CrowdStrike Holdings, Inc.

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended January 31, 2025, filed with the SEC. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties as described under the heading Special Note Regarding Forward-Looking Statements following the Table of Contents of this Quarterly Report on Form 10-Q. You should review the disclosure under Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended January 31, 2026, filed with the SEC. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties as described under the heading Special Note Regarding Forward-Looking Statements following the Table of Contents of this Quarterly Report on Form 10-Q. As discussed in Note 1 and Note 16 to the unaudited Condensed Consolidated Financial Statements included in this report, the Company revised its previously issued unaudited Condensed Consolidated Financial Statements as of and for the three months ended April 30, 2025 to correct for an immaterial error discovered during the fourth quarter of fiscal 2026. The revisions are intended to ensure comparability across all periods reflected herein. You should review the disclosure under Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Previous wording

Founded in 2011, we reinvented cybersecurity for the cloud era and transformed the way cybersecurity is delivered and experienced by customers. When we started CrowdStrike, cyberattackers had an asymmetric advantage over legacy cybersecurity products that could not keep pace with the rapid changes in adversary tactics. We took a fundamentally different approach to solve this problem with the AI-native CrowdStrike Falcon platform – the first, true cloud-native unified platform built with artificial intelligence (“AI”) at the core, capable of harnessing vast amounts of security and enterprise data to deliver highly modular solutions through a single lightweight agent.

Current wording

Founded in 2011, we reinvented cybersecurity for the cloud era and transformed the way cybersecurity is delivered and experienced by customers. When we started CrowdStrike, cyberattackers had an asymmetric advantage over legacy cybersecurity products that could not keep pace with the rapid changes in adversary tactics. We took a fundamentally different approach to solve this problem with the AI-native CrowdStrike Falcon platform – the first, true cloud-native unified platform built with artificial intelligence (“AI”) at the core, capable of harnessing vast amounts of security and enterprise data to deliver highly modular solutions through a single lightweight sensor.

Previous wording

A substantial majority of our customers purchase subscriptions with a term over one year. Our subscriptions are generally priced on a per-endpoint and per-module basis. We recognize revenue from our subscriptions ratably over the term of the subscription. We also generate revenue from our incident response and proactive professional services, which are generally priced on a time and materials basis. We view our professional services business primarily as an opportunity to cross-sell subscriptions to our Falcon platform and cloud modules.

Current wording

Our subscriptions are priced based on the unit of measure most relevant to each product, including per-endpoint, per-identity, per-cloud sensor, per-user, per-device, and per-gigabyte of daily ingestion. We recognize revenue from our subscriptions ratably over the term of the subscription. We also generate revenue from our incident response and proactive professional services, which are generally priced on a time and materials basis. We view our professional services business primarily as an opportunity to cross-sell subscriptions to our Falcon platform.

Previous wording

July 19 Incident. On July 19, 2024, we released a content configuration update for our Falcon sensor that resulted in system crashes for certain Windows systems (the “July 19 Incident”). As a result of the July 19 Incident, we are subject to lawsuits, claims and inquiries as described in Note 10, “Commitments and Contingencies,” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. We have incurred, and expect to continue to incur, significant legal and professional services and other general and administrative expenses associated with the July 19 Incident in future periods. It is not reasonably possible to quantify the precise impact of the July 19 Incident, but the incident has adversely affected our results of operations, and we currently expect a number of factors relating to the incident to adversely affect our key metrics and results of operations in future periods. While we have maintained high dollar-based gross retention rates following the incident, we have experienced delays in creating sales opportunities and longer sales cycles, including delays in customer purchasing decisions. Sales cycles may be elongated in future periods. In addition, because our customers typically sign contracts with terms of twelve months or longer, customer churn and any corresponding impact to our key metrics and revenue may occur in future periods. Customer commitment packages introduced following the July 19 Incident have included discounting, additional modules, professional services, flexible payment terms or subscription period extensions. Our customer commitment packages have resulted, and are expected to continue to result, in increased contraction, due to elongated subscription terms, and decreased upsell dollar values.

