Guidewire Software, Inc.

Previous wording

Global events have adversely affected and may continue to adversely affect workforces, organizations, economies, and financial markets globally, leading to economic downturns, inflation, and increased market volatility. For instance, ongoing conflicts such as the war between Russia and Ukraine, continued geopolitical instability in the Middle East, escalating tensions in the South China Sea, inflation, previous bank failures in the United States and Switzerland, and supply chain issues have contributed to global economic and market volatility in recent years. We are unable to accurately predict the full impact that these global events will have on our results of operations, financial condition, liquidity, and cash flows due to numerous uncertainties.

Current wording

Global events have adversely affected and may continue to adversely affect workforces, organizations, economies, and financial markets globally, leading to economic downturns, inflation, and increased market volatility. For instance, ongoing conflicts such as the war between Russia and Ukraine, continued geopolitical instability in the Middle East, escalating tensions in the South China Sea, inflation, tariffs, previous bank failures in the United States and Switzerland, and supply chain issues have contributed to global economic and market volatility in recent years. We are unable to accurately predict the full impact that these global events will have on our results of operations, financial condition, liquidity, and cash flows due to numerous uncertainties.

Previous wording

We use ARR to quantify the annualized recurring value outlined in active customer contracts at the end of a reporting period. ARR includes the annualized recurring value of term licenses, subscription agreements, support contracts, and hosting agreements based on customer contractual terms and invoicing activities for the current reporting period, which may not be the same as the timing and amount of revenue recognized. ARR reflects all fee changes due to contract renewals, non-renewals, expansion, cancellations, attrition, or renegotiations at a higher or lower fee arrangement that are effective as of the ARR reporting date. All components of the licensing and other arrangements that are not expected to recur (primarily perpetual licenses and professional services) are excluded from our ARR calculations. In some arrangements with multiple performance obligations, a portion of recurring license and support or subscription contract value is allocated to services revenue for revenue recognition purposes, but does not get allocated for purposes of calculating ARR. This revenue allocation generally only impacts the initial term of the contract. This means that if we increase arrangements with multiple performance obligations that include services at discounted rates, more of the total contract value would be recognized as services revenue, but our reported ARR amount would not be impacted. During the six months ended January 31, 2025, the recurring license and support or subscription contract value recognized as services revenue was $4.6 million.

Current wording

We use ARR to quantify the annualized recurring value outlined in active customer contracts at the end of a reporting period. ARR includes the annualized recurring value of term licenses, subscription agreements, support contracts, and hosting agreements based on customer contractual terms and invoicing activities for the current reporting period, which may not be the same as the timing and amount of revenue recognized. ARR reflects all fee changes due to contract renewals, non-renewals, expansion, cancellations, attrition, or renegotiations at a higher or lower fee arrangement that are effective as of the ARR reporting date. All components of the licensing and other arrangements that are not expected to recur (primarily perpetual licenses and professional services) are excluded from our ARR calculations. In some arrangements with multiple performance obligations, a portion of recurring license and support or subscription contract value is allocated to services revenue for revenue recognition purposes, but does not get allocated for purposes of calculating ARR. This revenue allocation generally only impacts the initial term of the contract. This means that if we increase arrangements with multiple performance obligations that include services at discounted rates, more of the total contract value would be recognized as services revenue, but our reported ARR amount would not be impacted. During the nine months ended April 30, 2025, the recurring license and support or subscription contract value recognized as services revenue was $8.1 million.

Previous wording

As of January 31, 2025, ARR was $918 million, compared to $864 million as of July 31, 2024. We measure ARR results on a constant currency basis during the fiscal year and revalue ARR at year end to current currency rates.

Current wording

As of April 30, 2025, ARR was $960 million, compared to $864 million as of July 31, 2024. We measure ARR results on a constant currency basis during the fiscal year and revalue ARR at year end to current currency rates.

