Guidewire Software, Inc.

Previous wording

InsuranceNow is a complete, cloud-based application that offers policy administration, claims management, and billing functionality, plus pre-integrated document production, analytics, and other capabilities, that increases agility without adding complexity. Like InsuranceSuite, InsuranceNow is hosted on GWCP and managed by our internal cloud operations team. InsuranceNow is currently only available in the United States, and is generally suited to mid-market carriers and managing general agents whose needs are often not as complex as a typical InsuranceSuite customer.

Current wording

InsuranceNow is a complete, cloud-based application that offers policy administration, claims management, and billing functionality, plus pre-integrated document production, analytics, and other capabilities, that increases agility without adding complexity. Like InsuranceSuite, InsuranceNow is hosted on GWCP and managed by our internal cloud operations team. InsuranceNow is currently only available in the United States and Canada, and is generally suited to mid-market carriers and managing general agents whose needs are often not as complex as a typical InsuranceSuite customer.

Previous wording

Global events have adversely affected and may continue to adversely affect workforces, organizations, economies, and financial markets globally, leading to economic downturns, inflationary pressures, 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, currency exchange fluctuations, changes in interest rates, changes in trade policies and practices (including the imposition of 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.

Current wording

Global events have adversely affected and may continue to adversely affect workforces, organizations, economies, and financial markets globally, leading to economic downturns, inflationary pressures, and increased market volatility. For instance, the ongoing war between Russia and Ukraine, conflicts in the Middle East, escalating tensions in the South China Sea, currency exchange fluctuations, changes in interest rates, changes in trade policies and practices (including the imposition of 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, 2026, 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, 2026, the recurring license and support or subscription contract value recognized as services revenue was $5.9 million.

Previous wording

As of January 31, 2026, ARR was $1,121 million, compared to $1,041 million as of July 31, 2025. 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, 2026, ARR was $1,147 million, compared to $1,041 million as of July 31, 2025. 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

Subscription revenue increased by $61.1 million and $115.7 million during the three and six months ended January 31, 2026, respectively, compared to the same periods a year ago, primarily due to the impact of cloud transition agreements entered into and provisioned since January 31, 2025, new subscription agreements, and the renewal or extension of subscription services at the fully ramped annual fees after the initial committed term.

Current wording

Subscription revenue increased by $65.7 million and $181.3 million during the three and nine months ended April 30, 2026, respectively, compared to the same periods a year ago, primarily due to the impact of cloud transition agreements entered into and provisioned since April 30, 2025, new subscription agreements, 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 $1.7 million and $3.8 million during the three and six months ended January 31, 2026, 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 that the small percentage of term licenses 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 $2.8 million and $6.6 million during the three and nine months ended April 30, 2026, 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 that the small percentage of term licenses 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 $4.2 million during the three months ended January 31, 2026, compared to the same period a year ago, primarily due to agreements that migrated from a term license to a subscription service.

Current wording

Term license revenue decreased by $1.2 million and $0.8 million during the three and nine months ended April 30, 2026, respectively, compared to the same periods a year ago, primarily due to agreements that migrated from a term license to a subscription service.

Previous wording

Services revenue increased by $14.4 million and $27.1 million during the three and six months ended January 31, 2026, respectively, compared to the same periods a year ago, due to higher utilization of services employees and new subscription implementation and migration projects.

Current wording

Services revenue increased by $17.4 million and $44.4 million during the three and nine months ended April 30, 2026, respectively, compared to the same periods a year ago, due to higher utilization of services employees and new subscription implementation and migration projects.

Previous wording

Cost of subscription and support revenue during the three months ended January 31, 2026 increased by $4.8 million compared to the same period a year ago, primarily due to increases in personnel costs of $2.4 million due to higher headcount, cloud infrastructure expenses of $1.2 million, amortization of intangible assets of $0.6 million, and royalties of $0.3 million.

Current wording

Cost of subscription and support revenue during the three months ended April 30, 2026 increased by $10.5 million compared to the same period a year ago, primarily due to increases in cloud infrastructure expenses of $6.1 million driven by increased transaction volume on our cloud services, personnel costs of $2.5 million due to higher headcount, amortization of intangible assets of $0.7 million, and royalties of $0.5 million.

