectively, "Releasees") from,anyandallclaims,agreements,promises,liabilities,rightsanddemandsofanykindwhatsoever,in law or equity, whether known or unknown, suspected or unsuspected, apparent or concealed, which you, your heirs, executors, administrators, successors or assigns ever had, now have or hereafter can, shall or mayhavefor,upon,orbyreasonofanymatter,causeorthingwhatsoever,priortoandincludingthedate you execute this Agreement, including, but not limited to, any and all claims arising out of or relating to your employment, compensation and benefits with the Company and/or the termination thereof, and claims for costs, expenses and attorneys' fees with respect thereto, except for claims for breach of this Agreement.

This release and waiver of claims includes, but is not limited to, claims for breach of contract, libel,slander,wrongful discharge,intentionalinflictionofemotionalharm,orothertort,ordiscrimination or harassment based upon any federal, state, or municipal statute or local ordinance relating to discrimination in employment, including, but in no way limited to, the Age Discrimination in Employment Act of 1967; the Older Workers Benefit Protection Act; the Worker Adjustment and Retraining Notification Act; Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Employee Retirement Income Security Act of 1974; the Americans with Disabilities Act of 1990; the Occupational Safety and Health Act, the Family and Medical Leave Act, the Massachusetts Fair Employment Practices Act, Mass. Gen. L. c. 151B; the Massachusetts Payment of Wages Statute, Mass. Gen. L. c. 149, section 148 et seq., including claims for timely and proper payment of wages; the Massachusetts overtime pay law, Mass. Gen. L. c. 151, section IA, et seq.; the Massachusetts Equal Rights Act; and the Massachusetts Civil Rights Act. This means that you may not sue Releasees for anycurrentorpriorclaims, includingthosearisingoutofhisemploymentwithorseparationfrom theCompanyandincludingthoseforunpaidwagesunderstatelaw.

YoucovenantnottosuetheReleaseeswithrespecttoanyoftheclaimscoveredbytheforegoing release.Notwithstandingtheforegoing,thisAgreement,includingtheclaimsreleasedinthisparagraph, doesnotpreclude:(a)claimsforbreach ofthisAgreement;(b)anyactsthatoccurafterthedateyousign this Release; (c) any rights or claims to vested benefits (including and such benefits under a retirement plangovernedbyERISA);(d)anyclaimsthatmaynotbereleased byapplicablelaw;(e)anyrightsyou may have to file, cooperate or participate in any proceeding before the Equal Employment Opportunity Commission ("EEOC") or any other state or local fair employment practices agency, except, however, youwaiveanyrighttorecoveranymonetarydamagesorawardinconnectionwithanysuchproceeding beforetheEEOCoranystateorlocalfairemploymentpracticesagency;(f)anyrightspursuanttoany Workers'Compensation claim;or(g)anyrightstounemploymentbenefits.

You represent that (a) the Company has advised you to consult with an attorney of your choosing concerning the rights waived in this Agreement; (b) you have carefully read this agreement and that you are fully aware of the Agreement's contents and legal effect, including the waiver of any legal claims; (c) you are voluntarily and knowingly entering this Agreement, including the General Release; and (d) you understand that you are receiving benefits pursuant to this Agreement that you would not otherwise be entitled to if you did not enter this Agreement.

9

You acknowledge that you have had a period of at least forty-five (45) days to consider the terms of this Agreement. However, you may sign this Agreement and return it to me at any time after the Separation Date and within this forty-five (45) day period. Returning the Agreement to me before the expirationoftheforty-five(45)dayperiodisconsideredavoluntarywaiverofanyofthetimeremaining in the forty-five (45) day period. You may revoke this Agreement during the seven (7) days immediately followingyourexecutionofthisAgreementbysubmittingarevocation,inwriting,toRichardF.Gilbody, ChiefFinancialOfficeratExa.IfyoudonotrevokethisAgreementpriortotheexpirationofthisseven(7)dayperiod,thisAgreementshalltakeeffectatthattimeasalegallybindingagreementbetweenyou andtheCompanyonthe basissetforthherein(the"EffectiveDate").

If you accept the terms of this Agreement, please sign below and return this Agreement to Richard

F. Gilbodyonorbeforethefirstbusinessdayfollowingtheforty-fifth (45^th) day afteryourreceiptofthis

Agreement.

Accepted:Executed on behalf of Exa Corporation:

Name: /s/ Suresh Sundaram Name: /s/ Stephen A. Remondi

10

Exhibit B

to

Employment Agreement dated August 8^th, 2016 (the “Agreement”)

between

Exa Corporation

and

Suresh Sundaram

EXACORPORATIONEXECUTIVEADDITIONALEMPLOYMENTCONDITIONSRELATED TO INTELLECTUAL PROPERTY, PROPRIETORY INFORMATION AND CONFIDENTIALITY

In consideration of your continued employment at will by Exa Corporation, a Delaware corporation ("Exa"), or by any of its subsidiaries or affiliated companies (together with Exa, the "Company"), and in recognition of the fact that, due to such role, you will or may have access to Confidential Information (as defined herein), you agree with the Company as follows:

1.PriorObligations.Youherebyrepresent,warrantandagree(i)thatyouhavethefullright to enter into this Agreement and to perform the services that you have been engaged to provide for or on behalf of the Company (the "Services"), without any restriction whatsoever; (ii) that in the course of performing the Services, you will not violate the terms or conditions of any agreement between you and any third party or infringe or wrongfully appropriate any patents, copyrights, trade secrets or other intellectual property rights of any person or entity anywhere in the world; (iii) that you have not and will not disclose or use during the course of your employment by the Company any confidential information that you acquired or will acquire as a result of any current or previous employment or consulting arrangement, or under a previous obligation of and all continuing obligations to current and previous employersandothersthatrequireyounottodiscloseanyinformationtotheCompany.

2.Ownership and Assignment of Intellectual Property. You agree that alloriginalsand all copies of all manuscripts, drawings, prints, manuals, diagrams, letters, notes,notebooks,reports, models, records, files, memoranda, plans, sketches and all other documents andmaterialscontaining, representing, evidencing, recording, or constituting any Confidential Information (as definedinSection12 of the Agreement), however and whenever produced (whether by you or others) during thecourseof andinconnectionwithyouremployment bytheCompany,andwhetherbeforeorafteryourentryintothe Agreement, is and will be the sole property of the Company. You agree that allConfidentialInformation and all other discoveries, inventions, ideas, specifications, designs, concepts, researchandother information, processes, products, methods and improvements, or parts thereof conceived,developed,or otherwise made by you, alone or jointly with others and in any way relating to theCompany'sbusiness, including but not limited to its present or proposed products, programs or services or to tasksassignedto you during the term of your employment by the Company, whether or not made duringyournormal workinghours,whetherornotpatentableorsubjecttocopyrightprotection,whetherornotreducedto tangible form or reduced to practice, during the term of your employmentby the Company, whetheror not developed, reduced to practice or made on the Company's premises, and whether or notdisclosedby you to the Company (hereinafter referred to as "Company Intellectual Property"), togetherwithall productsorserviceswhichembodyoremulatesuchCompanyIntellectualProperty,isandwillbethesole property oftheCompany andtothefullest extentpermittedbylawwillbedeemed"worksmadeforhire".