Previous wording

Our condensed consolidated financial statements are prepared in accordance with GAAP. Accounting policies, methods, and estimates are an integral part of the preparation of condensed consolidated financial statements in accordance with GAAP and, in part, are based upon management’s current judgments. Those judgments are normally based on knowledge and experience with regard to past and current events and assumptions about future events. Certain accounting policies, methods, and estimates are particularly sensitive because of their significance to the condensed consolidated financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments. While there are a number of significant accounting policies, methods, and estimates affecting our condensed consolidated financial statements, which are described in Note 1 “The Company and a Summary of Significant Accounting Policies and Estimates” to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended July 31, 2024, our revenue recognition policies are critical to the periods presented.

Current wording

Our condensed consolidated financial statements are prepared in accordance with GAAP. Accounting policies, methods, and estimates are an integral part of the preparation of condensed consolidated financial statements in accordance with GAAP and, in part, are based upon management’s current judgments. Those judgments are normally based on knowledge and experience with regard to past and current events and assumptions about future events. Certain accounting policies, methods, and estimates are particularly sensitive because of their significance to the condensed consolidated financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments. While there are a number of significant accounting policies, methods, and estimates affecting our condensed consolidated financial statements, which are described in Note 1 “The Company and Summary of Significant Accounting Policies and Estimates” to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended July 31, 2024, our revenue recognition policies are critical to the periods presented.

Previous wording

See Note 1 “The Company and Summary of Significant Accounting Policies and Estimates” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for a full description of recent accounting pronouncements adopted, including the dates of adoption, and recent account pronouncements not yet adopted.

Current wording

See Note 1 “The Company and Summary of Significant Accounting Policies and Estimates” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for a full description of recent accounting pronouncements adopted, including the dates of adoption, and recent accounting pronouncements not yet adopted.

Previous wording

Subscription revenue increased by $48.5 million and $91.8 million during the three and six months ended January 31, 2025, respectively, compared to the same periods a year ago, primarily due to the impact of cloud transition agreements, new subscription agreements entered into and provisioned, and the renewal or extension of subscription services at the fully ramped annual fees after the initial committed term since January 31, 2024.

Current wording

Subscription revenue increased by $46.0 million and $137.8 million during the three and nine months ended April 30, 2025, respectively, compared to the same periods a year ago, primarily due to the impact of cloud transition agreements, new subscription agreements entered into and provisioned, and the renewal or extension of subscription services at the fully ramped annual fees after the initial committed term.

Previous wording

Support revenue decreased by $2.3 million and $3.5 million during the three and six months ended January 31, 2025, respectively, compared to the same periods a year ago, primarily due to customers migrating from on-premise term licenses to subscription services. Support related to subscription arrangements is included in subscription revenue, as support is not quoted or priced separately from the subscription services. As customers enter into a subscription agreement to migrate from an existing term license agreement, the timing and amount of revenue recognized will be impacted by allocations of the total contract value between the license, subscription, and support performance obligations. As a result, we expect the increase in subscription orders as a percentage of total new sales and customers migrating from term licenses to subscription services will result in lower support revenue in the future.

Current wording

Support revenue decreased by $2.2 million and $5.7 million during the three and nine months ended April 30, 2025, respectively, compared to the same periods a year ago, primarily due to customers migrating from on-premise term licenses to subscription services. Support related to subscription arrangements is included in subscription revenue, as support is not quoted or priced separately from the subscription services. As customers enter into a subscription agreement to migrate from an existing term license agreement, the timing and amount of revenue recognized will be impacted by allocations of the total contract value between the license, subscription, and support performance obligations. As a result, we expect the increase in subscription orders as a percentage of total new sales and customers migrating from term licenses to subscription services will result in lower support revenue in the future.

Previous wording

Term license revenue decreased by $7.3 million and $3.9 million during the three and six months ended January 31, 2025, compared to the same period a year ago, primarily due to agreements that migrated from a term license to a subscription service and, to a lesser extent, fewer expansion orders within our existing customer base, partially offset by an increase in license renewal fees. Ongoing revenue related to migration agreements is recorded as subscription revenue.

