Zscaler Inc

Previous wording

We operate our business as one reportable segment. Our revenue has experienced significant growth in recent periods. For the six months ended January 31, 2024 and 2023, our revenue was $1,021.7 million and $743.1 million, respectively. We have incurred net losses in all periods since our inception. For the six months ended January 31, 2024 and 2023, our net loss was $62.0 million and $125.6 million, respectively. We expect we will continue to incur net losses for the foreseeable future, as we continue to invest in our sales and marketing organization to take advantage of our market opportunity, to invest in research and development efforts to enhance the functionality of our cloud platform, to incur additional compliance and other related costs as we operate as a public company, and to address any legal matters and related accruals, as further described in Note 10, Commitments and Contingencies, of the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

We operate our business as one reportable segment. Our revenue has experienced significant growth in recent periods. For the nine months ended April 30, 2024 and 2023, our revenue was $1,574.9 million and$1,161.9 million, respectively. We have incurred net losses in all annual periods since our inception. For the nine months ended April 30, 2024 and 2023, ournet loss was $42.8 million and $171.7 million, respectively. We expect we will continue to incur net losses for the foreseeable future, as we continue to invest in our sales and marketing organization to take advantage of our market opportunity, to invest in research and development efforts to enhance the functionality of our cloud platform, to incur additional compliance and other related costs as we operate as a public company, and to address any legal matters and related accruals, as further described in Note 11, Commitments and Contingencies, of the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

Recent changes in macroeconomic conditions such as high inflation and potential recessionary environments, and geopolitical factors, such as the Russia-Ukraine and Israel-Hamas crises, can cause uncertainty in our business. We continue to see customer scrutiny of and elongated approval processes for transactions, particularly larger deals, as potential new customers continue to scrutinize purchasing decisions and are requiring multiple approvals for large expenditures in response to the challenging economic environment. These macroeconomic conditions may impact the future demand for subscriptions of our cloud platform.

Current wording

Recent changes in macroeconomic conditions such as high inflation, high interest rates and potential recessionary environments, and geopolitical factors, such as the Russia-Ukraine and Israel-Hamas crises, can cause uncertainty in our business. We continue to see customer scrutiny of and elongated approval processes for transactions, particularly larger deals, as customers continue to scrutinize purchasing decisions and are requiring multiple approvals for large expenditures in response to the challenging economic environment. These macroeconomic conditions may impact the future demand for subscriptions of our cloud platform.

Previous wording

We believe that dollar-based net retention rate is a key metric to measure the long-term value of our customer relationships because it is driven by our ability to retain and expand the recurring revenue generated from our existing customers. Our dollar-based net retention rate compares the recurring revenue from a set of customers against the same metric for the prior 12-month period on a trailing basis. Because our customers have repeat buying patterns and the average term of our contracts is more than 12 months, we measure this metric over a set of customers who were with us as of the last day of the same reporting period in the prior fiscal year. Our dollar-based net retention rate includes customer attrition. We have not experienced a material increase in customer attrition rates in recent periods. For the trailing 12 months ended January 31, 2024 and 2023, the dollar-based net retention rate was 117% and above 125%, respectively.

Current wording

We believe that dollar-based net retention rate is a key metric to measure the long-term value of our customer relationships because it is driven by our ability to retain and expand the recurring revenue generated from our existing customers. Our dollar-based net retention rate compares the recurring revenue from a set of customers against the same metric for the prior 12-month period on a trailing basis. Because our customers have repeat buying patterns and the average term of our contracts is more than 12 months, we measure this metric over a set of customers who were with us as of the last day of the same reporting period in the prior fiscal year. Our dollar-based net retention rate includes customer attrition. We have not experienced a material increase in customer attrition rates in recent periods. For the trailing 12 months ended April 30, 2024 and 2023, the dollar-based net retention rate was 116% and above 125%, respectively.

Previous wording

We define non-GAAP income from operations as GAAP loss from operations, excluding stock-based compensation expense and related payroll taxes and amortization expense of acquired intangible assets. We define non-GAAP operating margin as non-GAAP income from operations as a percentage of revenue.