Current wording

July 19 Incident. On July 19, 2024, we released a content configuration update for our Falcon sensor that resulted in system crashes for certain Windows systems (the “July 19 Incident”). As a result of the July 19 Incident, we are subject to lawsuits, claims and inquiries as described in Note 10, “Commitments and Contingencies,” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. We have incurred, and expect to continue to incur, significant legal and professional services and other general and administrative expenses associated with the July 19 Incident in future periods. It is not reasonably possible to quantify the precise impact of the July 19 Incident, but the incident has adversely affected our results of operations, and we currently expect a number of factors relating to the incident to adversely affect our key metrics and results of operations in future periods. While we have maintained high dollar-based gross retention rates following the incident, we have experienced delays in creating sales opportunities and longer sales cycles, including delays in customer purchasing decisions. Sales cycles may be elongated in future periods. In addition, because our customers typically sign contracts with terms over one year, customer churn and any corresponding impact to our key metrics and revenue may occur in future periods. Customer commitment packages introduced following the July 19 Incident have included discounting, additional modules, professional services, flexible payment terms or subscription period extensions. Our customer commitment packages have resulted, and are expected to continue to result, in increased contraction, due to elongated subscription terms, and decreased upsell dollar values.

Previous wording

ARR grew to $4.9 billion as of October 31, 2025, of which $265.3 million and $680.2 million was net new ARR added for the three and nine months ended October 31, 2025, respectively. ARR grew to $4.0 billion as of October 31, 2024, of which $153.0 million and $582.3 million was net new ARR added for the three and nine months ended October 31, 2024, respectively.

Current wording

ARR grew to $5.5 billion as of April 30, 2026, of which $255.8 million was net new ARR added for the three months ended April 30, 2026. ARR grew to $4.4 billion as of April 30, 2025, of which $193.8 million was net new ARR added for the three months ended April 30, 2025.

Previous wording

Our dollar-based net retention rate increased in the quarter ended October 31, 2025 over the prior quarter. Our dollar-based net retention rate can fluctuate from period to period due to large customer contracts in a given period and incentives provided, which may reduce our dollar-based net retention rate in subsequent periods. In addition, if our customers are not able to fully utilize their product subscriptions (including in connection with our flexible subscription offering), we may experience increased contraction as such customers may elect to renew with shorter subscription periods, fewer cloud modules, fewer endpoints or smaller contract values, which may reduce our dollar-based net retention rate.

Current wording

Our dollar-based net retention rate continued to be strong during the three months ended April 30, 2026. Our dollar-based net retention rate can fluctuate from period to period due to large customer contracts in a given period and incentives provided, which may reduce our dollar-based net retention rate in subsequent periods. In addition, if our customers are not able to fully utilize their product subscriptions (including in connection with our flexible subscription offering), we may experience increased contraction as such customers may elect to renew with shorter subscription periods, fewer cloud modules, fewer endpoints or smaller contract values, which may reduce our dollar-based net retention rate.

Previous wording

Interest Expense. Interest expense consists primarily of amortization of debt issuance costs, contractual interest expense for our Senior Notes issued in January 2021, and amortization of debt issuance costs on our secured Revolving Facility.

Current wording

Interest Expense. Interest expense consists primarily of amortization of debt issuance costs and contractual interest expense for our Senior Notes issued in January 2021.

Previous wording

Provision for Income Taxes. Provision for income taxes consists of state income taxes in the United States, foreign income taxes, and withholding taxes related to customer payments in certain foreign jurisdictions in which we conduct business. We maintain a full valuation allowance on our U.S. federal and state and certain foreign deferred tax assets, including net operating loss carryforwards and tax credits, which we have determined are not realizable on a more-likely-than-not basis. We regularly evaluate the need for a valuation allowance.

Current wording

Provision (Benefit) for Income Taxes. Provision (benefit) for income taxes consists of income tax benefits recognized in the current period resulting from the realization of deferred tax assets in connection with recent acquisitions, offset by state income taxes in the United States, foreign income taxes, and withholding taxes related to customer payments in certain foreign jurisdictions in which we conduct business. We maintain a full valuation allowance on our U.S. federal and state and certain foreign deferred tax assets, including net operating loss carryforwards and tax credits, which we have determined are not realizable on a more-likely-than-not basis. We evaluate the need for a valuation allowance on a quarterly basis.

Previous wording

Total revenue increased by $224.1 million, or 22%, for the three months ended October 31, 2025 compared to the three months ended October 31, 2024. Subscription revenue accounted for 95% of total revenue for each of the three months ended October 31, 2025 and October 31, 2024. Professional services revenue accounted for 5% of our total revenue for each of the three months ended October 31, 2025 and October 31, 2024.

