ServiceNow, Inc.

Previous wording

As of June 30, 2026, our RPO was $29.0 billion, of which 46% represented cRPO. RPO and cRPO both increased by 21% compared to June 30, 2025. Factors that may cause our RPO to vary from period to period include the following:

Current wording

As of September 30, 2026, our RPO was $29.7 billion, of which 46% represented cRPO. RPO and cRPO increased by 22% and 20%, respectively, compared to September 30, 2025. Factors that may cause our RPO to vary from period to period include the following:

Previous wording

Number of customers with ACV greater than $5 million. We count the total number of customers with annual contract value (“ACV”) greater than $5 million as of the end of the period. We had 658 and 533 customers with ACV greater than $5 million as of June 30, 2026 and 2025, respectively. For purposes of customer count, a customer is defined as an entity that has a unique Dunn & Bradstreet Global Ultimate (“GULT”) Data Universal Numbering System (“DUNS”) number and an active subscription contract as of the measurement date. The DUNS number is a global standard for business identification and tracking. We make exceptions for holding companies, government entities and other organizations for which the GULT, in our judgment, does not accurately represent the ServiceNow customer. For example, while all U.S. government agencies roll up to “Government of the United States” under the GULT, we count each government agency that we contract with as a separate customer. Our customer count is subject to adjustments for acquisitions, spin-offs and other market activity; accordingly, we restate previously disclosed number of customers with ACV greater than $5 million calculations to allow for comparability. ACV is calculated based on the foreign exchange rate in effect at the time the contract was signed. Foreign exchange rate fluctuations could cause some variability in the number of customers with ACV greater than $5 million. We believe information regarding the total number of customers with ACV greater than $5 million provides useful information to investors because it is an indicator of our growing customer base and demonstrates the value customers are receiving from the Platform.

Current wording

Number of customers with ACV greater than $5 million. We count the total number of customers with annual contract value (“ACV”) greater than $5 million as of the end of the period. We had 680 and 553 customers with ACV greater than $5 million as of September 30, 2026 and 2025, respectively. For purposes of customer count, a customer is defined as an entity that has a unique Dunn & Bradstreet Global Ultimate (“GULT”) Data Universal Numbering System (“DUNS”) number and an active subscription contract as of the measurement date. The DUNS number is a global standard for business identification and tracking. We make exceptions for holding companies, government entities and other organizations for which the GULT, in our judgment, does not accurately represent the ServiceNow customer. For example, while all U.S. government agencies roll up to “Government of the United States” under the GULT, we count each government agency that we contract with as a separate customer. Our customer count is subject to adjustments for acquisitions, spin-offs and other market activity; accordingly, we restate previously disclosed number of customers with ACV greater than $5 million calculations to allow for comparability. ACV is calculated based on the foreign exchange rate in effect at the time the contract was signed. Foreign exchange rate fluctuations could cause some variability in the number of customers with ACV greater than $5 million. We believe information regarding the total number of customers with ACV greater than $5 million provides useful information to investors because it is an indicator of our growing customer base and demonstrates the value customers are receiving from the Platform.

Previous wording

production instance of our service and an active subscription contract as of the measurement date, instead of an entity with a unique GULT or DUNS number. We adjust our renewal rate for acquisitions, consolidations and other customer events that cause the merging of two or more accounts occurring at the time of renewal. Our renewal rate was 98% for each of the three and six months ended June 30, 2026 and 2025. As our renewal rate is impacted by the timing of renewals, which could occur in advance of, or subsequent to the original contract end date, period-to-period comparison of renewal rates may not be meaningful.

Current wording

production instance of our service and an active subscription contract as of the measurement date, instead of an entity with a unique GULT or DUNS number. We adjust our renewal rate for acquisitions, consolidations and other customer events that cause the merging of two or more accounts occurring at the time of renewal. Our renewal rate was 98% for each of the three and nine months ended September 30, 2026 and 97% and 98% for the three and nine months ended September 30, 2025, respectively. As our renewal rate is impacted by the timing of renewals, which could occur in advance of, or subsequent to the original contract end date, period-to-period comparison of renewal rates may not be meaningful.

