Zscaler, Inc.

Previous wording

We generate revenue primarily from sales of subscriptions to access our cloud platform, together with related support services. We also generate an immaterial amount of revenue from professional and other services, which consist primarily of fees associated with mapping, implementation, network design and training. Our subscription pricing is primarily calculated on a per-user basis. We recognize subscription and support revenue ratably over the life of the contract, which is generally one to three years. As of July 31, 2025, we had expanded our operations to over 9,400 customers across major industries, with users in over 185 countries. Government agencies and some of the largest enterprises in the world rely on us to support their secure digital transformation.

Current wording

We generate revenue primarily from sales of subscriptions to access our cloud platform, together with related support services. We also generate an immaterial amount of revenue from professional and other services, which consist primarily of fees associated with mapping, implementation, network design and training. Our subscription pricing is calculated on a per-user and metered-usage basis. We recognize subscription and support revenue ratably over the life of customer contracts, which is generally one to three years. As of July 31, 2025, we had expanded our operations to over 9,400 customers across major industries, with users in over 185 countries. Government agencies and some of the largest enterprises in the world rely on us to support their secure digital transformation.

Previous wording

We operate our business as one reportable segment. Our revenue has experienced significant growth in recent periods. For the three months ended October 31, 2025 and 2024, our revenue was $788.1 million and$628.0 million, respectively. We have incurred net losses in all annual periods since our inception. For the three months ended October 31, 2025 and 2024, ournet loss was $11.6 million and $12.1 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 maximize our market opportunity, to invest in research and development efforts to enhance the functionality of our cloud platform, 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.

Current 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, 2026 and 2025, our revenue was $1,603.9 million and$1,275.9 million, respectively. We have incurred net losses in all annual periods since our inception. For the six months ended January 31, 2026 and 2025, ournet loss was $45.9 million and $19.8 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 maximize our market opportunity, to invest in research and development efforts to enhance the functionality of our cloud platform and to address any legal matters and related accruals, as further described in Note 12, Commitments and Contingencies, of the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

In a cloud, mobile-first and AI-enabled world where organizations depend on public and third-party infrastructure and technologies to access critical applications that power their businesses, enterprises that continue to rely on legacy network and security architecture built on firewalls and VPNs face serious challenges. The adoption of cloud applications and infrastructure, the explosion of internet traffic volumes, the shift to mobile-first computing generally and the pace at which enterprises adopt the internet as their corporate network in particular, impact our ability to drive market adoption of our cloud platform. In addition, the dependence on the internet, expanding digital transformation and growing AI usage have increased exposure to malicious or compromised websites, and sophisticated hackers are exploiting the gaps left by legacy network security appliances. To securely access the internet, transform their networks and expand their AI adoption, organizations must make fundamental changes in their network and security architectures. We believe that most organizations have yet to fully make these investments. Because our cloud platform enables organizations to securely embrace digital transformation, we believe that the imperative for organizations to securely move to the cloud will increase demand for our cloud platform and broaden our customer base.

Current wording

In a cloud, mobile-first and AI-enabled world where organizations depend on public and third-party infrastructure and technologies to access critical applications that power their businesses, enterprises that continue to rely on outdated network and security architecture built on firewalls and VPNs face serious challenges. The adoption of cloud applications and infrastructure, the explosion of internet traffic volumes, the shift to mobile-first computing generally and the pace at which enterprises adopt the internet as their corporate network in particular, impact our ability to drive market adoption of our cloud platform. In addition, the dependence on the internet, expanding digital transformation and growing AI usage have increased exposure to malicious or compromised websites, and sophisticated hackers are exploiting the gaps left by legacy network security appliances. To securely access the internet, transform their networks and expand their AI adoption, organizations must make fundamental changes in their network and security architectures. We believe that most organizations have yet to fully make these investments. Because our cloud platform enables organizations to securely embrace digital transformation, we believe that the imperative for organizations to securely move to the cloud and safely realize the benefits of AI will increase demand for our cloud platform and broaden our customer base.