You agree to, and hereby do, assign to the Company all your rights, title and interest throughout the world in and to all Company Intellectual Property and to anything tangible whichevidences, incorporates, constitutes, represents or records any such Company Intellectual Property. You hereby assignand,totheextentanysuchassignmentcannotbemadeatpresent,youhereby agreetoassigntothe Company all copyrights, patents and other proprietary rights you may have in any such Company Intellectual Property, together with the right to file for and/or own wholly without restriction United States and foreign patents, trademarks, and copyrights. You agree to waive, and hereby waive, all moral rights or proprietary rights in or to any Company Intellectual Property and, to the extent that such rights may not be waived, agree not to assert such rights against the Company or its licensees, successors or assigns.

You hereby certify that Exhibit B-1 sets forth any and all confidential information and intellectual property that

11

you claim as your own or otherwise intend to exclude from this Agreement because it was developed by you prior to the commencement of your employment by the Company ("Prior Inventions"). You understand that after execution of this Agreement you will have no right to exclude Confidential Information or Company Intellectual Property from thisAgreement.

YouherebyrepresentandwarranttotheCompanythatallworkproductdeliveredtotheCompany by you has not incorporated and will not, without the Company's written consent, incorporate any Prior Invention. If you do incorporate a Prior Invention into work product delivered to the Company, you hereby grant to the Company a nonexclusive, royalty-free, paid-up, irrevocable, worldwide license (with the full right to sublicense) to make, have made, modify, use, sell, offer for sale and import such Prior Invention.

YouherebyrepresentandwarranttotheCompanythatallworkproductdeliveredtotheCompany by you has been and will be original and has not and will not without disclosure to the Company incorporate any "open source" computer code or be in any way subject to any open source license, including, by way of example, the GNU General Public License or Lesser General Public License, the Apache Software License, the Mozilla Public License or any other license that requires disclosure of sourcecodeorotherwisewouldlimittheCompany's proprietaryrights insuchcomputercode.

3.Obligation to Keep Records. During the course of your employment by the Company, you represent that you have made and maintained and agree to continue to make and maintain adequate and current written records of all Company Intellectual Property, including notebooks and invention disclosures, which records will be available to and remain the property of the Company at all times. You will disclose all Company Intellectual Property promptly, fully and in writing to the Company immediatelyuponproductionordevelopmentofthesameandatanytimeuponrequest.

4.Obligation to Cooperate. You will, at any time during your employment by the Company,or after the termination of such employment, upon request of the Company, execute all documents and performalllawfulactswhichtheCompany considersnecessaryoradvisabletosecureitsrightshereunder and to carry out the intent of this Agreement. Without limiting the generality of the foregoing, you will assist the Company in any reasonable manner to obtain for its own benefit patents or copyrights in any and all countries with respect to all Company Intellectual Property and Existing IP assigned pursuant to Section 2 of this Exhibit B, and you will execute, when requested, patent and other applications and assignmentsthereoftotheCompany,orpersonsdesignatedbyit,andanyotherlawfuldocumentsdeemed necessary by the Company to carry out the purposes of this Agreement, and you will further assist the Company in every way to enforce any patents and copyrights obtained, including, without limitation, testifying in any suit or proceeding involving any of said patents or copyrights or executing any documentsdeemednecessarybytheCompany,allwithoutfurtherconsiderationthanprovidedforherein. It is understood that reasonable out-of-pocket expenses for your assistance incurred at the request of the Company under this Section 4 will be reimbursed by the Company. If the Company is unable to obtain your signature on any document which you may be required to sign pursuant to this Agreement,whether becauseofyourphysicalormentalincapacityorforanyotherreasonwhatsoever,youherebyirrevocably designate and appoint each of the President and the Secretary of the Company (whether now or hereafter inoffice)asyouragentandattorney-in-facttoexecute anysuchdocumentonyourbehalf,andtotakeany andallactionsastheCompanymaydeemnecessaryordesirableinordertoprotectitsrightsand interests inanyCompanyIntellectualProperty.

5.Return of Property. Upon termination of your employment by the Company for any reason, or at any other time upon request of the Company, you will promptly return or destroy any and all customer or prospective customer, or client or prospective client, lists, information or related materials, computer programs, software, electronic data, specifications, drawings, blueprints, data storage devices, reproductions, sketches, notes, notebooks, memoranda, rep01is, records, proposals, business plans, or copies of them, other documents or materials, tools, equipment, or other property belonging to the Company or its customers which you may then possess or have under my control. You further agree that upon termination of your employment by the Company for any reason, you will not take with you any documents or data in any form or of any description containing or pertaining to Confidential Information orCompanyIntellectualProperty.

6.Other Obligations. You acknowledge that the Company from time to time may have agreements with other persons, including the government of the United States or other countries and agencies thereof, which impose obligations or restrictions on the Company regarding inventions made during the course of work thereunder

12

or regarding the confidential nature of such work. You agree to be bound by all such obligations and restrictions and to take all action necessary to discharge theobligations oftheCompanythereunder.

7.Publications and Public Statements. You will obtain the Company's written approval before publishing or submitting for publication any material that relates to your work at the Company and/or incorporates any Confidential Information. To ensure that the Company delivers a consistent message about its products, services and operations to the public, and further in recognition that even positive statements may have a detrimental effect on the Company in certain securities transactions and other contexts, any statement about the Company that you create, publish or post during the term of your employment by the Company and for six (6) months after termination of your employment by the Company,onanymediaaccessiblebythepublic,includingbutnotlimitedtoelectronicbulletin boardsor Internet-based chat rooms, must first be reviewed and approved by an officer of the Company before it is released in the publicdomain.

13

Exhibit B-1

to

Employment Agreement dated August 8^th, 2016 (the “Agreement”)

between

Exa Corporation

and

Suresh Sundaram

EXCLUDED CONFIDENTIAL INFORMATION AND INTELLECTUAL PROPERTY

("Prior Inventions")

14

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Stephen A. Remondi, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Exa Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and to the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ Stephen A. Remondi
	Stephen A. Remondi
	President and Chief Executive Officer (Principal Executive Officer)
Date:	November 30, 2016

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Richard F. Gilbody, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Exa Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and to the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ Richard F. Gilbody
	Richard F. Gilbody
	Chief Financial Officer (Principal Financial Officer)
Date:	November 30, 2016

EX-32.1

Exhibit 32.1

STATEMENT REQUIRED BY 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

This certificate is being delivered pursuant to the requirements of Section 1350 of Chapter 63 (Mail Fraud) of Title 18 (Crimes and Criminal Procedures) of the United States Code and shall not be relied on by any person for any other purpose.

In connection with the Quarterly Report on Form 10-Q of Exa Corporation (the “Company”) for the period ended October 31, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Stephen A. Remondi, President, Chief Executive Officer and Director of the Company, certifies that:

• the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

• the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 30, 2016

/s/ Stephen A. Remondi

Stephen A. Remondi

President and Chief Executive Officer

(Principal Executive Officer)

The foregoing certification is being furnished with the Company’s Quarterly Report on Form 10-Q for the period ended October 31, 2016, pursuant to 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and it is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general information language in such filing.