Current wording

Term license revenue decreased $1.8 million during the nine months ended April 30, 2025, compared to the same period a year ago, primarily due to agreements that migrated from a term license to a subscription service and, to a lesser extent, fewer expansion orders within our existing customer base, partially offset by an increase in license renewal fees.

Previous wording

Services revenue increased by $9.8 million and $19.8 million during the three and six months ended January 31, 2025, compared to the same period a year ago. Services revenue increased due to improved operational focus that resulted in higher utilization of services employees and more new subscription implementation and migration projects than projects that were completed over the past year.

Current wording

Services revenue increased by $8.0 million and $27.8 million during the three and nine months ended April 30, 2025, compared to the same periods a year ago. Services revenue increased due to improved operational focus that resulted in higher utilization of services employees and more new subscription implementation and migration projects than projects that were completed over the past year.

Previous wording

Cost of subscription and support revenue during the three months ended January 31, 2025 increased by $9.2 million, compared to the same period a year ago, primarily due to increases in cloud infrastructure expense of $8.4 million from increased transaction volume on our cloud services, internal-use software amortization of $0.4 million, and royalties of $0.3 million.

Current wording

Cost of subscription and support revenue during the three months ended April 30, 2025 increased by $6.2 million, compared to the same period a year ago, primarily due to increases in cloud infrastructure expense of $3.9 million from increased transaction volume on our cloud services, personnel costs of $2.5 million, and internal-use software amortization of $0.5 million, partially offset by a decrease in professional services of $0.6 million.

Previous wording

Cost of subscription and support revenue during the six months ended January 31, 2025 increased by $15.1 million, compared to the same period a year ago, primarily due to increases in cloud infrastructure expense of $16.7 million, royalties of $0.7 million, and internal-use software amortization of of $0.6 million, partially offset by decreases in professional services of $2.2 million and personnel costs of $0.7 million associated with the timing of benefits expenses.

Current wording

Cost of subscription and support revenue during the nine months ended April 30, 2025 increased by $21.4 million, compared to the same period a year ago, primarily due to increases in cloud infrastructure expense of $20.7 million, personnel costs of $1.7 million, internal-use software amortization of $1.1 million, and royalties of $0.7 million, partially offset by a decrease in professional services of $2.8 million.

Previous wording

The $0.5 million decrease in our cost of license revenue during the three months ended January 31, 2025, compared to the same period a year ago, was due to decreases in royalties of $0.3 million and in personnel costs associated with the development of online training curriculum included with the latest releases of InsuranceSuite of $0.2 million.

Current wording

The $0.8 million decrease in our cost of license revenue during the nine months ended April 30, 2025, compared to the same period a year ago, was primarily due to decreases in personnel costs associated with the development of online training curriculum included with the latest releases of InsuranceSuite of $0.5 million and royalties of $0.3 million.

Previous wording

The $3.2 million increase in cost of services revenue during the three months ended January 31, 2025, compared to the same period a year ago, was primarily due to increases in subcontractor expenses of $2.4 million due to implementations involving our SI partners, personnel costs of $0.4 million, professional services of $0.2 million and travel costs of $0.2 million.

Current wording

The $6.1 million increase in cost of services revenue during the three months ended April 30, 2025, compared to the same period a year ago, was primarily due to increases in personnel costs of $4.6 million, subcontractor expenses of $1.9 million due to implementations involving our SI partners, and professional services of $0.2 million, partially offset by a decrease in travel costs of $0.6 million.

Previous wording

The $7.0 million increase in cost of services revenue during the six months ended January 31, 2025, compared to the same period a year ago, was primarily due to increases in subcontractor expenses of $5.6 million due to implementations involving our SI partners, personnel costs of $1.1 million, and travel costs of $0.2 million.

