The 2015 Equity Incentive Plan (the 2015 Plan) provides for grants of incentive stock options to our employees and non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units (RSUs), performance-based stock and cash awards, market-based stock awards, and other forms of stock awards to our employees, directors and consultants. Our equity awards generally vest over a two to five year period and expire no later than ten years from the date of grant.

Upon vesting of equity awards, 1.1 million and 1.0 million shares were withheld during the second quarter of fiscal 2026 and 2027 to cover $57.8 million and $74.3 million in tax withholding obligations, and 2.3 million and 2.6 million shares were withheld to cover $117.9 million and $175.3 million in tax withholding during the first two quarters of fiscal 2026 and 2027. The shares withheld to satisfy employee tax withholding obligations are returned to our 2015 Plan and will be available for future issuance. Payments for employees’ tax obligations to the tax authorities are recognized as a reduction to additional paid-in capital and reflected as a financing activity in our condensed consolidated statements of cash flows.

Under our Amended and Restated 2015 Employee Stock Purchase Plan (2015 ESPP), our Board of Directors (or a committee thereof) has the authority to establish the length and terms of the offering periods and purchase periods and the purchase price of the shares of common stock which may be purchased under the plan. The current offering terms allow eligible employees to purchase shares of our common stock at a discount through payroll deductions of up to 30% of their eligible compensation, subject to a cap of 3,000 shares on any purchase date, a dollar cap of $7,500 per purchase period, or $25,000 in any calendar year (as determined under applicable tax rules). The current terms also allow for a 24-month offering period beginning March 16th and September 16th of each year, with each offering period consisting of four 6-month purchase periods, subject to a reset provision. Further, currently, on each purchase date, eligible employees may purchase our common stock at a price per share equal to 85% of the lesser of the fair market value of our common stock (1) on the first trading day of the applicable offering period or (2) the purchase date.

Under the reset provision currently authorized, if the closing stock price on the offering date of a new offering falls below the closing stock price on the offering date of an ongoing offering, the ongoing offering would terminate immediately following the purchase of ESPP shares on the purchase date immediately preceding the new offering and participants in the terminated offering would automatically be enrolled in the new offering (ESPP reset), resulting in a modification charge to be recognized over the new offering period. No ESPP reset occurred during the first two quarters of fiscal 2026. During the first two quarters of fiscal 2027, ESPP reset resulted in total modification charge of $6.0 million, which will be recognized over its new offering period.

Stock-based compensation expense related to our 2015 ESPP was $6.7 million and $8.6 million during the second quarter of fiscal 2026 and 2027, and $14.2 million and $16.6 million during the first two quarters of fiscal 2026 and 2027. At the end of the second quarter of fiscal 2027, total unrecognized stock-based compensation cost related to our 2015 ESPP was $27.7 million, which is expected to be recognized over a weighted-average period of 1.1 years.


	Options Outstanding
	Number of Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (in thousands)
Balance at the end of fiscal 2026	1,142,394	$	13.80	1.7	$	64,144
Options exercised	(1,074,224)	14.12
Balance at the end of the second quarter of fiscal 2027	68,170	$	1.89	3.4	$	5,132
Vested and exercisable at the end of the second quarter of fiscal 2027	68,170	$	1.89	3.4	$	5,132

The aggregate intrinsic value of options vested and exercisable at the end of the second quarter of fiscal 2027 is calculated based on the difference between the exercise price and the closing price of $77.17 of our common stock on the last day of the second quarter of fiscal 2027.

A summary of the RSUs activity under our 2015 Plan and related information is as follows:


	Number of RSUs Outstanding	Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)
Unvested balance at the end of fiscal 2026	17,340,284	$	44.32	$	1,205,843
Granted	8,064,353	68.38
Vested	(4,632,816)	40.37
Forfeited or canceled (1)	(961,873)	50.00
Unvested balance at the end of the second quarter of fiscal 2027	19,809,948	$	54.76	$	1,528,734

_________________________________

Stock-based compensation expense related to RSUs was $89.1 million and $103.6 million during the second quarter of fiscal 2026 and 2027, and $166.3 million and $189.2 million during the first two quarters of fiscal 2026 and 2027. At the end of the second quarter of fiscal 2027, total unrecognized stock-based compensation cost related to unvested RSUs was $1.0 billion, which is expected to be recognized over a weighted-average period of 3.0 years.

The number of shares that could be earned under our PRSU grants ranges from 0% to 200% of the target number granted depending on the achievement of certain performance conditions with any unearned shares canceled. Generally, the number of earned shares vest over three years from the date of grant subject to continuous service.

In fiscal 2024, 2026, and 2027, we granted 4.2 million, 1.2 million and 0.7 million LTP Awards, respectively, contingent on achieving specified market capitalization or stock price thresholds measured over approximately three- to five-year periods. Awards granted are measured for achievement at the end of the third, fourth and fifth fiscal years following the year of grant. For the fiscal 2024 and fiscal 2026 LTP Awards, any shares earned based on achievement at these measurement dates vest at the end of the fifth fiscal year following grant. For the fiscal 2027 LTP Awards, shares earned based on achievement at each measurement date vest during the respective quarter thereafter. In each case, vested shares are subject to continued service and a one-year post-vest holding period. The stock-based compensation expense for these awards is being recognized over the respective requisite service periods ranging from approximately three to five years using the accelerated attribution method and is not reversed if the market condition is not ultimately met.


	PRSUs and LTP Awards
	Number of Shares Outstanding	Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)
Unvested balance at the end of fiscal 2026	6,817,793	$	29.26	$	474,109
Granted	2,942,173	63.30
Vested and earned (1)	(1,351,984)	52.20

Forfeited (2)	(569,660)	27.86
Unvested balance at the end of the second quarter of fiscal 2027	7,838,322	$	38.18	$	604,883

Stock-based compensation expense related to PRSUs and LTP Awards was $21.6 million and $47.6 million during the second quarter of fiscal 2026 and 2027, and $33.2 million and $76.1 million during the first two quarters of fiscal 2026 and 2027. At the end of the second quarter of fiscal 2027, total unrecognized stock-based compensation cost related to unvested PRSUs and LTP Awards was $249.9 million, which is expected to be recognized over a weighted-average period of 2.6 years.


	Second Quarter of Fiscal				First Two Quarters of Fiscal
	2026		2027		2026		2027
Cost of revenue—product	$	4,149	$	5,336	$	7,415	$	9,468
Cost of revenue—subscription services	8,559		10,287		15,721		18,442
Research and development	60,354		80,010		109,596		140,341
Sales and marketing	26,527		33,461		48,611		62,624
General and administrative	17,804		30,721		32,325		51,004
Total stock-based compensation expense, net of amounts capitalized (1)	$	117,393	$	159,815	$	213,668	$	281,879