EX-32.2

Exhibit 32.2

STATEMENT REQUIRED BY 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

This certificate is being delivered pursuant to the requirements of Section 1350 of Chapter 63 (Mail Fraud) of Title 18 (Crimes and Criminal Procedures) of the United States Code and shall not be relied on by any person for any other purpose.

In connection with the Quarterly Report on Form 10-Q of Exa Corporation (the “Company”) for the period ended October 31, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Richard F. Gilbody, Chief Financial Officer of the Company, certifies that:

• the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

• the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 30, 2016

/s/ Richard F. Gilbody

Richard F. Gilbody

Chief Financial Officer

(Principal Financial Officer)

The foregoing certification is being furnished with the Company’s Quarterly Report on Form 10-Q for the period ended October 31, 2016, pursuant to 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and it is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general information language in such filing.

XML

Document and Entity Information - shares	9 Months Ended
	Oct. 31, 2016	Nov. 28, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Oct. 31, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Trading Symbol	EXA
Entity Registrant Name	EXA CORP
Entity Central Index Key	0000890264
Current Fiscal Year End Date	--01-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		14,851,501

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Oct. 31, 2016	Jan. 31, 2016
Current assets:
Cash and cash equivalents	$ 25,033	$ 27,649
Accounts receivable	16,663	32,072
Prepaid expenses and other current assets	2,862	3,707
Total current assets	44,558	63,428
Property and equipment, net	10,897	12,032
Intangible assets, net	1,782	2,044
Deferred tax assets	432	428
Restricted cash	352	352
Other assets	744	737
Total assets	58,765	79,021
Current liabilities:
Accounts payable	1,218	3,462
Accrued expenses	8,739	12,199
Current portion of deferred revenue	23,421	32,849
Current portion of capital lease obligations	1,997	2,823
Total current liabilities	35,375	51,333
Deferred revenue	699	4,484
Capital lease obligations	1,286	2,549
Deferred rent	2,537	2,490
Other long-term liabilities	719	678
Total liabilities	40,616	61,534
Commitments and contingencies (Note 9)
Stockholders’ equity :
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding
Common stock, $0.001 par value; 30,000,000 shares authorized; 14,882,446 and 14,663,621 shares issued, respectively; 14,849,944 and 14,631,119 shares outstanding, respectively	15	15
Additional paid-in capital	93,767	91,626
Accumulated deficit	(75,151)	(73,685)
Treasury stock (32,502 common shares, at cost)	0	0
Accumulated other comprehensive loss	(482)	(469)
Total stockholders’ equity	18,149	17,487
Total liabilities and stockholders’ equity	$ 58,765	$ 79,021

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Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) - $ / shares	Oct. 31, 2016	Jan. 31, 2016
Statement Of Financial Position [Abstract]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	30,000,000	30,000,000
Common stock, shares issued	14,882,446	14,663,621
Common stock, shares outstanding	14,849,944	14,631,119
Treasury stock, shares	32,502	32,502

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Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2016	Oct. 31, 2015	Oct. 31, 2016	Oct. 31, 2015
Revenue:
License revenue	$ 15,967	$ 13,966	$ 44,836	$ 39,185
Project revenue	3,191	2,998	8,219	8,002
Total revenue	19,158	16,964	53,055	47,187
Operating expenses:
Cost of revenues	4,904	5,118	14,340	14,516
Sales and marketing	3,357	2,336	10,080	7,264
Research and development	6,234	6,143	18,468	18,265
General and administrative	3,952	3,456	10,858	9,849
Total operating expenses	18,447	17,053	53,746	49,894
Income (loss) from operations	711	(89)	(691)	(2,707)
Other (expense) income, net
Foreign exchange (loss) gain	(99)	51	94	(172)
Interest expense	(30)	(60)	(116)	(179)
Interest income	12	3	33	8
Other (expense) income, net	(3)	6	9	6
Total other (expense) income, net	(120)	0	20	(337)
Income (loss) before income taxes	591	(89)	(671)	(3,044)
Provision for income taxes	(436)	(344)	(795)	(472)
Net income (loss)	$ 155	$ (433)	$ (1,466)	$ (3,516)
Net income (loss) per share:
Basic	$ 0.01	$ (0.03)	$ (0.10)	$ (0.24)
Diluted	$ 0.01	$ (0.03)	$ (0.10)	$ (0.24)
Weighted average shares outstanding used in computing net income (loss) per share:
Basic	14,826,758	14,610,479	14,750,153	14,484,563
Diluted	15,261,996	14,610,479	14,750,153	14,484,563
Comprehensive income (loss):
Net income (loss)	$ 155	$ (433)	$ (1,466)	$ (3,516)
Foreign currency translation adjustment	(55)	6	(13)	34
Comprehensive income (loss)	$ 100	$ (427)	$ (1,479)	$ (3,482)

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Oct. 31, 2016	Oct. 31, 2015
Cash flows provided by operating activities:
Net loss	$ (1,466)	$ (3,516)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	2,987	2,487
Stock-based compensation expense	1,458	1,766
Deferred rent expense	286	472
Deferred income taxes	(4)	4
Net change in operating assets and liabilities:
Accounts receivable	15,201	15,948
Prepaid expenses and other current assets	1,044	54
Other assets	(7)	11
Accounts payable	(1,865)	694
Accrued expenses	(3,755)	(2,946)
Other liabilities	40	(69)
Deferred revenue	(13,392)	(11,007)
Net cash provided by operating activities	527	3,898
Cash flows used in investing activities:
Purchases of property and equipment	(1,881)	(1,571)
Change in restricted cash		173
Net cash used in investing activities	(1,881)	(1,398)
Cash flows used in financing activities:
Proceeds from stock option and warrant exercises	453	1,168
Payments of capital lease obligations	(2,151)	(2,131)
Net cash used in financing activities	(1,698)	(963)
Effect of exchange rate changes on cash	436	(136)
Net (decrease) increase in cash and cash equivalents	(2,616)	1,401
Cash and cash equivalents, beginning of period	27,649	21,785
Cash and cash equivalents, end of period	25,033	23,186
Supplemental cash flow disclosures:
Cash paid for interest	116	179
Cash paid for income taxes	1,367	1,214
Supplemental disclosure of non-cash investing activities:
Acquisition of equipment through capital leases	62	4,351
Construction costs funded by landlord tenant improvement allowance		$ 554
Decrease in unpaid purchases of property and equipment	$ (381)

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Description of Business

9 Months Ended

Oct. 31, 2016

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Description of Business

1. Description of Business

Exa Corporation (the “Company” or “Exa”), a Delaware corporation, develops, sells and supports simulation software and services used primarily by vehicle manufacturers to enhance the performance of their products, reduce product development costs and improve the efficiency of their design and engineering processes. The Company’s solutions enable engineers and designers to augment or replace conventional methods of evaluating designs that rely on expensive and inefficient physical prototypes and test facilities with accurate digital simulations that are more useful, cost effective and timely. The Company’s simulation solutions enable customers to gain crucial insights about design performance early in the design cycle, reducing the likelihood of expensive redesigns and late-stage engineering changes, which results in cost savings and fundamental improvements in the development process. The Company is primarily focused on the ground transportation market, but is also exploring the application of its capabilities in the aerospace, oil and gas production, chemical processing, architecture, engineering and construction, power generation, biomedical and electronics industries.