Current wording

We define non-GAAP income from operations as GAAP loss from operations, excluding stock-based compensation expense and related payroll taxes, amortization expense of acquired intangible assets, and restructuring and other charges. We define non-GAAP operating margin as non-GAAP income from operations as a percentage of revenue.

Previous wording

Free cash flow includes the cyclical impact of inflows and outflows resulting from contributions to our employee stock purchase plan for which the purchase period of approximately six months ends in each of our second and fourth fiscal quarters. As of January 31, 2024, the accrued employee payroll contributions to our ESPP was $9.7 million, which will be used to purchase shares at the end of the current purchase period ending on June 15, 2024. Payroll contributions ultimately used to purchase shares will be reclassified to stockholders' equity upon issuance of the shares during our fourth quarter of fiscal 2024.

Current wording

Free cash flow includes the cyclical impact of inflows and outflows resulting from contributions to our employee stock purchase plan for which the purchase period of approximately six months ends in each of our second and fourth fiscal quarters. Payroll contributions accrued as of April 30, 2024 will be used to purchase shares at the end of the current ESPP purchase period ending on June 17, 2024. Payroll contributions ultimately used to purchase shares are reclassified to stockholders' equity on the purchase date.

Previous wording

Calculated billings is a non-GAAP financial measure that we believe is a key metric to measure our periodic performance. Calculated billings represents our total revenue plus the change in deferred revenue in a period. Calculated billings in any particular period aims to reflect amounts invoiced for subscriptions to access our cloud platform, together with related support services for our new and existing customers. We typically invoice our customers annually in advance, and to a lesser extent quarterly in advance, monthly in advance or multi-year in advance. Calculated billings increased $133.9 million, or 27%, for the three months ended January 31, 2024 over the three months ended January 31, 2023 and $250.3 million, or 30%, for thesix months ended January 31, 2024 over thesix months ended January 31, 2023. As calculated billings continues to grow in absolute terms, we expect our calculated billings growth rate to trend down over time. We also expect that calculated billings will be affected by seasonality in terms of when we enter into agreements with customers; and the mix of billings in each reporting period as we typically invoice customers annually in advance, and to a lesser extent quarterly in advance, monthly in advance or multi-year in advance.

Current wording

Calculated billings is a non-GAAP financial measure that we believe is a key metric to measure our periodic performance. Calculated billings represents our total revenue plus the change in deferred revenue in a period. Calculated billings in any particular period aims to reflect amounts invoiced for subscriptions to access our cloud platform, together with related support services for our new and existing customers. We typically invoice our customers annually in advance, and to a lesser extent quarterly in advance, monthly in advance or multi-year in advance. Calculated billings increased $145.7 million, or 30%, for the three months ended April 30, 2024 over the three months ended April 30, 2023 and $396.0 million, or 30%, for thenine months ended April 30, 2024 over thenine months ended April 30, 2023. As calculated billings continues to grow in absolute terms, we expect our calculated billings growth rate to trend down over time. We also expect that calculated billings will be affected by seasonality in terms of when we enter into agreements with customers; and the mix of billings in each reporting period as we typically invoice customers annually in advance, and to a lesser extent quarterly in advance, monthly in advance or multi-year in advance.

Previous wording

We generate revenue primarily from sales of subscriptions to access our cloud platform, together with related support services. Subscription and related support services accounted for approximately 97% of our revenue for each of the three and six months ended January 31, 2024 and 2023, respectively. Our contracts with our customers do not at any time provide the customer with the right to take possession of the software that runs our cloud platform. Our customers may also purchase professional services, such as mapping, implementation, network design and training. Professional services account for an immaterial portion of our revenue.

Current wording

We generate revenue primarily from sales of subscriptions to access our cloud platform, together with related support services. Subscription and related support services accounted for approximately 98% and 97% of our revenue for the three and nine months ended April 30, 2024, respectively, and 97% of our revenue for each of the three and nine months ended April 30, 2023, respectively. Our contracts with our customers do not at any time provide the customer with the right to take possession of the software that runs our cloud platform. Our customers may also purchase professional services, such as mapping, implementation, network design and training. Professional services account for an immaterial portion of our revenue.