Previous wording

Cost of subscription and support revenue during the six months ended January 31, 2026 increased by $14.7 million compared to the same period a year ago, primarily due to increases in personnel costs of $6.3 million due to higher headcount, cloud infrastructure expense of $6.0 million from increased transaction volume on our cloud services, amortization of intangible assets of $0.9 million, and royalties of $0.7 million.

Current wording

Cost of subscription and support revenue during the nine months ended April 30, 2026 increased by $25.2 million compared to the same period a year ago, primarily due to increases in cloud infrastructure expense of $12.1 million from increased transaction volume on our cloud services, personnel costs of $8.3 million due to higher headcount, amortization of intangible assets of $1.6 million, and royalties of $1.2 million.

Previous wording

We expect the cost of subscription and support revenue to increase in absolute dollars due to the increased number of customers utilizing our cloud services, the volume of transactions by our cloud customers, and the impact of inflation and other macroeconomic events.

Current wording

We expect the cost of subscription and support revenue to increase in absolute dollars due to a greater number of customers utilizing our cloud services, continued adoption of cloud-based and AI-related product features, growth in cloud customer transaction volume, and the impact of inflation and other macroeconomic events.

Previous wording

Cost of license revenue decreased by $0.5 million and $0.7 million during the three and six months ended January 31, 2026, respectively, compared to the same periods a year ago, primarily due to decreases in personnel costs of $0.3 million and $0.7 million, respectively, and to a lesser extent, decreases in royalties. Personnel costs associated with the development of online training curriculum are primarily focused on our cloud services, thus contributing to the decrease in cost of license revenue.

Current wording

Cost of license revenue decreased by $0.5 million and $1.3 million during the three and nine months ended April 30, 2026, respectively, compared to the same periods a year ago, primarily due to decreases in personnel costs of $0.3 million and $1.0 million, respectively, and to a lesser extent, decreases in royalties. Personnel costs associated with the development of online training curriculum are primarily focused on our cloud services, thus contributing to the decrease in cost of license revenue.

Previous wording

The $21.9 million increase in cost of services revenue during the six months ended January 31, 2026, compared to the same period a year ago, was primarily due to increases in personnel costs of $16.2 million due to higher headcount and subcontractor expenses of $4.0 million due to implementations involving our SI partners.

Current wording

The $15.1 million increase in cost of services revenue during the three months ended April 30, 2026, compared to the same period a year ago, was primarily due to increases in personnel costs of $8.2 million due to higher headcount, subcontractor expenses of $3.8 million due to implementations involving our SI partners, and travel expenses of $2.2 million.

Previous wording

The $12.9 million increase in cost of services revenue during the three months ended January 31, 2026, compared to the same period a year ago, was primarily due to increases in personnel costs of $9.3 million due to higher headcount and subcontractor expenses of $3.1 million due to implementations involving our SI partners, partially offset by a decrease in professional services of $0.3 million.

Current wording

The $37.0 million increase in cost of services revenue during the nine months ended April 30, 2026, compared to the same period a year ago, was primarily due to increases in personnel costs of $23.5 million due to higher headcount, subcontractor expenses of $7.8 million due to implementations involving our SI partners, and travel expenses of $3.2 million.

Previous wording

We had 651 cloud operations and technical support employees and 947 professional services employees at January 31, 2026, compared to 591 cloud operations and technical support employees and 802 professional services employees at January 31, 2025.

Current wording

We had 663 cloud operations and technical support employees and 972 professional services employees at April 30, 2026, compared to 591 cloud operations and technical support employees and 836 professional services employees at April 30, 2025.