Exa has offices and sells directly in the United States and through subsidiaries in France, Germany, Italy, Japan, Korea, China, and the United Kingdom. The Company also conducts business in Sweden, India, Brazil, Russia, Canada, Finland, Spain and Australia.

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Summary of Significant Accounting Policies

9 Months Ended

Oct. 31, 2016

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Applicable Accounting Guidance

Any reference in these notes to applicable accounting guidance is meant to refer to the authoritative United States generally accepted accounting principles (“GAAP”) as found in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”).

Basis of Presentation

The interim financial data as of October 31, 2016 and for the three and nine months ended October 31, 2016 and 2015 are unaudited; however, in the opinion of the Company’s management, the interim data includes all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the interim periods presented. The condensed consolidated balance sheet presented as of January 31, 2016 has been derived from the audited consolidated financial statements as of that date. The unaudited condensed consolidated financial statements presented herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all of the information and note disclosures required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Exa annual report on Form 10-K for the year ended January 31, 2016 filed with the Securities and Exchange Commission on March 21, 2016.

Reclassification

Certain prior year amounts have been reclassified to be consistent with current year classifications.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from management’s estimates if future events differ substantially from past experience, or other assumptions, which reasonable when made, do not turn out to be substantially accurate.

Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle, as a result of which more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP. The standard is effective for annual periods beginning after December 15, 2018, and interim periods therein. The two permitted transition methods under the new standard are: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). The Company is currently evaluating the impact of its pending adoption of ASU 2014-09 on its consolidated financial statements and has not yet determined the method by which it will adopt the standard when it becomes effective.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. Under the new guidance, management will be required to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosures in certain circumstances. The provisions of this ASU are effective for annual periods beginning after December 15, 2016, and for interim periods therein. This ASU is not expected to have a material impact on the Company’s financial statements or disclosures.

In April 2015, the FASB issued ASU No. 2015-05, Intangibles – Goodwill and Other – Internal-Use Software: Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The guidance clarifies the circumstances under which a cloud computing customer would account for the arrangement as a license of internal-use software. The standard will be effective for annual reporting periods beginning after December 15, 2016, and for interim periods therein. Early adoption is permitted. This ASU is not expected to have an impact on the Company’s financial statements or disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This standard requires the recognition of lease assets and liabilities for all leases, with certain exceptions, on the balance sheet. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. This ASU is effective for annual periods beginning after December 15, 2018, and for interim periods therein. The Company is currently evaluating the requirements of this ASU and has not yet determined its impact on the Company’s consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718)—Improvements to Employee Share-Based Payment Accounting. This standard simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The provisions of this ASU are effective for annual periods beginning after December 15, 2016, and for interim periods therein. Early adoption is permitted. The Company is currently evaluating the requirements of this ASU and has not yet determined its impact on the Company’s consolidated financial statements.

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Computation of Net Income (Loss) Per Share

9 Months Ended

Oct. 31, 2016

Earnings Per Share [Abstract]

Computation of Net Income (Loss) Per Share

3. Computation of Net Income (Loss) Per Share

Basic earnings per share (“EPS”) is computed by dividing income available to common stockholders by the weighted-average number of shares of common stock outstanding during the period. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding (using the treasury stock method) if securities convertible into or exercisable for potentially dilutive shares of common stock (stock options, restricted stock units and warrants) had been converted into or exercisable for such shares of common stock, and if such assumed conversion or exercise would have been dilutive. Exercises or conversions that would have been anti-dilutive are excluded from the calculation of diluted EPS.

The following summarizes the calculation of basic and diluted net income (loss) per share:

	Three Months Ended October 31,					Nine Months Ended October 31,
	2016		2015			2016			2015
Numerator:
Net income (loss)	$	155	$	(433	)	$	(1,466	)	$	(3,516	)
Denominator:
Weighted average common shares outstanding, basic		14,826,758		14,610,479			14,750,153			14,484,563
Dilutive effect of:
Options to purchase common stock		413,275		—			—			—
Options to purchase preferred stock		21,963		—			—			—
Weighted average common shares outstanding, fully    diluted		15,261,996		14,610,479			14,750,153			14,484,563
Basic net income (loss) per share	$	0.01	$	(0.03	)	$	(0.10	)	$	(0.24	)
Diluted net income (loss) per share	$	0.01	$	(0.03	)	$	(0.10	)	$	(0.24	)

The table below represents outstanding options, restricted stock unit awards and warrants that were excluded from the computation of diluted net income (loss) per share for the periods indicated because including them would have had an anti-dilutive effect. All of the Company’s outstanding stock options, unvested restricted stock units and warrants were anti-dilutive for the three months ended October 31, 2015 and for the nine months ended October 31, 2016 and 2015, respectively, due to the net loss incurred by the Company.

	Three Months Ended October 31,				Nine Months Ended October 31,
	2016		2015		2016		2015
Options, restricted stock unit awards and warrants to    purchase common and preferred stock		543,276		2,514,955		1,951,713		2,514,955

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Property and Equipment, net

9 Months Ended

Oct. 31, 2016

Property Plant And Equipment [Abstract]

Property and Equipment, net

4. Property and Equipment, net

Property and equipment, net consists of the following:

	October 31, 2016			January 31, 2016
Computer software and equipment	$	19,407		$	17,964
Office equipment and furniture		1,554			1,349
Leasehold improvements		1,630			1,562
Construction-in-process		110			169
Total property and equipment		22,701			21,044
Less accumulated depreciation		(11,804	)		(9,012	)
Property and equipment, net	$	10,897		$	12,032

For the three and nine months ended October 31, 2016, depreciation expense was $908 and $2,724, respectively. For the three and nine months ended October 31, 2015, depreciation expense was $871 and $2,224, respectively. Included in computer software and equipment and office equipment and furniture is equipment held pursuant to capital leases with costs of $14,883 and $14,809 and accumulated depreciation of $8,712 and $6,808 as of October 31, 2016 and January 31, 2016, respectively.

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Accrued Expenses

9 Months Ended

Oct. 31, 2016

Payables And Accruals [Abstract]

Accrued Expenses

5. Accrued Expenses

Accrued expenses consist of the following:

	October 31, 2016		January 31, 2016
Accrued payroll	$	1,958	$	1,828
Sales and value added taxes		1,763		4,075
Accrued commissions and bonuses		1,996		3,900
Accrued income taxes payable		833		541
Deferred rent, current portion		429		186
Legal and professional		651		805
Other		1,109		864
Total accrued expenses	$	8,739	$	12,199

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Deferred Rent

9 Months Ended

Oct. 31, 2016

Text Block [Abstract]

Deferred Rent

6. Deferred Rent

Payment escalations, rent holidays and lease incentives specified in the Company’s non-cancelable operating lease and hosting agreements are recognized on a straight-line basis over the terms of the agreements. For purposes of recognizing incentives and minimum rental expenses on a straight-line basis, the Company uses the date it obtains the legal right to use and control the leased space to begin amortization. The differences arising from straight-line expense recognition and cash payments are recorded as deferred rent in the accompanying consolidated balance sheets. Tenant leasehold improvement allowances received from landlords are recorded as deferred rent and are amortized to operating expenses over the applicable lease terms.