Previous wording

Our operating expenses consist of sales and marketing expenses, research and development expenses and general and administrative expenses. Personnel expenses are the most significant component of operating expenses and consist of salaries, benefits, bonuses, stock-based compensation expense and, with respect to sales and marketing expenses, sales commissions that are recognized as expenses over the period of benefit. Operating expenses also include overhead expenses for facilities, IT, depreciation expense and amortization expense.

Current wording

Our operating expenses consist of sales and marketing expenses, research and development expenses, general and administrative expenses and restructuring and other charges. Personnel expenses are the most significant component of operating expenses and consist of salaries, benefits, bonuses, stock-based compensation expense and, with respect to sales and marketing expenses, sales commissions that are recognized as expenses over the period of benefit. Operating expenses also include overhead expenses for facilities, IT, depreciation expense and amortization expense.

Previous wording

Other income (expense), net consists primarily of foreign currency transaction gains and losses and changes in fair value of our non-designated derivative instruments.

Current wording

Other expense, net consists primarily of foreign currency transaction gains and losses and changes in fair value of our non-designated derivative instruments.

Previous wording

Revenue increased by $137.4 million, or 35%, for the three months ended January 31, 2024, compared to the three months ended January 31, 2023. The increase in revenue was driven primarily by an increase in users and sales of additional subscriptions to existing customers, which contributed $89.3 million in additional revenue. The remainder of the increase was primarily attributable to the addition of new customers, as we increased our customer base by 14%from January 31, 2023 to January 31, 2024.

Current wording

Revenue increased by $134.4 million, or 32%, for the three months ended April 30, 2024, compared to the three months ended April 30, 2023. The change in revenue was driven primarily by an increase in users and sales of additional subscriptions to existing customers, which contributed $91.4 million in additional revenue. The remainder of the increase was primarily attributable to the addition of new customers, as we increased our customer base by 14%from April 30, 2023 to April 30, 2024.

Previous wording

Cost of revenue increased by $29.6 million, or 34%, for the three months ended January 31, 2024, compared to the three months ended January 31, 2023. The overall increase was driven primarily by the expanded use of our cloud platform by existing and new customers, which led to an increase of $17.2 million for data center and equipment related costs for hosting and operating our cloud platform. Additionally, our employee-related expenses increased by $13.4 million, inclusive of an increase of $3.6 million in stock-based compensation expense, driven primarily by an increase in headcount in our customer support and cloud operations organizations.

Current wording

Cost of revenue increased by $22.5 million, or 23%, for the three months ended April 30, 2024, compared to the three months ended April 30, 2023. The change was driven primarily by the expanded use of our cloud platform by existing and new customers, which led to an increase of $13.9 million for data center and equipment related costs for hosting and operating our cloud platform. Additionally, our employee-related expenses increased by $7.6 million, inclusive of an increase of $2.1 million in stock-based compensation expense, driven primarily by an increase in headcount in our customer support and cloud operations organizations.

Previous wording

Gross margin increased from 77% for the three months ended January 31, 2023 to 78% for the three months ended January 31, 2024. The increase in gross margin was driven primarily by a change in the estimated useful life from four to five years for our servers and network equipment, whichwas effective beginning fiscal 2024. For further information refer to Note 1, Business and Summary of Significant Accounting Policies, of our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

Gross margin increased from 77% for the three months ended April 30, 2023 to 79% for the three months ended April 30, 2024. The increase in gross margin was driven primarily by a change in the estimated useful life from four to five years for our servers and network equipment, which was effective beginning fiscal 2024. For further information refer to Note 1, Business and Summary of Significant Accounting Policies, of our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

Sales and marketing expenses increased by $40.5 million, or 17%, for the three months ended January 31, 2024, compared to the three months ended January 31, 2023. The increase was driven primarily by an increase in headcount, resulting in an increase of $34.6 million in employee-related expenses, inclusive of an increase of $8.8 million in stock-based compensation expense and an increase of $6.8 million in sales commissions expense. The remainder of the increase was primarily attributable to increased expenses of $11.0 million in travel expenses.