Previous wording

Our gross profit increased $52.4 million during the three months ended January 31, 2026, compared to the same period a year ago. Gross profit was primarily impacted by the increase in subscription and support gross profit due to the increase in subscription revenue from cloud migration and new subscription orders. Services contributed to the increased gross profit due to higher utilization of services employees and higher revenues from new subscription implementation and migration projects. These increases were 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 $53.9 million during the three months ended April 30, 2026, compared to the same period a year ago. Gross profit was primarily impacted by the increase in subscription and support gross profit due to the increase in subscription revenue from cloud migration and new and renewed subscription orders at a rate higher than subscription and support costs. Services contributed to the increased gross profit due to higher utilization of services employees and higher revenues from new subscription implementation and migration projects. These increases were 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 64% during the six months ended January 31, 2026 from 61% during the same period a year ago. Gross margin increased due to the growth in subscription and support revenue which continues to outpace personnel and cloud infrastructure costs.

Current wording

Our gross margin increased to 64% during the three months ended April 30, 2026 from 62% during the same period a year ago. Gross margin increased primarily due to the growth in subscription and support revenue which continues to outpace increases in cloud infrastructure and personnel costs.

Previous wording

Our gross profit increased $103.5 million during the six months ended January 31, 2026, compared to the same period a year ago. Gross profit was primarily impacted by the increase in subscription and support gross profit due to the increase in subscription revenue. Services contributed to the increased gross profit due to higher utilization of services employees and higher revenues from new subscription implementation and migration projects.

Current wording

Our gross profit increased $157.4 million during the nine months ended April 30, 2026, compared to the same period a year ago. Gross profit was primarily impacted by the increase in subscription and support gross profit due to the increase in subscription revenue at a rate higher than subscription and support costs. Services contributed to the increased gross profit due to higher utilization of services employees and higher revenues from new subscription implementation and migration projects.

Previous wording

Our gross margin increased to 64% during the three months ended January 31, 2026 from 62% during the same period a year ago. Gross margin was primarily impacted by the increases in subscription and support revenue at a higher margin.

Current wording

Our gross margin increased to 64% during the nine months ended April 30, 2026 from 62% during the same period a year ago. Gross margin increased primarily due to the growth in subscription and support revenue which continues to outpace increases in cloud infrastructure and personnel costs.

Previous wording

We expect subscription and support gross margin to continue to improve, though at a slower rate than in recent years, as we increase the number of cloud customers and scale our cloud platform. We expect services gross margin will continue to improve as we gain additional efficiencies, but could fluctuate between periods based on the use of subcontractors to supplement our internal services team. We expect license gross profit to decline over time due to customers migrating from licenses to subscription services but can fluctuate quarter to quarter depending on the timing of renewals and license revenue allocation from migration orders. Overall, we expect gross margins to continue to improve over time as improvements in subscription and support gross margin and services gross margin will more than offset the negative impact of revenue shifts away from high margin license revenue.

Current wording

We expect subscription and support gross margin to continue to improve, though at a slower rate than in recent years, as we increase the number of cloud customers and scale our cloud platform. We expect services gross margin will continue to improve as we gain additional efficiencies, but could fluctuate between periods based on the use of subcontractors to supplement our internal services team and the impact of any arrangements entered into to encourage customers to migrate from licenses to subscription services. We expect license gross profit to decline over time due to customers migrating from licenses to subscription services but can fluctuate quarter to quarter depending on the timing of renewals and license revenue allocation from migration orders. Overall, we expect gross margins to continue to improve over time as improvements in subscription and support gross margin and services gross margin will more than offset the negative impact of revenue shifts away from high margin license revenue.

Previous wording

Our research and development expenses primarily consist of personnel costs for our technical staff and consultants providing professional services.

Current wording

Our research and development expenses primarily consist of personnel costs for our technical staff, web hosting costs, and software subscription costs.

Previous wording

The $13.1 million increase in research and development expenses during the three months ended January 31, 2026, compared to the same period a year ago, was primarily due to increases in personnel costs of $11.8 million associated with higher headcount.

Current wording

The $15.0 million increase in research and development expenses during the three months ended April 30, 2026, compared to the same period a year ago, was primarily due to increases in personnel costs of $11.0 million associated with higher headcount, and web hosting and software subscription costs of $2.8 million driven by increased product development efforts.

Previous wording

The $22.5 million increase in research and development expenses during the six months ended January 31, 2026, compared to the same period a year ago, was primarily due to increases in personnel costs of $18.5 million associated with higher headcount, professional services of $1.5 million, and web hosting expenses of $1.3 million.