Current wording

Total revenue increased by $282.2 million, or 26%, for the three months ended April 30, 2026 compared to the three months ended April 30, 2025. Subscription revenue accounted for 95% of total revenue for each of the three months ended April 30, 2026 and April 30, 2025. Professional services revenue accounted for 5% of our total revenue for each of the three months ended April 30, 2026 and April 30, 2025.

Previous wording

Subscription revenue increased by $206.0 million, or 21%, for the three months ended October 31, 2025 compared to the three months ended October 31, 2024, which was primarily driven by a combination of the addition of new customers and the sale of additional sensors and modules to existing customers.

Current wording

Subscription revenue increased by $270.1 million, or 26%, for the three months ended April 30, 2026 compared to the three months ended April 30, 2025, which was primarily driven by a combination of the addition of new customers and the sale of additional sensors and modules to existing customers.

Previous wording

Professional services revenue increased by $18.1 million, or 38%, for the three months ended October 31, 2025, compared to the three months ended October 31, 2024, which was primarily attributable to an increase in the number of professional service hours.

Current wording

Professional services revenue increased by $12.1 million, or 23%, for the three months ended April 30, 2026, compared to the three months ended April 30, 2025, which was primarily attributable to an increase in the number of professional service hours.

Previous wording

Total cost of revenue increased by $52.7 million, or 21%, for the three months ended October 31, 2025 compared to the three months ended October 31, 2024. Subscription cost of revenue increased by $41.6 million, or 19%, for the three months ended October 31, 2025, compared to the three months ended October 31, 2024. The increase in subscription cost of revenue was primarily due to an increase in cloud hosting and related services costs of $11.3 million, an increase in employee-related expenses of $8.6 million driven by a 17% increase in average headcount, an increase in depreciation of data center equipment of $8.3 million, an increase in amortization of internal-use software of $5.8 million, an increase in allocated overhead costs of $5.0 million, and an increase in stock-based compensation expense of $5.0 million.

Current wording

Total cost of revenue increased by $54.4 million, or 19%, for the three months ended April 30, 2026 compared to the three months ended April 30, 2025. Subscription cost of revenue increased by $47.1 million, or 20%, for the three months ended April 30, 2026, compared to the three months ended April 30, 2025. The increase in subscription cost of revenue was primarily due to an increase in cloud hosting and related services costs of $10.9 million, an increase in depreciation of data center equipment of $9.7 million, an increase in employee-related expenses of $8.9 million driven by a 6% increase in average headcount, an increase in amortization of internal-use software of $6.0 million, an increase in allocated overhead costs of $4.5 million, and an increase in employee benefits of $2.1 million.

Previous wording

Professional services cost of revenue increased by $11.1 million, or 29%, for the three months ended October 31, 2025, compared to the three months ended October 31, 2024. The increase in professional services cost of revenue was primarily due to an increase in consulting expenses of $6.1 million, an increase in employee-related expenses of $2.1 million driven by a 11% increase in average headcount, and an increase in stock-based compensation expense of $1.9 million.

Current wording

Professional services cost of revenue increased by $7.3 million, or 16%, for the three months ended April 30, 2026, compared to the three months ended April 30, 2025. The increase in professional services cost of revenue was primarily due to an increase in consulting expenses of $5.3 million, an increase in employee-related expenses of $0.9 million driven by a 1% increase in average headcount, and an increase in allocated overhead costs of $0.7 million.

Previous wording

Subscription gross margin slightly decreased by one percentage point for the nine months ended October 31, 2025, compared to the nine months ended October 31, 2024. The decrease in subscription gross margin was primarily due to an increase in stock-based compensation expense, and an increase in depreciation of data center equipment during the nine months ended October 31, 2025.

Current wording

Subscription gross margin increased by one percentage point for the three months ended April 30, 2026, compared to the three months ended April 30, 2025. The increase in subscription gross margin was primarily attributable to hosting efficiencies.

Previous wording

Professional services gross margin increased by six percentage points for the three months ended October 31, 2025, compared to the three months ended October 31, 2024. The increase in professional services gross margin was primarily due to an increase in the number of professional service hours, partially offset by an increase in consulting expense during the three months ended October 31, 2025.