Previous wording

We sell our subscription services primarily through our direct sales organization. We also sell services through managed service providers and resale partners. We also generate revenues from certain professional services and from training of customers and partner personnel, through both our direct team and indirect sales channel. Revenues from our direct sales organization represented 75% and 76% of our total revenues for the three and six months ended June 30, 2026, respectively, and 78% of our total revenues for each of the three and six months ended June 30, 2025. For purposes of calculating revenues from our direct sales organization, revenues from systems integrators and managed services providers are included as part of the direct sales organization.

Current wording

We sell our subscription services primarily through our direct sales organization. We also sell services through managed service providers and resale partners. We also generate revenues from certain professional services and from training of customers and partner personnel, through both our direct team and indirect sales channel. Revenues from our direct sales organization represented 76% of our total revenues for each of the three and nine months ended September 30, 2026 and 78% of our total revenues for each of the three and nine months ended September 30, 2025. For purposes of calculating revenues from our direct sales organization, revenues from systems integrators and managed services providers are included as part of the direct sales organization.

Previous wording

Professional services are performed directly by our services team, as well as by contracted third-party partners. Fees paid by us to third-party partners are primarily recognized as cost of revenues as the professional services are delivered. Cost of revenues associated with our professional services engagements contracted with third-party partners as a percentage of professional services and other revenues was 42% and 40% for the three and six months ended June 30, 2026, respectively, and 33% and 34% for the three and six months ended June 30, 2025, respectively.

Current wording

Professional services are performed directly by our services team, as well as by contracted third-party partners. Fees paid by us to third-party partners are primarily recognized as cost of revenues as the professional services are delivered. Cost of revenues associated with our professional services engagements contracted with third-party partners as a percentage of professional services and other revenues was 53% and 44% for the three and nine months ended September 30, 2026, respectively, and 33% for each of the three and nine months ended September 30, 2025.

Previous wording

Provision for income taxes consists of federal, state and foreign income taxes. Our income tax provision for the three and six months ended June 30, 2026 is primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates and stock-based compensation shortfalls, offset by the release of a valuation

Current wording

Provision for income taxes consists of federal, state and foreign income taxes. Our income tax provision for the three and nine months ended September 30, 2026 is primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates and stock-based compensation shortfalls. For the nine months ended

Previous wording

allowance on certain California deferred tax assets. We continue to maintain a valuation allowance against a portion of our California deferred tax assets due to the uncertainty regarding realizability of these deferred tax assets as they have not met the “more likely than not” realization criteria, particularly as we expect research and development tax credit generation to exceed our ability to use the credits in future years.

Current wording

September 30, 2026, the provision was also impacted by the release of a valuation allowance on certain California deferred tax assets. We continue to maintain a valuation allowance against a portion of our California deferred tax assets due to the uncertainty regarding realizability of these deferred tax assets as they have not met the “more likely than not” realization criteria, particularly as we expect research and development tax credit generation to exceed our ability to use the credits in future years.

Previous wording

Subscription revenues increased by $764 million and $1,430 million for the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025, primarily driven by increased purchases by new and existing customers. Included in subscription revenues is $149 million and $109 million of revenues recognized upfront from the delivery of software associated with self-hosted offerings during the three months ended June 30, 2026 and 2025, respectively, and $287 million and $266 million during the six months ended June 30, 2026 and 2025, respectively.

Current wording

Subscription revenues increased by $689 million and $2,119 million for the three and nine months ended September 30, 2026, respectively, compared to the three and nine months ended September 30, 2025, primarily driven by increased purchases by new and existing customers. Included in subscription revenues is $96 million and $104 million of revenues recognized upfront from the delivery of software associated with self-hosted offerings during the three months ended September 30, 2026 and 2025, respectively, and $383 million and $370 million during the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

Professional services and other revenues increased by $8 million and $24 million during the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025, primarily due to an increase in services and trainings provided to new and existing customers.

Current wording

Professional services and other revenues increased by $10 million and $34 million during the three and nine months ended September 30, 2026, respectively, compared to the three and nine months ended September 30, 2025, primarily due to an increase in services provided to new and existing customers.