Current wording

Sales and marketing expenses increased by $26.2 million, or 11%, for the three months ended April 30, 2024, compared to the three months ended April 30, 2023. The change was primarily driven by an increase of $9.1 million in employee-related expenses, inclusive of an increase of $8.3 million in sales commissions expense and a decrease of $8.6 million instock-based compensation expense. The decreasein stock-based compensation expense was primarily driven by the reversal in February 2024 of $11.7 million of stock-based compensation expense associated with the cancellation of unvested equity awards as a result of the departure of our Chief Operating Officer, who led sales activities. The increase in employee related expenses was primarily due to an increase in headcount. The remainder of the increase was primarily attributable to increased expenses of $8.5 million in marketing and advertising expenses, $5.2 million in travel expenses and $3.1 million in facility related expenses.

Previous wording

Research and development expenses increased by $36.4 million, or 42%, for the three months ended January 31, 2024, compared to the three months ended January 31, 2023, as we continued to develop and enhance the functionality of our cloud platform and integrate technologies acquired through our business combinations. The increase was driven primarily by an increase of $35.9 million in employee-related expenses, inclusive of an increase of $13.9 million in stock-based compensation expense, primarily due to an increase in headcount. The remainder of the increase was primarily attributable to increased expenses of $2.6 million in facility, software and equipment related expenses to support our growth. The net increase was offset by higher capitalized internal-use software development costs of $2.4 million to support the enhancement and growth of our cloud platform.

Current wording

Research and development expenses increased by $32.3 million, or 35%, for the three months ended April 30, 2024, compared to the three months ended April 30, 2023, as we continued to develop and enhance the functionality of our cloud platform and integrate technologies acquired through our business combinations. The change was driven primarily by an increase of $31.9 million in employee-related expenses, inclusive of an increase of $13.3 million in stock-based compensation expense, primarily due to an increase in headcount. The remainder of the increase was primarily attributable to increased expenses of $6.1 million in facility, software and equipment related expenses to support our growth. The net increase was offset by higher capitalized internal-use software development costs of $6.6 million to support the enhancement and growth of our cloud platform.

Previous wording

Interest income increased by $15.7 million for the three months ended January 31, 2024, compared to the three months ended January 31, 2023. The increase was driven primarily by higher interest rates and our increased balance of cash equivalents and short-term investments.

Current wording

Interest income increased by $9.0 million for the three months ended April 30, 2024, compared to the three months ended April 30, 2023. The change was driven primarily by higher interest rates and our increased balance of cash equivalents and short-term investments.

Previous wording

Interest expense increased by $2.3 million for the three months ended January 31, 2024, compared to the three months ended January 31, 2023. The increase wasdriven primarily by fair value hedge adjustments related to our Notes.

Current wording

Interest expense increased by $1.4 million for the three months ended April 30, 2024, compared to the three months ended April 30, 2023. The change wasdriven primarily by fair value hedge adjustments related to our Notes.

Previous wording

Revenue increased by $278.6 million, or 37%, for the six months ended January 31, 2024, compared to the six months ended January 31, 2023. The increase in revenue was driven primarily by an increase in users and sales of additional subscriptions to existing customers, which contributed $195.6 million in additional revenue. The remainder of the increasewas primarily attributable to the addition of new customers, as we increased our customer base by 14% from January 31, 2023 to January 31, 2024.

Current wording

Revenue increased by $413.0 million, or 36%, for the nine months ended April 30, 2024, compared to the nine months ended April 30, 2023. The change in revenue was driven primarily by an increase in users and sales of additional subscriptions to existing customers, which contributed $318.5 million in additional revenue. The remainder of the increasewas primarily attributable to the addition of new customers, as we increased our customer base by 14% from April 30, 2023 to April 30, 2024.

Previous wording

Cost of revenue increased by $64.3 million, or 39%, for the six months ended January 31, 2024, compared to the six months ended January 31, 2023. Theoverall increasewas driven primarily by the expanded use of our cloud platform by existing and new customers, which led to an increase of $37.8 million for data center and equipment related costs for hosting and operating our cloud platform. Additionally, our employee-related expenses increased by $28.0 million, inclusive of an increase of $7.8 million in stock-based compensation expense, driven primarily by an increase in headcount in our customer support and cloud operations organizations.