Previous wording

We typically expand our relationship with our customers over time. While most of our new customers route all of their internet-bound web traffic through our cloud platform, some of our customers initially use our services for specific users or specific security functionality. We leverage our land-and-expand model with the goal of generating incremental revenue, often within the term of the initial subscription, by increasing sales to our existing customers in one of three ways:

Current wording

We typically expand our relationship with our customers over time. While most of our new customers route all of their internet-bound web traffic through our cloud platform, some of our customers initially use our services for a specific security functionality. We leverage our land-and-expand model with the goal of generating incremental revenue, often within the term of the initial subscription, by increasing sales to our existing customers in one of three ways:

Previous wording

•expanding deployment of our cloud platform to cover additional users;

Current wording

•expanding deployment of our cloud platform to cover additional users and services;

Previous wording

•upgrading to more advanced capabilities; and

Current wording

•upgrading to more advanced capabilities, including AI-enabled features; and

Previous wording

•selling a subscription to a new solution or product, for example selling a ZPA subscription to a ZIA customer or a ZIA subscription to a ZPA customer.

Current wording

•selling a subscription to a new solution or product, for example selling data security or AI security services to an existing ZIA or ZPA customer.

Previous wording

ARR is a non-GAAP financial measure that we believe is a key metric to measure our periodic performance. ARR refers to the next 12 months of revenue from subscription contracts as of the measurement date. To establish ARR for a customer, we assume that any contract expiring during the next 12 months will be renewed under the existing terms, excluding Red Canary's subscription contracts expiring in fiscal year 2026. ARR as of October 31, 2025 and 2024 was $3,204 million and $2,553 million, respectively.

Current wording

ARR is a non-GAAP financial measure that we believe is a key metric to measure our periodic performance. ARR refers to the next 12 months of revenue from subscription contracts as of the measurement date. To establish ARR for a customer, we assume that any contract expiring during the next 12 months will be renewed under the existing terms, excluding Red Canary's subscription contracts expiring in fiscal year 2026. ARR as of January 31, 2026 and 2025 was $3,359 million and $2,683 million, respectively.

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 98% and 97% of our revenue for the three months ended October 31, 2025 and 2024, 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% of our revenue for the three and six months ended January 31, 2026, respectively, and 98% and 97% of our revenue for the three and six months ended January 31, 2025, 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 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 (i.e., facilities, IT, depreciation expense and amortization expense).

Previous wording

Sales and marketing expenses consist primarily of employee compensation and related expenses, including salaries, bonuses and benefits for our sales and marketing employees, sales commissions that are recognized as expenses over the period of benefit, stock-based compensation expense, marketing programs, travel and entertainment expenses, expenses for conferences and events, amortization of intangible assets acquired through our business acquisitions and allocated overhead expenses. We capitalize our sales commissions and associated payroll taxes that are incremental to the acquisition of customer contracts and recognize them as expenses over the estimated period of benefit. The amount recognized in our sales and marketing expenses reflects the amortization of expenses previously deferred as attributable to each period presented in this Quarterly Report on Form 10-Q, as described below under "Critical Accounting Policies and Estimates."

Current wording

Sales and marketing expenses consist primarily of employee compensation and related expenses, including salaries, bonuses and benefits for our sales and marketing employees, sales commissions that are recognized as expenses over the period of benefit, stock-based compensation expense, marketing programs, travel and entertainment expenses, expenses for conferences and events, amortization of intangible assets acquired through our business acquisitions and allocated overhead expenses (i.e., facilities, IT, depreciation expense and amortization expense). We capitalize our sales commissions and associated payroll taxes that are incremental to the acquisition of customer contracts and recognize them as expenses over the estimated period of benefit. The amount recognized in our sales and marketing expenses reflects the amortization of expenses previously deferred as attributable to each period presented in this Quarterly Report on Form 10-Q, as described below under "Critical Accounting Policies and Estimates."

Previous wording

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

Previous wording

Provision for income taxes consists of state income taxes in the United States ("U.S."), foreign income taxes, and withholding taxes related to customer payments in certain foreign jurisdictions in which we conduct business. We weigh all available positive and negative evidence, including but not limited to our earnings history and results of recent operations, scheduled reversals of deferred tax liabilities, projected future taxable income and tax planning strategies and the nature of each deferred tax assets in assessing the extent to which a valuation allowance should be applied against our U.S. and foreign deferred tax assets.