Previous wording

Cost of subscription revenues increased by $405 million and $664 million for the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025, primarily due to increased headcount and increased costs to support the growth of our subscription offerings including costs to support customers in regulated markets. Personnel-related costs, including stock-based compensation and overhead expenses, increased by $115 million and $229 million for the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025. Depreciation expense related to infrastructure hardware equipment and expenses associated with software, maintenance and other costs, which together support the expansion of data center capacity, increased by $63 million and $123 million for the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025. Expenses associated with our contractual commitments with third-party cloud service providers increased by $63 million and $104 million for the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025. In addition, amortization of intangible assets increased by $153 million and $194 million for the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025 as a result of acquisitions.

Current wording

Cost of subscription revenues increased by $388 million and $1,052 million for the three and nine months ended September 30, 2026, respectively, compared to the three and nine months ended September 30, 2025, primarily due to increased headcount and increased costs to support the growth of our subscription offerings including costs to support customers in regulated markets. Personnel-related costs, including stock-based compensation and overhead expenses increased by $112 million and $341 million for the three and nine months ended September 30, 2026, respectively, compared to the three and nine months ended September 30, 2025. Depreciation expense related to infrastructure hardware equipment and expenses associated with software, maintenance and other costs, which together support the expansion of data center capacity, increased by $56 million and $179 million for the three and nine months ended September 30, 2026, respectively, compared to the three and nine months ended September 30, 2025. Expenses associated with our contractual commitments with third-party cloud service providers increased by $79 million and $183 million for the three and nine months ended September 30, 2026, respectively, compared to the three and nine months ended September 30, 2025. In addition, amortization of intangible assets increased by $119 million and $313 million for the three and nine months ended September 30, 2026, respectively, compared to the three and nine months ended September 30, 2025 as a result of acquisitions.

Previous wording

We expect our cost of subscription revenues for the year ending December 31, 2026 to increase in absolute dollars and increase as a percentage of revenue compared to the year ended December 31, 2025 as we provide subscription services to more customers, increase usage within our customer instances and continue to recognize amortization of acquired intangible assets. We will continue to incur incremental costs to attract customers in regulated markets by adopting public cloud offerings as well as increased support for customers impacted by new and evolving data residency requirements. To the extent future acquisitions are consummated, our cost of subscription revenues may increase due to additional non-cash charges associated with the amortization of intangible assets acquired.

Current wording

We expect our cost of subscription revenues for the year ending December 31, 2026 to increase in absolute dollars and increase as a percentage of revenue compared to the year ended December 31, 2025 as we provide subscription services to more customers, increase usage within our customer instances and continue to recognize amortization of acquired intangible assets. We will continue to incur incremental costs to attract customers by adopting public cloud offerings as well as increased support for customers impacted by new and evolving data residency requirements. To the extent future acquisitions are consummated, our cost of subscription revenues may increase due to additional non-cash charges associated with the amortization of intangible assets acquired.

Previous wording

Our subscription gross profit percentage was 73% and 75% for the three and six months ended June 30, 2026, respectively, and 80% and 81% for the three and six months ended June 30, 2025, respectively. We expect our subscription gross profit percentage to decrease for the year ending December 31, 2026 compared to the year ended December 31, 2025, primarily due to the ongoing growth of our third-party cloud services usage and incremental amortization of intangible assets acquired.

Current wording

Our subscription gross profit percentage was 74% and 75% for the three and nine months ended September 30, 2026, respectively, and 80% for each of the three and nine months ended September 30, 2025. We expect our subscription gross profit percentage to decrease for the year ending December 31, 2026 compared to the year ended December 31, 2025, primarily due to the ongoing growth of our third-party cloud services usage and incremental amortization of intangible assets acquired.

Previous wording

Cost of professional services and other revenues increased by $40 million and $70 million for the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025, primarily driven by increased personnel-related costs and an increase in partner ecosystem spend to further help accelerate customer value realization.

Current wording

Cost of professional services and other revenues increased by $49 million and $119 million for the three and nine months ended September 30, 2026, respectively, compared to the three and nine months ended September 30, 2025, primarily driven by increased personnel-related costs and an increase in partner ecosystem spend to further help accelerate customer value realization.