Current wording

Cost of revenue increased by $86.8 million, or 33%, for the nine months ended April 30, 2024, compared to the nine months ended April 30, 2023. The change was driven primarily by the expanded use of our cloud platform by existing and new customers, which led to an increase of $51.7 million for data center and equipment related costs for hosting and operating our cloud platform. Additionally, our employee-related expenses increased by $35.6 million, inclusive of an increase of $9.8 million in stock-based compensation expense, driven primarily by an increase in headcount in our customer support and cloud operations organizations.

Previous wording

Gross margin remained flat at 78% for the six months ended January 31, 2024, compared to the six months ended January 31, 2023.

Current wording

Gross margin remained flat at 78% for the nine months ended April 30, 2024, compared to the nine months ended April 30, 2023.

Previous wording

Sales and marketing expenses increased by $78.8 million, or 17%, for the six months ended January 31, 2024, compared to the six months ended January 31, 2023. The increasewas driven primarily by an increase in headcount, resulting in an increase of $64.9 million in employee-related expenses, inclusive of an increase of $12.9 million in sales commissions expense and an increase of$11.8 million in stock-based compensation expense. The remainder of the increase was primarily attributable to increased expenses of $15.6 million in travel expenses and $5.3 million in marketing and advertising expenses.

Current wording

Sales and marketing expenses increased by $105.0 million, or 15%, for the nine months ended April 30, 2024, compared to the nine months ended April 30, 2023. The changewas driven primarily by an increase of $74.0 million in employee-related expenses, inclusive of an increase of $21.2 million in sales commissions expense and an increase of$3.3 million in stock-based compensation expense. The increase in stock-based compensation expense includes a reversal in February 2024 of $11.7 million of stock-based compensation expense associated with the cancellation of unvested equity awards as a result of the departure of our Chief Operating Officer, who led sales incentives. The remainder of the increase was primarily attributable to increased expenses of $20.8 million in travel expenses, $13.9 million in marketing and advertising expenses and $3.9 million in facility related expenses.

Previous wording

Research and development expenses increased by $75.0 million, or 47%, for the six months ended January 31, 2024, compared to the six months ended January 31, 2023, as we continued to develop and enhance the functionality of our cloud platform and integrate technologies acquired through our business combinations. The increase was driven primarily by anincreaseof $72.5 million in employee-related expenses, inclusive of anincrease of $29.5 million in stock-based compensation expense, primarily due to anincreasein headcount. The remainder of the increasewas primarily attributable to increased expenses of $6.0 million in facility, software and equipment related expenses to support our growth. The net increase was offset by higher capitalized internal-use software development costs of $2.1 million to support the enhancement and growth of our cloud platform.

Current wording

Research and development expenses increased by $107.3 million, or 42%, for the nine months ended April 30, 2024, compared to the nine months ended April 30, 2023, as we continued to develop and enhance the functionality of our cloud platform and integrate technologies acquired through our business combinations. The change was driven primarily by anincreaseof $104.3 million in employee-related expenses, inclusive of anincrease of $42.9 million in stock-based compensation expense, primarily due to anincreasein headcount. The increase in stock-based compensation expense for the nine months ended April 30, 2024 was partially driven by a reversal of $9.9 million of stock-based compensation expense recognized in the nine months ended April 30, 2023, which reduced the stock-based compensation expense in that period. The reversal of stock-based compensation expense resulted from the cancellation of unvested equity awards in connection with the departure of our President, who led research and development activities, in October 2022. The remainder of the increasewas primarily attributable to increased expenses of $12.1 million in facility, software and equipment related expenses to support our growth. The net increase was offset by higher capitalized internal-use software development costs of $8.7 million to support the enhancement and growth of our cloud platform.

Previous wording

Interest income increased by $33.8 million for the six months ended January 31, 2024, compared to the six months ended January 31, 2023. The increase was driven primarily by higher interest rates and our increased balance of cash equivalents and short-term investments.

Current wording

Interest income increased by $42.8 million for the nine months ended April 30, 2024, compared to the nine months ended April 30, 2023. The change was driven primarily by higher interest rates and our increased balance of cash equivalents and short-term investments.