Deferred rent consists of the following:

	October 31, 2016			January 31, 2016
Leasehold improvement incentive	$	1,646		$	1,839
Non-cash rent expense		1,320			837
Total deferred rent		2,966			2,676
Less current portion included in accrued expenses		(429	)		(186	)
Deferred rent, net of current portion	$	2,537		$	2,490

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Fair Value Measurements

9 Months Ended

Oct. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

7. Fair Value Measurements

Financial instruments consist primarily of cash and cash equivalents, accounts receivable and capital lease obligations. As of October 31, 2016 and January 31, 2016, the carrying amounts of these instruments approximate their fair values. The estimated fair values have been determined from information obtained from market sources and management estimates.

In determining the fair value of its financial assets and liabilities, the Company uses various valuation approaches. ASC 820, Fair Value Measurements and Disclosures, establishes a hierarchy of inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances. The fair value hierarchy is broken down into three levels based on the source of inputs as follows:

Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

Level 2 – Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly.

Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement and that are based on management’s best estimate of inputs market participants would use for pricing the asset or liability at the measurement date, including assumptions about risk.

The following table summarizes the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value as of October 31, 2016:

	Total		Level 1		Level 2		Level 3
Assets:
Money market funds	$	10,048	$	10,048	$	—	$	—

The following table summarizes the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value as of January 31, 2016:

	Total		Level 1		Level 2		Level 3
Assets:
Money market funds	$	11,019	$	11,019	$	—	$	—

The availability of observable inputs can vary among the various types of financial assets and liabilities. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for financial statement disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is categorized is based on the lowest level input that is significant to the overall fair value measurement.

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Acquired Intangible Assets

9 Months Ended

Oct. 31, 2016

Goodwill And Intangible Assets Disclosure [Abstract]

Acquired Intangible Assets

8. Acquired Intangible Assets

Intangible assets acquired in a business combination are recorded under the purchase method of accounting at their estimated fair values at the date of acquisition. The Company amortizes acquired intangible assets over their estimated useful lives.

The following table reflects the carrying value of intangible assets as of October 31, 2016: 

	Cost		Accumulated Amortization			Net Book Value
Intellectual property	$	3,505	$	(1,723	)	$	1,782
Access to facilities contract		38		(38	)		—
Total	$	3,543	$	(1,761	)	$	1,782

The following table reflects the carrying value of intangible assets as of January 31, 2016:

	Cost		Accumulated Amortization			Net Book Value
Intellectual property	$	3,505	$	(1,461	)	$	2,044
Access to facilities contract		38		(38	)		—
Total	$	3,543	$	(1,499	)	$	2,044

For each of the three months ended October 31, 2016 and 2015, amortization expense of intangible assets was $88. For each of the nine months ended October 31, 2016 and 2015, amortization expense of intangible assets was $263.

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Commitments and Contingencies

9 Months Ended

Oct. 31, 2016

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

9. Commitments and Contingencies

Legal Contingencies

From time to time the Company is involved in legal proceedings arising in the ordinary course of business. There is no litigation pending that could, individually or in the aggregate, reasonably be expected to have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

Indemnification Obligations

The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to these agreements, the Company indemnifies, holds harmless, and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally the Company’s business partners or customers, in connection with any United States patent, or any copyright or other intellectual property infringement claim by any third party with respect to the Company’s products. The term of these indemnification provisions is generally perpetual after execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these agreements is unlimited.

Based on historical experience and information known as of October 31, 2016 and January 31, 2016, the Company has not recorded any liabilities for these indemnities.

Operating Leases

During the second quarter of fiscal year 2017, the Company entered into an agreement to lease space and high performance computing capacity at a data center located in Virginia. The three-year agreement will provide access to up to 300 KW hours of computing capacity, which the Company believes will be suitable and adequate to meet the growing demands of its customers.

As of October 31, 2016, after taking into consideration the above agreement, total future minimum lease payments under non-cancelable lease arrangements are as follows:

Year ended January 31,
2017 (Remainder as of October 31, 2016)	$	1,588
2018		6,061
2019		5,503
2020		3,916
2021		2,062
Thereafter		4,898
	$	24,028

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Stock-Based Compensation

9 Months Ended

Oct. 31, 2016

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

10. Stock-Based Compensation

The fair value of common stock service-based options for employees is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used: 

	Nine Months Ended October 31,
	2016		2015
Expected life (years)		6.25		6.23
Risk-free interest rate		1.4%		2.0%
Expected volatility		35.0%		36.8%
Expected dividend yield		0.0%		0.0%

The weighted-average grant date fair value per share for service-based stock options granted in the three and nine months ended October 31, 2016 was $5.24 and $5.12, respectively. The weighted-average grant date fair value per share for service-based stock options granted in the three and nine months ended October 31, 2015 was $4.14 and $4.21, respectively.

For standard service-based stock options and restricted stock units, the Company records stock-based compensation expense over the estimated service/vesting period. The amount of stock-based compensation expense recognized during a period is based on the value of the portion of the awards that is ultimately expected to vest.

Performance-based stock options are recognized as expense over the requisite service period when it becomes probable that performance measures triggering vesting will be met. Certain grants vested during the first quarter of fiscal year 2017 based on achieved performance metrics. As of October 31, 2016, the Company has concluded that it is not probable that the required metrics for vesting of the remaining unvested options will be achieved. As such, the Company has not recognized any additional share-based compensation expense associated with the unvested portion of these performance-based options.

During the first quarter of fiscal year 2017, the Company granted performance-based restricted stock units (“PSUs”). PSUs are recognized as expense when it becomes probable that performance measures triggering vesting will be achieved. As of October 31, 2016, the Company has concluded that it is not probable that any of the required metrics for vesting of the PSUs will be achieved. As a result, the Company has not recognized any share-based compensation expense associated with these awards.

Total stock-based compensation expense related to stock options and restricted stock units issued by the Company is as follows: 

	Three Months Ended October 31,				Nine Months Ended October 31,
	2016		2015		2016		2015
Cost of revenues	$	41	$	64	$	124	$	186
Sales and marketing		54		117		202		317
Research and development		222		265		567		691
General and administrative		215		215		565		572
Total	$	532	$	661	$	1,458	$	1,766

The total unrecognized compensation cost related to all outstanding stock options and restricted stock units is $10,637 at October 31, 2016. This amount is expected to be recognized over a weighted-average period of 1.65 years.

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Income Taxes

9 Months Ended

Oct. 31, 2016

Income Tax Disclosure [Abstract]

Income Taxes

11. Income Taxes

For the three and nine months ended October 31, 2016, the Company’s income tax provision was $436 and $795, respectively. For the three and nine months ended October 31, 2015, the income tax provision was $344 and $472, respectively. The provision for all periods primarily consists of the tax effects of foreign operating results and foreign withholding taxes.

In determining the realizability of the net United States federal and state deferred tax assets, the Company considers numerous factors including historical profitability, estimated future taxable income, prudent and feasible tax planning strategies and the industry in which it operates. Management reassesses the realization of the deferred tax assets each reporting period, which resulted in a valuation allowance against the full amount of the Company’s United States deferred tax assets in the first quarter of fiscal year 2015. To the extent that the financial results of the United States operations improve in the future and the deferred tax assets become realizable, the Company will reduce the valuation allowance through earnings.