Previous wording

Our professional services and other gross loss percentage was 26% for the three months ended June 30, 2026 compared to a gross profit percentage of 3% for the three months ended June 30, 2025. Our professional services and other gross loss percentage was 24% for the six months ended June 30, 2026 compared to 2% for the six months ended June 30, 2025. Our professional services and other gross loss percentage was primarily driven by personnel-related costs and partner ecosystem spend to further help accelerate customer value realization increasing at a faster rate than revenue. We expect our professional services and other gross loss percentage to increase for the year ending December 31, 2026 compared to the year ended December 31, 2025 as we continue to accelerate customer value realization and support our customers in gaining the maximum value of our latest offerings.

Current wording

Our professional services and other gross loss percentage was 33% for the three months ended September 30, 2026 compared to breakeven for the three months ended September 30, 2025. Our professional services and other gross loss percentage was 27% for the nine months ended September 30, 2026 compared to 1% for the nine months ended September 30, 2025. Our professional services and other gross loss percentage was primarily driven by personnel-related costs and partner ecosystem spend to further help accelerate customer value realization increasing at a faster rate than revenue. We expect our professional services and other gross loss percentage to increase for the year ending December 31, 2026 compared to the year ended December 31, 2025 as we continue to accelerate customer value realization and support our customers in gaining the maximum value of our latest offerings.

Previous wording

Sales and marketing expenses increased by $244 million and $406 million for the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025, primarily due to increased headcount resulting in an increase in personnel-related costs including stock-based compensation and overhead expenses of $138 million and $211 million for the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025. Amortization expenses associated with deferred commissions increased by $21 million and $44 million for the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025, primarily due to an increase in contracts with new customers, expansion and renewal contracts. Other sales and marketing program expenses, which include branding, costs associated with purchasing advertising, marketing events and market data, increased by $29 million and $62 million for the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025, primarily due to increased program costs and travel costs for our annual Knowledge user conference. In addition, amortization of intangible assets increased by $41 million and $56 million for the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025 as a result of acquisitions.

Current wording

Sales and marketing expenses increased by $215 million and $621 million for the three and nine months ended September 30, 2026, respectively, compared to the three and nine months ended September 30, 2025, primarily due to increased headcount resulting in an increase in personnel-related costs including stock-based compensation and overhead expenses of $104 million and $315 million for the three and nine months ended September 30, 2026, respectively, compared to the three and nine months ended September 30, 2025. The increase in personnel-related costs includes an increase of $1 million and $28 million in employee severance and related costs for the three and nine months ended September 30, 2026, respectively, compared to the three and nine months ended September 30, 2025, in connection with our initiatives to optimize our workforce through AI-driven efficiencies and investment in talent in key strategic areas. Amortization expenses associated with deferred commissions increased by $17 million and $61 million for the three and nine months ended September 30, 2026, respectively, compared to the three and nine months ended September 30, 2025, primarily due to an increase in contracts with new customers, expansion and renewal contracts. Other sales and marketing program expenses, which include branding, costs associated with purchasing advertising, marketing events and market data, increased by $19 million and $81 million for the three and nine months ended September 30, 2026, respectively, compared to the three and nine months ended September 30, 2025, with the increase in the nine-month period primarily due to increased program costs and travel costs for our annual Knowledge user conference. In addition, amortization of intangible assets increased by $44 million and $100 million for the three and nine months ended September 30, 2026, respectively, compared to the three and nine months ended September 30, 2025 as a result of acquisitions.

Previous wording

We expect sales and marketing expenses for the year ending December 31, 2026 to increase in absolute dollars and to decrease slightly as a percentage of revenue compared to the year ended December 31, 2025, as we continue to see leverage from increased sales productivity and marketing efficiencies.

Current wording

We expect sales and marketing expenses for the year ending December 31, 2026 to increase in absolute dollars but remain relatively flat as a percentage of revenue compared to the year ended December 31, 2025, as we continue to see leverage from increased sales productivity and marketing efficiencies.