Current wording

The $37.4 million increase in research and development expenses during the nine months ended April 30, 2026, compared to the same period a year ago, was primarily due to increases in personnel costs of $28.4 million associated with higher headcount, and web hosting and software subscription costs of $5.7 million.

Previous wording

Our research and development headcount was 1,340 at January 31, 2026, compared with 1,144 at January 31, 2025.

Current wording

Our research and development headcount was 1,369 at April 30, 2026, compared with 1,204 at April 30, 2025.

Previous wording

We expect our research and development expenses to increase in absolute dollars due to inflation and investments to enhance and develop our product and services, but decrease as a percentage of revenue as we focus on hiring in lower cost regions. We continue to dedicate internal resources to develop, improve, and expand the functionality, efficiency, and security of our solutions in the cloud. Our research and development expenses may also increase as we dedicate more resources to our software development efforts and our investment in AI-driven solutions for our customers, as well as if we pursue additional acquisitions.

Current wording

We expect our research and development expenses to increase in absolute dollars due to inflation and investments to enhance and develop our products and services, but decrease as a percentage of revenue as we focus on hiring in lower cost regions. We continue to dedicate internal resources to develop, improve, and expand the functionality, efficiency, and security of our solutions in the cloud. Our research and development expenses may also increase as we dedicate more resources to our software development efforts, utilize AI tools to accelerate development efforts, and invest in AI-driven solutions for our customers, as well as if we pursue additional acquisitions.

Previous wording

The $6.0 million increase in sales and marketing expenses during the three months ended January 31, 2026, compared to the same period a year ago, was primarily due to increases in personnel costs of $6.2 million associated with higher headcount, which includes the impact of contract acquisition costs, and travel expenses of $0.7 million, partially offset by a decrease in marketing and advertising expenses of $1.0 million due to the timing of Connections, our annual customer conference, which was held in the second quarter of fiscal year 2025 and in the first quarter of fiscal year 2026.

Current wording

The $10.4 million increase in sales and marketing expenses during the three months ended April 30, 2026, compared to the same period a year ago, was primarily due to increases in personnel costs of $7.8 million associated with higher headcount, which includes the impact of contract acquisition costs, and marketing and advertising expenses of $1.9 million due to customer events and increased lead generation activity.

Previous wording

The $18.8 million increase in sales and marketing expenses during the six months ended January 31, 2026, compared to the same period a year ago, was primarily due to increases in personnel costs of $13.1 million associated with higher headcount, which includes the impact of contract acquisition costs, travel expenses of $3.1 million, and marketing and advertising expenses of $2.5 million, partially offset by decreases in amortization of intangible assets of $0.3 million and web hosting costs of $0.3 million.

Current wording

The $29.2 million increase in sales and marketing expenses during the nine months ended April 30, 2026, compared to the same period a year ago, was primarily due to increases in personnel costs of $20.4 million associated with higher headcount, which includes the impact of contract acquisition costs, marketing and advertising expenses of $4.3 million, and travel expenses of $4.3 million, partially offset by a decrease in web hosting costs of $1.1 million.

Previous wording

Our sales and marketing headcount was 547 at January 31, 2026, compared with 496 at January 31, 2025.

Current wording

Our sales and marketing headcount was 554 at April 30, 2026, compared with 497 at April 30, 2025.

Previous wording

The $12.3 million increase in general and administrative expenses during the six months ended January 31, 2026, compared to the same period a year ago, was due to increases in personnel costs of $7.4 million driven by the impact of annual salary increases, an increase in the annual bonus accrual and stock-based compensation, professional services of $2.2 million, bad debt expenses of $1.3 million, travel expenses of $1.0 million, and facilities costs of $0.9 million, partially offset by a decrease in software subscription costs of $1.1 million.

Current wording

The $2.4 million increase in general and administrative expenses during the three months ended April 30, 2026, compared to the same period a year ago, was due to increases in personnel costs of $2.6 million, driven by the impact of annual salary increases and an increase in the annual bonus accrual and stock-based compensation, which was partially offset by the net impact of fluctuations in bad debt expenses, web hosting, software subscription and professional services costs.