The Company and one or more of its subsidiaries file United States federal income tax returns and tax returns in various state and foreign jurisdictions. With limited exceptions, the Company is no longer subject to federal, state, local or foreign examinations for years ending prior to January 31, 2011. However, carryforward attributes that were generated in tax years ending prior to January 31, 2012 may still be adjusted upon examination by state or local tax authorities if they either have been or will be used in a future period.

Under Section 382 of the Internal Revenue Code of 1986, as amended, substantial changes in the Company’s ownership may limit the amount of net operating loss carryforwards that could be utilized annually in the future to offset its taxable income. Specifically, this limitation may arise in the event of a cumulative change in ownership of the Company of more than 50% within a three-year period. During the first quarter of fiscal year 2015, management determined that the Company had experienced an ownership change for purposes of Section 382. This ownership change resulted in annual limitations to the amount of net operating loss carryforwards that can be utilized to offset future taxable income, if any, at the federal level. The Company’s management has determined that, as of October 31, 2016, it had not experienced another ownership change for purposes of Section 382. However, future transactions in the Company’s common stock could trigger an ownership change for purposes of Section 382, which could further limit the amount of net operating loss carryforwards that could be utilized annually in the future to offset the Company’s taxable income, if any. Any such limitation, whether as the result of sales of common stock by the Company’s existing stockholders or sales of common stock by the Company, could have a material adverse effect on the Company’s results of operations in future years.

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Geographic Information

9 Months Ended

Oct. 31, 2016

Segment Reporting [Abstract]

Geographic Information

12. Geographic Information

Revenue by geographic area, attributed to individual countries based upon location of the external customer, is as follows:

	Three Months Ended October 31,				Nine Months Ended October 31,
	2016		2015		2016		2015
United States	$	4,805	$	5,320	$	13,526	$	13,462
Germany		2,797		2,431		8,089		7,081
Japan		4,045		2,917		10,367		7,396
France		2,199		1,768		6,111		5,387
Korea		1,465		1,464		4,257		4,170
United Kingdom		1,839		1,700		5,220		5,403
China		960		520		2,530		1,544
Sweden		428		420		1,275		1,377
Italy		427		294		1,159		996
Other		193		130		521		371
	$	19,158	$	16,964	$	53,055	$	47,187

Net long-lived assets, consisting of net property and equipment, are subject to geographic risks because they are generally difficult to move and to effectively utilize in another geographic area in a reasonable time period and because they are relatively illiquid. Net long-lived assets by principal geographic areas were as follows:

	October 31,		January 31,
	2016		2016
United States	$	10,284	$	11,346
France		242		388
Germany		101		110
Japan		144		116
Other		126		72
	$	10,897	$	12,032

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Oct. 31, 2016

Accounting Policies [Abstract]

Applicable Accounting Guidance

Applicable Accounting Guidance

Any reference in these notes to applicable accounting guidance is meant to refer to the authoritative United States generally accepted accounting principles (“GAAP”) as found in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”).

Basis of Presentation

Basis of Presentation

The interim financial data as of October 31, 2016 and for the three and nine months ended October 31, 2016 and 2015 are unaudited; however, in the opinion of the Company’s management, the interim data includes all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the interim periods presented. The condensed consolidated balance sheet presented as of January 31, 2016 has been derived from the audited consolidated financial statements as of that date. The unaudited condensed consolidated financial statements presented herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all of the information and note disclosures required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Exa annual report on Form 10-K for the year ended January 31, 2016 filed with the Securities and Exchange Commission on March 21, 2016.

Reclassification

Reclassification

Certain prior year amounts have been reclassified to be consistent with current year classifications.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from management’s estimates if future events differ substantially from past experience, or other assumptions, which reasonable when made, do not turn out to be substantially accurate.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle, as a result of which more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP. The standard is effective for annual periods beginning after December 15, 2018, and interim periods therein. The two permitted transition methods under the new standard are: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). The Company is currently evaluating the impact of its pending adoption of ASU 2014-09 on its consolidated financial statements and has not yet determined the method by which it will adopt the standard when it becomes effective.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. Under the new guidance, management will be required to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosures in certain circumstances. The provisions of this ASU are effective for annual periods beginning after December 15, 2016, and for interim periods therein. This ASU is not expected to have a material impact on the Company’s financial statements or disclosures.

In April 2015, the FASB issued ASU No. 2015-05, Intangibles – Goodwill and Other – Internal-Use Software: Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The guidance clarifies the circumstances under which a cloud computing customer would account for the arrangement as a license of internal-use software. The standard will be effective for annual reporting periods beginning after December 15, 2016, and for interim periods therein. Early adoption is permitted. This ASU is not expected to have an impact on the Company’s financial statements or disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This standard requires the recognition of lease assets and liabilities for all leases, with certain exceptions, on the balance sheet. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. This ASU is effective for annual periods beginning after December 15, 2018, and for interim periods therein. The Company is currently evaluating the requirements of this ASU and has not yet determined its impact on the Company’s consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718)—Improvements to Employee Share-Based Payment Accounting. This standard simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The provisions of this ASU are effective for annual periods beginning after December 15, 2016, and for interim periods therein. Early adoption is permitted. The Company is currently evaluating the requirements of this ASU and has not yet determined its impact on the Company’s consolidated financial statements.

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Computation of Net Income (Loss) Per Share (Tables)

9 Months Ended

Oct. 31, 2016

Earnings Per Share [Abstract]

Calculation of Basic and Diluted Net Income (Loss) Per Share

The following summarizes the calculation of basic and diluted net income (loss) per share:

	Three Months Ended October 31,					Nine Months Ended October 31,
	2016		2015			2016			2015
Numerator:
Net income (loss)	$	155	$	(433	)	$	(1,466	)	$	(3,516	)
Denominator:
Weighted average common shares outstanding, basic		14,826,758		14,610,479			14,750,153			14,484,563
Dilutive effect of:
Options to purchase common stock		413,275		—			—			—
Options to purchase preferred stock		21,963		—			—			—
Weighted average common shares outstanding, fully    diluted		15,261,996		14,610,479			14,750,153			14,484,563
Basic net income (loss) per share	$	0.01	$	(0.03	)	$	(0.10	)	$	(0.24	)
Diluted net income (loss) per share	$	0.01	$	(0.03	)	$	(0.10	)	$	(0.24	)

Outstanding Options, Restricted Stock Unit Awards and Warrants Excluded from Computation of Diluted Net Loss Per Share

The table below represents outstanding options, restricted stock unit awards and warrants that were excluded from the computation of diluted net income (loss) per share for the periods indicated because including them would have had an anti-dilutive effect. All of the Company’s outstanding stock options, unvested restricted stock units and warrants were anti-dilutive for the three months ended October 31, 2015 and for the nine months ended October 31, 2016 and 2015, respectively, due to the net loss incurred by the Company.