Previous wording

We expect R&D expenses for the year ending December 31, 2026 to increase in absolute dollars but remain relatively flat as a percentage of revenue compared to the year ended December 31, 2025, as we continue to improve the existing functionality of our services, develop new applications to fill market needs and enhance our core platform.

Current wording

We expect R&D expenses for the year ending December 31, 2026 to increase in absolute dollars but remain relatively flat as a percentage of revenue compared to the year ended December 31, 2025, as we continue to improve the existing functionality of our services, develop new applications to fill market needs and enhance our core platform, including investments in AI capabilities such as agentic AI and AI security.

Previous wording

General and administrative expenses (“G&A”) increased by $98 million and $157 million for the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025, primarily due to an increase in outside services of $61 million and $96 million, largely related to recent acquisitions. Personnel-related costs including stock-based compensation increased $56 million and $66 million for the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025. These increases were partially offset by an impairment of assets of $30 million that was recorded in the three and six months ended June 30, 2025.

Current wording

General and administrative expenses (“G&A”) increased by $28 million and $185 million for the three and nine months ended September 30, 2026, respectively, compared to the three and nine months ended September 30, 2025. Personnel-related costs including stock-based compensation increased $23 million and $89 million for the three and nine months ended September 30, 2026, respectively, compared to the three and nine months ended September 30, 2025. The increase in personnel-related costs includes an increase of $10 million and $31 million in employee severance and related costs for the three and nine months ended September 30, 2026, respectively, compared to the three and nine months ended September 30, 2025, in connection with our initiatives to optimize our workforce through AI-driven efficiencies and investment in talent in key strategic areas. In addition, for the nine months ended September 30, 2026, outside services increased by $100 million, largely related to recent acquisitions, and was partially offset by an impairment of assets of $30 million that was recorded in the nine months ended September 30, 2025.

Previous wording

Stock-based compensation increased by $156 million and $244 million for the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025, primarily due to additional grants to current and new employees and stock-based awards granted in connection with acquisitions.

Current wording

Stock-based compensation increased by $141 million and $385 million for the three and nine months ended September 30, 2026, respectively, compared to the three and nine months ended September 30, 2025, primarily due to additional grants to current and new employees and stock-based awards granted in connection with acquisitions.

Previous wording

Our international operations have provided and will continue to provide a significant portion of our total revenues. Revenues outside North America represented 37% for each of the three and six months ended June 30, 2026 and 38% and 37% for the three and six months ended June 30, 2025, respectively.

Current wording

Our international operations have provided and will continue to provide a significant portion of our total revenues. Revenues outside North America represented 37% for each of the three and nine months ended September 30, 2026 and 2025.

Previous wording

Because we primarily transact in certain foreign currencies for sales outside of the United States, the general weakening of the U.S. Dollar relative to other major foreign currencies had a favorable impact on our revenues for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025. For entities reporting in currencies other than the U.S. Dollar, if we had translated our results for the six months ended June 30, 2026 at the exchange rates in effect for the six months ended June 30, 2025 rather than the actual exchange rates in effect during the period, our reported subscription revenues would have been $138 million lower, excluding the impact of our cash flow hedging program. The impact from foreign currency movements were not material to subscription revenues for the three months ended June 30, 2026, or to professional services and other revenues for the three and six months ended June 30, 2026.

Current wording

We primarily transact in certain foreign currencies for sales outside of the United States. The general strengthening of the U.S. Dollar relative to other major foreign currencies had an immaterial impact on our revenues for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The general weakening of the U.S. Dollar relative to other major foreign currencies had a favorable impact on our revenues for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. For entities reporting in currencies other than the U.S. Dollar, if we had translated our results for the nine months ended September 30, 2026 at the exchange rates in effect for the nine months ended September 30, 2025 rather than the actual exchange rates in effect during the period, our reported subscription revenues would have been $134 million lower, excluding the impact of our cash flow hedging program. The impact from foreign currency movements was not material to professional services and other revenues for the three and nine months ended September 30, 2026.

Previous wording

In addition, we primarily transact in several foreign currencies for cost of revenues and operating expenses outside of the United States. The movement of the U.S. Dollar had an immaterial impact on our expenses for the three and six months ended June 30, 2026.