Current wording

Professional services gross margin increased by five percentage points for the three months ended April 30, 2026, compared to the three months ended April 30, 2025. The increase in professional services gross margin was primarily due to an increase in utilization, partially offset by an increase in consulting expense during the three months ended April 30, 2026.

Previous wording

Sales and marketing expenses increased by $72.8 million, or 18%, for the three months ended October 31, 2025 compared to the three months ended October 31, 2024. The increase in sales and marketing expenses was primarily due to an increase in employee-related expenses of $36.6 million driven by a 10% increase in average headcount, an increase in stock-based compensation expense of $17.5 million, an increase in marketing programs of $9.0 million, an increase in allocated overhead costs of $5.3 million, an increase in employee benefits of $4.5 million, an increase in cloud hosting and related services costs of $4.5 million, and an increase in travel expenses of $2.4 million, partially offset by a decrease in expenses associated with the July 19 Incident and related matters of $14.9 million.

Current wording

Sales and marketing expenses increased by $49.5 million, or 11%, for the three months ended April 30, 2026 compared to the three months ended April 30, 2025. The increase in sales and marketing expenses was primarily due to an increase in employee-related expenses of $14.9 million driven by a 3% increase in average headcount, an increase in marketing programs of $8.3 million, an increase in allocated overhead costs of $6.1 million, an increase in stock-based compensation expense of $5.1 million, an increase in company event expenses of $5.1 million, an increase in travel expenses of $3.9 million, an increase in employee benefits of $3.6 million, an increase in cloud hosting and related costs of $0.9 million, and a decrease of $3.4 million in sales commission expense related to the change in estimated period of benefit, partially offset by an increase in capitalized sales commissions.

Previous wording

Research and development expenses increased by $266.6 million, or 35%, for the nine months ended October 31, 2025 compared to the nine months ended October 31, 2024. This increase was primarily due to an increase in stock-based compensation expense of $98.9 million, an increase in employee-related expenses of $93.4 million driven by a 20% increase in average headcount, an increase in cloud hosting and related costs of $35.0 million, an increase in allocated overhead costs of $21.4 million, charges related to the Plan of $16.8 million, an increase in employee benefits of $11.3 million, and an increase in term-based software licenses of $2.3 million, partially offset by a decrease in other labor expenses of $11.3 million, and an increase in software capitalization of $10.2 million.

Current wording

Research and development expenses increased by $77.4 million, or 23%, for the three months ended April 30, 2026 compared to the three months ended April 30, 2025. This increase was primarily due to an increase in employee-related expenses of $33.3 million driven by a 13% increase in average headcount, an increase in stock-based compensation expense of $21.7 million, an increase in allocated overhead costs of $9.2 million, an increase in cloud hosting and related costs of $7.5 million, an increase in term-based software licenses of $3.9 million, an increase in employee benefits of $3.3 million, and an increase in depreciation of data center equipment of $1.6 million, partially offset by an increase in software capitalization of $4.2 million.

Previous wording

General and administrative expenses increased by $173.3 million, or 51%, for the nine months ended October 31, 2025 compared to the nine months ended October 31, 2024. The increase in general and administrative expenses was primarily due to an increase in expenses associated with the July 19 Incident and related matters of $82.0 million, an increase in stock-based compensation expense of $43.7 million, charges related to the Plan of $12.6 million, an increase in employee-related expenses of $10.5 million driven by a 19% increase in average headcount, an increase in allocated overhead costs of $3.6 million, an increase in legal expense of $3.4 million unrelated to the July 19 Incident or related matters, an increase in term-based software licenses of $2.6 million, an increase in consulting expense of $2.0 million, and an increase in travel expenses of $1.9 million.

Current wording

General and administrative expenses increased by $12.8 million, or 8%, for the three months ended April 30, 2026 compared to the three months ended April 30, 2025. The increase in general and administrative expenses was primarily due to an increase in stock-based compensation expense of $23.9 million, an increase in consulting expense of $13.1 million, and an increase in legal expense of $1.8 million unrelated to the July 19 Incident or related matters, partially offset by a decrease in expenses associated with the July 19 Incident and related matters of $20.5 million and a decrease in charges related to the Strategic Plan of $6.6 million.

Previous wording

The decrease in interest income for the three months ended October 31, 2025 compared to the three months ended October 31, 2024 was driven by lower market rates, partially offset by higher cash balance.