Previous wording

Interest expense increased by $4.1 million for the six months ended January 31, 2024, compared to the six months ended January 31, 2023. Theincreasewas driven primarily by fair value hedge adjustments related to our Notes.

Current wording

Interest expense increased by $5.5 million for the nine months ended April 30, 2024, compared to the nine months ended April 30, 2023. The change was driven primarily by fair value hedge adjustments related to our Notes.

Previous wording

Other expense, net increased by $0.3 million for the six months ended January 31, 2024, compared to the six months ended January 31, 2023. The increase was driven primarily by fluctuations in foreign currency transactions gains and losses.

Current wording

Other expense, net increased by $0.4 million for the nine months ended April 30, 2024, compared to the nine months ended April 30, 2023. The change was driven primarily by fluctuations in foreign currency transactions gains and losses.

Previous wording

Our provision for income taxes increased by$8.5 million for the six months ended January 31, 2024, compared to the six months ended January 31, 2023. The increase was primarily driven by a tax expense associated with the integration of a business acquisition and increased pre-tax income in the foreign jurisdictions in which we conduct business.

Current wording

Our provision for income taxes increased by$3.6 million for the nine months ended April 30, 2024, compared to the nine months ended April 30, 2023. The change was primarily driven by the increase in our pre-tax income in both foreign and US jurisdictions in which we conduct business, offset by the reduction of the valuation allowance due to the establishment of deferred tax liabilities from the business acquisition.

Previous wording

As of January 31, 2024, our principal sources of liquidity were cash, cash equivalents and short-term investments totaling $2,459.8 million which were held for working capital and general corporate purposes. Our cash equivalents and investments consist of highly liquid investments in money market funds, U.S. treasury securities, U.S. government agency securities and corporate debt securities.

Current wording

As of April 30, 2024, our principal sources of liquidity were cash, cash equivalents and short-term investments totaling $2,240.0 million which were held for working capital and general corporate purposes. Our cash equivalents and investments consist of highly liquid investments in money market funds, U.S. treasury securities, U.S. government agency securities and corporate debt securities.

Previous wording

We have generated significant losses from operations, as reflected in our accumulated deficit of $1,152.3 million as of January 31, 2024. We expect to continue to incur operating losses and have in the past and may in the future generate negative cash flows due to expected investments to grow our business, including potential business acquisitions and other strategic transactions.

Current wording

We have generated significant losses from operations, as reflected in our accumulated deficit of $1,133.2 million as of April 30, 2024. We expect to continue to incur operating losses and have in the past and may in the future generate negative cash flows due to expected investments to grow our business, including potential business acquisitions and other strategic transactions.

Previous wording

We typically invoice our customers annually in advance, and to a lesser extent quarterly in advance, monthly in advance or multi-year in advance. Therefore, a substantial source of our cash is from such prepayments, which are included on our consolidated balance sheets as a contract liability. Deferred revenue consists of the unearned portion of billed fees for our subscriptions, which is subsequently recognized as revenue in accordance with our revenue recognition policy. As of January 31, 2024, we had deferred revenue of $1,502.2 million, of which $1,316.4 million 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. Subscriptions that are invoiced annually in advance or multi-year in advance contribute significantly to our short-term and long-term deferred revenue in comparison to our invoices issued quarterly in advance or monthly in advance. Accordingly, we cannot predict the mix of invoicing schedules in any given period.

Current wording

We typically invoice our customers annually in advance, and to a lesser extent quarterly in advance, monthly in advance or multi-year in advance. Therefore, a substantial source of our cash is from such prepayments, which are included on our consolidated balance sheets as a contract liability. Deferred revenue consists of the unearned portion of billed fees for our subscriptions, which is subsequently recognized as revenue in accordance with our revenue recognition policy. As of April 30, 2024, we had deferred revenue of $1,577.0 million, of which $1,376.7 million 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. Subscriptions that are invoiced annually in advance or multi-year in advance contribute significantly to our short-term and long-term deferred revenue in comparison to our invoices issued quarterly in advance or monthly in advance. Accordingly, we cannot predict the mix of invoicing schedules in any given period.