	Three Months Ended October 31,				Nine Months Ended October 31,
	2016		2015		2016		2015
Options, restricted stock unit awards and warrants to    purchase common and preferred stock		543,276		2,514,955		1,951,713		2,514,955

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Property and Equipment, net (Tables)

9 Months Ended

Oct. 31, 2016

Property Plant And Equipment [Abstract]

Schedule of Property and Equipment

Property and equipment, net consists of the following:

	October 31, 2016			January 31, 2016
Computer software and equipment	$	19,407		$	17,964
Office equipment and furniture		1,554			1,349
Leasehold improvements		1,630			1,562
Construction-in-process		110			169
Total property and equipment		22,701			21,044
Less accumulated depreciation		(11,804	)		(9,012	)
Property and equipment, net	$	10,897		$	12,032

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Accrued Expenses (Tables)

9 Months Ended

Oct. 31, 2016

Payables And Accruals [Abstract]

Accrued Expenses

Accrued expenses consist of the following:

	October 31, 2016		January 31, 2016
Accrued payroll	$	1,958	$	1,828
Sales and value added taxes		1,763		4,075
Accrued commissions and bonuses		1,996		3,900
Accrued income taxes payable		833		541
Deferred rent, current portion		429		186
Legal and professional		651		805
Other		1,109		864
Total accrued expenses	$	8,739	$	12,199

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Deferred Rent (Tables)

9 Months Ended

Oct. 31, 2016

Text Block [Abstract]

Deferred Rent

Deferred rent consists of the following:

	October 31, 2016			January 31, 2016
Leasehold improvement incentive	$	1,646		$	1,839
Non-cash rent expense		1,320			837
Total deferred rent		2,966			2,676
Less current portion included in accrued expenses		(429	)		(186	)
Deferred rent, net of current portion	$	2,537		$	2,490

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Fair Value Measurements (Tables)

9 Months Ended

Oct. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value Hierarchy for Financial Assets and Liabilities Measured at Fair Value

The following table summarizes the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value as of October 31, 2016:

	Total		Level 1		Level 2		Level 3
Assets:
Money market funds	$	10,048	$	10,048	$	—	$	—

The following table summarizes the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value as of January 31, 2016:

	Total		Level 1		Level 2		Level 3
Assets:
Money market funds	$	11,019	$	11,019	$	—	$	—

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Acquired Intangible Assets (Tables)

9 Months Ended

Oct. 31, 2016

Goodwill And Intangible Assets Disclosure [Abstract]

Carrying Value of Intangible Assets

The following table reflects the carrying value of intangible assets as of October 31, 2016: 

	Cost		Accumulated Amortization			Net Book Value
Intellectual property	$	3,505	$	(1,723	)	$	1,782
Access to facilities contract		38		(38	)		—
Total	$	3,543	$	(1,761	)	$	1,782

The following table reflects the carrying value of intangible assets as of January 31, 2016:

	Cost		Accumulated Amortization			Net Book Value
Intellectual property	$	3,505	$	(1,461	)	$	2,044
Access to facilities contract		38		(38	)		—
Total	$	3,543	$	(1,499	)	$	2,044

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Commitments and Contingencies (Tables)

9 Months Ended

Oct. 31, 2016

Commitments And Contingencies Disclosure [Abstract]

Future Minimum Lease Payments Under Non-Cancelable Lease Arrangements

As of October 31, 2016, after taking into consideration the above agreement, total future minimum lease payments under non-cancelable lease arrangements are as follows:

Year ended January 31,
2017 (Remainder as of October 31, 2016)	$	1,588
2018		6,061
2019		5,503
2020		3,916
2021		2,062
Thereafter		4,898
	$	24,028

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Stock-Based Compensation (Tables)

9 Months Ended

Oct. 31, 2016

Stock-Based Compensation Expense Related to Stock Options Issued and Restricted Stock Units by the Company

Total stock-based compensation expense related to stock options and restricted stock units issued by the Company is as follows: 

	Three Months Ended October 31,				Nine Months Ended October 31,
	2016		2015		2016		2015
Cost of revenues	$	41	$	64	$	124	$	186
Sales and marketing		54		117		202		317
Research and development		222		265		567		691
General and administrative		215		215		565		572
Total	$	532	$	661	$	1,458	$	1,766

Service-Based Stock Options [Member]

Assumptions Used to Calculate Fair Value of Common Stock Options for Employees and Executive Team Members

The fair value of common stock service-based options for employees is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used: 

	Nine Months Ended October 31,
	2016		2015
Expected life (years)		6.25		6.23
Risk-free interest rate		1.4%		2.0%
Expected volatility		35.0%		36.8%
Expected dividend yield		0.0%		0.0%

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Geographic Information (Tables)

9 Months Ended

Oct. 31, 2016

Segment Reporting [Abstract]

Revenues by Geographic Area

Revenue by geographic area, attributed to individual countries based upon location of the external customer, is as follows:

	Three Months Ended October 31,				Nine Months Ended October 31,
	2016		2015		2016		2015
United States	$	4,805	$	5,320	$	13,526	$	13,462
Germany		2,797		2,431		8,089		7,081
Japan		4,045		2,917		10,367		7,396
France		2,199		1,768		6,111		5,387
Korea		1,465		1,464		4,257		4,170
United Kingdom		1,839		1,700		5,220		5,403
China		960		520		2,530		1,544
Sweden		428		420		1,275		1,377
Italy		427		294		1,159		996
Other		193		130		521		371
	$	19,158	$	16,964	$	53,055	$	47,187

Net Long-Lived Assets by Principal Geographic Area

Net long-lived assets by principal geographic areas were as follows:

	October 31,		January 31,
	2016		2016
United States	$	10,284	$	11,346
France		242		388
Germany		101		110
Japan		144		116
Other		126		72
	$	10,897	$	12,032

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Computation of Net Income (Loss) Per Share - Calculation of Basic and Diluted Net Income (Loss) Per Common Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2016	Oct. 31, 2015	Oct. 31, 2016	Oct. 31, 2015
Numerator:
Net income (loss)	$ 155	$ (433)	$ (1,466)	$ (3,516)
Denominator:
Weighted average common shares outstanding, basic	14,826,758	14,610,479	14,750,153	14,484,563
Dilutive effect of:
Options to purchase common stock	413,275
Options to purchase preferred stock	21,963
Weighted average common shares outstanding, fully diluted	15,261,996	14,610,479	14,750,153	14,484,563
Basic net income (loss) per share	$ 0.01	$ (0.03)	$ (0.10)	$ (0.24)
Diluted net income (loss) per share	$ 0.01	$ (0.03)	$ (0.10)	$ (0.24)

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Computation of Net Income (Loss) Per Share - Outstanding Options, Restricted Stock Unit Awards and Warrants Excluded from Computation of Diluted Net Loss Per Share (Detail) - shares	3 Months Ended		9 Months Ended
	Oct. 31, 2016	Oct. 31, 2015	Oct. 31, 2016	Oct. 31, 2015
Earnings Per Share [Abstract]
Options, restricted stock unit awards and warrants to purchase common and preferred stock	543,276	2,514,955	1,951,713	2,514,955