Current wording

Provision for (benefit from) income taxes consists of state income taxes in the United States ("U.S."), foreign income taxes, and withholding taxes related to customer payments in certain foreign jurisdictions in which we conduct business. We weigh all available positive and negative evidence, including but not limited to our earnings history and results of recent operations, scheduled reversals of deferred tax liabilities, projected future taxable income and tax planning strategies and the nature of each deferred tax assets in assessing the extent to which a valuation allowance should be applied against our U.S. and foreign deferred tax assets.

Previous wording

Revenue increased by $160.2 million, or 26%, for the three months ended October 31, 2025, compared to the three months ended October 31, 2024. The change in revenue was driven primarily by an increase in users and sales of additional subscriptions to existing customers, which contributed $86.2 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 October 31, 2024 to October 31, 2025, and revenue from the Red Canary acquisition.

Current wording

Revenue increased by $167.9 million, or 26%, for the three months ended January 31, 2026, compared to the three months ended January 31, 2025. The change in revenue was driven primarily by sales of additional subscriptions to existing customers, which contributed $96.9 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 15%from January 31, 2025 to January 31, 2026.

Previous wording

Cost of revenue increased by $43.3 million, or 31%, for the three months ended October 31, 2025, compared to the three months ended October 31, 2024. The overall increase in cost of revenue was driven primarily by the expanded use of our cloud platform by existing and new customers, which led to an increase of $31.7 million for data center and equipment-related costs for hosting and operating our cloud platform. Additionally, our employee-related expenses increased by $8.6 million, inclusive of an increase of $2.0 million in stock-based compensation expense, driven primarily by an increase in headcount, including as a result of the Red Canary acquisition.

Current wording

Cost of revenue increased by $42.8 million, or 29%, for the three months ended January 31, 2026, compared to the three months ended January 31, 2025. The overall increase in cost of revenue was driven primarily by the expanded use of our cloud platform by existing and new customers, which led to an increase of $26.9 million for data center and equipment-related costs for hosting and operating our cloud platform. The remainder of the increase was primarily attributable to employee-related expenses of $12.4 million, inclusive of an increase of $5.6 million in stock-based compensation expense, driven primarily by an increase in headcount, and higher amortization of acquired intangible assets of $3.1 million.

Previous wording

Research and development expenses increased by $46.2 million, or 30%, for the three months ended October 31, 2025, compared to the three months ended October 31, 2024, as we continue to develop and enhance the functionality of our cloud platform and integrate technologies acquired through our business acquisitions. The change was driven primarily by an increase of $29.1 million in employee-related expenses, inclusive of an increase of $15.5 million in stock-based compensation expense, primarily due to an increase in headcount, including as a result of the Red Canary acquisition. The remainder of the increase was primarily attributable to increased expenses of $10.4 million in facility, cloud hosting, software and equipment-related expenses to support our growth and lower capitalized internal-use software development costs of $4.8 million.

Current wording

Research and development expenses increased by $58.3 million, or 34%, for the three months ended January 31, 2026, compared to the three months ended January 31, 2025, as we continue to develop and enhance the functionality of our cloud platform and integrate technologies acquired through our business acquisitions. The change was driven primarily by an increase of $40.6 million in employee-related expenses, inclusive of an increase of $19.1 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 $13.7 million in facility, cloud hosting, software and equipment-related expenses to support our growth and lower capitalized internal-use software development costs of $3.8 million.

Previous wording

Interest income increased by $3.1 million, or 10%, for the three months ended October 31, 2025, compared to the three months ended October 31, 2024. The change was driven primarily by our increased balance of cash equivalents and short-term investments.

Current wording

Interest income increased by $3.0 million, or 10%, for the three months ended January 31, 2026, compared to the three months ended January 31, 2025. The change was driven primarily by our increased balance of cash equivalents and short-term investments.

Previous wording

Other expense, net increased by $2.4 million for the three months ended October 31, 2025 compared to the three months ended October 31, 2024. The change was driven primarily by fluctuations in foreign currency transactions gains and losses.