Previous wording

Net cash provided by operating activities during the six months ended January 31, 2024 was $402.9 million, which resulted from a net loss of $62.0 million, adjusted for non-cash charges of $383.4 million and net cash inflows of $81.5 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $269.6 million for stock-based compensation expense, $61.5 million for amortization of deferred contract acquisition costs, $29.4 million for depreciation and amortization expense, $21.6 million for non-cash operating lease costs, $6.1 million for amortization expense of acquired intangible assets and unrealized gains on hedging transactions of $2.8 million. Non-cash charges were partially offset by accretion of investments purchased at a discount of $9.6 million. Net cash inflows from changes in operating assets and liabilities were primarily the result of $102.4 million in accounts receivable, primarily due to timing of billings and collections, an increase of $62.5 million in deferred revenue, an increase of $6.0 million in accrued expenses, other current and noncurrent liabilities and a decrease of $2.7 million in prepaid expenses, other current and noncurrent assets. Net cash inflows were partially offset by cash outflows resulting from an increase of $67.7 million in deferred contract acquisition costs and a decrease of $22.5 million in operating lease liabilities, and a decrease of $2.4 million in accounts payable.

Current wording

Net cash provided by operating activities during the nine months ended April 30, 2024 was $576.3 million, which resulted from a net loss of $42.8 million, adjusted for non-cash charges of $554.8 million and net cash inflows of $64.3 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $382.8 million for stock-based compensation expense, $94.7 million for amortization of deferred contract acquisition costs, $47.0 million for depreciation and amortization expense, $34.9 million for non-cash operating lease costs and $9.5 million for amortization expense of acquired intangible assets. Non-cash charges were partially offset by accretion of investments purchased at a discount of $14.6 million and deferred income taxes of $5.8 million. Net cash inflows from changes in operating assets and liabilities were primarily the result of an increase of $132.4 million in deferred revenue, a decrease of $78.4 million in accounts receivable, primarily due to timing of billings and collections, an increase of $14.6 million in accrued expenses, other current and noncurrent liabilities and an increase of $7.5 million in accounts payable. Net cash inflows were partially offset by cash outflows resulting from an increase of $122.7 million in deferred contract acquisition costs, a decrease of $35.4 million in operating lease liabilities and an increase of $23.5 million in prepaid expenses, other current and noncurrent assets.

Previous wording

Net cash provided by operating activities during the six months ended January 31, 2023 was $217.9 million, which resulted from a net loss of $125.6 million, adjusted for non-cash charges of$305.3 million and net cash inflows of$38.2 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $214.9 million for stock-based compensation expense, $46.1 million for amortization of deferred contract acquisition costs, $25.2 million for depreciation and amortization expense, $15.0 million for non-cash operating lease costs and $5.1 million for amortization expense of acquired intangible assets. Net cash inflows from changes in operating assets and liabilities were primarily the result of an increase of $90.9 million in deferred revenue, a decrease of $40.8 million in accounts receivable, primarily due to timing of billings and collections, an increase of $5.9 million in accrued expenses, other current and noncurrent liabilities and an increase of $5.2 million in accounts payable. Net cash inflows were partially offset by cash outflows resulting from an increase of $64.2 million in deferred contract acquisition costs, a decrease of $17.7 million in accrued compensation, a decrease of $14.9 million in operating lease liabilities and an increase of $7.8 million in prepaid expenses, other current and noncurrent assets.

Current wording

Net cash provided by operating activities during the nine months ended April 30, 2023 was $326.4 million, which resulted from a net loss of $171.7 million, adjusted for non-cash charges of$462.9 million and net cash inflows of$35.2 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $322.7 million for stock-based compensation expense, $71.4 million for amortization of deferred contract acquisition costs, $39.8 million for depreciation and amortization expense, $23.3 million for non-cash operating lease costs and $8.1 million for amortization expense of acquired intangible assets. Net cash inflows from changes in operating assets and liabilities were primarily the result of an increase of $154.3 million in deferred revenue, a decrease of $23.0 million in accounts receivable, primarily due to timing of billings and collections, an increase of $14.9 million in accrued expenses, other current and noncurrent liabilities, and an increase of $10.9 million in accrued compensation. Net cash inflows were partially offset by cash outflows resulting from an increase of $110.6 million in deferred contract acquisition costs, a decrease of $23.6 million in operating lease liabilities, an increase of $29.6 million in prepaid expenses, other current and noncurrent assets, and a decrease of $4.1 million in accounts payable.