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Property and Equipment, Net - Schedule of Property and Equipment (Detail) - USD ($) $ in Thousands	Oct. 31, 2016	Jan. 31, 2016
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 22,701	$ 21,044
Less accumulated depreciation	(11,804)	(9,012)
Property and equipment, net	10,897	12,032
Computer Software and Equipment [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	19,407	17,964
Office Equipment and Furniture [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	1,554	1,349
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	1,630	1,562
Construction in Process [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 110	$ 169

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Property and Equipment, Net - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2016	Oct. 31, 2015	Oct. 31, 2016	Oct. 31, 2015	Jan. 31, 2016
Property, Plant and Equipment [Line Items]
Depreciation and amortization expense	$ 908	$ 871	$ 2,724	$ 2,224
Cost of equipment held pursuant to capital leases	14,883		14,883		$ 14,809
Accumulated amortization	11,804		11,804		9,012
Assets Held under Capital Leases [Member]
Property, Plant and Equipment [Line Items]
Accumulated amortization	$ 8,712		$ 8,712		$ 6,808

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Accrued Expenses - Accrued Expenses (Detail) - USD ($) $ in Thousands	Oct. 31, 2016	Jan. 31, 2016
Payables And Accruals [Abstract]
Accrued payroll	$ 1,958	$ 1,828
Sales and value added taxes	1,763	4,075
Accrued commissions and bonuses	1,996	3,900
Accrued income taxes payable	833	541
Deferred rent, current portion	429	186
Legal and professional	651	805
Other	1,109	864
Total accrued expenses	$ 8,739	$ 12,199

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Deferred Rent - Deferred Rent (Detail) - USD ($) $ in Thousands	Oct. 31, 2016	Jan. 31, 2016
Deferred Revenue Disclosure [Abstract]
Leasehold improvement incentive	$ 1,646	$ 1,839
Non-cash rent expense	1,320	837
Total deferred rent	2,966	2,676
Less current portion included in accrued expenses	(429)	(186)
Deferred rent, net of current portion	$ 2,537	$ 2,490

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Fair Value Measurements - Fair Value Hierarchy for Financial Assets and Liabilities Measured at Fair Value (Detail) - Money Market Funds [Member] - USD ($) $ in Thousands	Oct. 31, 2016	Jan. 31, 2016
Assets:
Money market funds	$ 10,048	$ 11,019
Level 1 [Member]
Assets:
Money market funds	$ 10,048	$ 11,019

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Acquired Intangible Assets - Carrying Value of Intangible Assets (Detail) - USD ($) $ in Thousands	Oct. 31, 2016	Jan. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Cost	$ 3,543	$ 3,543
Accumulated Amortization	(1,761)	(1,499)
Net Book Value	1,782	2,044
Intellectual Property [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	3,505	3,505
Accumulated Amortization	(1,723)	(1,461)
Net Book Value	1,782	2,044
Access to Facilities Contract [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	38	38
Accumulated Amortization	$ (38)	$ (38)

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Acquired Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2016	Oct. 31, 2015	Oct. 31, 2016	Oct. 31, 2015
Goodwill And Intangible Assets Disclosure [Abstract]
Intangible assets amortization expense	$ 88	$ 88	$ 263	$ 263

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Commitments and Contingencies - Additional Information (Detail)	3 Months Ended
	Jul. 31, 2016 kWh	Oct. 31, 2016 USD ($)	Jan. 31, 2016 USD ($)
Commitments And Contingencies Disclosure [Abstract]
Recorded liabilities for guarantees and indemnities | $		$ 0	$ 0
Operating leases arrangement term	3 years
Computing capacity | kWh	300

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Commitments and Contingencies - Future Minimum Lease Payments Under Operating Lease Commitments (Detail) $ in Thousands	Oct. 31, 2016 USD ($)
Commitments And Contingencies Disclosure [Abstract]
2017 (Remainder as of October 31, 2016)	$ 1,588
2018	6,061
2019	5,503
2020	3,916
2021	2,062
Thereafter	4,898
Total	$ 24,028

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Stock-Based Compensation - Assumptions Used to Calculate Fair Value of Common Stock Options for Employees and Executive Team Members (Detail) - Service-Based Stock Options [Member]	9 Months Ended
	Oct. 31, 2016	Oct. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life (years)	6 years 3 months	6 years 2 months 23 days
Risk-free interest rate	1.40%	2.00%
Expected volatility	35.00%	36.80%
Expected dividend yield	0.00%	0.00%

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Stock-Based Compensation - Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Oct. 31, 2016	Oct. 31, 2015	Oct. 31, 2016	Oct. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized compensation cost	$ 10,637		$ 10,637
Weighted average period over which unrecognized compensation cost is expected to be recognized			1 year 7 months 24 days
Service-Based Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average grant date per share for stock options	$ 5.24	$ 4.14	$ 5.12	$ 4.21

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Stock-Based Compensation - Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2016	Oct. 31, 2015	Oct. 31, 2016	Oct. 31, 2015
Stock Based Compensation [Line Items]
Stock-based compensation expense	$ 532	$ 661	$ 1,458	$ 1,766
Cost of Revenues [Member]
Stock Based Compensation [Line Items]
Stock-based compensation expense	41	64	124	186
Sales and Marketing [Member]
Stock Based Compensation [Line Items]
Stock-based compensation expense	54	117	202	317
Research and Development [Member]
Stock Based Compensation [Line Items]
Stock-based compensation expense	222	265	567	691
General and Administrative [Member]
Stock Based Compensation [Line Items]
Stock-based compensation expense	$ 215	$ 215	$ 565	$ 572

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Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2016	Oct. 31, 2015	Oct. 31, 2016	Oct. 31, 2015
Income Tax Disclosure [Abstract]
Provision (benefit) for income taxes	$ 436	$ 344	$ 795	$ 472
Income tax examination, description			With limited exceptions, the Company is no longer subject to federal, state, local or foreign examinations for years ending prior to January 31, 2011. However, carryforward attributes that were generated in tax years ending prior to January 31, 2012 may still be adjusted upon examination by state or local tax authorities if they either have been or will be used in a future period
Threshold percentage for change in ownership			50.00%
Period of change in ownership			3 years

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Geographic Information - Revenues by Geographic Area (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2016	Oct. 31, 2015	Oct. 31, 2016	Oct. 31, 2015
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 19,158	$ 16,964	$ 53,055	$ 47,187
United States [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	4,805	5,320	13,526	13,462
Germany [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	2,797	2,431	8,089	7,081
Japan [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	4,045	2,917	10,367	7,396
France [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	2,199	1,768	6,111	5,387
Korea [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	1,465	1,464	4,257	4,170
United Kingdom [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	1,839	1,700	5,220	5,403
China [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	960	520	2,530	1,544
Sweden [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	428	420	1,275	1,377
Italy [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	427	294	1,159	996
Other [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 193	$ 130	$ 521	$ 371

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Geographic Information - Net Long-Lived Assets by Principal Geographic Area (Detail) - USD ($) $ in Thousands	Oct. 31, 2016	Jan. 31, 2016
Revenues from External Customers and Long-Lived Assets [Line Items]
Property and equipment, net	$ 10,897	$ 12,032
United States [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Property and equipment, net	10,284	11,346
France [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Property and equipment, net	242	388
Germany [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Property and equipment, net	101	110
Japan [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Property and equipment, net	144	116
Other [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Property and equipment, net	$ 126	$ 72