Current wording

In addition, we primarily transact in several foreign currencies for cost of revenues and operating expenses outside of the United States. The movement of the U.S. Dollar had an immaterial impact on our expenses for the three and nine months ended September 30, 2026.

Previous wording

Interest income decreased by $46 million and $73 million for the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025, primarily driven by a decrease in investment income from our managed portfolio resulting from lower average portfolio balances and lower interest rates.

Current wording

Interest income decreased by $46 million and $119 million for the three and nine months ended September 30, 2026, respectively, compared to the three and nine months ended September 30, 2025, primarily driven by a decrease in investment income from our managed portfolio resulting from lower average portfolio balances and lower interest rates.

Previous wording

Other income (expense), net increased by $209 million and $302 million for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025, primarily driven by unrealized gains on strategic investments, partially offset by higher interest expense resulting from the issuance of senior notes, commercial paper and senior unsecured term loan.

Current wording

Interest expense increased by $75 million and $135 million for the three and nine months ended September 30, 2026, respectively, compared to the three and nine months ended September 30, 2025, primarily due to the issuance of senior notes and commercial paper.

Previous wording

To mitigate our risks associated with fluctuations in foreign currency exchange rates, we enter into foreign currency forward contracts with maturities of 12 months or less to hedge a portion of our net outstanding monetary assets and liabilities. These hedging contracts may reduce, but cannot entirely eliminate, the impact of adverse currency exchange rate movements. For each of the three and six months ended June 30, 2026, the gains (losses) recognized for these foreign currency forward contracts in other income (expense), net were immaterial. For the three and six months ended June 30, 2025, the gains recognized for foreign currency forward contracts from derivatives not designated as hedging instruments in other income (expense), net of $86 million and $120 million, offset the remeasurement losses of the related foreign currency denominated assets and liabilities of $87 million and $125 million, respectively.

Current wording

To mitigate our risks associated with fluctuations in foreign currency exchange rates, we enter into foreign currency forward contracts with maturities of 12 months or less to hedge a portion of our net outstanding monetary assets and liabilities. These hedging contracts may reduce, but cannot entirely eliminate, the impact of adverse currency exchange rate movements. For each of the three and nine months ended September 30, 2026

Previous wording

Our income tax provision was $140 million and $344 million for the three and six months ended June 30, 2026, respectively, and was primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates and stock-based compensation shortfalls, offset by the release of a valuation allowance on certain California deferred tax assets. Our income tax provision was $86 million and $181 million for the three and six months ended June 30, 2025, respectively, and was primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates, offset by excess tax benefits of stock-based compensation. We may continue to see fluctuations in our effective tax rate and tax obligations as we further integrate Armis into our corporate structure and intercompany relationships.

Current wording

Our income tax provision was $93 million and $437 million for the three and nine months ended September 30, 2026, respectively, and was primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates and stock-based compensation shortfalls. For the nine months ended September 30, 2026, the provision was also impacted by the release of a valuation allowance on certain California deferred tax assets. Our income tax provision was $192 million and $373 million for the three and nine months ended September 30, 2025, respectively, and was primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates, offset by excess tax benefits of stock-based compensation. We may continue to see fluctuations in our effective tax rate and tax obligations as we further integrate Armis into our corporate structure and intercompany relationships.

Previous wording

On July 4, 2025, H.R. 1, the "One Big Beautiful Bill Act," was enacted into law, bringing significant amendments to the U.S. tax code. This legislation extends and modifies provisions from the 2017 Tax Cuts and Jobs Act and introduces new tax measures affecting both businesses and individuals. The enacted legislation had an immaterial impact on the Company’s effective tax rate for the three and six months ended June 30, 2026. The

Current wording

On July 4, 2025, H.R. 1, the "One Big Beautiful Bill Act," was enacted into law, bringing significant amendments to the U.S. tax code. This legislation extends and modifies provisions from the 2017 Tax Cuts and Jobs Act and introduces new tax measures affecting both businesses and individuals. The enacted legislation had an immaterial impact on the Company’s effective tax rate for the three and nine months ended September 30, 2026 and 2025. The Company will continue to monitor any future changes in its business or interpretations of the new tax law that could affect its tax position in subsequent periods.