Previous wording

Net cash provided by investing activities during the six months ended January 31, 2023 of $12.4 million was primarily attributable to the purchases of short-term investments of $513.7 million and capital expenditures of $59.5 million, primarily to support the growth and expansion of our cloud platform. These activities were partially offset by proceeds from the maturity of short-term investments of $586.8 million.

Current wording

Net cash used in investing activities during the nine months ended April 30, 2024 of $609.0 million was primarily attributable to the purchases of short-term investments of $1,004.0 million, capital expenditures of $127.7 million to support the growth and expansion of our cloud platform, and $361.8 million, net of cash acquired for a business acquisitions, and expenditures on strategic investments of $2.0 million. These activities were partially offset by proceeds from the maturities and sales of short-term investments of$886.4 million.

Previous wording

Net cash used in investing activities during the six months ended January 31, 2024 of $248.8 million was primarily attributable to the purchases of short-term investments of $761.8 million, capital expenditures of $77.4 million to support the growth and expansion of our cloud platform, and $4.4 million, net of cash acquired for a business acquisition. These activities were partially offset by proceeds from the maturity and sale of short-term investments of$596.8 million.

Current wording

Net cash used in investing activities during the nine months ended April 30, 2023 of $78.9 million was primarily attributable to the purchases of short-term investments of $740.2 million, capital expenditures of $94.1 million to support the growth and expansion of our cloud platform, $15.6 million, net of cash acquired for a business acquisitions, and expenditures on strategic investments of $2.2 million. These activities were partially offset by proceeds from the maturities and sales of short-term investments of $773.2 million.

Previous wording

Net cash provided by financing activities of $22.3 million during the six months ended January 31, 2024 was primarily attributable to $18.4 million in proceeds from the issuance of common stock under the ESPP and $3.8 million from proceeds from the exercise of stock options.

Current wording

Net cash provided by financing activities of $29.7 million during the nine months ended April 30, 2024 was primarily attributable to $18.4 million in proceeds from the issuance of common stock under the ESPP and $11.3 million in proceeds from the exercise of stock options.

Previous wording

Net cash provided by financing activities of $13.5 million during the six months ended January 31, 2023 was primarily attributable to $11.4 million in proceeds from the issuance of common stock under the ESPP and $2.1 million from proceeds from the exercise of stock options.

Current wording

Net cash provided by financing activities of $14.6 million during the nine months ended April 30, 2023 was primarily attributable to $11.4 million in proceeds from the issuance of common stock under the ESPP and $3.2 million in proceeds from the exercise of stock options.

Previous wording

During the six months ended January 31, 2024, there have been no material changes outside the ordinary course of business to our contractual obligations and commitments from those disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations, set forth in Part II, Item 7, of our Fiscal 2023 Form 10-K, other than to non-cancelable purchase obligations. For further information refer to Note 10, Commitments and Contingencies, of our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

During the nine months ended April 30, 2024, there have been no material changes outside the ordinary course of business to our contractual obligations and commitments from those disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations, set forth in Part II, Item 7, of our Fiscal 2023 Form 10-K, other than to non-cancelable purchase obligations. For further information refer to Note 11, Commitments and Contingencies, of our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

Our significant accounting policies are discussed in Note 1, Business and Summary of Significant Accounting Policies, of our consolidated financial statements included in our Fiscal 2023 Form 10-K. There have been no significant changes to these policies for the six months ended January 31, 2024, other than the change in useful lives of our servers and networking equipment as described in Note 1, Business and Summary of Significant Accounting Policies, of our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

Our significant accounting policies are discussed in Note 1, Business and Summary of Significant Accounting Policies, of our consolidated financial statements included in our Fiscal 2023 Form 10-K. There have been no significant changes to these policies for the nine months ended April 30, 2024, other than the change in useful lives of our servers and networking equipment as described in Note 1, Business and Summary of Significant Accounting Policies, of our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.