Current wording

The $13.1 million increase in cost of services revenue during the nine months ended April 30, 2025, compared to the same period a year ago, was primarily due to increases in subcontractor expenses of $7.5 million due to implementations involving our SI partners, personnel costs of $5.7 million, and professional services of $0.3 million, partially offset by a decrease in travel costs of $0.4 million.

Previous wording

We had 591 cloud operations and technical support employees and 802 professional services employees at January 31, 2025, compared to 595 cloud operations and technical support employees and 770 professional services employees at January 31, 2024.

Current wording

We had 591 cloud operations and technical support employees and 836 professional services employees at April 30, 2025, compared to 604 cloud operations and technical support employees and 750 professional services employees at April 30, 2024.

Previous wording

Our gross profit increased $36.7 million during the three months ended January 31, 2025, compared to the same period a year ago. Gross profit was impacted by increases in subscription and support gross profit due to the increase in subscription revenue and cloud operations efficiencies and services gross profit due to an increase in service revenue in conjunction with the completion of certain implementation projects that required significant investment by us and higher utilization rates, partially offset by a decrease in license gross profit due to lower license revenue as customers migrate to subscription services.

Current wording

Our gross profit increased $40.5 million during the three months ended April 30, 2025, compared to the same period a year ago. Gross profit was impacted by increases in subscription and support gross profit due to the increase in subscription revenue and cloud operations efficiencies, and services gross profit due to an increase in service revenue in conjunction with the completion of certain implementation projects that required significant investment by us and higher utilization rates.

Previous wording

Our gross profit increased $82.8 million during the six months ended January 31, 2025, compared to the same period a year ago. Gross profit was impacted by an increase in subscription and support gross profit due to the increase in subscription revenue and cloud operations efficiencies and improvements in services gross profit due to the completion of certain implementation projects that required significant investment by us and higher utilization rates, partially offset by a decrease in license gross profit due to lower license revenue as customers migrate to subscription services.

Current wording

Our gross profit increased $123.3 million during the nine months ended April 30, 2025, compared to the same period a year ago. Gross profit was impacted by an increase in subscription and support gross profit due to the increase in subscription revenue and cloud operations efficiencies and improvements in services gross profit due to the completion of certain implementation projects that required significant investment by us and higher utilization rates, partially offset by a decrease in license gross profit due to lower license revenue as customers migrate to subscription services.

Previous wording

Our gross margin increased to 61% during the six months ended January 31, 2025, from 57% during the same period a year ago. Gross margin was primarily impacted by the increase in subscription and support revenue at a higher margin due to cloud operations efficiencies and improvements in services gross margin due to completion of certain implementation projects that required significant investment by us and higher utilization rates.

Current wording

Our gross margin increased to 62% during the nine months ended April 30, 2025, from 58% during the same period a year ago. Gross margin was primarily impacted by the increase in subscription and support revenue at a higher margin due to cloud operations efficiencies and improvements in services gross margin due to completion of certain implementation projects that required significant investment by us and higher utilization rates.

Previous wording

The $4.8 million increase in research and development expenses during the three months ended January 31, 2025, compared to the same period a year ago, was primarily due to increases in personnel costs of $4.0 million associated with higher headcount, travel costs of $0.5 million, cloud hosting costs of $0.4 million, and software subscription costs of $0.4 million. These increases were partially offset by decreases in acquisition consideration holdback costs of $0.3 million and professional services of $0.2 million.

Current wording

The $6.8 million increase in research and development expenses during the three months ended April 30, 2025, compared to the same period a year ago, was primarily due to increases in personnel costs of $5.7 million associated with higher headcount, professional services of $0.5 million, and software subscription costs of $0.2 million.

Previous wording

The $11.2 million increase in research and development expenses during the six months ended January 31, 2025, compared to the same period a year ago, was primarily due to increases in personnel costs of $9.6 million associated with higher headcount, software subscription costs of $0.8 million, cloud hosting costs of $0.8 million and travel costs of $0.7 million. These increases were partially offset by decreases in acquisition consideration holdback costs of $0.7 million.