Previous wording

We generate cash inflows from operations primarily from selling subscription services which are generally paid in advance of provisioning services, and expend cash outflows to develop new services and core technologies that further enhance the Platform, engage our customers and enhance their experience, and enable and transform our business operations. Subscription services arrangements typically have a three-year duration, and we have experienced a renewal rate of 98% over the last three years. Cash outflows from operations are principally comprised of the salaries, bonuses, commissions, and benefits for our workforce, licenses and services arrangements, including cloud services, that are integral to our business operations and data centers and operating lease arrangements that underlie our facilities. We have generated positive operating cash flows for more than ten years as we continue to grow our business in pursuit of our business strategy, and we expect to grow our business and generate positive cash flows from operations during 2026. When assessing sources of liquidity, we also include cash and cash equivalents, marketable securities and long-term marketable securities totaling $6.7 billion as of June 30, 2026. Our unsecured revolving credit facility and our commercial paper program also serve as sources of liquidity. Refer to the “Debt” section below for more details.

Current wording

We generate cash inflows from operations primarily from selling subscription services which are generally paid in advance of provisioning services, and expend cash outflows to develop new services and core technologies that further enhance the Platform, engage our customers and enhance their experience, and enable and transform our business operations. Subscription services arrangements typically have a three-year duration, and we have experienced a renewal rate of 98% over the last three years. Cash outflows from operations are principally comprised of the salaries, bonuses, commissions, and benefits for our workforce, licenses and services arrangements, including cloud services, that are integral to our business operations and data centers and operating lease arrangements that underlie our facilities. We have generated positive operating cash flows for more than ten years as we continue to grow our business in pursuit of our business strategy, and we expect to grow our business and generate positive cash flows from operations during 2026. When assessing sources of liquidity, we also include cash and cash equivalents, marketable securities and long-term marketable securities totaling $7.0 billion as of September 30, 2026. Our unsecured revolving credit facility and our commercial paper program also serve as sources of liquidity. Refer to the “Debt” section below for more details.

Previous wording

Our capital requirements are principally comprised of capital expenditures to support data center capacity expansion, non-contract workforce salaries, bonuses, commissions, and benefits and, to a lesser extent, cancellable and non-cancellable licenses, operating leases and services arrangements that are integral to our business operations. We also acquire technology and businesses to expand our service offerings and functionality. Operating lease obligations totaling $1.1 billion are principally associated with leased facilities and have varying maturities with $733 million due over the next five years.

Current wording

Our capital requirements are principally comprised of capital expenditures to support data center capacity expansion, non-contract workforce salaries, bonuses, commissions, and benefits and, to a lesser extent, cancellable and non-cancellable licenses, operating leases and services arrangements that are integral to our

Previous wording

Our supply chain finance (“SCF”) program provides suppliers with the opportunity to sell their receivables due from us to a global financial institution. A supplier’s election to receive early payment at a discounted amount from the financial institution does not change the amount that we must remit to the financial institution on our payment date, which is generally 90 days from the invoice date. As of June 30, 2026, our outstanding payment obligations to suppliers participating in the SCF program totaled $28 million. These obligations are included in accounts payable in our condensed consolidated balance sheets, and all activity related to these obligations is presented within operating activities in the condensed consolidated statements of cash flows.

Current wording

Our supply chain finance (“SCF”) program provides suppliers with the opportunity to sell their receivables due from us to a global financial institution. A supplier’s election to receive early payment at a discounted amount from the financial institution does not change the amount that we must remit to the financial institution on our payment date, which is generally 90 days from the invoice date. As of September 30, 2026, our outstanding payment obligations to suppliers participating in the SCF program totaled $18 million. These obligations are included in accounts payable in our condensed consolidated balance sheets, and all activity related to these obligations is presented within operating activities in the condensed consolidated statements of cash flows.