Previous wording

The $6.6 million increase in general and administrative expenses during the three months ended January 31, 2026, compared to the same period a year ago, was due to increases in personnel costs of $4.9 million, driven by the impact of annual salary increases, an increase in the annual bonus accrual and stock-based compensation, professional services expenses of $1.0 million, and facilities costs of $0.6 million, partially offset by a decrease in software subscription costs of $0.4 million.

Current wording

The $14.7 million increase in general and administrative expenses during the nine months ended April 30, 2026, compared to the same period a year ago, was due to increases in personnel costs of $9.9 million driven by the impact of annual salary increases and an increase in the annual bonus accrual and stock-based compensation, professional services of $1.8 million, bad debt expenses of $1.5 million, and facilities costs of $1.2 million.

Previous wording

Our general and administrative headcount was 476 at January 31, 2026, compared with 474 at January 31, 2025. General and administrative headcount includes facilities personnel whose expenses are allocated across all functional departments.

Current wording

Our general and administrative headcount was 491 at April 30, 2026, compared with 468 at April 30, 2025. General and administrative headcount includes facilities personnel whose expenses are allocated across all functional departments.

Previous wording

Interest income decreased $3.2 million and $2.2 million during the three and six months ended January 31, 2026, respectively, compared to the same periods a year ago, primarily due to lower interest rates.

Current wording

Interest income decreased $2.5 million and $4.7 million during the three and nine months ended April 30, 2026, respectively, compared to the same periods a year ago, primarily due to lower interest rates and lower available funds to invest due to purchases under our stock repurchase program.

Previous wording

Interest expense for the three months ended January 31, 2026 consists of stated interest of $2.2 million, non-cash interest expense of $1.0 million related to amortization of debt issuance costs, and $0.2 million of commitment fees on our undrawn 2025 Credit Facility. 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 the amortization of debt issuance costs.

Current wording

Interest expense for the three months ended April 30, 2026 consists of stated interest of $2.2 million, non-cash interest expense of $1.0 million related to amortization of debt issuance costs, and $0.2 million of commitment fees on our undrawn 2025 Credit Facility. Interest expense for the three months ended April 30, 2025 consists of stated interest of $2.4 million, non-cash interest expense of $1.1 million related to the amortization of debt issuance costs, and $0.2 million of commitment fees on our undrawn 2025 Credit Facility.

Previous wording

Interest expense for the six months ended January 31, 2026 consists of stated interest of $4.3 million, non-cash interest expense of $2.0 million related to amortization of debt issuance costs, and $0.3 million of commitment fees on our undrawn 2025 Credit Facility. Interest expense for the six months ended January 31, 2025 consists of stated interest of $4.4 million and non-cash interest expense of $1.7 million related to the amortization of debt issuance costs.

Current wording

Interest expense for the nine months ended April 30, 2026 consists of stated interest of $6.5 million, non-cash interest expense of $2.9 million related to amortization of debt issuance costs, and $0.5 million of commitment fees on our undrawn 2025 Credit Facility. Interest expense for the nine months ended April 30, 2025 consists of stated interest of $6.8 million, non-cash interest expense of $2.8 million related to the amortization of debt issuance costs, and $0.3 million of commitment fees on our undrawn 2025 Credit Facility.

Previous wording

Other income (expense), net during the three months ended January 31, 2026 was income of $27.0 million, compared to expense of $66.3 million during the same period a year ago due to $53.3 million of expense related to the retirement of a portion of our 2025 Convertible Senior Notes during the three months ended January 31, 2025. Additionally, during the three months ended January 31, 2026, we recorded a foreign currency gain of $26.9 million, compared to a loss of $16.0 million during the same period a year ago due to fluctuations in foreign currency exchange rates.