Current wording

The $18.0 million increase in research and development expenses during the nine months ended April 30, 2025, compared to the same period a year ago, was primarily due to increases in personnel costs of $15.3 million associated with higher headcount, software subscription costs of $1.0 million, cloud hosting costs of $0.7 million, travel costs of $0.7 million, and professional services of $0.4 million.

Previous wording

Our research and development headcount was 1,144 at January 31, 2025, compared with 1,087 at January 31, 2024.

Current wording

Our research and development headcount was 1,204 at April 30, 2025, compared with 1,115 at April 30, 2024.

Previous wording

The $6.3 million increase in sales and marketing expenses during the three months ended January 31, 2025, compared to the same period a year ago, was primarily due to increases in personnel costs associated with higher headcount, including higher contract acquisition costs and stock-based compensation, of $5.8 million, travel costs of $1.2 million, and cloud hosting costs of $0.4 million, partially offset by a decrease in marketing and advertising costs of $1.0 million.

Current wording

The $7.3 million increase in sales and marketing expenses during the three months ended April 30, 2025, compared to the same period a year ago, was primarily due to increases in personnel costs associated with higher headcount, including higher contract acquisition costs and stock-based compensation, of $4.8 million, marketing and advertising costs of $1.1 million, cloud hosting costs of $1.0 million, travel costs of $0.3 million, and software subscription costs of $0.2 million.

Previous wording

The $13.2 million increase in sales and marketing expenses during the six months ended January 31, 2025, compared to the same period a year ago, was primarily due to increases in personnel costs, including contract acquisition costs and stock-based compensation, of $10.6 million, travel costs of $2.2 million, cloud hosting costs of $1.0 million, professional services costs of $0.3 million, and software subscription costs $0.2 million, partially offset by lower marketing and advertising costs of $1.0 million.

Current wording

The $20.4 million increase in sales and marketing expenses during the nine months ended April 30, 2025, compared to the same period a year ago, was primarily due to increases in personnel costs, including contract acquisition costs and stock-based compensation, of $15.4 million, travel costs of $2.5 million, cloud hosting costs of $2.0 million, professional services costs of $0.4 million, and software subscription costs $0.4 million, partially offset by lower intangible assets amortization costs of $0.2 million.

Previous wording

Our sales and marketing headcount was 496 at January 31, 2025, compared with 469 at January 31, 2024.

Current wording

Our sales and marketing headcount was 497 at April 30, 2025, compared with 475 at April 30, 2024.

Previous wording

The $1.5 million increase in general and administrative expenses during the three months ended January 31, 2025, compared to the same period a year ago, was due to increases in professional services cost of $1.0 million, travel costs of $0.6 million, and software subscription costs of $0.2 million, partially offset by a decrease in personnel costs of $0.2 million.

Current wording

The $5.2 million increase in general and administrative expenses during the three months ended April 30, 2025, compared to the same period a year ago, was due to increases in personnel costs of $2.1 million, professional services cost of $2.1 million, travel costs of $0.5 million, and software subscription costs of $0.4 million.

Previous wording

The $5.3 million increase in general and administrative expenses during the six months ended January 31, 2025, compared to the same period a year ago, was due to increases in professional services costs of $2.0 million, travel costs of $1.3 million, bad debt expenses of $1.0 million, higher personnel costs of $0.5 million, and cloud hosting costs of $0.3 million.

Current wording

The $10.5 million increase in general and administrative expenses during the nine months ended April 30, 2025, compared to the same period a year ago, was due to increases in professional services costs of $3.9 million, personnel costs of $2.9 million, travel costs of $1.8 million, bad debt expenses of $1.0 million, software subscription costs of $0.5 million, and cloud hosting costs of $0.2 million.

Previous wording

Our general and administrative headcount was 474 at January 31, 2025, compared with 449 at January 31, 2024. General and administrative headcount includes facilities personnel whose expenses are allocated across all functional departments.