Current wording

Other income (expense), net increased by $5.7 million for the three months ended January 31, 2026 compared to the three months ended January 31, 2025. The change was driven primarily by fluctuations in foreign currency transactions gains and losses.

Previous wording

Our provision for income taxes decreased by $4.4 million for the three months ended October 31, 2025, compared to the three months ended October 31, 2024. The change is primarily attributable to a tax benefit from the release of a portion of the U.S. valuation allowance in connection with the acquisitions that occurred during the year.

Current wording

Our provision for (benefit from) income taxes increased by $21.8 million for the three months ended January 31, 2026, compared to the three months ended January 31, 2025. The change is primarily attributable to the prior year's non-recurring release of valuation allowance on United Kingdom deferred tax assets.

Previous wording

Our provision for income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that arise during the period. Each fiscal quarter, we update our estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, we make a cumulative adjustment in such period.

Current wording

Our provision for (benefit from) income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that arise during the period. Each fiscal quarter, we update our estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, we make a cumulative adjustment in such period.

Previous wording

Our quarterly tax provision, and estimate of our annual effective tax rate, is subject to variation due to several factors, including variability in pre-tax income or loss, the mix of jurisdictions to which such income relates, changes in our business operations and changes in tax laws. Our estimated annual effective tax rate for the year differs from the U.S. statutory rate of 21% primarily due to the benefit of a portion of our earnings being taxed at rates lower than the U.S. statutory rate.

Current wording

Our quarterly tax provision for (benefit from), and estimate of our annual effective tax rate, is subject to variation due to several factors, including variability in pre-tax income (or loss), the mix of jurisdictions to which such income relates, changes in our business operations and changes in tax laws. Our estimated annual effective tax rate for the year differs from the U.S. statutory rate of 21% as a result of our U.S. losses for which no tax benefit will be realized, as well as our foreign operations which are subject to tax rates that differ from those in the United States.

Previous wording

On July 4, 2025, the United States enacted tax reform legislation through the One Big Beautiful Bill Act. Included in this legislation are provisions that allow for the immediate expensing of domestic research and development expenses, immediate expensing of certain capital expenditures, and other changes to the U.S. taxation of profits derived from foreign operations. The provisions in the legislation resulted in an immaterial favorable effect on the income tax provision due to the Company's valuation allowance and has been accounted for in the first quarter of fiscal year 2026.

Current wording

On July 4, 2025, the United States enacted tax reform legislation through the One Big Beautiful Bill Act. Included in this legislation are provisions that allow for the immediate expensing of domestic research and development expenses, immediate expensing of certain capital expenditures, and other changes to the U.S. taxation of profits derived from foreign operations. We began accounting for the provisions in the legislation in fiscal 2026, which resulted in an immaterial favorable effect on the income tax provision, mainly due to the Company's valuation allowance.

Previous wording

Sales and marketing expenses increased by $67.5 million, or 22%, for the three months ended October 31, 2025, compared to the three months ended October 31, 2024. The change was driven primarily by an increase of$38.7 million in employee-related expenses, inclusive of an increase of $5.5 million instock-based compensation expense and$0.7 million in sales commissions expense. The increase in employee-related expenses was primarily due to an increase in headcount, including as a result of the Red Canary acquisition. The remainder of the increase was primarily attributable to $8.7 million in marketing and advertisement expenses, $6.8 million in facility related expenses, $6.8 million in travel expenses and $2.8 million inrestructuring and other charges.

Current wording

Sales and marketing expenses increased by$128.5 million, or 21%, for the six months ended January 31, 2026, compared to the six months ended January 31, 2025. The change was driven primarily by an increase of$87.3 million in employee-related expenses, inclusive of an increase of $18.8 million in sales commissions expense and $17.1 million instock-based compensation expense. The increase in employee-related expenses was primarily due to an increase in headcount. The remainder of the increase was primarily attributable to $12.6 million in facility related expenses, $10.2 million in marketing and advertisement expenses, $9.7 million in travel expenses and $6.3 million in amortization of acquired intangible assets.

Previous wording

As of October 31, 2025, our principal sources of liquidity were cash, cash equivalents and short-term investments totaling $3,321.3 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, certificates of deposit and corporate debt securities.