Current wording

The decrease in interest income for the three months ended April 30, 2026 compared to the three months ended April 30, 2025 was driven by lower market rates and a lower cash balance.

Previous wording

The decrease in other income (expense), net for the nine months ended October 31, 2025 compared to the nine months ended October 31, 2024 was primarily due to a decrease in net realized gains on our strategic investments of $6.2 million, an increase in net foreign currency transaction losses of $3.7 million, and downward adjustments and impairment of $1.6 million of our strategic investments, partially offset by an increase in gains from deferred compensation assets of $0.7 million.

Current wording

The increase in other income (expense), net for the three months ended April 30, 2026 compared to the three months ended April 30, 2025 was primarily due to an increase in net realized gains on our strategic investments of $36.4 million, an increase of $1.6 million attributable to no downward adjustments or impairment charges on our strategic investments in the current period, and an increase of $1.0 million attributable to lower net foreign currency transaction losses.

Previous wording

The following shows the provision for income taxes for the three months ended October 31, 2025 as compared to the three months ended October 31, 2024 (in thousands, except percentage):

Current wording

The following shows the provision (benefit) for income taxes for the three months ended April 30, 2026 as compared to the three months ended April 30, 2025 (in thousands, except percentage):

Previous wording

Our primary sources of liquidity as of October 31, 2025, consisted of: (i) $4.8 billion in cash and cash equivalents, which mainly consists of cash on hand and highly liquid investments in money market funds, U.S. Treasury bills, and time deposits, (ii) cash we expect to generate from operations, and (iii) available capacity under our $750.0 million Revolving Facility. It is not currently possible to reasonably estimate the amount of loss or range of possible loss that might result from adverse judgments, settlements, penalties, or other resolution of proceedings resulting from the July 19 Incident or related matters. However, despite such uncertainties, we expect that the combination of our existing cash and cash equivalents, cash flows from operations, and the Revolving Facility will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next 12 months. Our Revolving Facility matures on January 2, 2026.

Current wording

Our primary sources of liquidity as of April 30, 2026, consisted of: (i) $4.6 billion in cash and cash equivalents, which mainly consists of cash on hand and highly liquid investments in money market funds, U.S. Treasury bills, and time deposits, and (ii) cash we expect to generate from operations. It is not currently possible to reasonably estimate the amount of loss or range of possible loss that might result from adverse judgments, settlements, penalties, or other resolution of proceedings resulting from the July 19 Incident or related matters. However, despite such uncertainties, we expect that the combination of our existing cash and cash equivalents and cash flows from operations will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next 12 months.

Previous wording

We have historically generated operating losses, as reflected in our accumulated deficit of $1.3 billion as of October 31, 2025. We expect to continue to make investments, particularly in sales and marketing and research and development. As a result, we may require additional capital resources in the future to execute strategic initiatives to grow our business.

Current wording

We have a history of losses, and while we have achieved profitability in certain periods, including the first quarter of fiscal 2027 and fiscal 2024, our accumulated deficit was $1.3 billion as of April 30, 2026. We expect to continue to make investments, particularly in sales and marketing and research and development. As a result, we may require additional capital resources in the future to execute strategic initiatives to grow our business.

Previous wording

We generally invoice our subscription customers at the beginning of the subscription term, or in some instances, such as in multi-year arrangements, in installments. Therefore, a substantial source of our cash is from such prepayments, which are included on our condensed consolidated balance sheets as deferred revenue. Deferred revenue primarily consists of billed fees for our subscriptions, prior to satisfying the criteria for revenue recognition, which are subsequently recognized as revenue in accordance with our revenue recognition policy. As of October 31, 2025, we had deferred revenue of $4.1 billion, of which $2.9 billion was recorded as a current liability and is expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria have been met.

Current wording

We generally invoice our subscription customers at the beginning of the subscription term, or in some instances, such as in multi-year arrangements, in installments. Therefore, a substantial source of our cash is from such prepayments, which are included on our condensed consolidated balance sheets as deferred revenue. Deferred revenue primarily consists of billed fees for our subscriptions, prior to satisfying the criteria for revenue recognition, which are subsequently recognized as revenue in accordance with our revenue recognition policy. As of April 30, 2026, we had deferred revenue of $4.7 billion, of which $3.4 billion was recorded as a current liability and is expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria have been met.