Current wording

Our general and administrative headcount was 468 at April 30, 2025, compared with 452 at April 30, 2024. General and administrative headcount includes facilities personnel whose expenses are allocated across all functional departments.

Previous wording

Interest income increased $5.4 million and $8.4 million during the three and six months ended January 31, 2025, respectively, compared to the same periods a year ago, primarily due to the higher amount of funds available for investment due to the net cash received from our October 2024 debt offering and positive cash flow.

Current wording

Interest income increased $3.0 million and $11.4 million during the three and nine months ended April 30, 2025, respectively, compared to the same periods a year ago, primarily due to the higher amount of funds available for investment due to the net cash received from our October 2024 debt offering and positive cash flow.

Previous wording

Interest expense includes both stated interest and the amortization of debt issuance costs associated with the outstanding amount due on the aggregate principal amount of our 1.25% Convertible Senior Notes due 2025 (“2025 Convertible Senior Notes”) and the aggregate principal amount of our 1.25% Convertible Senior Notes due 2029 (the “2029 Convertible Senior Notes”, together with the 2025 Convertible Senior Notes, the “Convertible Senior Notes”). The amortization of debt issuance cost is recognized on an effective interest basis. A portion of the 2025 Convertible Senior Notes was retired in October 2024 in connection with the issuance of the 2029 Convertible Senior Notes and an additional portion of the 2025 Convertible Senior Notes was retired in December 2024 in transactions with certain holders of the notes. Interest expense also includes the amortization of issuance costs associated with our revolving credit agreement recognized on a straight-line basis.

Current wording

Interest expense includes both stated interest and the amortization of debt issuance costs associated with the outstanding amount due on the aggregate principal amount of our 1.25% Convertible Senior Notes due 2025 (“2025 Convertible Senior Notes”) and the aggregate principal amount of our 1.25% Convertible Senior Notes due 2029 (the “2029 Convertible Senior Notes”, together with the 2025 Convertible Senior Notes, the “Convertible Senior Notes”). The amortization of debt issuance cost is recognized on an effective interest basis. Our 2025 Convertible Senior Notes were partially retired in October and December 2024, and were fully settled on their maturity date of March 15, 2025. Interest expense also includes the amortization of issuance costs associated with our revolving credit agreement recognized on a straight-line basis.

Previous wording

Interest expense for the three months ended January 31, 2025 consists of stated interest of $2.9 million and non-cash interest expense of $1.2 million related to amortization of debt issuance costs. Interest expense for the three months ended January 31, 2024 consists of stated interest of $1.3 million and non-cash interest expense of $0.4 million related to the amortization of debt issuance costs.

Current wording

Interest expense for the three months ended April 30, 2025 consists of stated interest of $2.4 million and non-cash interest expense of $1.1 million related to amortization of debt issuance costs. Interest expense for the three months ended April 30, 2024 consists of stated interest of $1.3 million and non-cash interest expense of $0.4 million related to the amortization of debt issuance costs.

Previous wording

Interest expense for the six months ended January 31, 2025 consists of stated interest of $1.9 million and non-cash interest expense of $1.7 million related to amortization of debt issuance costs. Interest expense for the six months ended January 31, 2024 consists of stated interest of $2.5 million and non-cash interest expense of $0.9 million related to the amortization of debt issuance costs.

Current wording

Interest expense for the nine months ended April 30, 2025 consists of stated interest of $6.8 million and non-cash interest expense of $2.8 million related to amortization of debt issuance costs. Interest expense for the nine months ended April 30, 2024 consists of stated interest of $3.8 million and non-cash interest expense of $1.3 million related to the amortization of debt issuance costs.

Previous wording

Other income (expense), net during the three months ended January 31, 2025 was expense of $66.3 million, compared to income of $10.8 million during the same period a year ago, primarily due to $53.3 million of expense related to the retirement of a portion of our 2025 Convertible Senior Notes and $25.8 million of higher expense related to fluctuations in foreign currency exchange rates, partially offset by $2.0 million higher gain from the sale of strategic investments.