Current wording

As of January 31, 2026, our principal sources of liquidity were cash, cash equivalents and short-term investments totaling $3,512.8 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, certificates of deposit, corporate debt securities and asset-backed securities.

Previous wording

We have generated significant losses from operations, as reflected in our accumulated deficit of $1,201.2 million as of October 31, 2025. 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 $1,235.5 million as of January 31, 2026. 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 October 31, 2025, we had deferred revenue of $2,351.3 million, of which $1,946.2 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.

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 January 31, 2026, we had deferred revenue of $2,355.4 million, of which $1,983.6 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.

Previous wording

Net cash provided by operating activities during the three months ended October 31, 2025 was $448.3 million, which was driven by a net loss of $11.6 million, adjusted for non-cash charges of $297.1 million and net cash inflows of $162.8 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $188.6 million for stock-based compensation expense, $48.1 million for amortization of deferred contract acquisition costs, $32.7 million for depreciation and amortization expense, $18.4 million for non-cash operating lease costs, $8.6 million for amortization expense of acquired intangible assets, $3.0 million in unrealized losses on hedging transactions and $2.0 million in amortization of debt issuance costs. These non-cash charges were partially offset by deferred income taxes of $3.7 million and an accretion of investments purchased at a discount of $1.9 million. Net cash inflows from changes in operating assets and liabilities were primarily attributable to $482.9 million decrease in accounts receivable, primarily due to the timing of billings and collections, as well as an $8.4 million increase in accrued expenses and other current and noncurrent liabilities. These cash inflows were partially offset by cash outflows resulting from a decrease of $191.1 million in deferred revenue, a decrease of $54.8 million in accrued compensation, an increase of $43.7 million in deferred contract acquisition costs, a decrease of $18.6 million in operating lease liabilities, an increase of $17.3 million in prepaid expenses, other current and noncurrent assets and a decrease of $2.9 million in accounts payable.

Current wording

Net cash provided by operating activities during the six months ended January 31, 2026 was $652.4 million, which was driven by a net loss of $45.9 million, adjusted for non-cash charges of $629.1 million and net cash inflows of $69.1 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $405.1 million for stock-based compensation expense, $97.6 million for amortization of deferred contract acquisition costs, $67.6 million for depreciation and amortization expense, $38.8 million for non-cash operating lease costs, $19.7 million for amortization expense of acquired intangible assets, and $4.1 million in amortization of debt issuance costs. These non-cash charges were partially offset primarily by $3.6 million in accretion of investments purchased at a discount. Net cash inflows from changes in operating assets and liabilities were primarily attributable to $461.5 million decrease in accounts receivable, primarily due to the timing of billings and collections, as well as an $6.3 million increase in accrued expenses and other current and noncurrent liabilities. These cash inflows were partially offset by cash outflows resulting from a decrease of $187.1 million in deferred revenue, an increase of $107.4 million in deferred contract acquisition costs, an increase of $30.2 million in prepaid expenses, other current and noncurrent assets, a decrease of $29.5 million in accrued compensation, a decrease of $22.3 million in operating lease liabilities and a decrease of $22.1 million in accounts payable.

Previous wording

Net cash provided by operating activities during the three months ended October 31, 2024 was $331.3 million, which resulted from a net loss of $12.1 million, adjusted for non-cash charges of$238.1 million and net cash inflows of$105.3 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $157.2 million for stock-based compensation expense, $39.1 million for amortization of deferred contract acquisition costs, $21.4 million for depreciation and amortization expense, $15.7 million for non-cash operating lease costs and $4.2 million for amortization expense of acquired intangible assets and unrealized losses on hedging transactions of $3.7 million. These non-cash charges were partially offset by accretion of investments purchased at a discount of $5.0 million. Net cash inflows from changes in operating assets and liabilities were primarily the result of $312.0 million in accounts receivable and an increase of $1.0 million in accounts payable. Net cash inflows were partially offset by cash outflows resulting from a decrease of $111.3 million in deferred revenue, a decrease of $34.4 million in accrued compensation, an increase of $32.8 million in deferred contract acquisition costs, a decrease of $14.2 million in operating lease liabilities, an increase of $8.8 million in prepaid expenses, other current and noncurrent assets and a decrease of $6.2 million in accrued expenses.