Previous wording

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities. We do not have any outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions, or foreign currency forward contracts.

Current wording

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities. As of April 30, 2026, we did not have any outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions, or foreign currency forward contracts.

Previous wording

Net cash provided by operating activities during the nine months ended October 31, 2025 was $1.1 billion, which resulted from net loss of $222.6 million, adjusted for non-cash charges of $1.4 billion and net cash outflow of $27.4 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $822.7 million in stock-based compensation expense, $325.4 million of amortization of deferred contract acquisition costs, $180.9 million of depreciation and amortization, $23.1 million of amortization of intangibles assets, $12.6 million of non-cash operating lease costs, $3.5 million of non-cash interest expense, and $1.6 million change in fair value of strategic investments, partially offset by $5.4 million of deferred income taxes. The net cash outflow from changes in operating assets and liabilities was primarily due to an increase of $333.7 million in deferred revenue, a decrease of $116.2 million in accounts receivable, an increase of $32.6 million in accrued payroll and benefits, and an increase of $19.9 million in accrued expenses and other liabilities, partially offset by an increase of $431.7 million in deferred contract acquisition costs, an increase of $79.4 million in prepaid expenses and other assets, a decrease of $9.6 million in accounts payable, and a decrease of $9.0 million in operating lease liabilities.

Current wording

Net cash provided by operating activities during the three months ended April 30, 2026 was $590.9 million, which resulted from net income of $46.0 million, adjusted for non-cash charges of $442.7 million and a net cash inflow of $102.3 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $297.7 million in stock-based compensation expense, $98.9 million of amortization of deferred contract acquisition costs, $75.5 million of depreciation and amortization, $12.4 million of amortization of intangible assets, $4.9 million of non-cash operating lease costs, and $0.5 million of non-cash interest expense, partially offset by $36.4 million of realized gains on strategic investments and $10.8 million of deferred income taxes. The net cash inflow from changes in operating assets and liabilities was primarily due to a decrease of $428.8 million in accounts receivable, partially offset by an increase of $92.7 million in deferred contract acquisition costs, an increase of $75.0 million in prepaid expenses and other assets, a decrease of $54.4 million in accounts payable, a decrease of $44.0 million in accrued expenses and other liabilities, a decrease of $36.7 million in deferred revenue, a decrease of $19.6 million in accrued payroll and benefits, and a decrease of $4.2 million in operating lease liabilities.

Previous wording

Net cash used in investing activities of $641.5 million during the nine months ended October 31, 2025 was primarily due to business acquisitions, net of cash acquired, of $380.9 million, purchases of property and equipment of $199.6 million, capitalized internal-use software and website development costs of $51.5 million, purchases of strategic investments of $10.3 million, and purchases of deferred compensation investments of $4.3 million, partially offset by proceeds from sales of strategic investments of $4.9 million.

Current wording

Net cash used in investing activities of $994.1 million during the three months ended April 30, 2026 was primarily due to business acquisitions, net of cash acquired, of $881.4 million, which was related to the Seraphic and SGNL acquisitions, purchases of property and equipment of $97.6 million, capitalized internal-use software and website development costs of $22.6 million, purchases of deferred compensation investments of $2.3 million, and purchases of strategic investments of $0.4 million, partially offset by proceeds from sales of strategic investments of $10.2 million.

Previous wording

Net cash provided by financing activities of $81.1 million during the nine months ended October 31, 2025 was primarily due to proceeds from our employee stock purchase plan of $74.6 million, capital contributions from non-controlling interests of $6.0 million, and proceeds from the exercise of stock options of $2.6 million, partially offset by distributions to non-controlling interest holders of $2.2 million.

Current wording

Net cash used in financing activities of $195.9 million during the three months ended April 30, 2026 was primarily due to repurchases of common stock of $175.6 million and distributions to non-controlling interest holders of $21.0 million, partially offset by proceeds from the issuance of common stock upon exercise of stock options of $0.7 million.

Previous wording

During the nine months ended October 31, 2025, there were no significant changes to our debt obligations related to the Senior Notes, as presented in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2025.

Current wording

During the three months ended April 30, 2026, there were no significant changes to our debt obligations related to the Senior Notes, as presented in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026.