Current wording

Other income (expense), net during the three months ended April 30, 2025 was income of $34.1 million, compared to expense of $6.5 million during the same period a year ago due to fluctuations in foreign currency exchange rates.

Previous wording

Other income (expense), net during the six months ended January 31, 2025 was expense of $70.3 million, compared to expense of $3.0 million during the same period a year ago, primarily due to $53.6 million of expense related to the retirement of a portion of our 2025 Convertible Senior Notes and $15.8 million of higher expense related to fluctuations in foreign currency exchange rates, partially offset by $2.0 million higher gain from the sale of strategic investments.

Current wording

Other income (expense), net during the nine months ended April 30, 2025 was expense of $36.3 million, compared to expense of $9.5 million during the same period a year ago, primarily due to $53.6 million of expense related to the retirement of a portion of our 2025 Convertible Senior Notes, partially offset by a $25.5 million favorable impact related to fluctuations in foreign currency exchange rates and $2.0 million higher gain from the sale of strategic investments.

Previous wording

We recognized an income tax benefit of $5.8 million and $2.7 million for the three months ended January 31, 2025 and 2024, respectively, and an income tax benefit of $12.1 million and $14.2 million for the six months ended January 31, 2025 and 2024, respectively. The increase in the amount of income tax benefit recorded for the three months ended January 31, 2025, compared to the same period a year ago was primarily due to an increase in tax deductions from stock-based compensation, the U.S. Foreign-Derived Intangible Income (“FDII”) deduction, and research and development credits, offset by the debt retirement expense which is non-deductible for tax purposes. The decrease in the amount of income tax benefit recorded for the six months ended January 31, 2025, compared to the same period a year ago, was primarily due to the debt retirement expense which is non-deductible for tax purposes, offset by an increase in the deductions for stock-based compensation, FDII deduction, and research and development credits.

Current wording

We recognized an income tax expense of $2.7 million and an income tax benefit of $8.6 million for the three months ended April 30, 2025 and 2024, respectively, and an income tax benefit of $9.4 million and $22.9 million for the nine months ended April 30, 2025 and 2024, respectively. The change in the income tax benefit (expense) recorded for the three months ended April 30, 2025, compared to the same period a year ago was primarily due to an increase in income before taxes and non-deductible executive compensation, offset by an increase in tax deductions from stock-based compensation, the U.S. Foreign-Derived Intangible Income (“FDII”) deduction, and research and development credits. The decrease in the amount of income tax benefit recorded for the nine months ended April 30, 2025, compared to the same period a year ago, was primarily due to an increase in income before taxes and the debt retirement expense which is non-deductible for tax purposes, offset by an increase in the deductions for stock-based compensation, FDII deduction, and research and development credits.

Previous wording

The effective tax rate of 13% and 30% for the three and six months ended January 31, 2025, respectively, differs from the statutory U.S. Federal income tax rate of 21% primarily due to the debt retirement expense which is non-deductible for tax purposes and other permanent differences related to stock-based compensation, research and development credits, foreign earnings taxed in the U.S., the FDII deduction, and certain non-deductible expenses, including the limitation on executive compensation.

Current wording

The effective tax rate of (112)% for the nine months ended April 30, 2025 differs from the statutory U.S. Federal income tax rate of 21% primarily due to the tax deductions from stock-based compensation, research and development credits, and the FDII deduction partially offset by the non-deductible debt retirement expense and non-deductible executive compensation.

Previous wording

(1) During the six months ended January 31, 2025, we recorded a $53.6 million loss on retirement of debt in other income (expense) comprised of a $53.3 million loss on extinguishment of a portion of the 2025 Convertible Senior Notes and a $0.3 million loss on the induced conversion of a portion of the 2025 Convertible Senior Notes. Prior to the first quarter of fiscal year 2025, there were no transactions similar to the retirement of debt in any periods presented on the condensed consolidated statements of operations.