Current wording

Net cash provided by operating activities during the six months ended January 31, 2025 was $510.8 million, which resulted from a net loss of $19.8 million, adjusted for non-cash charges of$473.3 million and net cash inflows of$57.3 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $329.3 million for stock-based compensation expense, $79.2 million for amortization of deferred contract acquisition costs, $45.9 million for depreciation and amortization expense, $31.6 million for non-cash operating lease costs and $8.5 million for amortization expense of acquired intangible assets and unrealized losses on hedging transactions of $3.0 million. Non-cash charges were partially offset by deferred income taxes of $17.4 million and an accretion of investments purchased at a discount of $10.1 million. Net cash inflows from changes in operating assets and liabilities were primarily the result of $222.0 million in accounts receivable. Net cash inflows were partially offset by cash outflows resulting from an increase of $74.2 million in deferred contract acquisition costs, a decrease of $30.2 million in operating lease liabilities, a decrease of $20.4 million in accrued compensation, a decrease of $16.5 million in deferred revenue, an increase of $12.1 million in prepaid expenses, other current and noncurrent assets and a decrease of $11.5 million in accrued expenses.

Previous wording

Net cash used in investing activities during the three months ended October 31, 2025, totaled $1,502.2 million. This was primarily driven by purchases of short-term investments of $896.4 million, payments for business acquisitions, net of cash acquired, of $672.8 million and capital expenditures of $35.0 million to support the growth and expansion of our cloud platform. These outflows were partially offset by proceeds of$101.9 million from sales and maturities of short-term investments.

Current wording

Net cash used in investing activities during the six months ended January 31, 2026, totaled $1,863.1 million. This was primarily driven by purchases of short-term investments of $1,401.5 million, payments for business acquisitions, net of cash acquired, of $672.8 million and capital expenditures of $69.9 million to support the growth and expansion of our cloud platform. These outflows were partially offset by proceeds of$283.1 million from sales and maturities of short-term investments.

Previous wording

Net cash used in investing activities during the three months ended October 31, 2024, totaled $201.7 million. This was primarily driven by purchases of short-term investments of $430.3 million and capital expenditures of $39.5 million to support the growth and expansion of our cloud platform. These outflows were partially offset by proceeds of $268.7 million from maturities of short-term investments.

Current wording

Net cash used in investing activities during the six months ended January 31, 2025 of $201.1 million was primarily attributable to purchases of short-term investments of $729.1 million and capital expenditures of $75.5 million to support the growth and expansion of our cloud platform. These activities were partially offset by proceeds from maturities of short-term investments of $605.0 million.

Previous wording

Net cash provided by financing activities of $3.1 million during the three months ended October 31, 2025 was primarily attributable to proceeds from the exercise of stock options.

Current wording

Net cash provided by financing activities of $24.5 million during the six months ended January 31, 2026 was primarily attributable to $21.5 million in proceeds from the issuance of common stock under the ESPP and $4.0 million was attributable to proceeds from the exercise of stock options.

Previous wording

Net cash provided by financing activities during the three months ended October 31, 2024 of $0.9 million was attributable to proceeds from the exercise of stock options.

Current wording

Net cash provided by financing activities of $25.8 million during the six months ended January 31, 2025 was primarily attributable to $22.3 million in proceeds from the issuance of common stock under the ESPP and $3.5 million was attributable to proceeds from the exercise of stock options.

Previous wording

During the three months ended October 31, 2025, 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 2025 Form 10-K.

Current wording

During the six months ended January 31, 2026, 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 2025 Form 10-K.

Previous wording

Our significant accounting policies are described in the Fiscal 2025 Form 10-K. There have been no significant changes to these policies that have had a material impact on the condensed consolidated financial statements and related notes for the three months ended October 31, 2025.

Current wording

Our significant accounting policies are described in the Fiscal 2025 Form 10-K. There have been no significant changes to these policies that have had a material impact on the condensed consolidated financial statements and related notes for the six months ended January 31, 2026.