Previous wording

Our commitments also consist of obligations under non-cancelable real estate arrangements on an undiscounted basis, of which $14.7 million is due in the next 12 months and $163.6 million is due thereafter.

Current wording

Our commitments also consist of obligations under non-cancelable real estate arrangements on an undiscounted basis, of which $21.7 million is due in the next 12 months and $64.2 million is due thereafter.

Previous wording

As of October 31, 2025, our unrecognized tax benefits included $62.6 million, which were classified as long-term liabilities due to the inherent uncertainty with respect to the timing of future cash outflows associated with our unrecognized tax benefits.

Current wording

As of April 30, 2026, our unrecognized tax benefits included $50.7 million, which were classified as long-term liabilities due to the inherent uncertainty with respect to the timing of future cash outflows associated with our unrecognized tax benefits.

Previous wording

As of October 31, 2025, we had non-cancelable unfunded commitments from our financing arrangements totaling approximately $121.3 million.

Current wording

As of April 30, 2026, we had non-cancelable unfunded commitments from our financing arrangements totaling approximately $34.8 million.

Previous wording

There have been no significant changes in our critical accounting policies and estimates during the nine months ended October 31, 2025, as compared to the critical accounting policies and estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended January 31, 2025, filed with the SEC on March 10, 2025.

Current wording

In February 2026, we completed an assessment of the estimated period of benefit of commissions earned upon the initial acquisition of a contract, or subsequent upsell, and determined that it should increase from four to five years. This change in estimate was effective beginning in fiscal year 2027. Based on the carrying value of the related deferred contract acquisition costs as of January 31, 2026, the effect of this change in estimate for the three months ended April 30, 2026 was a reduction in sales commission expense of $27.9 million. There have been no other significant changes in our critical accounting policies and estimates during the three months ended April 30, 2026, as compared to the critical accounting policies and estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended January 31, 2026, filed with the SEC on March 5, 2026.

Previous wording

We enter into both single and multi-year subscription contracts for our solutions. We generally invoice our subscription customers at the beginning of the subscription term, or in some instances, such as in multi-year arrangements, in installments. Until we have the contractual right to invoice, these contract amounts are classified as backlog. They are not recorded in deferred revenue or elsewhere in our condensed consolidated financial statements. As of October 31, 2025, we had backlog of approximately $3.8 billion. We expect backlog will change from period to period for several reasons, including the timing and duration of customer agreements, varying billing cycles of subscription agreements, and the timing and duration of customer renewals. Because revenue for any period is a function of revenue recognized from deferred revenue under contracts in existence at the beginning of the period, as well as contract renewals and new customer contracts during the period, backlog at the beginning of any period is not necessarily indicative of future revenue performance. We do not utilize backlog as a key management metric internally.

Current wording

We enter into both single and multi-year subscription contracts for our solutions. We generally invoice our subscription customers at the beginning of the subscription term, or in some instances, such as in multi-year arrangements, in installments. Until we have the contractual right to invoice, these contract amounts are classified as backlog. They are not recorded in deferred revenue or elsewhere in our condensed consolidated financial statements. As of April 30, 2026, we had backlog of approximately $4.0 billion. We expect backlog will change from period to period for several reasons, including the timing and duration of customer agreements, varying billing cycles of subscription agreements, and the timing and duration of customer renewals. Because revenue for any period is a function of revenue recognized from deferred revenue under contracts in existence at the beginning of the period, as well as contract renewals and new customer contracts during the period, backlog at the beginning of any period is not necessarily indicative of future revenue performance. We do not utilize backlog as a key management metric internally.

Previous wording

As of October 31, 2025, we had 10,410 full-time employees. We also engage temporary employees and consultants as needed to support our operations. None of our employees in the United States are represented by a labor union or subject to a collective bargaining agreement. In certain countries in which we operate, we are subject to local labor law requirements which may automatically make our employees subject to industry-wide collective bargaining agreements. We have not experienced any work stoppages, and we consider our relations with our employees to be good.

Current wording

As of April 30, 2026, we had 11,157 full-time employees. We also engage temporary employees and consultants as needed to support our operations. None of our employees in the United States are represented by a labor union or subject to a collective bargaining agreement. In certain countries in which we operate, we are subject to local labor law requirements which may automatically make our employees subject to industry-wide collective bargaining agreements. We have not experienced any work stoppages, and we consider our relations with our employees to be good.