Current wording

(1) During the nine months ended April 30, 2025, we recorded a $53.6 million loss on retirement of debt in other income (expense) comprised of a $53.3 million loss on extinguishment of a portion of the 2025 Convertible Senior Notes and a $0.3 million loss on the induced conversion of a portion of the 2025 Convertible Senior Notes. Prior to the first quarter of fiscal year 2025, there were no transactions similar to the retirement of debt in any periods presented on the condensed consolidated statements of operations.

Previous wording

As of January 31, 2025, approximately $61.6 million of our cash and cash equivalents were domiciled in foreign jurisdictions. We may repatriate foreign earnings to the United States in the future to the extent that the repatriation is not restricted by local laws or there are no substantial incremental costs associated with such repatriation.

Current wording

As of April 30, 2025, approximately $65.1 million of our cash and cash equivalents were domiciled in foreign jurisdictions. We may repatriate foreign earnings to the United States in the future to the extent that the repatriation is not restricted by local laws or there are no substantial incremental costs associated with such repatriation.

Previous wording

Our working capital increased to $919.4 million as of January 31, 2025 compared to $457.9 million as of July 31, 2024, primarily due to net proceeds received of $412.7 million from the issuance of the 2029 Convertible Senior Notes in October 2024, where a portion of the gross proceeds were used to purchase capped calls related to the 2029 Convertible Senior Notes and the retirement of a portion of the 2025 Convertible Senior Notes. We are required to and have the ability to settle the principal of the 2025 Convertible Senior Notes and 2029 Convertible Senior Notes in cash, and any conversion premium in cash, equity, or a combination of both.

Current wording

Our working capital increased to $907.1 million as of April 30, 2025 compared to $457.9 million as of July 31, 2024, primarily due to proceeds received from the issuance of the 2029 Convertible Senior Notes in October 2024 and operating cash flow, partially offset by settlement of the 2025 Convertible Senior Notes and the purchase of capped calls related to the 2029 Convertible Senior Notes. We are required to, and have the ability to, settle the principal of the 2029 Convertible Senior Notes in cash and any conversion premium in cash, equity, or a combination of both.

Previous wording

In September 2022, our board of directors authorized and approved a share repurchase program of up to $400.0 million of our outstanding common stock. During the six months ended January 31, 2025, we did not repurchase any shares of our common stock. As of January 31, 2025, $138.2 million remained available for future share repurchases subject to our compliance with the terms of the Credit Agreement.

Current wording

In September 2022, our board of directors authorized and approved a share repurchase program of up to $400.0 million of our outstanding common stock. During the nine months ended April 30, 2025, we did not repurchase any shares of our common stock. As of April 30, 2025, $138.2 million remained available for future share repurchases subject to our compliance with the terms of the Credit Agreement.

Previous wording

Net cash provided by operating activities was $23.7 million for the six months ended January 31, 2025 compared to net cash used in operating activities of $2.8 million during the six months ended January 31, 2024. This $26.5 million increase in cash provided by operating activities was attributable to a $54.5 million decrease in net loss, after excluding the impact of non-cash charges such as deferred taxes, stock-based compensation expense, depreciation and amortization expense, loss on retirement of debt, and other non-cash items, partially offset by a $28.0 million increase in cash used by working capital activities.

Current wording

Net cash provided by operating activities was $56.0 million for the nine months ended April 30, 2025 compared to net cash provided by operating activities of $2.0 million during the nine months ended April 30, 2024. This $54.1 million increase in cash provided by operating activities was attributable to a $123.1 million decrease in net loss, after excluding the impact of non-cash charges such as deferred taxes, stock-based compensation expense, depreciation and amortization expense, loss on retirement of debt, and other non-cash items, partially offset by a $69.1 million increase in cash used by working capital activities.