Current wording

Other income (expense), net during the three months ended April 30, 2026 was expense of $18.9 million, compared to income of $34.1 million during the same period a year ago. This change was primarily driven by a foreign currency loss of $20.1 million during the three months ended April 30, 2026, compared to a gain of $34.2 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, 2026 was income of $21.6 million, compared to expense of $70.3 million during the same period a year ago due to $53.6 million of expense related to the retirement of a portion of our 2025 Convertible Senior Notes during the six months ended January 31, 2025. Additionally, during the six months ended January 31, 2026, we recorded a foreign currency gain of $21.7 million, compared to a loss of $20.2 million during the same period a year ago due to fluctuations in foreign currency exchange rates.

Current wording

Other income (expense), net during the nine months ended April 30, 2026 was income of $2.8 million, compared to expense of $36.3 million during the same period a year ago due to $53.6 million of expense related to the retirement of a portion of our 2025 Convertible Senior Notes during the nine months ended April 30, 2025. Additionally, during the nine months ended April 30, 2026, we recorded a foreign currency gain of $1.5 million, compared to $14.0 million during the same period a year ago due to fluctuations in foreign currency exchange rates.

Previous wording

We recognized an income tax expense of $14.4 million and an income tax benefit of $5.8 million for the three months ended January 31, 2026 and 2025, respectively, and an income tax expense of $7.6 million and an income tax benefit of $12.1 million for the six months ended January 31, 2026 and 2025, respectively.

Current wording

We recognized an income tax expense of $3.3 million and $2.7 million for the three months ended April 30, 2026 and 2025, respectively, and an income tax expense of $10.9 million and an income tax benefit of $9.4 million for the nine months ended April 30, 2026 and 2025, respectively.

Previous wording

The change in income taxes recorded for the three months ended January 31, 2026, compared to the same period a year ago was primarily due to an increase in income before taxes, an increase in non-deductible executive compensation, a decrease in the Foreign-Derived Intangible Income (“FDII”) deduction, and a decrease in research and development credits due to U.S. tax law changes under H.R. 1 enacted on July 4, 2025.

Current wording

The change in income taxes recorded for the three months ended April 30, 2026, compared to the same period a year ago, was primarily due to an increase in non-deductible executive compensation, a decrease in the Foreign-Derived Intangible Income (“FDII”) deduction, a decrease in research and development credits due to U.S. tax law changes under H.R. 1 enacted on July 4, 2025, and a decrease in the deductions for stock-based compensation, offset by a decrease in income before taxes.

Previous wording

The change in income taxes recorded for the six months ended January 31, 2026, compared to the same period a year ago, was primarily due to an increase in income before taxes, an increase in non-deductible executive compensation, a decrease in the FDII deduction, a decrease in research and development credits due to U.S. tax law changes under H.R. 1 enacted on July 4, 2025, offset by an increase in the deductions for stock-based compensation.

Current wording

The change in income taxes recorded for the nine months ended April 30, 2026, compared to the same period a year ago, was primarily due to an increase in income before taxes, an increase in non-deductible executive compensation, a decrease in the FDII deduction, and a decrease in research and development credits due to U.S. tax law changes under H.R. 1 enacted on July 4, 2025, offset by an increase in the deductions for stock-based compensation.

Previous wording

In the United States, on July 4, 2025, H.R. 1 was signed into law. Among other provisions, the legislation reinstated immediate expensing for domestic research and experimental expenditures, extended 100% bonus depreciation for qualified property placed in service beginning January 20, 2025, and made certain other provisions of the Tax Cuts and Jobs Act permanent. The legislation has multiple effective dates, with certain provisions effective in fiscal year 2026 and others effective from fiscal year 2027. We recognized the fiscal year 2026 tax effects of the legislation in our income tax provision for the three and six months ended January 31, 2026.

Current wording

In the United States, on July 4, 2025, H.R. 1 was signed into law. Among other provisions, the legislation reinstated immediate expensing for domestic research and experimental expenditures, extended 100% bonus depreciation for qualified property placed in service beginning January 20, 2025, and made certain other provisions of the Tax Cuts and Jobs Act permanent. The legislation has multiple effective dates, with certain provisions effective in fiscal year 2026 and others effective from fiscal year 2027. We recognized the fiscal year 2026 tax effects of the legislation in our income tax provision for the three and nine months ended April 30, 2026.