Previous wording

During the six months ended June 30, 2026, the Company repurchased an additional 1.6 million shares of our common stock for $225 million in open market transactions. There were no share repurchases during the three months ended June 30, 2026. As of June 30, 2026, approximately $4.2 billion of the authorized amount under the Share Repurchase Program remained available for future repurchases.

Current wording

During the nine months ended September 30, 2026, the Company repurchased an additional 1.6 million shares of our common stock for $225 million in open market transactions. There were no share repurchases during the three months ended September 30, 2026. As of September 30, 2026, approximately $4.2 billion of the authorized amount under the Share Repurchase Program remained available for future repurchases.

Previous wording

In April 2026, we borrowed an aggregate principal amount of $4.0 billion under a secured term loan (the “Term Loan”) to fund a portion of the cash consideration for our acquisition of Armis Security Ltd. In May 2026, we repaid the outstanding balance on the Term Loan primarily through the issuance of the Notes.

Current wording

In April 2026, we borrowed an aggregate principal amount of $4.0 billion under an unsecured term loan (the “Term Loan”) to fund a portion of the cash consideration for our acquisition of Armis Security Ltd. In May 2026, we repaid the outstanding balance on the Term Loan primarily through the issuance of the Notes.

Previous wording

In April 2026, we established a commercial paper program under which we may issue unsecured commercial paper up to a total of $3.0 billion outstanding at any time, with maturities of up to 397 days from the date of issuance. As of June 30, 2026, we have $2.1 billion of commercial paper outstanding, with a weighted-average interest rate of 3.98% and a weighted-average remaining term of 81 days.

Current wording

In April 2026, we established a commercial paper program under which we may issue unsecured commercial paper up to a total of $3.0 billion outstanding at any time, with maturities of up to 397 days from the date of

Previous wording

Net cash provided by operating activities was $2,257 million for the six months ended June 30, 2026 compared to $2,393 million for the six months ended June 30, 2025. The net decrease in operating cash flows was primarily due to higher business combination and related costs to support business growth.

Current wording

Net cash provided by operating activities was $3,096 million for the nine months ended September 30, 2026 compared to $3,206 million for the nine months ended September 30, 2025. The net decrease in operating cash flows was primarily due to higher business combination and related costs to support business growth.

Previous wording

Net cash used in investing activities was $7,105 million for the six months ended June 30, 2026 compared to $640 million for the six months ended June 30, 2025. The net increase in cash used in investing activities was primarily due to a $8,700 million increase in cash used in business combinations and a $40 million increase in purchases of strategic investments, partially offset by a $1,896 million decrease in purchases of marketable securities, a $247 million increase in sales and maturities of marketable securities and a $140 million decrease in purchases of property and equipment.

Current wording

Net cash used in investing activities was $7,943 million for the nine months ended September 30, 2026 compared to $1,191 million for the nine months ended September 30, 2025. The net increase in cash used in investing activities was primarily due to a $8,952 million increase in cash used in business combinations and a $250 million decrease in sales and maturities of marketable securities, partially offset by a $1,271 million decrease in purchases of marketable securities, a $829 million decrease in purchases of strategic investments and a $284 million decrease in purchases of property and equipment.

Previous wording

Net cash provided by financing activities was $3,638 million for the six months ended June 30, 2026 compared to net cash used of $944 million for the six months ended June 30, 2025. The net increase in cash provided by financing activities is primarily due to proceeds of $3,944 million from the issuance of the Notes, net of discount and issuance costs, net proceeds from commercial paper of $3,534 million and a decrease in taxes paid related to net share settlement of equity awards of $157 million, partially offset by an increase in repurchases of common stock of $1,566 million and $1,472 million of repayments of commercial paper.

Current wording

Net cash provided by financing activities was $3,524 million for the nine months ended September 30, 2026 compared to net cash used of $1,601 million for the nine months ended September 30, 2025. The net increase in cash provided by financing activities is primarily due to net proceeds from commercial paper of $4,529 million, proceeds of $3,943 million from the issuance of the Notes, net of discount and issuance costs and a decrease in taxes paid related to net share settlement of equity awards of $172 million, partially offset by repayments of commercial paper of $2,484 million and an increase in repurchases of common stock of $982 million.